Politicians Can’t Cut Spending

It would be political suicide for a politician to even suggest that we should cut back in any area of the budget. If you suggest cutting the military budget, the right wing will tell you you're un-American and there are terrorists under your bed. If you suggest cutting Social Security, AARP will mobilize their tsunami of voters against you. And if you suggest cutting Medicare and Medicaid, the entire population will rise up against you screaming, "But health care is teh single most important issue of our day."

The problem is that every issue is the single most important issue of our day. That is why the tough choices that need to be made to shore up our economy won't be made.

Whenever a problem arises, the majority always say the same thing. "The government should do something about it." They all seem to think that our government shouldn't be everybody's safety net. When major hedge funds overleverage themselves, thkey think the government should bail them out, and when homeowners overmortgage their homes, they think the government should save them from foreclosure. We don't seem to make the connection that whenever the government "does something about it," it does so at half the efficiency and twice the cost of the private sector. Then it hands the public the bill through either direct taxation, or through inflation taxation. That means, in the end, we all pay.

Michael Maloney
Guide to Investing in Gold & Silver: Protect Your Financial Future

Why Is Goldman Sachs So Profitable?

Matt Taibbi at Rolling Stone magazine tells us why Goldman Sachs is so profitable – with great research and colorful commentary. Journalism is not dead.

After reading the article, I see a superior predator (Goldman Sachs) feeding on naive prey (investors, consumers, banks, regulators, the Federal Reserve) assisted by Goldman Sachs alumni in high positions in government and industry (like Henry Paulson, former Treasury secretary). Goldman Sachs' motto is long-term greed.

If you find the title intriguing – The Great American Bubble Machine: From tech stocks to high gas prices, Goldman Sachs has engineered every major market manipulation since the Great Depression – and they're about to do it again – I recommend that you read the whole article (link below). The next bubble is Cap and Trade.

Thanks to Bill Voegeli for recommending this eye-opening analysis.

Link: The Great American Bubble Machine : Rolling Stone.

What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

The bank's unprecedented reach and power have enabled it to turn all of America into a giant pumpanddump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere — high gas prices, rising consumercredit rates, halfeaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you're losing, it's going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it's going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth — pure profit for rich individuals.

They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s — and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet.

Cap and Trade…

The new carbon credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance.

Here's how it works: If the bill passes, there will be limits for coal plants, utilities, natural-gas distributors and numerous other industries on the amount of carbon emissions (a.k.a. greenhouse gases) they can produce per year. If the companies go over their allotment, they will be able to buy "allocations" or credits from other companies that have managed to produce fewer emissions. President Obama conservatively estimates that about $646 billion worth of carbon credits will be auctioned in the first seven years; one of his top economic aides speculates that the real number might be twice or even three times that amount.

The feature of this plan that has special appeal to speculators is that the "cap" on carbon will be continually lowered by the government, which means that carbon credits will become more and more scarce with each passing year. Which means that this is a brand new commodities market where the main commodity to be traded is guaranteed to rise in price over time. The volume of this new market will be upwards of a trillion dollars annually; for comparison's sake, the annual combined revenues of all electricity suppliers in the U.S. total $320 billion.

Goldman wants this bill. The plan is (1) to get in on the ground floor of paradigmshifting legislation, (2) make sure that they're the profitmaking slice of that paradigm and (3) make sure the slice is a big slice. Goldman started pushing hard for cap and trade long ago, but things really ramped up last year when the firm spent $3.5 million to lobby climate issues.

Blue Arrived Four Years Ago

Young-BlueFour years ago today Ann went to look at some kittens. We were looking for a companion for our new kitten Sweetie Wildcat. (Scooter the Siamese Cat had passed away two months prior to Sweetie's arrival.)

Ann arrived at a home where some seven-week-old kittens were available. One of the kittens crawled out from under a sofa where it had been hiding from the kids and came to Ann. She picked her up and the kitten went to sleep in her arms. Easy decision.

Sweetie was not overjoyed to meet her new companion at first, as you can see in the photo. They have become great friends over time. 

Today Ann took Blue to the garden. Blue spotted a wood rat that had been eating the beans (we thought chipmunks were to blame) and ended its existence with a terrier-like shake. She was very proud of her hunt. We are so pleased that this joyous, pretty kitten came to live with us and is also a working garden cat.Sweetie-Meets-Blue

A Glaring Flaw in Economics Dogma Is Being Exposed

More than a century ago, John Muir theorized that ice-age glaciers carved out Yosemite valley into the beautiful rock formations that we see today. Geologists ridiculed him, because he was not trained as a geologist and thus his ideas were heresy. Muir was right, of course, and I doubt that the geologists apologized to him.

Similarly, John Michael Greer is looking at economics from a perspective untainted by economic dogma. He uses organic agriculture, in contrast to industrial agriculture, as his metaphor. He builds on the work of E.F. Schumacher to describe a "primary" economy that is ignored by most economists (which may explain why our economy is such a mess).

I've included some excerpts below in the hope that anyone concerned about future generations  might click on the link below and read the whole essay. And while you are there, read the comments. His audience has some great questions and insight, especially on the topic of  the value of land and organic farming.

Link: The Archdruid Report: The Wealth of Nature.

… a society that permits the advantages of ecological abuse to go to individuals, while the costs are shared by the whole society, is effectively subsidizing the destruction of its environment.

…fertile land suitable for growing crops does not simply happen. Like anything else of value, it must be made, and once made, it must be maintained; the only difference is that the laborers that make and maintain it do not happen to be human beings.

Soil suitable for crops, after all, is not simply rock dust. A large part of it – sometimes more than half – is organic matter, some living, some dead but not yet wholly decayed, some dissolved into organic colloids complex enough to give analytical chemists sleepless nights, and all of it is put there by the activity of living things over long periods of time. Energy and raw materials flow through soil, uniting bacteria, fungi, algae, worms, insects, and many other living things into one of the most intricate ecosystems on Earth. Plants participate in and depend on this bewilderingly complex world; they draw water and mineral nutrients from it, and cycle leaves and a wide range of chemical compounds back into it.

The farmer who wants to grow crops is attempting to extract wealth from the underground ecosystem of the soil. She can ignore that, and simply plant and harvest with no attention to the needs of the soil, but the soil will be depleted of nutrients in a few years and her crops will fail. Alternatively, she can replace nutrients with chemical fertilizers, predators with pesticides, and so on; if she does this she will have to use steadily larger doses of chemicals to get the same yields, and when the chemical feedstocks run out – as they eventually will – she will be left with soil too sterile and pest-ridden to grow much of anything. If she wants to fulfill Ricardo’s promise and hand the land on to her grandchildren in the same condition that it came from her grandparents, she will have to provide the things the soil needs for its long-term health. Put another way, she will have to barter with the soil, giving it the things it will accept in exchange for crops.

This is the premise of organic agriculture, of course. It’s a premise that has proven itself over millennia, in the Asian farming regions that inspired the organic pioneers of the early 20th century to devise a more general way of doing the same thing, and over decades, in the farms now using organic methods to get yields roughly comparable to those of chemical agriculture. The organic approach has many dimensions, but one may not have received the importance it deserves. To an organic farmer, land is not a commodity that can be owned but a community with which she interacts, and that community has its own economy on which the farmer’s own economy depends.

The same thing is true of every other form of economic activity, though the dependence on nature may be less obvious in some cases than in others. Behind the human activities that produce secondary goods lie nonhuman activities that produce primary goods – the biological cycles that yield soil fertility, crop pollination, and countless other things; the hydrological cycles that put fresh water into reservoirs and taps; the tectonic processes in the crust that put economically useful metals and minerals into veins in the rocks; and, of central importance just now, the extraordinarily complex interplay of biological and geological processes that stored away countless billions of tons of carbon under the earth’s surface in the form of fossil fuels.

Conventional economics assumes that these things get there by some materialist equivalent of divine fiat. This misstates the situation disastrously. Primary goods are produced by an exact analogue of the way that secondary goods are produced: raw materials are transformed, through labor, using existing capital and energy, to produce goods and services of value. The difference is simply that all this takes place in the nonhuman world. Human beings do not manage the production of primary goods, and the disastrous results of trying to do so suggest that we probably never will; on the other hand, in at least some cases – maltreated farmland is a good example – we can interfere with the production of primary goods, and suffer the consequences.

… The cycles of nature that produce goods needed by human beings constitute the primary economy, while the process by which human beings produce goods is the secondary economy. The secondary economy depends utterly on the primary in at least two ways. First, as discussed last week, something like three-quarters of all economic value in today’s world is produced by nature – that is, by the primary economy – and only around a quarter is produced by human labor. Second, even that quarter is made directly or indirectly from primary goods, and cannot be made at all if the necessary primary goods aren’t there. This is why the attempt to replace a depleted natural resource with something else always involves substitution costs: human labor must be brought in to replace some part of the work previously done by nature, and the costs of that part of the work thus end up having to be paid out of the secondary economy.

We have become so used to thinking of economics as a matter of human labor that it’s probably best to point out that what are sometimes called “primary industries” – farming, mining, and the like – belong to the secondary economy, not the primary one. The primary economy consists wholly of those nonhuman processes that yield economic goods to human beings. Thus a farm and the crops grown on it are part of the secondary economy, while the soil, water, sun, and genetic potential in the seed stock that make the farm and its crops possible are part of the primary economy. In the same way, a mine is part of the secondary economy, while the slow geological processes that put ore in the ground where it can be mined are part of the primary economy. If you examine any human economic activity, you’ll find behind it natural processes that make that activity possible; those processes are the inputs from the primary economy that make the secondary economy possible.

Thus Adam Smith’s dictum cited earlier badly needs reformulation. The product of the natural environment of every nation is the fund which originally supplies it with all the necessities and conveniences of life; the annual human labor is simply the energy input required to turn some of that product into forms useful for human beings. The wealth of nations, it turns out, is ultimately the wealth of nature, and the sooner the value of natural cycles and primary goods is taken into account, the better chance our descendants will have of avoiding the self-defeating habits that are pushing modern industrial system down the long road to collapse. To do so, however, will require a clear sense of the difference between value and price, or to put matters another way, between wealth and money – the theme of next week’s post.

I recommend that you read the whole essay and comments at this link: The Wealth of Nature.

The Battle over our Food – the Pesticiders Hate Organic Gardens

Jim Hightower provides some political insight into symbolism and lobbyists.

Link: Jim Hightower | SPREADING THE ORGANIC MOVEMENT COAST TO COAST.

What's the number one outdoor activity in America? Not baseball, soccer, jogging or golf. Instead, it's gardening!

I happen to be part of this happy activity. Maintaining a small organic garden in my yard lets me dig in compost, rejoice at ripening tomatoes, clip fresh herbs – and devour the luscious results. So, when Michelle Obama recently planted an organic garden on the White House lawn, I joined gardeners and organic food advocates all across the country in applauding this symbolic stand for good food, the environment, and common sense.

Not everyone joined in the joy, however. An outfit called the Mid American Croplife Association (MACA) was in a full-tilt snit over this "First Garden." MACA is the lobbying front for such pesticide purveyors as Monsanto, Dow, and DuPont – not a bunch that's simpatico with the organic movement. Indeed, MACA executives zipped out an alarmist notice to their members: "Did you hear the news," they asked? "The White House is planning to have an 'organic' garden… The thought of it being organic made [us] shudder."

Well, they'd better get used to shuddering, for political leaders from coast to coast are getting on board with the good food movement. Agriculture Secretary Tom Vilsack, for example, is putting an organic garden on the National Mall to encourage visitors to plant their own back home. Also, governors and mayors – from Annapolis to Sacramento – are vying with each other to put in the biggest and best organic gardens. In Baltimore, Mayor Sheila Dixon notes that her plot in front of City Hall is nearly twice as big as the White House garden.

Yes, these are symbolic gestures, but symbolism is a powerful tool for educating the public and affirming the virtues of local, sustainable, non-chemical food production. Spread the word.

"Farms Race: The Obama's White House Garden Has Given Fire to an International Movement," www.alternet.org, May 1, 2009.

"Organic White House Garden Puts Some Conventional Panties in a Twist," www.lavidalocavore.org, March 28, 2009.

"MACA lobbyists and Michelle Obama's garden," Email from Julie S., April 13, 2009.

Congressman Ron Paul – Celebrating the Fight for Freedom on July 4

Ron Paul knows history and economics - unlike some other "leaders" from his state.

Link: Congressman Ron Paul – Celebrating the Fight for Freedom on the Fourth – Texas Straight Talk.

Every year on the Fourth of July we remember our founding fathers and the precious inheritance of freedom that they secured for us. Every year it seems we get further and further away from that birthright, but we still have much to celebrate.

This country was founded on principles of freedom from overbearing rulers, onerous taxation, and the right to live our lives as we see fit. Our independence was won after decades, and even centuries of abuses that unscrupulous, corrupted leaders and big governments visited upon their subjects. The Founders knew there was a better way, and they forged it here on this soil.

In the new United States of America, the rights of the individual were enshrined in the Bill of Rights. Today, government encroaches on those rights through countless provisions in numerous laws. However, how much worse off might we be had the Founders not enumerated these rights in the highest law of the land? While it is true that many aspects of those rights have been redefined and watered down, and will likely continue to be eroded, we can celebrate the wisdom of the Founders and that at our very core we, as Americans, still hold these rights dear.

The American tradition of individual liberty and self-reliance still runs deep, in spite of the increasing nanny state tendencies that government has been gradually shoving down our throats. It is sad to see government seeking to completely replace the voluntary protections through families and charities that we have relied on throughout our history. Especially disturbing is the rhetoric of community and interdependence being employed by the administration to institute government as the great middle man for all healthcare and charity for which all citizens must dutifully sacrifice. This trend is not improving quality of life for Americans, but instead is greatly enriching the government bureaucracies that take a generous cut of all transactions in the welfare state. There still remains much resistance to cradle to grave government dependence and control. This spirit of fierce independence is a tribute to our founders and is cause to celebrate.

The majority of our Founders believed in sound money, in part because they knew it kept government in check. Governments that are unable to expand the money supply and manipulate credit at will are unable to fund frivolous wars of conquest. Instead of adventurism abroad, seeking monsters to destroy, governments restrained by sound money are restricted to truly defensive wars that the people are willing to fight and to fund. Today, in spite of all the economic turmoil that fiat currency and military interventionism has caused, there is cause to celebrate. The demand to audit the Federal Reserve is quite encouraging. The truth about the fed will put us one step closer to sound money, and peace.

Public outcry against the bank bailouts and the government power grab known as cap-and-trade proves that the spirit of liberty still lives. Part of our celebration of Independence Day should include a renewed determination to keep fighting the good fight for freedom. As long as government continually seeks to take liberties away, patriots need to keep fighting this ongoing war for sustained independence.

An Adorable Orange Kitten Becomes a Great Cat

Kitten Sweetie Wildcat

Four years ago today our neighbor Leigh Ann dropped off an orange kitten at our home. We were going to take care of her while Leigh Ann and Chris were on vacation. They had rescued her from a parking lot the previous week. She was born in a colony of feral cats and was completely wild when her angels swooped in and got her.

She's been with us ever since. She is the only grateful cat I've even known. It's been a great joy to watch her grow up.

Here's her story: Fast Food Kitten – Sweetie Wildcat Arrives.

FYI: Her eye color changed from blue to orange! Her claws are much sharper than our two Siameses. The only place outside she wants to go is onto our deck and sometimes she jumps up to patrol the roof. She eats a lot and often. She's a lap cat and a bed cat. She'll snatch a moth out of the air and eat it.

Sweetie Cat on Roof

 

I Heart Peanuts

I'm eating a lot of peanut butter (Trader Joe's Organic Crunchy) these days. Ann's garden is producing an amazing number of cucumbers now, so I eat cucumber slices with a dab of peanut butter for lunch.

Here's some interesting info on peanuts, from the World's Healthiest Foods web site (sponsored by the George Mateljan Foundation).

Link: Health Benefits of Peanuts

In addition to being every kid's (and many grownup kid's) favorite sandwich filling, peanuts pack a serious nutritional punch and offer a variety of health benefits.

Your Heart Will Go Nuts for Peanuts

Peanuts are a very good source of monounsaturated fats, the type of fat that is emphasized in the heart-healthy Mediterranean diet. Studies of diets with a special emphasis on peanuts have shown that this little legume is a big ally for a healthy heart. In one such randomized, double-blind, cross-over study involving 22 subjects, a high monounsaturated diet that emphasized peanuts and peanut butter decreased cardiovascular disease risk by an estimated 21% compared to the average American diet.

In addition to their monounsaturated fat content, peanuts feature an array of other nutrients that, in numerous studies, have been shown to promote heart health. Peanuts are good sources of vitamin E, niacin, folate, protein and manganese. In addition, peanuts provide resveratrol, the phenolic antioxidant also found in red grapes and red wine that is thought to be responsible for the French paradox: the fact that in France, people consume a diet that is not low in fat, but have a lower risk of cardiovascular disease compared to the U.S. With all of the important nutrients provided by nuts like peanuts, it is no wonder that numerous research studies, including the Nurses' Health Study that involved over 86,000 women, have found that frequent nut consumption is related to reduced risk of cardiovascular disease.

Peanuts Rival Fruit as a Source of Antioxidants

Not only do peanuts contain oleic acid, the healthful fat found in olive oil, but new research shows these tasty legumes are also as rich in antioxidants as many fruits.

While unable to boast an antioxidant content that can compare with the fruits highest in antioxidants, such as pomegranate, roasted peanuts do rival the antioxidant content of blackberries and strawberries, and are far richer in antioxidants than apples, carrots or beets. Research conducted by a team of University of Florida scientists, published in the journal Food Chemistry, shows that peanuts contain high concentrations of antioxidant polyphenols, primarily a compound called p-coumaric acid, and that roasting can increase peanuts' p-coumaric acid levels, boosting their overall antioxidant content by as much as 22%.

Peanuts' Antioxidants Key to their Heart-Health Benefits

Research published in the British Journal of Nutrition (Blomhoff R, Carlsen MH), which identified several nuts among plant foods with the highest total antioxidant content, suggests nut's high antioxidant content may be key to their cardio-protective benefits.

Nuts' high antioxidant content helps explain results seen in the Iowa Women's Health Study in which risk of death from cardiovascular and coronary heart diseases showed strong and consistent reductions with increasing nut/peanut butter consumption. Total death rates decreased 11% and 19% for nut/peanut butter intake once per week and 1-4 times per week, respectively.

Even more impressive were the results of a review study of the evidence linking nuts and lower risk of coronary heart disease, also published in the British Journal of Nutrition. (Kelly JH, Sabate J.) In this study, researchers looked at four large prospective epidemiological studies-the Adventist Health Study, Iowa Women's Study, Nurses' Health Study and the Physician's Health Study. When evidence from all four studies was combined, subjects consuming nuts at least 4 times a week showed a 37% reduced risk of coronary heart disease compared to those who never or seldom ate nuts. Each additional serving of nuts per week was associated with an average 8.3% reduced risk of coronary heart disease.

Practical Tip: To lower your risk of cardiovascular and coronary heart disease, enjoy a handful of peanuts or other nuts, or a tablespoon of nut butter, at least 4 times a week.