Fiatch

Who was Charles Ponzi?
Who’s really running Ponzi schemes?

You probably thought that payments such as unemployment benefits were provided via some sort of trust fund, right?  After all, the government commands under the muzzle of a gun that you contribute to this program, and government officials are so bright, capable, and selfless, correct?

Think again.

Florida has borrowed $45 million to pay the unemployed and officials estimate that it will borrow $1.2 billion by the end of the year for such payments.

Florida is the 19th state to borrow money to keep unemployment benefits flowing after the trust fund ran dry.

There is no trust.  There is no fund.  It’s just more theft present (taxes) and theft future (debt and/or inflation).

It’s often hard for the victim to admit to being conned.  Think again.

HT Robert Wenzel

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“Senator Edward Kennedy” via The Austrian Economists includes (emphasis added):

Americans like heroes and to many people Senator Kennedy was one. It is not the place to judge the deep motives for his actions, I leave that to others. The reaction to his death is telling, however, of the situation in which the country stands – I mean as far as the battle of ideas is concerned. For a country that was founded on the precept that political power is dangerous as it can lead to corruption and totalitarianism, it is strange that its politicians are often revered as gods. I do not know if Senator Kennedy was ignorant of the teachings of economics, but his lifelong fight in favor of universal health care and various other socialistic legislations paved the way to impoverishment and social disaster. Like many in politics, he stood for ideas that seemed noble and beautiful to the ignorant mind, but were truly destructive of the social order.

Instead of worshiping politicians, we should wake up to the current situation.

And closes with:

With all this said, I pray that Senator Kennedy’s soul may rest in peace.

Guest: “We’ve just been Cheneyed by a guy named Barack Obama who said he’d never do this… Every line was crossed….”

Host: “He’s such a charming liar, though.”

via Robert Murphy’s “Principled Leftists Realizing that Bush + Eloquence = Obama”

The grand bipartisan project — centralize vast federal power over everything — continues, but the going is thankfully getting tougher for the corrupt and corrupting:

Guest: What if the people out there screaming and breaking up the discussion at town meetings are correct?  What if we have a situation in which you have secret meetings being held by the President — the absolute fascist nightmare — because fascism is defined as government combining with corporate powers to impose their profit-making regime on you.

What if, indeed.

I keep asking:

• What builds trust?  What destroys it?
• What store of value is safe?
• What if the ideas of the Austrian economists are correct?
• What happens next?  What most concentrates power?
• Why do we still pretend?
• What are you willing to do with your voice?

The answers to these questions take shape as individuals act and events unfold.  I find it significant, and perhaps a little hopeful, that tiny signs are emerging from both the right and left (so-called) that folks are realizing that:

1. The ongoing, damaging, dangerous power grab has nothing to do Republican versus Democrat because both parties are on board.
2. The current regime is a corporatist, fascist nightmare.  This federal power grab does not represent capitalism.
3. It is time for each individual to wake up, engage, learn, and take action with a healthy distrust if not disregard for lying politicians and their media proxies.

Not all is lost.

The Market Ticker writes:

At 5% of non-performing loans a bank is at risk of being insolvent.

But the entire banking system in the United States had its non-performing loan ratio increase from 5.58% in the first quarter to 6.49% in the second, a record, and higher than the 5% level at which the survival of a bank(ing system) is threatened with collapse.

Hmmmm….  So should we take from this that the entire US Banking System is about to collapse?

This much we know for certain - you’re being screwed - systematically - to cover the sins of these banksters who made loans to people who they had no reason to believe could pay…

This is the problem with allowing the blatant and outrageous fraud in our system to continue: Those who are prudent, who have done only good and not bad things, get reamed repeatedly and are forced, at gunpoint, to pay for the sins of those who committed that fraud.

Yet we, as Americans, permit this…

Folks, wake the hell up.

Read the whole thing.

Emmanuel Goldstein captured the dynamic well.  What happens if “Don’t Tread on Me” becomes “Come and Take It?”  What happens if it doesn’t?  Federal power apparently knows no other bound.

What builds trust?  What destroys it?  What store of value is safe?  What if the ideas of the Austrian economists are correct?

What builds trust? What destroys it?  Why do we still pretend?

The proliferation of czars across the federal government symbolizes the fatal conceit that has taken hold.

Katherine Mangu-Ward writes in “The Lure of the Czars:”

President Barack Obama is taking the practice of naming czars to new heights. As Foreign Policy points out, with the selection of “border czar” Alan Bersin, the Obama administration surpassed the Romanovs in its production of czars. It took those old Russkies 300 years to produce 18 czars. It took Obama less than 100 days.

The czar is a perfect techocratic role—appealing to Obama, who has been much praised for “surrounding himself with smart people.” The appeal of the czar rests on the belief that if we could just figure out the right smart, competent, well-intentioned person to put charge, everything would go more smoothly.

Would you believe we now have a TARP Czar, a Stimulus Czar, and a Car Czar?  We do.

This czarist approach is both conceited and futile.  It will necessarily underperform markets.  Free enterprise simply, clearly does a better job.

It is amazing that our officials idolize the czar position.  It is even more startling that American citizens tolerate such arrogant, expensive folly.

Of course, it must feel intoxicating to become a czar.  Note the full title of Russian sovereign rulers:

“…according to the article 59 of the Russian Constitution of April 23, 1906, ‘the full title of His Imperial Majesty is as follows: We, ——— by the grace of God, Emperor and Autocrat of all the Russias, of Moscow, Kiev, Vladimir, Novgorod, Tsar of Kazan, Tsar of Astrakhan, Tsar of Poland, Tsar of Siberia, Tsar of Tauric Chersonesos, Tsar of Georgia, Lord of Pskov, and Grand Duke of Smolensk, Lithuania, Volhynia, Podolia, and Finland, Prince of Estonia, Livonia, Courland and Semigalia, Samogitia, Belostok, Karelia, Tver, Yugra, Perm, Vyatka, Bulgaria and other territories; Lord and Grand Duke of Nizhni Novgorod, Sovereign of Chernigov, Ryazan, Polotsk, Rostov, Yaroslavl, Beloozero, Udoria, Obdoria, Kondia, Vitebsk, Mstislavl, and all northern territories; Sovereign of Iveria, Kartalinia, and the Kabardinian lands and Armenian territories - hereditary Lord and Ruler of the Circassians and Mountain Princes and others; Lord of Turkestan, Heir of Norway, Duke of Schleswig-Holstein, Stormarn, Dithmarschen, Oldenburg, and so forth, and so forth, and so forth.’”

Now read about US Auto Czar Ron Bloom who:

according to his not being embroiled in a state-pension-kickback scandal like his predecessor and despite his union ties; by the grace of President Obama, Regulator and Technocrat of all the Automakers, of General Motors, Buick, Cadillac, Chevrolet, Tsar of Chrysler, Tsar of Dodge, Tsar of Jeep, Tsar of Ford, Tsar of Pontiac, Tsar of Hummer, Lord of GMC, and Grand Duke of Autoparts Makers Visteon, Delphi, Williams Controls, AutoZone, and PepBoys, Prince of CarMax, Penske, AutoNation and Advance Auto Parts, US Auto Parts, O’Reilly, Pick-Ups Plus, and other Auto-Parts Retailers; Lord and Grand Duke of Genuine Parts Company, Sovereign of LKQ Corporation, The Coast Distribution System, and All Wholesale Auto-Parts Distributors; Sovereign of Conrad Industries, Harley-Davidson, and the Michigan lands and union territories - Heir of Hoffa, Duke of Washington, D.C., Ohio, Indiana, and so forth, and so forth, and so forth.

It is also worth noting that the Obama administration placed a 31-year-old Yale Law School student with no auto industry experience in charge of restructuring GM.  Reportedly, he is a very smart guy.

These arrogant officials should get over themselves and get out of the way.  Entrepreneurship is hope and change that yields an open tomorrow.  Centralized power is an old, sad, terrible road that leads to a dead end.

And so, forth.

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Reportedly, The Federal Reserve has already begun monetizing the US Treasury’s debt:

“The speed of the shell game is accelerating.”

Chris Martenson (via Karl Denninger and Robert Murphy)

What’s the term for making promises you know you cannot keep?  These days, it’s apparently about 7 years at 3 1/4%.

[photo source]

Robert Murphy linked to this nugget:

Small businesses that received $682 million in IOUs from the state say California expects them to pay taxes on the worthless scraps of paper, but refuses to accept its own IOUs to pay debts or taxes. The vendors’ federal class action claims the state is trying to balance its budget on their backs.

Lead plaintiff Nancy Baird filled her contract with California to provide embroidered polo shirts to a youth camp run by the National Guard, but never was paid the $27,000 she was owed. She says California “paid” her with an IOU that two banks refused to accept - yet she had to pay California sales tax on the so-called “sale” of the uniforms.

California, well past flat broke, squeezes its productive citizens even more.  As the walls come tumbling down, why do we still pretend?

Entrepreneurship is hope and change that yields an open tomorrow.  Centralized power is an old, sad, terrible road that leads to a dead end.

Please read “F. A. Hayek and the Fatal Conceit of [President] Barack Obama:”

BY STEVEN HORWITZ

The headlines blare that President Obama will “restructure the financial services industry” and “fix the health care crisis.” A 31-year-old with no experience in the business world, but a lot of experience in politics, has been put in charge of dismantling General Motors.

Members of Congress lecture car manufacturers and mortgage lenders on how to do their jobs. Politicians keep taking on more and more responsibility for the U.S. economy, as each industry appears to be getting its own “czar.” Unfortunately, more czars will not produce better cars, or health care, or mortgages, or much of anything else.

The belief that one person or group, no matter how smart, can know how best to allocate resources is a classic example of what the Nobel Laureate economist F. A. Hayek called “the fatal conceit.”

In Hayek’s view, what enables businesspeople to make good decisions about the allocation of resources is not that they are smarter than other people. Instead, two other factors are key.

First, businesspeople have very detailed knowledge of their particular corners of the world. They know where resources are, where their customers are and what they want, and have the experience of knowing how to deliver it. This is not about being “smarter,” but about having local and contextual knowledge that others don’t have.

Second, entrepreneurs develop this knowledge by making use of the signals provided by prices, profits, and losses. Prices guide entrepreneurial decision-making by enabling them to formulate budgets and estimate the profitability of the various choices they might make.

Profits and losses provide information after the fact about how well they chose. Profits signal them to continue, while losses tell them that resources need to be reallocated. By acting on the basis of that information, each entrepreneur contributes to the overall improved allocation of resources.

The lesson from Hayek is that when the rules are right, markets are collectively much smarter than any individual or group within them. This is the lesson that the Obama administration has utterly missed.

The administration evidently believes that experience in policymaking is an effective substitute for the local and contextual knowledge of how to produce goods and services. This is a complete misunderstanding of the way in which markets work and what kinds of knowledge matter.

Much of the same is true with Obama’s supposed fixes for health care and financial services. Imposing a vision of how an industry “should” work and how it should produce and deliver its products from the top down is the height of political hubris.

The conceit behind it is one that dates back to the earliest visions of socialist central planning. Even as belief in that more comprehensive vision has died, the mindset behind it is still manifested in the belief that top-down fixes driven by well-meaning political actors are more rational than letting individuals with their local knowledge coordinate and cooperate via markets.

When politicians such as Barney Frank lecture financial executives on their lending practices, they too are guilty of the sort of hubris Hayek identifies.

How they know better what it takes to run a business is not at all clear, especially since many of them have never done so. This sort of second-guessing of business inevitably gets politicized as there is no other basis for decision-making by politicians who are ignorant of the detailed, contextual knowledge on which effective entrepreneurship relies.

Absent the signals of the marketplace, czars, presidents, and members of Congress are thrashing around in the dark in their attempts to improve upon the outcomes generated in actual markets. Top-down directives forgo the opportunity to learn from the decentralized knowledge of those actually producing the goods and services in question.

Obama’s reliance on experts and czars and top-down restructuring is particularly ironic in light of his promises of change and bringing the spirit of 21st century technology to government.

The clearest lesson of the networked world is that decentralized, bottom-up collaboration works much more effectively than top-down solutions. From Wikipedia, to open source software, to the Internet itself, the 21st century is quickly becoming the century of the “wisdom of crowds.”

Young people understand how contributing their own contextual knowledge to aggregating and signaling processes on the Web make all of us more effective users of information through shared knowledge. Whatever its flaws, Wikipedia could never be written by an Information Czar or Task Force.

Hayek recognized decades ago that markets work in precisely the same way. To think otherwise would be to suffer from the fatal conceit. Czars and second-guessing politicians with grand designs will only frustrate the much more effective decentralized processes of the market.

Even as they communicate constantly through the Internet, probably using open source software in the process, Obama and his administration, in their hubris, continue to believe that industries need czars and that individuals and committees are smarter than collaborating, distributed collectives. We can only hope that conceit will not be as fatal as Hayek feared.

Listen as one citizen politely confronts a Senator (emphasis added):

Largely, I think, people’s apprehension about what’s pending in Congress at this point is because they are unsure of what is going to wind up happening.  It’s a matter of trust and whether or not they are being represented in Congress the right way.

So my question to you is when Congressman scoff at the notion of reading legislation because they aren’t qualified or they aren’t competent to understand it, how can we be confident that those Congressmen are competent to re-engineer the entire health care system?

First, let’s quickly dispense with Senator Specter’s response.  He claims that he and his staff divide up the reading and do the best they can.  “We have to make judgments very fast…”  “And [somehow] every bill is understood by me before I vote.”

This is no joke.  This is happening.

Second, and more importantly, consider the Fatal Conceit at play here. Because we have allowed the federal government to acquire massive, centralized power, our representatives now confront a totally hopeless task.

At this point, they cannot possibly execute their duties responsibly.  A body of people this small in number cannot run entire industries including banking, housing, and health care.  It is utterly impossible.  They will inevitably squander resources, fall prey to manipulation, become corrupted, trample liberties, and do serious economic damage.

Let’s hope and pray that we can unwind this travesty peacefully before this fundamentally flawed design does irreparable harm.  Let’s also get to work fixing this damn mess.

What builds trust?  What destroys it?   What store of value is safe?  What happens next?  What are you prepared to do?

HT Instapundit

Really, I am at a loss on this one.  We are all, in fact, looking at a total loss at this point.

Congressman Conyers today stated:

“I love these members that get up and say, ‘Read the bill.’  What good is reading the bill if it’s a thousand pages and you don’t have two days and two lawyers to find out what it means after you’ve read the bill?”

This thing is obviously totally off the rails. I’m sorry, but there is now no way around it.  With sarcastic self-satisfaction, this man just clearly and concisely declared total abdication to madness and manipulated machinery.

Our government is insane, and it grows larger, more intrusive, more damaging, more dangerous, and more oblivious by the day.

This government is morally bankrupt.  Soon enough, it will be recognized as financially so as well.

Old news that is not yet news is dangerous.  Prepare yourself.

What inspires trust?  What destroys it?  What store of value is safe?  What happens next?

“Officials have taken the view that the exact use of the federal aid cannot be tracked because money given to a bank is like water poured into an ocean.”

“Bailout Overseer Says Banks Misused TARP Funds” via the WP

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With Jamie Dimon becoming poster boy for the James-Taggart type of banker, where is our Midas Mulligan?

See also “President Obama’s Favorite Banker” via Robert Wenzel.

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