On fiscal stimulus

“Fiscal stimulus is like the government trying to help you with your migrain by shooting you in the head”

You may quote me on that one.

Daily Quote #12 & 13

Being an avid Glenn Beck viewer, I picked this up from last weeks episodes :

“If small business is the engine running at the front of this company, why are we feeding all the money to the tailpipe???”

Also, seen on ZeroHedge :

“With the market pricing an economy about 6 std devs above perfection, the last thing needed is for the economy to be even worse than fundamentals (do not) represent in silly 80x P/E multiples of stocks such as Amazon (for example).”

6 standard deviations seems about right. Assuming you include fundamentals in your calculation of course, otherwise this rally could go on forever.

What is wrong with financials, analysts and economists

This quote, provided by MarketWatch pretty much proves my entire point when I say that the current rally is not sustainable, and that theUS economy isn’t really getting better, just crapping up at a slower rate. This is actually so stupid that I rest my case for a week or so.

“If today’s release of U.S. consumer confidence data comes in above expectations as our economists expect, we should see further price gains,” said Credit Suisse analysts.

Daily Quote #11 : The stupidity of economists

“Retail sales were unexpectedly weaker than expected, suggesting that the money spent on the ‘Cash for Clunkers’ plan wasn’t spent on other things”

- Peter Boockvar, equity strategist at Miller Tabak & Co in New York. (HT@ Free Advice)

Seriously, you THINK?? And here I was thinking that someone purchased both a car, redecorated their house, payed off their mortgage and took a trip to Stupiditistan with the SAME money. Do these people seriously think that “I know – we’ll make people spend money on something – I’m sure it won’t have any effect on what they spend on other things”. Right – everyone just got collectively richer because you said so. Not only can they afford a new car, they can still afford all the other things they planned on purchasing before you subsidized they car purchase.

This is yet another standing proof that Keynesianism doesn’t work. According to Keynesians, all this recession stuff is due to “animal spirits” causing people to over-save. Thus, if we can trick stupid old Average Joe into spending some of that money he planned on saving, with a nice government ‘Cash for Clunker’ plan, then this should stimulate the economy. Reality check – people aren’t over-saving, because there was a negative savings rate in the US. People are broke, just like the government. All you just did was

• Destroy a few hundred thousand working cars
• Make sure people loaded up on even MORE debt
• Get a few morons temporarily hired by car companies that will have to fire them once the program is over
• Add to the government debt.

Let’s have five cheers for the ‘Crash for Clunkheads’-plan, yet another beautiful initiative by the Obama administration in order to wreck the US economy.

Daily Quote #10 : For a constitutional republic

“For when the government is not in the laws, then there is no free state, for the law ought to be supreme over all things(…) any such establishment which centers all power in the votes of the people can not, properly speaking, be called a democracy, for their decrees can not be general in their extent.” - Aristotle, as quoted by Friedrich Hayek (Mises.org)

Daily Quote #9

“President Obama is going to be the biggest bond salesman in the history of America”

- Larry Kudlow (interview with Ron Paul)

Daily Quote #8 : Joe Bidens record of stupidity

“We’re going to go bankrupt as a nation. People, when I say that, look at me and say, ‘What are you talking about, Joe? You’re telling me we have to go spend money to keep from going bankrupt?’ The answer is yes.”

-Vice President Joe Biden

Things aren’t as complicated as politicians want to make them. After reading this, if you get the feeling that the vice-president of the United States is the most stupid man on earth, then yes – you are correct. What planet does he come from? Which magical law of absurdity makes it possible to spend your way out of bankrupcy as a nation, when it is impossible as an individual, an organization, a business enterprise, a local administration, or any other entity that do any monetary transactions what-so-ever?

Daily Quote #7

“Goldman Sachs is front-running the entire stock-market with this high frequency trading scandal. (…) They’re all crooks, and they should be thrown in jail.”
- Max Keiser

Max Keiser does yell a lot, but this one I think gives him credit. Hank Paulsen & Co. should be indicted.

Daily Quote #…6?

Another one seen on MarketWatch :

“People make the dollar question too complicated. The US has only two choices:
Default = Dollar worthless
Print Money (Monetize Debt) = Dollar worth less

The longer the world waits to dump the dollar the less their reserves will be worth. To say that these dollar fluff pieces are irresponsible would be an understatement. Me thinks the media doth protect the dollar’s virtue too much.”

I like the term “dollar fluff pieces”. But I have to admit – with all the noise that is being heard about “reserve currencies” and budget deficits and manic spending – I am so far surprised by the remarkable resistance of the dollar. Maybe it’s like one of those posh, victorian tea-parties – no one knows who should start speaking, or reach for the cookie tray?

Daily Quote #5

“One engine of the agent model is the pre-paid bank card and the humble point-of-sale machine, the device that reads your card at the supermarket checkout counter. A point-of-sale machine typically costs less than $100 vs. thousands for an ATM. Customers can use cards at locations with the point-of-sale machine to make deposits, withdraw cash and pay bills as well as make purchases.

The pre-paid card model avoids risks of over-indebtedness and the problems of complex fees currently bedeviling the U.S. market. For poor people, liberation from the need to pay every bill in cash and in person at the bank branch saves a tremendous amount of time, cost and risk.”

- Article from MarketWatch, discussing the revolution in banking going on in the developing world

But we all know that the lifeblood of the US economy is credit, not savings, right? Everything works so much better if you just borrow and spend, instead of save and spend? Interesting thing, that economic laws (according to consensus) works differently in the developing world than they do in the developed world. Could it be that if the credit-engine of the world stopped, and people started putting their money into savings first, and spent it later – the majority of the bloated financial sector would be out of a job – so they are very keen on keeping their credit flow intact?

For all of his flaws it seems that Marx may have been correct when he predicted that the final step of empoverishment would be lending money to the poor and having them work indebted to pay the interest (this has been going on in many bad places of the third world, but seems to have become the new American model). What Marx got wrong was that it wasn’t due to capitalism, instead it is due to the socialist-corporatist conglomerate that currently holds the US in its hands. Of course, no one has to live on credit, and I’m sure that many prudent Americans don’t. But the “serve-me-all” generation of the late 1900’s cannot for the life of them figure out why it’s better to save than to borrow. It’s so easy, isn’t it, to get a new credit card? A big flaw in Marx’s thinking was that somehow people couldn’t make choices for themselves, somehow they kept on working in slavery despite there being a so much better world they could live in. What he didn’t realize was that economic development had not gone far enough to allow everyone a high living-standard. That (some of) the capitalists enjoyed a higher living standard was a direct effect of providing other’s with a higher living standard. But make no mistake – those who profit from the credit-machinery today are no capitalists – because they live off government subsidies and central bank policies – not sound investments and production.