Week in Review

Quote of the week

“[D]emocracy alone is not at all desirable if it is not attached to a culture that highly values the protection of life, liberty and property.” – Thomas DiLorenzo

Debt Ceiling Drama

by Ron Paul

“Politicians also need to acknowledge that our debt is unsustainable. For decades our government has been spending and promising far more than it collects in taxes. But the problem is not that the people are not taxed enough. The government has managed to run up $61.6 trillion in unfunded liabilities, which works out to $528,000 per household. A tax policy that would aim to extract even half that amount of money from American families would be unimaginably draconian, and not unlike attempting to squeeze blood from a turnip. This is, unequivocally, a spending problem brought about by a dramatically inflated view of the proper role of government in a free society.” more…[This is a short one worth the read if you are still seeking some clarity on the debt/deficit issue.]

Debt or Default: A False Choice

by Emily C. Skarbek

“With the White House and the House of Representatives still at loggerheads over how to resolve the debt crisis, administration officials are turning up the heat, claiming that Washington has only two choices: increase the government’s borrowing capacity beyond the current $14.3 trillion limit or face a catastrophic U.S. Treasury default. If the latter happens, they warn, the government won’t be able to pay its debts and will have to stop cutting checks. “But this is a false choice. There’s a third option: Washington can cut spending.” more…

The Myth That Democracy = Freedom

by Thomas J. DiLorenzo

When the universally reviled South African policy of apartheid was ended and majority rule democracy instituted in that country there was great hope that democracy would at long last restore freedom and justice that the black majority of that country had been deprived of for so many decades. Most Western elites unquestioningly assumed that the god of democracy would work its usual miracles. It has not only not done so, but has created a catastrophe in that country, as documented by a new book by Ilana Mercer entitled Into the Cannibal’s Pot: Lessons for America from Post-Apartheid South Africa. more…

Regulars

And now the numbers…

DOW Jones Industrials – 12,681.16 (+98.39/0.78%)
S&P 500 – 1,345.02 (+5.35/0.40%)
VIX – 17.52 (+1.65/10.40%)
CSI 300 (China) – 3,067.985 (+18.24/0.60%)
BSE 500 (India) – 7,305.41 (+35.31/0.49%)
MICEX (Russia) – 1,728.84 (+30.74/1.81%)
BOVESPA (Brazil) – 60,270.469 (-3,123.871/-4.93%)
Nikkei 225 (Japan) – 10,132.11 (+264.04/2.68%)
RICI (Commodities) – 4,104.19 (+184.21/4.70%)
Oil/bbl (Brent) – 118.67 (+6.90/6.17%)
Corn/bu – 685.50 (+88.75/14.87%)
Wheat/bu (CBT) – 692.25 (+80.00/13.07%)
Rough Rice (CBOT) – 16.74 (+1.83/12.27%)
Copper/lb – 441.00 (+10.75/2.50%)
Gold/oz – 1,601.50 (+118.90/8.02%)
Silver/oz – 40.122 (+6.417/19.04%)
EUR-USD – 1.436 (-0.0166/-1.14%)
USD-JPY – 78.542 (-2.286/-2.83%)
USD-BRL – 1.552 (-0.004/-0.26%)
NZD-USD – 0.8645 (+0.0372/4.50%)
3 Month Treasury – 0.03 (+0.01/50.00%)
2 Year Treasury – 0.39 (-0.08/-17.02%)
10 Year Treasury – 2.96 (-0.22/-6.92%)
30 Year Treasury – 4.26 (-0.13/-2.96%)
3 Month LIBOR – 0.25 (UNCHG)
U.S. Public Debt (official) – 14,342,884,944,996.30 (-202,695,012.10/-0.00%)
Baltic Dry Index (BDIY:IND) – 1,323.00 (-99.00/-6.96%)

Please note since I did not publish for the last two weeks the differentials in the numbers are against those of three weeks ago as opposed to the typical one week lag. I had hoped to at least look up the numbers while in Maui, but my wife’s laptop keyboard broke and so I decided not to bother. Surprisingly gold is up over $100 in the last three weeks.

Yes, so meanwhile we were in Maui, for a wedding no less. My brother-in-law got married on the beach, and I have to say it was by far the coolest wedding I’ve ever been to, excepting my own.

It was a really good time, we got to see the Seven Sacred Pools, which is a series of fresh water pools that were made by a stream coming down out of the mountains to the ocean. They made for great swimming.

I also got to do deep sea fishing and our group caught two Mahi Mahi and one Ono. I was able to land one of the Mahi Mahi’s. We also hooked a Marlin, but unfortunately it was able to jump off. When we finished up the deck hand cut some sashimi and sent us off with enough fish for several meals. If you’re in the area and you want a good time fishing definitely check out the Lucky Strike.

The next day we went snorkeling at Molokini crater. Unfortunately the water was really rough and it made things pretty difficult. Wonderful Wife and I had Baby Girl in the water on a boogie board and she did pretty good with it especially given that we had interrupted her nap time a bit. Overall she loved playing on the beach in the sand. Her uncle and new auntie even bought her some beach toys!

Otherwise we spent our time around Ka’anapali and Lahina at the beach, eating, and shopping. We don’t tend to buy too much when we travel, we mainly just look, but I got a super sweet wide brimmed beach hat. It will double as my yard work hat.

Of course now we’re home and back to work.

On the United States political front, I have to say that the whole “debt ceiling” thing is wonderfully absurd. First off consider the 2010 budget, which is $3.83 trillion. Now consider that four items: 1) Medicare and Medicaid, 2) Social Security, 3) Military Spending, 4) Interest on the Debt make up $2.66 trillion of that, or just over 69%. The deficit was $1.27 trillion. So the fools could cut every other item in the budget to ZERO and based upon just these four things they would still have a deficit! That’s how serious the problem is.

Unfortunately this is lost on the criminal class in Washington, so what happens is that these bozo Republicans come up with a plan which is entirely inadequate given the enormity of the problem, and then the idiot Democrats complain that it is too extreme. Next they dance around for weeks, or months, trying to create a compromise which must of necessity be even more inadequate than the original proposal.

Real solutions, which must include a combination of DRASTICALLY reduced military and entitlement spending have not been seriously considered. Unfortunately real solutions are politically unfeasible. Cutting military spending by even 25% would be unthinkable. Similarly reducing the benefits associated with any of the entitlements or creating plans to phase them out entirely are also politically impossible. Neither is defaulting on the debt a politically acceptable option. So there will not be a solution. Not now.

Instead the criminals will resort to more gimmicks and accounting hackery to engineer a stealth default via inflation. And this is going to be ruinous for the middle class in the United States, most especially those of us who are unprepared. Watch for the value of the dollar to continue its decline even as the official (read: cooked) inflation numbers try to hide it.

Personally, I see very little possibility that this state of affairs will change without the help of an external event. The Congressional Critters just do not have the will to do anything substantial. As for an external event it could take any number of shapes, but there must at some point be a rebalancing. Just don’t count on that happening next week.

Have a great weekend!

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