Dec 26, 2009

Former Fed bank chief on paying Goldman Sachs counter-parties in full

What was done was appropriate because the potential costs of not doing that were probably exceedingly high. It certainly looked very threatening.

~ Gary Stern, former president of the Federal Reserve Bank of Minneapolis, "Taxpayers Help Goldman Reach Height of Profit in New Skyscraper," Bloomberg.com, December 27, 2009

(Stern stepped down in August as president of the Federal Reserve Bank of Minneapolis.)

Dec 20, 2009

Nouriel Roubini: Jim Rogers's $2,000 gold is "utter nonsense"

[Today's forecast by investor Jim Rogers that gold will double to at least $2,000 an ounce is] utter nonsense. [There is no inflation or] “near-depression” [to drive gold prices that high. If a severe depression came to pass, with investors buying canned goods and hiding out in log cabins,] maybe you want some gold in that scenario. Maybe it will reach $1,100 or so but $1,500 or $2,000 is nonsense.

~ Nouriel Roubini, speech at the Inside Commodities Conference in New York, reported by Bloomberg TV, "Rogers's $2,000 gold 'utter nonsense'," November 5, 2009

(Gold rose to a record $1,098.50 today.)

Dec 18, 2009

Jim Cramer on investing in banks he admittedly knows little about

"The Citigroup (C) deal was a good deal. It just wasn't good for the bank

I was adamant the other day -- some would say rabid -- that you be in on the deal. I specifically did not want you to buy it ahead of the deal, although I am now being ridiculed -- thanks Huffington Post! -- for suggesting that I wanted you in at $3.70.

Look, I have no idea really how Citigroup is doing. That's because they don't know how it is doing. That's the biggest flaw of the joint, of course. But what does matter is that I think that worldwide GDP growth is going to be stronger than people think, and that will cure a lot of the errors of all banks, including Citigroup.

Sometimes, as I say in Getting Back to Even, bad merchandise turns into good merchandise at a price. The idea that so much supply could knock down Citigroup to where the stock traded is of ZERO interest to me. The dilution? It is manageable.

The main thing is the stupidity of the critics who keep calling it a bad deal. A bad deal is one that breaks print, not one that goes up after.

Make judgments only about whether you make or lose money. That's what you can try to control.
The rest is dross ginned up by people who need something to write or talk about."

~Jim Cramer, "Did You Make Money? Then It Was A Good Deal", TheStreet.com, December 18, 2009, (link)

Dec 17, 2009

Alan Greenspan on stock market rally as economic stimulus

“When stock prices go up, the market value of common stock or of equity in banks and other financial institutions rises,” he said. “And the market value of liabilities is importantly affected by the size of the equity market value cushion on banks’ balance sheets.”

~Alan Greenspan, "Greenspan Says Stock Rally Means Lower Stimulus Need", December 17, 2009, Bloomberg.com (link)

Dec 16, 2009

Mortimer Zuckerman on creating jobs

Only massive programmes are equal to the challenge of restoring stable growth to our economy. One such programme would be to establish a National Infrastructure Bank, advocated by prominent Democrat Felix Rohatyn, to which the government would assign the $65bn (£40bn, €45bn) annually allocated to support infrastructure construction nationally. The bank would have the capacity to borrow, with federal guarantees, an additional $200bn. This programme would ensure a rational rather than a political investment in infrastructure, and provide long-term infrastructure development on a major scale with a maximum multiplier effect on the economy.

~ Mortimer Zuckerman, "The free market is not up to the job of creating work," FT.com, October 18, 2009

Time on their 2009 Person of the Year

Professor Bernanke of Princeton was a leading scholar of the Great Depression. He knew how the passive Fed of the 1930s helped create the calamity — through its stubborn refusal to expand the money supply and its tragic lack of imagination and experimentation. Chairman Bernanke of Washington was determined not to be the Fed chairman who presided over Depression 2.0. So when turbulence in U.S. housing markets metastasized into the worst global financial crisis in more than 75 years, he conjured up trillions of new dollars and blasted them into the economy; engineered massive public rescues of failing private companies; ratcheted down interest rates to zero; lent to mutual funds, hedge funds, foreign banks, investment banks, manufacturers, insurers and other borrowers who had never dreamed of receiving Fed cash; jump-started stalled credit markets in everything from car loans to corporate paper; revolutionized housing finance with a breathtaking shopping spree for mortgage bonds; blew up the Fed's balance sheet to three times its previous size; and generally transformed the staid arena of central banking into a stage for desperate improvisation. He didn't just reshape U.S. monetary policy; he led an effort to save the world economy.

~ Time, "Person of the Year 2009," December 16, 2009, by Michael Grunwald

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Dec 15, 2009

Bill Gates Sr on estate taxes

Society has a just claim on these fortunes. The facts are clear: The estate tax raises substantial revenue from those with the capacity to pay it.

"Senate’s Baucus Seeks Temporary Extension of Estate Tax in 2010", Bloomberg, December 15, 2009,

Humpty Dumpty on the meaning of words

"When I use a word, "said Humpty Dumpty in rather a scornful tone, "it means just what I choose it to mean - neither more nor less."

"The question is," said Alice, "whether you can make words mean so many different things."

"The question is," said Humpty Dumpty, "which is to be master - that's all."

~ Lewis Carroll, Through the Looking Glass, Chapter VI

Dec 14, 2009

Maria Bartiromo on the Fed's independence

The independence of the Federal Reserve has been one of the greatest things about this country.

~ Maria Bartiromo, as appeared on CNBC, December 14, 2009, 3:10 EST

Dec 11, 2009

Alexander Hamilton, father of the US central bank, on the price of liberty

"The United States debt, foreign and domestic, was the price of liberty"

~Alexander Hamilton, as quoted on the front page of the website of the US Bureau of the Public Debt, a wing of the US Department of the Treasury

Dec 10, 2009

Obama on TARP bailout

There has rarely been a less loved or more necessary emergency program than TARP, which as galling as the assistance to banks may have been indisputably helped prevent a collapse of the entire financial system.

"Obama to extend bailout fund, use a chunk for deficit", CNBC.com, December 10, 2009,

Dec 9, 2009

Walter Williams on the pretense of knowledge

Whether it is health care, education, employment or most other areas of our lives, I ask you: Who has the capacity to master all the complexity to make choices on behalf of others? Each of us possesses only a tiny percentage of the knowledge that would be necessary to make totally informed decisions in our own lives, much less the lives of others. There is only one reason for the forcible transference of decision-making authority over important areas of our private lives to elite decision-makers in Congress and government bureaucracies. Doing so confers control, power, wealth and revenue to society's elite.

~ Walter Williams, "The Pretense of Knowledge," December 2, 2009

VP Joe Biden on the prospects for economic recovery

"We inherited one heck of a mess, as you well know. The GDP was a -6.3%, 740,000 people lost their jobs before I lowered my hand after taking the oath... We're making progress. The GDP's growing, we're going to be producing jobs by the beginning of next year, in the first quarter of next year... it took us a long time to catch up.
...
Here's the deal, we have now, of that recovery act, we've been in business 7, 8 months, the one thing you haven't seen... is those big wasteful projects. No one has come up with anything like, 'You went out there and spent $2-million on something that didn't exist.'
...
First of all, the kind of jobs we're trying to create are not make-work jobs. We're trying to build a new platform, Jon [Stewart], for the 21st century. We're investing in energy, we're investing in education, we're investing in healthcare... these are the kinds of things that are going to provide these guys with real, live jobs that aren't exportable, that are going to be able to be kept here
...
Jobs are going to lag behind growth in this country from somewhere between 12 to 18 months... Everything is growing now... We'll be creating jobs by February or March of next year."

~Vice President Joe Biden, as appeared on Comedy Central's The Daily Show With Jon Stewart, November 17, 2009

Jason Trennert: bullish until "the bill comes due" (2009)

We're bullish until the bill comes due.

~ Jason Trennert, as appeared on CNBC, December 9, 2009, 9:35 EST

Dec 6, 2009

Jesper Parnevik on Tiger Woods transgressions

I feel really sorry for Elin [Nordegren Woods]. I would be especially sad about it since I'm kind of ... I really feel sorry for Elin, since me and my wife were at fault for hooking her up with him. We probably thought he was a better guy than he is. I would probably need to apologize to her and hope she uses a driver next time instead of the 3-iron.

It's a private thing, of course. But when you are the guy he is, the world's best athlete, you should think more before you do stuff. . . And maybe not just do it, like Nike says.

~ Jesper Parnevik, professional golfer, "Jesper Parnevik on Tiger Woods transgressions," Golf Channel, December 3, 2009

Dec 3, 2009

Lloyd Blankfein on dog-piling short sellers

“I’m for markets,” says Blankfein, who today describes the situation [financial panic of 2008] as “tricky.” “But when it felt like it had gotten abusive, when it was free money to short-sellers who were piling on, it felt less like the market and more like it was being manipulated.” He adds, “I crossed over.”

~ Lloyd Blankfein, CEO, Goldman Sachs, "The Bank Job," Vanity Fair, January 2010, by Bethany McLean

Dec 2, 2009

Sovereign wealth funds play bubbles

It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we're just taking advantage of that. So we can't lose.

~ Lou Jiwei, Chairman China’s sovereign wealth fund, China Investment Corporation, "Wealth Fund Muscles Up as Markets Recover," Reuters, August 28, 2009

Nov 27, 2009

Antony Herrey on the coming collapse in Dubai (2008)

Having experienced my fair share of severe down cycles over more than four decades as a real estate developer and investor, the extravagant reports emanating from the Emirates over the past decade or more of islands created in the sea, mile-high skyscrapers in the desert, artificial ski slopes under glass, endless new quantities of unsold condominiums overlooking the Gulf, and the like foretold for me one of the most spectacular collapses of any bubble bust in the long history of excessive speculation. This could not possibly end, it seemed to me, without a horrendous downturn that would turn many of these new monster structures into empty ruins.

~ Antony Herrey, Austrians in Finance chat group, October 20, 2008

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Nov 26, 2009

H.L. Mencken on the Puritans

It’s too bad Plymouth Rock didn’t land on the Puritans.

~ H.L. Mencken

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Nov 25, 2009

Lyndon B. Johnson on government waste

I believe the Congress and the American people approve my goals of economy and efficiency. I believe they are as opposed to waste as I am. We can and will eliminate it.

~ President Lyndon B. Johnson, speech to Congress in 1965

Nov 21, 2009

New EU president on world government

The climate conference in Copenhagen is another step towards the global management of our planet.

~ Herman von Rompoy, new president of the European Union, "New EU Head Blatantly Admits the Goal of One World Government," LewRockwell.com blog, November 21, 2009

Nov 18, 2009

Charles Goyette on American cronyism

America’s national government has moved way beyond a political spoils system. A spoils system leaves the host alive so that a politician’s occasional ne’er-do-well brother-in-law can be put on the payroll. America has become a piñata: everybody gets a crack at it. Presidents and other elected officials pass the big stick around as a reward to those who help keep them in charge of the piñata party. The American media plays the role of the party’s mariachi bank, keeping festive spirits high. And the people in their demographic and interest groups all line up to take a whack at the goodies. America has become a piñata.

~ Charles Goyette, The Dollar Meltdown

Ben Bernanke on identifying bubbles

It is inherently extraordinarily difficult to know whether an asset’s price is in line with its fundamental value. It’s not obvious to me in any case that there’s any large misalignments currently in the US financial system. The best approach here if at all possible is to use supervisory and regulatory methods to restrain undue risk taking and to make sure the system is resilient in case an asset-price bubble bursts in the future.

~ Ben Bernanke, Federal Reserve chairman, “On the Outlook for the Economy and Policy," NY Economic Club, November 16, 2009

Nov 11, 2009

Ken Fisher: 1,300 on the S&P 500

It’s just a reversal of excessive pessimism. We still have a lot more bull market to go because we had such a huge bear market.

The economy is not recovering at a slow pace. America is faster than people think. Third-quarter GDP numbers knocked the socks off of expectations.

~ Ken Fisher, "Billionaire Fisher Sees S&P 500 Above 1,300 as Economy Recovers," Bloomberg.com, November 10, 2009

(Ken Fisher predicted the S&P 500 would reach 1,300. It closed at 1,093.08 on the day of the interview with Bloomberg.)

Nov 10, 2009

Friedrich Hayek on crises and liberty

Emergencies have always been the pretext on which the safeguards of individual liberty have eroded.

~ Friedrich Hayek

Nov 4, 2009

Blaise Pascal on war and collateral damage

Can any thing be more ridiculous than that a man has a right to kill me because he dwells the other side of the water, and because his prince has a quarrel with mine, although I have none with him?

~ Blaise Pascal, Pensees, IV (1670)

Nov 3, 2009

Charles Gasparino on the fate of Goldman Sachs in 2008

If it weren't for a government bailout they were done.

~ Charles Gasparino, author, The Sellout, as appeared on CNBC, November 3, 2009

Nov 1, 2009

Emerson on the corruption of language

The corruption of man is followed by the corruption of language.

~ Ralph Waldo Emerson, Nature, Chapter 4, Language

John Milton on the corruption of language

When language in common use in any country becomes irregular and depraved, it is followed by their ruin and degradation.

~ John Milton

Oct 29, 2009

WSJ: Fund managers turning defensive

Amid market volatility, several stock-fund managers have been turning defensive. Managers across investment styles have lately been buying stocks of companies that they expect will hold up better through the recession, and are trading at what they consider to be low prices. These include a range of companies, from makers of toothpaste and soaps, to food companies to pharmaceutical firms.

~ WSJ, "Beaten-Up Managers Grab for 'Safter' Picks," March 4, 2009, by Shefali Anand

Mohamed El-Erian, Pimco on the recapitalization of the financial sector

Q: So what is anchoring the markets today?

A: We're seeing a much-needed recapitalization. Over the past decade you've seen the balance sheet of the emerging markets get recapitalized. Then it was the turn of the U.S. corporate and industrial sector on the back of Enron and WorldCom. Today we're seeing the recapitalization of the U.S. financial system. A massive amount of capital has been issued in the past two weeks, some in the form of preferred stock. Once we get through [this period], we'll all look back and realize that it's positive.

Q: Is the worst behind us?

A: We're three-quarters through a major dislocation that has repriced the U.S. financial system. The risk going forward is less about Wall Street and more about the small and midsize banks. They missed much of the current crisis because they never really got into structured products. But they're heavily tied to commercial real estate and the consumer.

~ Mohamed El-Erian, Pimco, "A Peek at Pimco's Long View," BusinessWeek, May 19, 2008

Andrew Jackson on equality under the law and his veto of the recharter of the Bank of the United States

It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth cannot be produced by human institutions [but]... every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society... who have neither the time nor the means of securing like favors to themselves, confine itself to equal protection... it would be an unqualified blessing. In the act before me [to recharter the Bank of the United States] there seems to be a wide and unnecessary departure from these just principles.

~ Andrew Jackson, statement on his veto of the Bank of the United States

(Quoted by Robert Remini, Andrew Jackson and the Bank War, p. 83.)

Andrew Jackson on central banking

[The Bank of the United States (precursor to the Fed)] is a monster, a hydra-headed monster... equipped with horns, hoofs, and a tail so dangerous that it impaired the morals of our people, corrupted our statesmen, and threatened our liberty. It bought up members of Congress by the Dozen... subverted the electoral process, and sought to destroy our republican institutions.

~ Andrew Jackson, March 1829

Oct 28, 2009

AIG on Hank Greenberg's role in creating the ill-fated financial products unit

It strains common sense to accept [Hank] Greenberg's allegations that he was misled or did not appreciate the risks from the multisector CDS book written by AIG.

~ AIG (press release?), "AIG Fires Back Over Greenberg Suit," WSJ, March 4, 2009

Oct 26, 2009

Amelia Earhart on decision making

The most difficult thing is the decision to act, the rest is merely tenacity. The fears are paper tigers. You can do anything you decide to do. You can act to change and control your life; and the procedure, the process is its own reward.

~ Amelia Earhart, aviation pioneer

Oct 25, 2009

Ron Paul on Wall Street, bailouts, and who pulls the strings in DC

You know, it is said that the Congress didn't have enough strings attached to the money that they were giving away, but I think the strings go in the other direction. I think Wall Street has the strings on Washington. And they pull and do what they want and that's where the corruption is. They control the monetary system.

~ Congressman Ron Paul, "Ron Paul on the recession: 'None of this is behind us'," The Hill's Blog Briefing Room, October 20, 2009, by Michael O'Brien

Ludwig von Mises on evil

Do not give in to evil, but proceed ever more boldly against it.

~ Ludwig von Mises

Oct 24, 2009

Charles Schwab on the government rescue of Fannie Mae and Freddie Mac

Q: Friday [July 11] was particularly scary. Do you think that the just-announced rescue plan for Fannie and Freddie will be enough to restore confidence?

A: It truly is a confidence issue. All professionals knew Fannie Mae and Freddie Mac would be sustained by federal assistance if required. I don't think that was really an issue. But yes, it is scary that it was even contemplated that they wouldn't [be backed by the government]. I think the Fed and the Treasury are doing all the things they can do. I wish we would do something like they do in firefighting—put a line in the sand a little bit further away from where the fire is that would stop the contagion that's going on.

~ Charles Schwab, "Chuck Schwab on Scary Markets and Election '08," BusinessWeek, July 16, 2008

Charles Schwab on short sellers and regulation of hedge funds

Q: With the SEC trying to crack down on short-sellers, do you see regulation of the market going too far?

A: It's very natural for us all to overreact in times of stress, but I'm not a fan of unmitigated shorting. We have nearly $2 trillion in hedge funds that simply don't have any reporting responsibilities.

~ Charles Schwab, "Chuck Schwab on Scary Markets and Election '08," BusinessWeek, July 16, 2008

Giff on the aging process

You can't outrun Father Time.

~ Dave Giffen, a.k.a. "Giff the Sage"

Oct 22, 2009

M.S. Peck on evil

Evil is not committed by people who feel uncertain about their righteousness, who question their own motives, who worry about betraying themselves. The evil in this world is committed by the spiritual fat cats, by the Pharisees of our own day, the self-righteous who think they are without sin because they are unwilling to suffer the discomfort of significant self-examination.

~ M.S. Peck, People of the Lie: the Hope for Healing Human Evil (1990)

Oct 21, 2009

Bill Bonner on debt

For much of history, failing to repay debt was regarded as not merely a breach of contract, but a crime. People who failed to repay their debts in timely fashion were thought to have stolen from their lenders; they were put in prison. In the Middle Ages even a dead debtor's children could be sent to prison.

Now, bankruptcy laws allow individuals and businesses to go to rehab. Then, they can stiff creditors again. Neither sin nor crime, debt is now just a cost of doing business.

~ Bill Bonner, "Paying Off Debt Is Like Dying…," LewRockwell.com, October 21, 2009

Rich Karlgaard on the (bad) advice of Forbes columnists

Happily, there is a small but reliable pro-market commentariat that will guide you in understanding the world's economies. Two of them precede me on these pages. I also always listen to Brian Wesbury, the chief economist for First Trust Advisors, and the great Art Laffer of Laffer Associates.

For stock tips, you can't beat Ken Fisher. Even if you have read Ken's FORBES columns, don't miss his new book, The Only Three Questions That Count: Investing by Knowing What Others Don't. Original thinking and witty writing by a great investor.

~ Rich Karlgaard, publisher, Forbes, "Pundits Versus the Market," January 29, 2007

Cicero on education

To add a library to a house is to give that house a soul.

~ Cicero

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Oct 20, 2009

Bob Chapman on home equity loan exposure at four large banks

U.S. financial institutions hold almost $1.1 trillion in second liens, also known as home equity loans or "helocs." Some 42% of all helocs are held by four banks—Bank of America, J.P. Morgan Chase, Citibank and Wells Fargo. Since in a traditional mortgage foreclosure the second loan is usually wiped out, these big four banks have an exposure in the hundreds of billions of dollars.

Mortgage-finance consultant Edward Pinto points out that these same lenders have about $800 billion of first mortgage loans on their books, representing 8% of the total outstanding first mortgage loans in the U.S. But they also act as the servicers on almost 60% of total first mortgages, which means they handle negotiations on loan modifications. Thus when a home owner asks one of the big four banks to redo a loan, the banker may have a greater interest in saving the home-equity loan than in protecting the creditors of the first mortgage…

~ Bob Chapman, "US Treasury Controlled by Wall Street," LewRockwell.com, October 20, 2009

Oct 19, 2009

Legg Mason analyst on Countrywide Financial (2007)

The fallout among smaller subprime lenders will give survivors like Countrywide even more market share. We liked the stock when it was trading at $44 a share and we see even more value now.

~ Legg Mason analyst Mitchel Penn, "Top Funds Stand by Subprime Stocks," Fortune, March 9, 2007

(Countrywide, which gets only 10 percent of its revenues from subprime lending, continues to deliver solid growth, he pointed out.)

Bill Miller on his decision to increase his holdings of financial stocks in 2007

We bought financials after the Fed [first] injected liquidity [into the market by cutting the discount rate on Aug. 17, 2007, and then the fed-funds rate on Sept. 18, 2007, continuing into 2008.] That's what you do in a liquidity crisis... This turned out to be a collateral-driven crisis caused by underperforming debt... We've analyzed that mistake and tried to make adjustments to risk management and the portfolio-construction process.

~ Bill Miller, portfolio manager, Legg Mason Value Trust, "It's Miller Time!," Barron's, October 12, 2009

Bill Miller on his decision to invest in Bear Stearns

When it failed in March [2008], it had the highest capital ratios ever. There was no rogue trader... But that didn't stop a run on the bank.

~ Bill Miller, portfolio manager, Legg Mason Value Trust, "It's Miller Time!," Barron's, October 12, 2009

(Bear Stearns was eventually purchased by JPMorgan Chase for $10 a share, leaving Value Trust with a huge loss.)

Hayek on morals and compulsion

Responsibility, not to a superior, but to one's conscience, the awareness of a duty not exacted by compulsion, the necessity to decide which of things one values are to be sacrificed to others, and to bear the consequences of one's decision, are the very essence of any morals which deserve the name.

~ Friedrich A. Hayek, The Road to Serfdom - The Definitive Edition, Page 217

Burton Wheeler on despotism

Every despot has usurped the power of the legislative and judicial branches in the name of the necessity for haste to promote the general welfare of the masses—and then proceeded to reduce them to servitude.

~ Senator Burton K. Wheeler, Montana New Deal Democrat, referring to Franklin D. Roosevelt's attempt to pack the Supreme Court in the mid 1930s

Oct 17, 2009

Justin Fox on the stewardship of the world's oil and gas reserves

Only 7% of the world's estimated oil and gas reserves are in countries that allow companies like ExxonMobil free rein, according to consulting firm PFC Energy. Fully 65% are in the hands of state-owned companies such as Saudi Aramco, and the rest are in the likes of Russia and Venezuela, where Western companies can get a foothold one day but lose it the next.

~ Justin Fox, "No More Gushers," Time, May 31, 2007

Michael Kinsley on libertarians

Libertarians and communitarians (to continue this unjustified generalizing) are different character types. Communitarians tend to be bossy, boring and self-important, if they're not being oversweetened and touchy-feely. Libertarians, by contrast, are not the selfish monsters you might expect. They are earnest and impractical--eager to corner you with their plan for using old refrigerators to reverse global warming or solving the traffic mess by privatizing stoplights. And if you disagree, they're fine with that. It's a free country.

~ Michael Kinsley, "Libertarians Rising," Time, October 29, 2007

Keynes on Lenin and inflation

Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

~ John Maynard Keynes, The Economic Consequences of the Peace

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Oct 14, 2009

Henry Adams on politics and hatred

Politics, as a practice, whatever its professions, has always been the systematic organization of hatreds.

~ Henry Adams

Oct 13, 2009

Friedrich Hayek on monetary policy from the mid-1920s to the early 1930s

We must not forget that, for the last six or eight years monetary policy all over the world has followed the advice of the stabilizers. It is high time that their influence, which has already done harm enough, should be overthrown.

~ Friedrich Hayek, 1932

Oct 12, 2009

William Trufant Foster: "Thrift is wasteful" (1931)

The glow of righteous satisfaction that many have felt in their recent savings should be replaced by the knowledge that thrift under certain conditions is very wasteful.

~ William Trufant Foster, leading pre-Keynesian economist in the “underconsumptionist tradition,” September, 1931

Business Week on the global boom (2006)

John Templeton, the elder statesman of global investing, famously remarked that among the four most costly words in market history are "this time is different." Yet we all share a sense, from the factory floor to executive suites, that something new is going on in the global economy. And that something new is optimism. For the first time in history, almost everyone in the world economy has a chance for a better life -- or at least their children do. Let the long boom begin.

~ Business Week, "Let the Good Times Roll," March 27, 2006, by Chris Farrell

Business Week on a new "era of nonexistent inflation and rapid economic growth" (2006)

Nevertheless, despite all the twists, hedges, and cautious asides, a much bigger theme emerged from [Fed chairman] Bernanke's speech. He believes that real bond yields have taken a fundamental step down. If he's right, and I think he is, the significance of lower real rates is a seismic event for everyone from a young, first-time homebuyer to a grizzled venture capitalist. Put it this way: The world economy is on the cusp of an era of nonexistent inflation and rapid economic growth -- a long boom of historic proportions.

~ Business Week, "Let the Good Times Roll," March 27, 2006, by Chris Farrell

Oct 9, 2009

Ludwig von Mises on the impoverishment of the boom

The boom squanders through malinvestment scarce factors of production and reduces the stock available through overconsumption; its alleged blessings are paid for by impoverishment.

~ Ludwig von Mises, Human Action (1949)

David Kramer on Barack Obama winning the 2009 Nobel Peace Prize

If the economically-ignorant Paul Krugman could win the 2008 Nobel Prize in Economics while continuing to promote the exact same economic policies that got us into our current economic mess, why shouldn’t Barack Obama win the 2009 Nobel Peace Prize for escalating an unjust war in Afghanistan plus starting a potential new war by already bombing Pakistan (something even his predecessor didn’t have the “pleasure” of doing)?

What did George Orwell write in 1984? War is Peace? I guess so—at least according to the Nobel Peace Prize committee members.

~ David Kramer, "First Krugman, Now Obama," LewRockwell.com Blog, October 9, 2009

Sep 29, 2009

George Orwell on egalitarianism

ALL ANIMALS ARE EQUAL, BUT SOME ARE MORE EQUAL THAN OTHERS.

~ George Orwell, Animal Farm, Chapter 10

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Sep 28, 2009

Barron's on state tax burdens

California has the nation's fourth-highest income tax (10.55%) behind Hawaii and Oregon (both with 11%) and New Jersey (10.75%). It also has the sixth highest overall U.S. tax burden, according to the nonpartisan Tax Foundation. In contrast, Texas has the eighth-lowest tax burden and is one of nine states that don't tax earned income. The others: Washington, Florida, Tennessee, New Hampshire, South Dakota, Wyoming, Nevada and Alaska.

~ Karen Hube, "Fleeing the Tax Man," Barron's, September 28, 2009

Eugene Fama on bubbles and the '29 and '87 stock market crashes

The way I look at it, there were two crashes in the last century. One turned out to be too small. The ’29 crash was too small; the market went down subsequently. The ’87 crash turned out to be too big; the market went up afterwards. So you have two cases: One was an underreaction; the other was an overreaction. That’s exactly what you’d expect if the market’s efficient.

The word “bubble” drives me nuts. For example, people say “the Internet bubble.” Well, if you go back to that time, most people were saying the Internet was going to revolutionize business, so companies that had a leg up on the Internet were going to become very successful. I did a calculation. Microsoft was an example of a corporation that came from the previous revolution, the computer revolution. It was hugely profitable and successful. How many Microsofts would it have taken to justify the whole set of Internet valuations? I think I estimated it to be something like 1.4.

~ Eugene Fama, "Interview with Eugene Fama," November 2, 2007

Sep 27, 2009

Escaping statism

Sep 25, 2009

Alexis de Tocqueville on centralization and war

All military geniuses love centralization, which increases their strength, and all centralizing geniuses love war, which obliges nations to concentrate all powers in the hands of the state.

~ Alexis de Tocqueville, Democracy in America, Volume 2 (1840)

Sep 21, 2009

Ayn Rand on the humanitarian nature of capitalism

If capitalism had never existed, any honest humanitarian should have been struggling to invent it. But when you see men struggling to evade its existence, to misrepresent its nature, and to destroy its last remnants - you may be sure that whatever their motives, love for man is not one of them.

~ Ayn Rand, Capitalism: The Unknown Ideal

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