Tuesday, May 26, 2015

We don't want to ban guns, we just want to prohibit them within 5 miles of a school...

How is within 5 miles of a school not a ban? Here's Houston, with a mark on the map for each elementary school, middle school, high school, college and university. Note the scale at the bottom right. That's 5 miles.

Here's approximately what that map looks like when you expand each dot to a 5 mile radius circle. (I missed a few, but you get the idea.) Note the scale is still there.

No gun ban indeed.

Monday, April 13, 2015

So if we're not going to pay down the debt...

I've discussed the national debt on multiple occasions. It's very clear that we as a people are far too childish and needy to do what must be done to take responsibility and pay off the debt, and even if we weren't a bunch of overgrown babies, our attention spans are too short to work towards a 100 year goal. There's more - there is the consideration of the growing population, and the effect on the world that would occur if we started to pay down the debt. There's the fact that if interest rates rise, even a little, our government wouldn't be able to handle the increased cost.

So yes, I think it's safe to assume that we are not going to pay down the national debt. So what does that mean?

It must mean that the FED will continue to create money and suppress interest rates. In other words, QE Forever.

The US government cannot let interest rates rise, and must continue to try to extend the rollover of the debt as far as possible. This is something the whole world is trying to do. Recently Switzerland issued 10 year debt with negative yields. Mexico indicated they would issue 100 year debt! The US will keep pushing longer yield times and lower interest rates, to try to buy more time and keep the cost of the debt down. Meanwhile this will increase the magnitude of the debt, but stabilize the interest we are paying each year.

This near decade long easy money policy has already created asset bubbles and massive malinvestment. The NASDAQ has more than tripled since the last market correction while the housing sector, which crashed so spectacularly with the "Great Recession" and which is generally considered to be a strong indicator of the health of the economy, has taken 6 years to recover to a mere 45% of its former heights. The last time the housing sector crashed this hard was during the Savings and Loan Crisis, which, incidentally was followed up by the.. drum roll... Dot Com Bubble. Yes, the markets are soaring on waves and waves of easy money, created by the FED and pumped in by their asset purchases. Everyone is wearing rose colored classes and loving the euphoria - they're addicted to it.

Does anyone think the FED can uncreate the monster it has created? Unwind the asset purchases and tighten the money supply without creating an international firestorm? I didn't think so.

So again, what does it mean?

I think it means, and maybe someone else will dissuade me, that the FED will be forced to hyperinflate and destroy our currency and our debt along with it. It's happened before, and will happen again. The only question is how much damage will it cause when it does happen. Of the $18+ trillion in US debt, over $5 trillion is intragovernmental - social security, medicare, pensions, etc. That will all be gone. Another $6.5 trillion belongs to Americans, individuals, 401ks, IRAs, businesses, banks, etc.; only about a third of our debt is foreign. So when it gets wiped out, so does the capital/savings of an enormous number of Americans.

I don't know if we will really end up carrying heaps of worthless cash in a wheelbarrow to buy a loaf of moldy bread, but again, it's happened before. I hope we can avoid it somehow.

Thursday, April 2, 2015

Gun Free Zone in Kenya: Over 500 hostages taken at Garissa University

Gun free zones don't work - especially in turbulent areas. We should take note of this and make sure that we tell our legislators that we want our students to be able to protect themselves.
NAIROBI — Gunmen stormed a university in northern Kenya on Thursday, taking nearly 600 students and staff members hostage. At least 21 people were killed and 65 others seriously wounded, officials said. 
Heavy gunfire was reported at the Garissa University campus as the Kenyan military tried to end the siege. The Somali-based al-Shabab terrorist group claimed responsibility for the attack. 
Kenya Interior Cabinet Secretary Joseph Nkaissery said 533 students are being held hostage and 282 have been rescued. The total number of students at the school is 815. Sixty staff members, including the principal, are also being held.
These are the same guys that killed 67 at another gun free zone (a mall) a couple of years ago.
Al-Shabab has carried out several attacks in Garissa and across Kenya in the past few years, including the 2013 attack at the Westgate shopping mall in Nairobi that left 67 people dead, and others on mosques in Mombasa, a coastal city in the east. 
Nairobi-based security analyst Abdiwahab Sheikh said the incident highlights how the government has failed to shore up security in the country. 
"The government has not learned anything from the Westgate attack," he said. "How do you allow terrorists to take students hostage for more 10 hours? I think our security forces need to learn from the past." 
Recall that carrying at all is prohibited in Kenya, so the entire country is a gun free zone. It's no wonder that terrorists can act with impunity there.

Monday, March 30, 2015

Talking the long view on the national debt

The average age that a woman first gives childbirth is about 25 years. That means that if we pay down only $180B (1%) a year the national debt will last to our grandchildren's grandchildren.

Yet, as crazy as this sounds, it would it take a miracle to convince anyone - ANYONE - in Congress to make it happen. After all, our current obligations already carry $435B a year in interest. That means we'd have to dedicate about $615 billion dollars towards the debt, and not accumulate any more.

Federal revenues in 2014 were about $3 trillion. That would leave about $2.4 trillion for all of the rest of the spending, but we spent $3.5 trillion! So not only do we have to dedicate more money toward the debt, we have to cut a LOT more out of our spending.

Exactly which politician is going to cut $680 billion dollars, and out of which programs? Are we going to end medicare or social security? Because that is what it would take. Is the Republican party going to do that? Are the Democrats?

No. We have no one, anywhere with the willingness to do what it takes. Even if we did, even if they were in elected office, they wouldn't be able to overcome the demagoguery that exists. If it were possible to overcome this, if it were possible to convince 100 years of legislators and citizens that they had to pay off the debt for their great-great-great-great-great (that's right, 5 greats) grandchildren, we still have to contend with the growing population. Some estimates put us at close to 600 million by 2100, fifteen years before the debt would be paid off.

Every one of those additional 285 million people would need to be willing to go without any government handouts. And if the trend in takers continues as it is, we'll be suffering 300 million loafers in this country. We'll have to somehow deal with them too. But we won't. We've become a nation of children, petulant, demanding children, unwilling to detach from the teat of mommy.

Thursday, March 26, 2015

The Liberal Empire Strikes Back: Peruta to be reheard en banc

They're intent on going down swinging.
THOMAS, Chief Judge: 
Upon the vote of a majority of nonrecused active judges, it is ordered that

this case be reheard en banc pursuant to Federal Rule of Appellate Procedure
35(a) and Circuit Rule 35-3. The three-judge panel opinion and order denying
motions to intervene shall not be cited as precedent by or to any court of the Ninth Circuit.

Almost 5 months ago at NLOGAM, Sebastian blogged about the call for en banc from one of the judges. It looks like a majority of them voted to rehear the case.
Given the strong Second Amendment rationale in the Peruta decision by Judge O'Scannlain, I'm guessing some of the more liberal judges on the 9th Circuit don't want to be bound by it. After all, the 9th Circuit has a reputation as the most liberal circuit. Only 18 out of the 38 current active judges - those not having senior status - were appointed by Republican presidents. 
They don't want to be bound by a precedent that more strongly protects your rights. Gotta love these judges.

Friday, March 20, 2015

The very first Quote of the Day!

LaughingTarget has the honors! :) Thank you sir, for this excellent explanation of the trap the FED has created.
The elephant in the room is public debt. The Federal government leans heavily on short term debt instruments and rolls them over year to year. 
On page 19, it shows the maturity schedule by year. Most of it is due by 2019 with a huge portion of it due this year. The average interest rate in 1989 was close to 9% and has been driven down to 3% this year. With the tremendous debt load on the books, if rates rise, it will create a major fiscal problem for the Federal Government. Current debt servicing is running $443 billion, or 10% of the total annual spending. If rates rose up to the 1980s average, debt servicing would be 25% of all spending just at the Federal level. 
It would additionally cripple municipalities that rely on short term rollover debt as well. The Federal Reserve has incentivised huge debt loading over the past decade and any attempts to return rates to relative normal will destroy numerous governments and undermine a large portion of the Federal level's programs. 
Despite what everyone wants us to believe, the Federal Reserve is not independent. With these huge debt levels hanging over our heads, the chances the Fed will raise rates are slim. They'll continue to use every excuse in the book to avoid admitting that they fueled government debt and don't want to be the cause of the reduction or elimination of redistribution programs.
Yes, that sums it up quite nicely. They have created so much debt, that increasing the rates on borrowing would destroy the system. It will happen much faster than anyone most people would believe, given the annual turnover is close to 10 trillion. Even though they've been pushing for longer turnover since the crisis began, an increased interest rate fueled sovereign debt crisis could not be held off for more than one presidency.

Fixed GAO audit link, and adding the following:
For fiscal year 2014, interest expense incurred totaled $433 billion; [~2.4%] this consisted of interest expense on debt held by the public of $260 billion, and $137 billion in interest incurred for intragovernmental debt holdings. [Social Security and Medicare]
Investors may be piling on US treasuries right now, but that will only last while the US looks like the best ship in a sinking fleet. If our average interest rate rises to 4% we would need to divert an additional $300 billion towards the interest payments. In the meanwhile, we continue to overspend, so the number will continue to rise. Without balancing our budget, there is no way out of the hole - remember the last time we were close to balancing our budget the Federal funds rate was over 6%, and so was the average interest payment.  Today a 6% interest payment would cost $1 Trillion! That means we have less than $1.5 trillion of revenue remaining for spending on programs such as the military, medicare, and social security.

Something's got to give, and something WILL give. Reality is, and always has been, unforgiving. We are in for a lot of pain in the very near future. It won't be decades, probably not even one decade.

Eighteen Trillion One Hundred Fifty Two Billion Four Hundred Eight Million Six Hundred Thirty-Five Thousand Fifty-Five Dollars and Fifty-One Cents

$18,152,408,635,055.51. The debt to the penny.

In just 81 days, the national debt has grown by $122,295,278,979.46. Your personal liability for this has increased by $994 and you now owe $147,579.

This is becoming a habit for me.
As of today, our national debt is $18,030,113,356,076.05. 
In just 70 days, the national debt has grown by $130,797,271,522.68. Big Gov has added $1,063 to the debt of every producer in America. You now owe $146,585! Aren't you lucky.