Let me start by saying that I have no interest in what consenting adults choose to do so long as those activities do not result in corpses, do not scare the horses, and are not otherwise harmful to society in general. Many of us are attracted to individuals that bewilder our friends and relatives.

The question before us is whether or not some sorts of behavior and traditions should be changed to meet the desires of less than two per cent. of the population. I have no difficulty with same-sex couples who want to “live in sin,” a very old term for cohabiting without marriage, although I am against that for heterosexual couples because we all know the enormous damage done to our society by the increase in illegitimate children. In the nineteen fifties the white illegitimacy rate was 5% and that of blacks was 25%. After half a century of welfare the rate for whites is 25% and that of blacks 80%, to the widespread detriment of all of the little bastards, to use the technical term deliberately for shock effect. Does it strike you as odd that the technical term is still one of the strongest insults in our society, while no social force is leveled against those who bear children out of wedlock? Perhaps mandatory health insurance would solve the argument that gays should be allowed “to marry,” a perfectly straightforward infinitive that has never referred to anything other than heterosexual unions for the purposes of procreation, preservation of capital and family power, and perhaps even happiness.

In particular, the questions are whether or not those who are openly gay have a “right” to serve in the military if they wish, with others questioning whether our fighting forces would be better or worse for their inclusion. The arguments are that a sexual deviant can be just as patriotic and competent as anyone else and they should not be denied permission to join the Marines if they want to and can get through Parris Island successfully. I’m quite willing to admit that military prowess and even genius may be — even probably are — independent of sexual orientation. As I recall, Gaius Julius Caesar was at least AC-DC, and many ancient Greeks were of the opinion that a man will fight harder under the eyes of his lover. (If we’re going to take society of two millenia ago as our standard, should modern mothers tell our sons, “Come back with your shield or on it?”)

On my angle of the argument, after a life of having been the wife, daughter, sister, aunt, cousin, niece, and daughter-in-law of career military officers, I keep running into the ancient proscription against “conduct prejudicial to good order” and another about “conduct unbecoming an officer.” There are very clear rules against “fraternization” between officers and enlisted men/women, and against after lights out trysts in the barracks. More recent rules involve “sexual harassment” and rendering one’s self unfit for combat by becoming pregnant, neither of which were an issue when all the ships at sea were manned, period. I think all of us can agree that we would find it uncomfortable to shower in mixed groups, whether that meant those of both genders or those of our own who saw us as sex objects. The situation will be even worse on submarines, where quarters are always tight and it can be difficult to pass someone without touching, a situation that could lead quickly to those so inclined taking advantage of others who did not appreciate being touched inappropriately. Surely we have had enough scandals and ruined careers without openly setting up situations where charges will arise.

I consulted three military men tonight. The gentleman reared in Romania, where mandatory service is required after high school, said in outrage that he thought all homosexuals should be shot, which does seem a little severe, given easier solutions. The former, ah, “black ops” type said firmly that he didn’t want to risk his life in tight situations with someone who saw him as desirable, and Charles spoke bitingly of the Wisconsin and the Wikipaedia mess. If you aren’t familiar with the little emotional tiff, which led to death and destruction, a jealous lover rigged the large gun his boyfriend served to blow up. Such an occurrence can happen, obviously, even under “Don’t ask, don’t tell.” Needless to say, both men had broken several regs, and shipmates who were innocent died. Can heterosexual unions end as badly? Of course they can, but have I indicated in any way that I am in favor of mixed crews living together in cramped, dangerous quarters? There are many military jobs that women can do better than men, including being jet pilots. One of our top snipers is a gorgeous little blonde with a sweet smile and a wholesome look about her. Obviously we can handle Air Traffic Control, analysis, and logistics, and even serve in motor pools.

The problem is, do we allow gays to serve on the premise that women can? Do we go to open segregation, with a Lysistrata Corps? I can imagine the furor if anyone suggested that. The Romanian astrophysicist demanded indignantly several times to know if gays would be required to wear an insignia (perhaps the ancient pink triangle?) to identify themselves plainly. My friend from Dracula land is a brilliant, fascinating man with an authentic accent, and he asks good questions. We require military infantry, engineers, pilots, Master Sergeants, and Admirals to wear insignia identifying their specialties and rank, after all. I can’t think of an army in at least a thousand years that has not done so.

We need to figure in the results of several surveys that indicate that something on the order of 40% say they will resign if open homosexuality is practiced, a number very close to the number of doctors who speak of going out of practice under Obamacare. What is the likelihood that there would be increased fragging in combat? In other words, what is the best policy for our military services and our country? How will we handle all the probable lawsuits for Bad Conduct Discharges, demanding back pay for twenty or thirty years?

If all rules are subject to question, why should anything be allowed as a disqualifying factor for military service? I am being discriminated against by a cut off of age 35 to join the Army or Navy, when I feel I have a great deal to offer as Chairman of the Joint Chiefs of Staff. I wouldn’t be surprised if I know more about tactics, strategy, and military history than Admiral Mike Mullen does, and I have a lot more guts when it comes to standing up for what I believe and analyzing consequences. I don’t yield to political expediency; I say what I think before reading audiences of nearly 500,000, and sign my full name to everything I write. I’d make a terrific General, and it is only sheer, blind prejudice that prevents me from serving my country!

Regards,
Linda Brady Traynham
Whiskey & Gunpowder

December 20, 2010

Don’t Ask, Don’t Tell, Don’t Act was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Most of you have an IRA or a 401(k) and have at least heard rumors that Congress is scheming to coerce you into rolling the funds into a Government Retirement Account filled with freshly-printed treasuries backed by the full faith and credit of the folks who brought you Social Security and Medicare. It sounds like a grand idea to appropriate somewhere between $7.5 trillion and $14.5 trillion (depending upon the estimator and where the Dow is) if you are a rapacious government official seeking whom you might devour.

Is it, though, really? That is, can the ploy actually work? Bearing in mind that fewer than 8% of those associated with Mr. Obama have any business experience at all, and given that it is difficult to make most of us who are aware of danger behave to our disadvantage, let us consider two very simple scenarios covering 1. Those who geek and let the government appropriate their savings; and 2. Those who take their lumps via taxes and fines quickly and wrest what they can from the clutches of the Feds.

1. Okay, Messires Bernanke, Geithner, Reid, and Obama, suppose you have managed to claw half of all such retirement accounts from their unhappy owners. We’ll be conservative, as always, and estimate that you are now in possession of $3.5 trillion in the form of stocks, in a very hinky market. What are you going to do next? “Well, uh, we’re going to replace the stocks with government bonds, just like the non-negotiable ones in the so-called ‘Social Security Fund,’ and spend the money.”

That’s nice, gentlemen. What will you do with the stocks themselves? That is, how do you plan on converting them into cash?

“Why, we’ll…we’ll…uh. Oh.” Uh-oh, even. No, indeed, you really don’t want to dump that sort of load on the trading floor because such a course would almost certainly crash the market and burn out softwear while triggering shutdowns. (Note that there are those in government who would approve of this idea.) Trying to sell that much stock would be an even bigger disappointment than recent auctions of treasuries. What is the point of stealing bearer bonds you can’t exchange other than proving you can and impoverishing the citizens, worthy Statist goals though those may be? True, you could be the Tyranosaurus Rex terrorizing Wall Street by your ability to fling individual companies down, but what does that get you other than the fun of pulling the wings off flies and McDonald Douglas? Short of making George Soros Stock Tsar (deep shudder) and running a gigantic government mutual fund/ retirement plan for Congress and unions, what are your options? I’m not at all certain that George, T-Bone, and the entire Agora hierarchy could cope with an “asset” of that magnitude. It would add whole new dimensions to “cornering the market,” one on the order of shoving Israel into an untenable corner. For those of you who will let your retirement plans be confiscated meekly, I suggest reading my “Son of Social Security.”

2. Many of us grimaced and cashed out long ago. Sure, it hurt to pay higher taxes and penalties, but what we retrieved is now ours to do with as we please, and in general we benefited well by missing the crash of ’08. We will suppose that a quarter of the investors say to their accountants, “No. Enough is enough. I don’t care what it costs, just do your best and get me out of this.” (We are postulating that the final quarter didn’t get the word or dithered past the point where compliance is required on pain of enormous fines and/or jail time.) Here’s our potential situation: the Feds will then own 3/4 of all stocks and bonds currently in private pension plans, and a quarter of the mutual funds, for an easy description, will be in the hands of private investors. Have you looked recently at what your grossly over-paid fund manager has loaded you up with? You would never have chosen many of those things, most of us are bearish, and it will seem like a good time to clean house. If individuals decide to cash in even a trillion dollars’ worth of such dogs — or blue chips — if it can be done at all, what will happen to the market? A Keynesian will reply, doubtless, that it will go up, igniting a true recovery, and laying down St. Augustine sod as far as the eye can see.

Snicker. SURE it will, in one giant white elephant sale.

“Well, in that case we’ll step in and equalize the markets to protect our holdings, rather like Quantative Easing,” sounds like a probable Bernanke response stripped to basic meaning. Hey, great idea, why didn’t I think of that? You can print even more trillions to bid stocks up artificially or purchase them, thereby increasing the national debt, raising M1, and further skewing discerned value.

Don’t those of you who have already bitten the 7.62 NATO round get smug too soon, because even if you start selling NOW you’ve got problems over and above what is going to happen when a bunch of ham-fisted eggheads start mucking around in stocks and bonds when they haven’t got the skills to drive a pig to market. Let’s suppose you manage to sell everything you have and receive a nice six-figure check representing your hopes for a secure, dignified future. Note, for starters, that if you no longer have an IRA/401(k) the proposed legislation includes a provision that all who are employed WILL start a GRA which will be funded with 5% of earnings. That’s a mild issue, however. You can afford a 5% pay decrease, can’t you? The real difficulties will be where to put the money to preserve current value, stocks and bonds having become even less safe abruptly, and the sheer physical process of receiving greenbacks in return for your check. You can’t just walk into your bank and say, “I’d like the entire $248,679.31 in small used bills, banded, stamped, dated, and initialled, please.” (Those precautions will give you faint cover if the SWAT team raids and claims they are confiscating drug money.)

It is almost impossible to get a banker to disgorge more than $20,000 in cash because he hasn’t got it on hand. Most bank managers have an excellent idea of the usual amount needed to cover typical daily disbursements; larger amounts must be arranged for ahead of time. Be prepared to have to make multiple trips to multiple banks to rescue your cash, and do go spend a thousand bucks on a big heavy safe, first. I still like to pull large amounts out late in the week, lest there be a Friday Surprise, on the theory I can always redeposit it on Monday if the bank is still there…a condition subject to change another way.

It gets harder every month to keep up with all the taxes slipped into other bills (such as requiring gold dealers to file forms on every purchase of $600 or more so the Feds will know who is buying gold), so you may have missed a cute little 1% “transaction tax.” EVERY time you have dealings with a bank — hitting the ATM, depositing a check, writing a check for cash, paying bills by check — you will be hit for one per cent. Isn’t that clever? At a bare minimum you will lose another 2% from your IRA just depositing the original check and getting it out. If you want to turn some into cashiers’ checques, that will be an additional transaction, of course, and no doubt traveler’s checks are, too, plus the premium charged for them. Just the simple nuts and bolts of turning your paycheck or SS into usable funds will give you a new net loss of 2%, and we can only suppose that quite a few bank charges for insufficient funds will result until people learn to adjust to the new rules and annotate their check registers accordingly. Ya gotta love it; if there is a more regressive tax to be found, I don’t know what it is, not that I have anything against regressive taxes. Forty-five per cent. of citizens and almost all illegal aliens pay no taxes at all other than sales taxes. They need to have some skin in the game, too.

This means your Social Security (and for all I know, welfare checks; why shouldn’t they be covered?) just took a 2% loss, which, in my case, is more than twice as large as the proposed $250 “voters’ bonus” Nancy Pelosi proposes to give us in lieu of COLA. (There are some great quotes from the Dems about supporting our senior citizens and being certain we don’t suffer from not receiving COLA again, for the second of three years scheduled. What frosts is that the troops and military retirees aren’t getting COLA, either…but Congress sure did.) Hey, the check goes into the bank, and if I don’t take money out I can’t spend it, right? Most of us here at W&G are past the point of defining change we find under sofa cushions as “gas money at the end of the month,” but $16.00 is significant to someone on the average $800 SS, just as $24.00 is to a lady on $1200 SDS and receiving $15.00 “too much” to receive any other sort of assistance; this charge won’t increase her income at all, just make life much harder. I’m cynical enough to believe the underserving “poor” on welfare will get additional food stamps and cash.

My, the taxes do add up, don’t they, Mr. Obama? 3.8% for ObamaCare, 2% for bank transactions, 5% to start a GRA, and if the Bush tax cuts aren’t extended another 5% for those at the bottom of the tax-paying structure. That comes to 17.8% in new taxes (not counting those on liquor and tobacco) for those currently in the 15% bracket who sure aren’t pulling in a quarter of a mil, plus another third for Capital Gains and higher taxes for the rest of us…if nobody dies with an estate of over 1.5 M, very easy to do these days in terms of over-valued houses and land. The safest choice I could find is to stash the cash in assets which do not show taxable gains or income, some of which produce useful deductions. Chortle…I didn’t pay a dime of income tax this year and I did it completely honestly with ample to spare, although we won’t discuss my iniquitous property taxes, currently eating nearly two months’ income a year.

Next time we’ll look at the effects (both ways) on banks (increased cash/interest-bearing accounts, e.g.), velocity, the behavioral consequences of rule 1099 on gold sales, M2, stressing banks via possible runs, and sexy stuff like that. For now, I suggest that you do some serious thinking about how to get your money under cover before all the new taxes, rules, and regulations are passed or implented completely.

Never forget that Bulls make money and Bears make money but Hogs get slaughtered…and that the slowest, fattest antelopes are devoured by the lions.

Regards,
Linda Brady Traynham
Whiskey & Gunpowder

October 19, 2010

Human Nature and the GRA, Part I was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

China has many counters to the latest puff ball protectionist gambit, an obvious one being a stiff little note from their Ambassador regretting that due to lost revenue from increased U.S. tariffs his country feels obliged to sell Treasuries according to the enclosed schedule until trading relations are stabilized at the current level…or even one more favorable to China. Start with $100 bn the first month, $200 bn the second month, and schedule $300 bn the next month, anticipating the U.S. would fold after the first sale, if not sooner. Robert Mugabe stymied DeBeers by selling diamonds at a discount, so why not discount T-bills if political and other economic advantages make that course feasible?

If I were Chinese Premier Wen Jiabao, I would hold ostentatious talks with the Japanese (who are scared stiff of me) about selling U.S. paper jointly in order to protect my dear friends on the islands not that far off my coast, that description being a non-subtle reminder that the sun cannot rise if Beijing decides otherwise. I would offer favorable discounts for those purchasing in yen or yuan, and push harder to replace the U.S.$ as the world’s reserve currency with a “basket” that included gold, the Euro, and BRIC currencies. I would step up demands for restrictions on where the U.S. fleet can sail — because my fleet is bigger and I have a million men in my army. I’d make a nice donation to Japan which is doing quite well rebuilding a blue water navy and has demanded that the U.S. vacate some very pricey naval yards. If I were really annoyed I would seize Taiwan and defy the U.S. to do anything about it. U.S. forces are already overextended and Formosa needs repatriating, in the Chinese view.

To put it mildly, the Community Organizer in the White House hasn’t the least notion of how games are played in the East and no hint that he is attempting to compete way out of his league. Perhaps the Joint Chiefs of Staff are still too engrossed in “Don’t ask, don’t tell” and the Rules of Engagement to suggest that there is enough turmoil in the Far East without us poking the dragon frivolously. Mr. Obama can never bear to consider that he might be fallible, but his sole position is that the Chinese are holding their currency artificially low — in his opinion. I have consulted an authority, and the gist of his comments on the probity of the U.S. claim is that China does not allow its currency to float. It is not obliged to let its currency float. The number of yuan offered in any given contract is arbitrary, at the discretion of the Chinese, so there is some plausibility to the claim that their rate isn’t “fair.” Life isn’t fair and if we don’t like their rate, don’t trade. China doesn’t believe in “social justice.”

I’m concerned more about actual territorial aggression than I am about mercantile wars. China has used a nice euphemism, “the peaceful rise,” to imply that they’re just a nation of shopkeepers and the fleet, the army, and war materiel are just window dressing every country needs to attain first world status. It is easy to overlook that China has been an imperial power throughout recorded history. Nobody has succeeded in breaking away or taking any part of China in quite some time. Mostly they just sat there being Chinese, other than the time they decided the Great Wall was necessary, held the Boxer Rebellion, wanted our help to get rid of the Japanese in WWII, and Chang Kai Shek grabbed Formosa in 1949 after being run off the mainland. China will take it back when the time is right. China has never had any objection to expansion; for all practical purposes China owns Tibet and Manchuria, is keeping a close eye on Mongolia, and would like to acquire Siberia. We may see May Day parades of tanks again; the party firmly in charge remains a military one with a tradition of such displays.

Have you ever heard of the Spratley Islands, named for a British sea captain who ran aground on them? Sometimes known as Senkaku? This is a group of 750 reefs, atolls, cays, and islands (including the Purcells) in the South China sea, only 4 square kilometers of which is above high tide in 425,000 square kilometers of ocean. Japan has had possession for a century, but the area is still claimed by China, the Philippines, Brunei, Malaysia, Vietnam, and Taiwan; it is desirable real estate with excellent fishing and reserves of oil and gas as well as for vital strategic position. A good comparison is that this area is the equivalent of the Mediterranean if you are Italy, Lebanon, or Egypt, or Rome, wanting to control shipping and be able to rush Legions where they were needed. Last month a Chinese fishing vessel — obviously not a junk — began ramming Japanese Coast Guard cutters on patrol in the area. This is an act of war, or at least an international incident, not a simple “oops.”

Japan impounded the Chinese boat, and China pitched hysterical fits, demanding that Japan release the Captain and crew. Japan attempted to split the difference by releasing the crew but retaining the Captain for trial, and things turned ugly quickly. Amid some very fevered rhetoric, China retaliated in part by halting exports of rare earths to Japan — thereby endangering Toyota, Sony, and everyone else there who manufactures electronics. This is a threat of concern to the U.S., because according to The New York Times, “China mines (Author’s note: and refines many of them) 93 percent of the world’s rare earth minerals and more than 99 percent of the world’s supply of some of the most prized rare earths…” The U.S. will come to rue this since our own ample supply of such minerals has been tied up in forest preserves, no machinery zones, and other brilliant treehugger projects. China has been very busy tying up or acquiring such minerals from Africa, and it is probable Australia will come to regret swapping so much of its vast mineral wealth for mere fiat currency.

Japan’s government geeked and let the Captain go, causing a furore at home over whether placating China was a good idea. You may recall that diplomatic relations became strained between Japan and the U.S. after elections of an anti-U.S. party last year partially in recognition of the fact that “geography is history;” it is a great deal farther from California to Japan than it is across the Yellow Sea, and considerable potential for money and currying favor with the Chinese are to be had from denying the U.S. fleet refueling rights and eventual takeover of some very nice ship yards and air fields which one supposes the Chinese could “borrow” in time of need. One almost pities Japan, caught betwen the current Washington regime’s failure to back allies and emerging Chinese aggression. “We’ve just watched the Chinese attempt to manage a dispute and they showed they would ratchet up the pressure and bully their way through a problem” commented a spokesman for the CFR.

Zhong Yongsheng, a university professor in Beijing commented: “This time China’s stand was very effective. This is shock and awe for those Southeast Asian nations that have territorial disputes with China.” “Shock and awe” isn’t a casual expression; it has specific military implications. “The gaming between China and Japan will be a protracted war,” purred Yi Tianfeng, a political scholar with Fudan University…and he may well have meant it literally. Imperial ambitions are hard to set aside once roused, and the Chinese resent a small incident during the Second Sino-Japanese war. I don’t know what those involved call it, but we refer to it as “the Rape of Nanking.” Aggressive nations never really change their national character and a great many countries remember that Japanese troops behaved very badly during WWII — and the Chi Coms have not been the most genteel of adversaries, either, as our oldest members, who fought in Korea, remember well. If actual hostilities break out this time Japan will be out-manned, out-gunned, and out-bankrolled. China is making demands to restrict shipping of various sorts in the South China Sea, which could be for several reasons, including arrogance, seeing what they can get away with, or future conquest.

Japan has real problems, here. Cessation of trade would be a serious blow to Japanese manufacturers, Japan is in the 20th year of almost no economic growth, and purchases by China of a large number of Japanese Government Bonds recently forced the value of the yen up — and increasingly advantage is held to lie in having one’s currency undervalued. Japanese are protesting openly about large land purchases by the Chinese, and it is improbable that the Japanese government will respond as Brazil did some months ago by nationalizing foreign-held land. At present Brazil is unlikely to be invaded by China, if only for logistical reasons.

China has the means, the motives, and the opportunities to gulp down several hunks of prime real estate, as well as difficulties brought about by too many Yankee dollars, too much unneeded expansion, their own probable real estate bubble, and the precarious state of economies worldwide. The reestablishment of the Greater East Asia Co-Prosperity Sphere, even if they call it “Asian Solidarity,” bodes well for no one except the Chinese, but a swift, victorious war without retaliation must look attractive. If China gets what it wants it can scale back and take a breather. One of the biggest advantages of underdeveloped nations is the ability to go on hold and just herd goats and plant rice by hand. The U.S. has lost that advantage since 85% of the population now lives in cities and only 2% is engaged actively in producing food.

We don’t like to think about war. We deal in macroeconomics here, so we could settle for disentangling our finances from Chinese companies on the single ground that an outbreak of war would likely cause stocks in Chinese enterprises to plummet, with perhaps a fleeting thought that in times of conflict foreign investments tend to be nationalized. Boots on the ground are a compelling case for ownership. Without succombing to total paranoia we could ask ourselves how we and the world in general would react if China retook Formosa and stationed a sufficient number of naval vessels to hold the Senkaku Islands, in easy striking distance of Japan and other bordering nations.

What would there be to do, bleat indignantly, “Give those back?!”

I don’t know how to ask, “Who’s going to make us?!” in Chinese, but Wen Jiabao does. Russia? Why? Russia doesn’t want to see its ancient enemy grow stronger, but why would the Bear be willing to take on the Dragon over the South China Sea? The U.S. is broke, fully extended militarily, lacks the will to fight another war, and I think is most unlikely to honor ancient pledges to South Korea, Taiwan, and Japan. We might be able to scrape up a defense of the Philippines, because if we don’t the way is cleared to Hawaii and the West coast.

If what we are seeing is the rise of Asiatic adventurism, we’re still dealing with the same geography with the same bloody history. Wake, Midway, the Solomons, Iwo Jima, the Coral Sea…

Sober regards,
Linda Brady Traynham
Whiskey & Gunpowder

October 12, 2010

Asiatic Adventurism, Part III was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

China isn’t taking kindly to making its products less competitive by adding large tariffs (any more than it does to demands that it revalue its currency), and the very rapid reply to Mr. Obama’s U.N. meeting and the new house bill was to strike swiftly at major US manufacturers. We have to admire their style, none of that tough talk stuff, a simple, polite, “the Chinese government announced Sunday (Ed. Note: a week ago) that it is launching a probe into (the) possibility of the U.S. dumping auto parts and chickens on the Chinese market.” Those in the know had no difficulty reading that as “We have Tyson Foods, Pilgrim, Goodyear, and Cooper Tire & Rubber in our crosshairs, and that’s just for starters.” Somewhere here I had a dignified retort that adjusting the exchange rate by 20% would drive many Chinese firms out of business, which certainly makes sense on the margins they’re working on. The Smoot-Hawley Tariff Act of 1930 raised import duties to record highs and was a large contributing factor in the length and depth of the Great Depression. Protectionism never works out the way proponents think it will.

There are those saying “there, there, now.” “Michael Strauss, chief economist with Commonfund, a money management firm based in Wilton, Conn. said there is not going to be a repeat of the mistakes of Smoot-Hawley. Strauss said both the U.S. and Chinese are smart enough students of economic history to know that the last thing the world needs now is for arguably the two most important economic powers to turn a spat over tires and chickens into something that could derail a global rebound. ‘This is not that big of a deal. You get these battles once in a while and they pass. This is not reminiscent of what happened 80 years ago. Deep down, the U.S. and China know that they need one another. There’s going to be more negotiation than retaliation.’” Right. Now, about the chicken parts and the auto parts…

CNN caroled cheerfully, “But at least one economist thinks cooler heads will eventually prevail and that the brouhaha over tires won’t lead to the China and U.S. levying more tariffs on other goods.”

Kurt Karl, the Chief U.S. economist with Swiss Re weighed in with this opinion: “One would hope we can avoid more of this. There is no positive side to raising tariffs.” “Mr. Karl isn’t too concerned that China would dump Treasurys. He argues that would be the equivalent of China shooting itself in the foot since it would further erode the value of its holdings. Nonetheless, Karl does worry that China could retaliate against the tire tariff with tariffs of its own and even more government subsidies of Chinese manufacturers. That could make the trade deficit worse. And that’s especially true with China since it is also the largest foreign holder of U.S. Treasury debt, owning about $776 billion of Treasurys as of June. If the Chinese stopped buying Treasurys (sic)– or worse started selling them en masse — it could have a catastrophic effect on the dollar and the nation’s fiscal state as a whole.”

Sometimes I wonder if the current government has any inkling that foreigners aren’t just Americans who talk funny. US business can be cowed by threats of higher taxes, Cap & Trade, and Card Check, but when China gets upset it invades Tibet, slams into Japanese ships, and puts over a thousand missiles in the Taiwan Strait. There is a much, ah, closer relationship between business and government, and I rather expect that Beijing will do far more to protect their companies than the Demmies will, particularly companies without Union labor. The whole pie in the sky concept is that tariffs will change the balance “so that U.S. tire makers can compete more effectively with cheaper tires imported from China.” It doesn’t work that way. The reason Americans cannot compete are excessive wages, distrously high taxes, devastating regulations, the cost of the Green dreams, and protection of favored groups, concatenated over decades.

Here’s an interesting slant: “It’s not uncommon for the government to side with certain industries to protect American workers,” said Keith Hembre, chief economist with First American Funds in Minneapolis. “These tariffs wouldn’t be happening if the unemployment rate was substantially lower.” Huh? The tariffs were imposed because unemployment is high? People without job will be better off if prices go up? Oh, silly me: the expectation is that rather than paying higher prices for Chinese enterprising Americans will go in competetion with dollar stores and Wal-Mart.

Another fellow with a good grasp of the obvious: “A trade war would be very detrimental to the U.S. and the global economy,” said Michael Pento, chief economist with Delta Global Advisors, Inc., a money management firm. “We should have fair, open trade. But our banker right now is the Chinese, and it’s best not to bite your banker’s hand.” The government’s idea of “fair, open trade” being for the Chinese to make less money.

The backroom boys understand rough and tumble Chicago-style politics, but they are woefully ignorant of the world of diplomacy and business. Sensible observers realize that a trade war would stifle any little seeds that are beginning to sprout and assist the slide straight into deeper depression.

Tariffs and import duties have three purposes: to make money for the government, as punitive measures, and — in theory — to make imported goods align more closely with the price of domestic production. The retaliatory use was demonstrated when Mr. Obama and his friends smacked China with an additional 35% tariff starting about now on small tires. (A year later the penalty portion of the tariff will be reduced to 25%, and even lower the third year before being phased out.) Never mind the double talk, the problem was that China had captured 15% of the market and a major U.S. tire manufacturer had closed down a plant, firing 5000 voters. The day the news came out tire managers raised their prices immediately, which makes perfect sense to anyone who understands economics and opportunity. Between then and September 26th store owners were reaping the windfall profits that the government will appropriate from now on. The result of the grandstanding was punishing American consumers, not the Chinese. American tires do not look more attractively priced, Chinese tires just cost more.

Politicians are forever attempting to rig the game, and it never works. China can make a short bathrobe and market it through Wal*Mart for four bucks. The thought is that by levying import duties, the price of the Chinese version can be made to approach the cost of an American-made robe, which we will pretend is $12.00. (It isn’t, of course. Be prepared to spend at least $80 to $125 for a cuddly bathrobe.) In order to make American goods priced competitively, a duty, or tariff, of 200% of the retail value would have to be imposed. Chinese eat very funny things and have odd writing, but that doesn’t mean they’re dumb enough to attempt to sell a unit at three times the original costs and projected profit. The upshot is whatever Third World nation was making fuzzy bathrobes quits or markets them elsewhere, American robe manufacturers don’t sell any more, and most of us do without a new robe or go raid Good Will. In addition to which, the government does not making an enormous profit in return for permission to market wares here. Governments are very bad about not recognizing that it is rarely possible to make any of us behave in ways deleterious to our own best interests. The Chinese won’t sell at a loss, must of us will do without before we buy $175 bathrobes, no tariffs will clank into government coffers, and union labor will continue to price itself out of business.

If there is anything a moribund economy does not need it is a trade war. What it needs is conditions favoring job creation and renewed consumer spending. Government is desperate, however, since the last figure I saw indicated tax revenue collection is down 25%! A whooole lot uh spendin’ ain’t goin’ on. Those in charge of the circus on the Potomac don’t get this. “The trade deficit with China has soared in recent years, hitting a record high in 2008. This is a concern for obvious reasons: If we continue to buy a lot more from China than we sell to them, more U.S.-based manufacturing jobs could be lost.” 2008 was an Obama ago, and US manufacturers do not go out of business primarily because of cheap imports, although that hit the tire people hard — and deservedly so. U.S. tires were more expensive and no better. The only change is that the $50 Chinese tire now costs $80, but we’re still buying Chinese. True, the government rakes off the tariff, but that’s an expensive short-term fix.

This is going to have to run to a third segment in order to discuss current adventuring by Asiatics and how it is that the Chinese really are able to set the value of their own currency, as unlikely as that sounds to those of us who believed ForEx had something to do with it. Until then, if you want a high ticket item from China it sounds wise to pick it up now.

Regards,
Linda Brady Traynham
Whiskey & Gunpowder

October 8, 2010

Asiatic Adventurism, Part II was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Mr. Obama fired the opening salvo last week, urging Chinese Premier Wen Jiabao “to speed up the revaluation of the yuan, telling him in a two-hour meeting at the United Nations that the slow pace of reforms was affecting both global and U.S. economies.”

I’m going to give you a lot of quotes in this article because they are simply too hilarious to pass up. According to CNNMoney, “Lawmakers say China’s currency is unfairly cheap and passed a measure Wednesday that opens the door to tariffs that aim to help U.S. companies compete. The legislation, which authorizes the Commerce Department to impose duties on imports from countries with undervalued currencies, passed the House of Representatives by a vote of 348 to 79. The Senate, however, is not expected to take up the issue until later this year.” The article continues with a jibe at Republicans: “The bill got support from both sides of the aisle, a rarity in recent sessions, with Democrats framing the legislation as a jobs issue,” and follows immediately with a magnificent bit of economic insight from Representative Xavier Becerra, Democrat, of California: “We can talk, or we can act. International trade is a high stakes, cut-throat business, and every time we simply talk, the other side acts, and every time they act, an American loses a job.” Perhaps he should simply stop talking?

Honestly, I had no idea how incredibly funny left wing fiscal policy can be. Consider this gem: “China said this year it would allow its currency, the yuan, to trade in a wider range against the dollar. But the currency has scarcely appreciated since then, inflaming critics who charge the undervalued yuan helps steal U.S. manufacturing jobs.” No explanation is given for how the Peterson Institute of International Economics came up with a figure of a 24% discrepancy in the relationship between the two currencies, but the gang on the Hill believes it. Funny me…I thought foreign exchange rates were set by a bidding process on the FOREX. If all we have to do is declare the value of our currencies, what’s the problem? A simple Congressional resolution would do it. “Resolved: henceforth the US$ shall trade against the yuan at a ratio of 3:1 instead of 4:1, Sincerely yours, Congress. P.S. We really mean it.”

Let’s make it even simpler: how many dollars does it take to buy a barrel of oil? How many yuan are required? That shows us the Arab world’s opinion on the relative values of the currencies, if no one wants to believe world currency exchange rates. Obama’s position is claiming “undervaluation” drives up the price of our goods in China and makes Chinese products cheaper in the USA than they would be if a “fair” exchange rate were used. Okay, back to my complex economic model, compare the price of any Chinese export to America and the same item sold in any two other countries chosen at random. Do the Chinese price items differently according to the market or the currency used? Could the same sum not buy an identical amount of the third parties’ currencies? If so, then, yeah, the Chinese are probably playing dirty pool and our choice is to stop buying from them. If not, then this is just another ploy to raise revenue and stand up nobly declaring Demmies are the “working man’s” friend. CNN proceeds to this gem: “The House vote caps years of frustration for lawmakers as the United States has continued to shed manufacturing jobs, and promises of reform from the Chinese have failed to result in policy changes.” Wait a moment…didn’t we just read that China promised this year to reevaluate? Has anyone other than the current crop of solons carped about this? Seems to us that Reagan, Bush, and Clinton were all in favor of increased trade with China. We’ve been working on this since the time of RMN. Other than one on one I simply do not see how China can change the perceptions of currency traders and foreign nations concerning the value of the yuan.

Here is a real prize from Tim Ryan, D-Ohio, demonstrating a terrific grasp of the politics of envy and pipe dreams: “If this risks upsetting the People’s Republic of China, so be it…Whether you’re a Democrat or a Republican, a liberal or a conservative — millions of good-paying jobs have been lost and hundreds of thousands of families across this country have suffered as a result of China’s unlawful trade policies.” No, Tim, we cannot risk upsetting China lightly, partially because we owe them three-quarters of a trillion dollars. Far more to the point, those millions of good-paying jobs were not stolen by China, they were driven out of America by increasing taxes, regulation, and legislation. The current economic mess stems from those and government interference in banking, devastating “green” demands, and Bernanke’s policies.

The Senate will not consider the issue until later in the year, which isn’t going to keep China from reacting quickly. That great economist, Charles Schumer, D-NY, pontificated, “We must take decisive action against China’s currency manipulation and other economically injurious behavior. (Ed. Note: unspecified) China is merely pretending to take significant steps on its currency,” Schumer said. “This sucker’s game is never going to stop unless we finally call their bluff.” In my experience, that is the sort of rhetoric heard on school grounds and probably between Crips and Bloods with vocabulary adjusted suitably to include “diss” and references to the opponents mothers. It is not the language of diplomacy or economics, but it is pre-election posturing. The proponents are hoping to make some money (the government keeps tariffs), but this is politics, not so pure, but simple. You have been told that you cannot judge a book by its cover, but in very large part you can make a quick decision on the advisability of any given bit of legislation by seeing who supports it. Don’t agree if the answer is “…trade groups and unions cheered the bill’s passage. AFL-CIO President Richard Trumka issued a statement of support and Scott Paul, the director of the Alliance for American Manufacturing echoed the message. “This is one of the most pleasantly lopsided trade votes in recent history,” Paul. “Voters are mad and Congress is finally responding.” I particularly like Mr. Paul’s statement. The Statists have finally figured out what the TEA Party is all about. Voters aren’t mad about runaway spending, higher taxes, higher costs of living, socialized medicine, and increasing regulation, by golly, we’re feeling menaced by the Yellow Peril, and it’s about time Congress did something about it. I feel that way every time I walk into my friendly “Everything $1.09″ store. Dirty bunch of commies, taking advantage of me that way.

I’ll close this preliminary discussion with another quote from the entrepreneur in the White House: “The reason I’m pushing China about their currency is because their currency is undervalued,” Mr Obama orated. “…people generally think they are managing their currency in a way that makes our goods more expensive to sell there and their goods cheaper to sell here.” He added, further, that “the resulting imbalance is a major factor contributing to the U.S. trade deficit.” I stopped at this point to take dear Charles to task, chastising him fiercely for having become a bore who drones on endlessly about how the Chinese are manipulating the currency exchange, threatening working class Americans, and destroying our way of life by offering four dollar bathrobes. Charles just grinned, of course, knowing full well that neither one of us had discussed China other than to speculate on the possibilities of collapsing bubbles and whiffs of rebellion in the air.

I’ve started with the light side because all of this is funny as indicative of what passes for thinking amongst Statists. Want more money? Pass another tax. Election prospects looking grim? Whip up the populace over an outside threat. Next time we’ll get into psychology and the real effects declaiming to the fans will have on the world you and I live in. They aren’t pretty, and it is a lot easier to start a war than it is to stop one. Mr. Obama is in dire need of a swift, victorious war, but this isn’t it.

It doesn’t help that China is overreacting, too, starting with accusing us already of “dumping product” on the Chinese market, in particular auto parts and chicken parts. I was under the impression that our primary poultry export to that portion of the world is the feet of chicken, which are considered a delicacy there and good for nothing other than grinding up for pet food after simmering to get a little coloring for chicken broth in the USA.

When the Chinese fling chicken feet on the table, I think they’re serious.

Regards,
Linda Brady Traynham
Whiskey & Gunpowder

October 6, 2010

P.S.: If you really can’t wait until next time and/or do not know why we do not wish to engage in trade wars, it seems to me that my discussion of the tire fiasco is archived under “Smoot Hawley Must Ride Again.” The reasons haven’t changed.

Asiatic Adventurism, Part I was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Michelle Obama has decided that it takes a pack of lawyers, several bills from Congress, and lowering restaurant traffic and profits to feed a child in public or frequently “free” lunch at school. She is on a crusade against traditional menus which contain foods children like. Kids prefer familiar foods, primarily those that are easy to chew: hot dogs, spaghetti, chicken nuggets, macaronni and cheese, hamburgers, and grilled cheese sandwiches. Never mind that, and never mind the fun we’ll have attempting to placate kids who were looking forward to greasy nuggets and refills on their Cokes with skimmed milk and carrot and apple slices, and smaller portions, to boot; she knows best.

CNSNews.com reports that “In remarks to the National Restaurant Association in Washington, D.C., on Monday, first lady Michelle Obama said American restaurants should offer and market more healthy options to children on menus and make it easier for parents to select the best meal for their child.” You cannot force restaurants to sell things, one meaning of “market,” and nowhere in the Constitution does it say that corporations are obliged to spend advertising dollars on government propaganda. Will that become a forced choice, like health insurance? She insists that every restaurant must “offer healthy menu options and then provide them up front so that parents don’t have to hunt around and read the small print to find an appropriately sized portion that doesn’t contain levels – high levels of fat, salt and sugar.” With the literacy rates falling I can see that finding a section marked “Kiddie Choices” or “Little Wranglers” would be difficult. One shudders to think what her idea of an “appropriately sized portion” on a child’s meal is; will later legislation require menus divided by age or pounds, such as “suitable for ages three to four,” or “calculated to provide one-third of the nutrients necessary to sustain a 43-50 pound body daily?”

Former lawyer Michelle says condescendingly that “These choices have to be easy to make,” which is statist speak for restricting them. The little brats can have tofu, yogurt, TVP, salad without dressing, water cress, and watery milk substitutes and eat them or stay hungry — and this mother’s opinion is the kids will prefer hunger to celery and carrot sticks. Michelle insists that “restaurants should offer lower-fat fare and that high-calorie and fatty items such (sic) French fries might require a special order.” Amazing. A special order, at a marked up price, to get the kid some fry-fries? Parents would simply order fries on their own, insisting that they were for personal consumption and sneaking forbidden items under the table when the Food Police weren’t looking. Madame Obama “implied that restaurants are not contributing enough to the cause” of her drive to eliminate childhood obesity in this generation. She brought up the immensely unpopular ObamaCare bill which mandated — effective upon signing — that restaurants list calorie counts on menus and proclaimed that “if restaurants market healthy food properly, it (sic) would create demand for it.” Amazing what they teach in law school, isn’t it? “The Field of Greens: if we serve them, they will come.”

“Even if we give parents all the information they need and we improve school meals and build brand new supermarkets on every corner, none of that matters if when families step into a restaurant, they can’t make a healthy choice.” SHE has to give us the information we need? SHE has to change school menus to suit her choice — and increase waste? Parents won’t be able to make “healthy” choices unless SHE bullies restaurants into restricting their offerings? The government is going to challenge Kroger’s, HEB, and Wal*Mart building supermarkets? Michelle serves $400/pound beef to numerous guests several times a week, and has had seven vacations already this year. Michelle and Barack live it up royally, although who knows what Malia, Sasha, and Bo get fed. To most families, going out other than drive through is a rare treat and getting rarer. High ticket restaurants are still doing fine — in general — but the receipts at more expensive chains like Olive Garden, Outback, and Red Lobster are falling. Middle America is hurting, and every last one of those frivolous demands will be paid for by price increases and decreases in quality and/or quantity. Imagine the cost and effectiveness of POP (Point of Purchase) materials encased in glossy plastic.

America’s self-chosen menu planner said her “Let’s Move” campaign is working with local officials in states around the country to “reward” (emphasis mine) restaurants that provide healthier choices, including “agree(ing) to serve smaller portions and promote more nutritious options.” “Together, we (she, the National Restaurant Association, doubtless a new Food Czar, and Congress) can help make sure that every family that walks into a restaurant can make an easy, healthy choice.” Appetizing and filling are too much to ask, apparently. Together they can make sure that restaurants lose money and adults and children dread going out to dinner or resent not being able to due to increased prices and restricted choices. Menus matter. I stopped going to Outback when it stopped serving rack of lamb and outlawed smoking even in the bar. Imagine trying to order a something a sullen child will eat at Olive Garden other than the “free” cheese biscuits.

Michelle and Congress do not worry their heads about the cost of reprinting all those menus, of course, or revising routines, supplies, training (and materials), and choices because they don’t know enough about how businesses operate to do so, and if they did, well, “it’s for the children.” They don’t know that every suggestion goes through extensive testing for customer approval before being adopted, and clearly do not know that the sliced apples would have to be treated with Fruit Fresh or lemon juice (making them even less palatable) or sliced individually for each order, increasing personnel costs, for the simple reason that apples turn brown quickly when exposed to air. If all restaurants complied the impact on Sanderson Farms, IHOP, Mrs. Baird, and other current eateries and suppliers could be significant.

It would be easy to chide, “Now, Mrs. Traynham, what’s the harm of working towards ‘healthy’ choices on menus? Nobody said they couldn’t still offer current choices.” Yet. Even granting the “healthy” stipulation, it is not the proper business of government to dictate what will be offered in restaurants. (I can think of precisely one possible exception, the required “tourist menu” in Italy which mandates offering a modestly priced meal complete with salad, pasta, a glass of bad wine, and a very small portion of meat at a state-set price. Most restaurants are glad to oblige, and those which are not offer french-fried baby goldfish and kidneys!)

We’re talking major disruptions in several areas which will lower profits and increase waste from unordered food and uneaten food — which cannot even be sold to hog farmers any more. Some of us are concerned about “peak food” and the EPA mandate that will drive ethanol percentages up by half, thereby consuming 45% of our corn crop. Vegetarians might be pleased, but most parents, children, and restaurants will not be. The camel’s nose frequently looks cute, soft, and pettable as it thrusts into the tent, but almost overwhelmingly camels spit, bite, and kick. Once governments begin interferring, anything can happen. Why not outlaw Tony Roma’s and Rudy’s because they serve very fattening ribs, including pork, which is offensive to Muslims?

The devastating “Endangered Species Act” started with a sentimental gesture about Bald Eagles. This ploy may be aimed at more traditional restaurants, but it will spread to the drive-through trade, and their menus are not exempt from full caloric disclosure already. MacDonald’s just eliminated the one dollar menu, raising prices suddenly to $1.50. Imagine the forces it took to cause corporate America to make a decision like that…and I wonder if that is how they paid for redoing all of the menus and outside menu boards. Does Micky D’s need another kick while they’re staggering? This is no time to insist a Happy Meal contain foods David Copperfield wouldn’t want. Michelle lives in a world of $150.00 hamburgers and light snacks of caviar and champagne in campaign season ($400, signed hotel bill available) and is unlikely to know that an ordinary good hamburger is closing in on six bucks and the Angus burger is rising eight at Jack in the Box. A very meager “dinner and the movies” for a family of four burns through a Bernanke, and with fifteen million unemployed I keep expecting to see box office receipts sag. Oops! She hasn’t gotten around to haranguing movie theaters, yet.

In a world increasingly devoid of pleasures the “home ATM” generation took for granted, let’s not make life any more difficult for parents or business.

Regards,
Linda Brady Traynham
Whiskey & Gunpowder

September 16, 2010

Taking Over the Restaurant Business was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

What kind of jobs might those projects create, who could benefit, are any of the ideas themselves laudable, and what effect will they have on the economy and stock market if implemented? Is there anything in there which suggests going long anything other than concrete, asphalt, and steel — if those? Let’s not be pessimistic and partisan, here, let’s at least look at the man’s ideas before we bury our faces in our hands and whimper for our mothers and Lee Iacocca.

Railways. What railways, where, serving what purpose? Another Amtrak, perchance? If there be a bigger waste of transportation dollars than passenger rail, I don’t know what it is, particularly what is known as “light passenger rail” which is detested by all except those who have no intention of using it and those who think there should be rail transportation from Las Vegas to Los Angeles.

New commercial rail? From where to where to carry what cargo? It isn’t as though we are building a lot of new factories. 4000 miles of rail would cross the continent and go pretty much from New York to Florida as well. What do I know about trains? Quite a bit. I’m not 20 miles from Hearne, “the cross roads of Texas,” where all the moguls lived a hundred years ago because the rail lines East to West and North to South intersect there. We move lots of freight by train in Texas. Restoring American railroads for the transportation of freight would be a fine idea, since it is faster, cheaper, and more energy-efficient. It saves wear and tear on the roads. I’ve ridden one from San Francisco to Texas (miserably uncomfortable) and from Rome to Frankfurt (ditto) but choo-choos haul cars, oil, and grain just fine. Besides, I’ve read Atlas Shrugged at least two dozen times.

Rebuilding 150,000 miles of roads? He’s joking, right? Again, from where to where, serving what purpose? As of 2002 there were 42,793 miles of Interstate in America. At the current price of building roads most of the entire sum would be required to replace just those and the project would snarl traffic beyond redemption for years, adding to transit time, gasoline consumption, and road rage. If we figure a million a mile (read the road signs, people; that’s conservative) we come up with $42,793,000,000. Borrowed dollars. Plus cost overruns, no doubt. Still, they could recycle the expensive signs bragging about current “stimulus” projects…

150 miles of runways is an interesting project for those who don’t know anything about where airports are situated, zoning laws, public outrage, noise abatement programs, changes which would be required to terminals, and the government’s own quaint interference in almost everything. The “environmental impact studies” alone would be quite time-consuming. I can believe that Washington, New York City, Chicago, Denver, Atlanta, D/FW, HOU, and LAX would appreciate some more runways of a mile to three miles each but it would surprise me very much if even one of those cities had any idea where to put them, including Henry Cisneros’ disaster 30 miles out from Denver. If we start constructing new airports we’re talking real money, waste, and inconvenience.

Well…what about investing in Mr. Mowan’s Amalgamated Switching? Look at the wording again: “installing a new air navigation system to reduce travel times and delays.” Uh…the problem isn’t that pilots don’t know how to get from LAX to Hobby by way of Albuquerque, non-stop from NYC to SF, or even Love to CLL in a puddle jumper. It isn’t that new machinery would draw straighter lines through the sky to arrive at shorter distances from point A to various points B, C, and/or D. The very thought of reconfiguring all of the flight paths to accomodate new electronic gadgets (which might or might not work) gives me an even stronger urge never to get on another airplane as long as I live, and up until this point I was exempting private ‘planes, which will let me smoke. Unless everyone is flying on autopilot all the way, sooner or later some experienced pilots would end up on their regular routes and drop metal and people all over the landscape.

It would really help if there were anyone in the Cabinet who had ever run a simple household on an average American income and had learned to assess needs, set priorities, and work within a budget. But do let’s see how Mr. O proposes to pay for this: “Obama said the proposal would be fully paid for. In an earlier briefing for reporters, administration officials said Obama would pay for the program by asking lawmakers to close tax breaks for oil and gas companies and multinational corporations.” Whee! There is a wingdinger of an idea. We’ll raise costs for oil and gas companies breaking an immutable law of economics: you cannot make manufacturers and businessmen pay taxes out of their profits. The increased costs are invariably passed on to consumers or compensated for by moving to countries with friendlier business environments. That’s why the 2008 $2.25 quart jar of Hellman’s Mayonnaise now costs $3.95 and contains 30 ounces. The Oil and Gas people have already had leases cancelled and new vast areas declared off-limits for drilling, and face the same tax increases the rest of us do 1/1/11.

“But the JOBS, Mrs. Traynham! Think of the jobs.” Okay. What jobs? Heavy equipment operators. Probably some extra shifts pouring the rail (have you noticed the price of steel lately?), more Union jobs. Undocumented workers holding STOP signs at $28/hour. A few draftsmen and engineers. A few more people mixing concrete and asphalt. All of those people we see lounging along the road while a few others work, apparently doing nothing other than wearing day-glo orange vests and hard hats. None of those jobs are permanent, and every last project is subject to corruption and bid manipulation. When the project is finished, the job is gone — and the unemployment compensation begins. The only jobs which will remain long afterwards are government administrative ones. Look at government agencies which persist decades after the original reason ceased to be.

In May we took the Interstate from central Texas to Charleston, South Carolina. Yes, some of it — notably in Louisiana which has probably had to skimp following Katrina — had stretches in pretty bumpity shape. What impressed me most, though, was that not a quarter of a mile the whole trip passed without seeing at least one hunk of rubber thrown off a retread tire. That told me two things: the states haven’t got crews to spare to clear road hazards, and Americans are hurting. There are already more than ample funds allocated for roads (such as the forty-two cents a gallon tax on gasoline), and I think we need a good definition of “rebuilding.”

Permanent jobs are not based upon repairs or increasing unnecessary bits of infrastructure for the sake of appearing to be doing something and rewarding voter blocks. Lest you think I am a die-hard Republican, dear readers, I would feel exactly the same way had such projects been promulgated by Dubya, Ronald Reagan, Teddy Roosevelt, or Donald Duck. Bad economics is bad economics, and such proposals lead to increased joblessness, squandering resources, and reduced tax collection.

Instead of increasing taxes on the O&G people and multinationals and subjecting those of us who do the consumer spending to bigger strains on our checkbooks, how much of a “tax holiday” could we have for sixty billion? That has been suggested, and we wouldn’t have to borrow it, pay interest on it, or try to extort it inefficiently from the citizenry. $60 Bn imaginary dollars spent on make-work projects, filtered inefficiently through bureaucracy, won’t begin to get the stalled economy rolling, but $60 Bn in the hands of employed consumers and employers would be spent, re-spent, and spent again many times, and taxed on most of the transactions.

Put a moratorium on withholding, extend the Bush tax cuts permanently, don’t bail out anyone else, get serious about cutting “social services” drastically, and promise the American people — meaning it — that no taxes will be raised for two years at any level, and let’s see if Reaganomics won’t work once again with even that much stability and access to captal. Only this time let’s don’t spend the gusher of revenue that comes in, stick the surplus in a real Social Security fund Congress can’t touch. We have plenty of taxes already to run more government than anyone needs and far more than we want.

If we really want to get serious before nothing will work, over the next two years reduce government jobs by a minimum of 25% and reduce the salaries of the rest of the 40% of those employed who work in government at some level (either as a sub-contractor or as an almost unfirable direct hire) to prevailing market wages in the private sector. Tell everyone under 45 the truth, that SS is just another tax and to make better provisions for their own futures. Raise eligibility age, end SS for any reason other than actual retirement after having qualified, and no more increases for anyone, anywhere, until the budget balances. Life is tough all over, people. Get used to it. Get rid of everything unreasonable and unnecessary from the Department of Agriculture to the Department of Education, to Medicaid to wage and price controls…and stop foreign aid and close and defend the borders.

Well, yeah, we’d have riots in the streets over welfare and other “entitlement” programs, but at the rate we’re slipping into third world status we’re going to have those anyway because they cannot be paid for much longer even with unlimited imaginary money.

Regards,
Linda Brady Traynham
Whiskey & Gunpowder

September 7, 2010

Job Creation, Obama Style was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

How many times do banana republics (and others) have to “nationalize” foreign investments before it seeps into the less avaricious portions of investors’ minds that perhaps it isn’t a good idea to start businesses, construct factories, build up the infrastructure, and hire and train locals while trusting generals in comic opera uniforms to abide by contracts and their pledged word? Okay, so Brazil’s top contender for Presidente is Dilma Rousseff, and elections are a scant two months away, but her gender and wardrobe aren’t as important as her ability to employ the politics of envy in order to play to her “something for nothing” crowd and please friends in high places.

The more I think about the timing, the more nervous about Brazil I get. What are those people thinking? Do most of the people in Brazil own land now? No. Were most of them in line to benefit directly from jobs with foreigners? No, but there was big money on the line for the top 5%. Was there a slight chance that small amounts of reals from enormous taxes and expenditures might filter down to those cheering now? A slight one. Does anyone care about the peasants? Only as voters and if they had any sense generals and juntas wouldn’t let the peons vote. Mexico has done quite well for decades with a variation on that theme. The ones with the most to gain, are those who already have the most, which is the way the world usually goes…which is what baffled me. Unless they think they can raise their own financing, why not hold off for a bigger pay-off?

What seems to me a bigger threat is the likelihood that politicos in Argentina, Belize, and Nicaragua might be inspired to go and do likewise, and some of us here in this very Bar have money on the line scattered around Latin America.

Brazil is an enormous country, rich in mineral deposits, with the potential to develop immense agricultural acreage at the optimal point in history when greatly increased populations are beginning to stagger into the late nineteenth century in terms of sufficient income to purchase more and more highly prized foodstuffs…which isn’t going to make the least bit of difference so long as the political structure in Brazil remains a combination of feudalism and socialism. One expert estimates that between 2006 and 2008 alone foreign investors dropped $2.5 Bn on land. That is certainly a nice chunk of money to confiscate by, um, repatriating the land, but the thought that anyone other than politicians and whatever the Brazilian equivalent of the haciendado class will benefit is risible. The rich will get richer, the poor will get poorer, and Brazil can sit there until the system changes…if it ever does.

Those enormous deep water oil deposits off the coast? Any country willing to confiscate foreigners’ cane fields won’t have any difficulty with the concept of nationalizing the rigs or 90% of the output, although I wouldn’t bet on Brazil’s ability to hire qualified personnel to keep the oil flowing afterwards. Brazil just turned off the money spigot and will learn that a big slice of pie is vastly superior to raw ingredients on the counter, no cook, and no oven. They will find out that “Brazilian land for Brazilians” means the status quo for most of the population and makes as much economic sense as doing their own dental work at home with nothing more than a rock. I don’t know what the average per capita income is in Brazil, but I doubt that it is much. Chuckle. I doubt that anyone is worrying about the peasants. (The things I do for you people! Wanting to know the precise term, I started Googling, and ended up on a terrorist site! For the record, amongst those who write in English the preferred term is “landless peasants,” not “peons,” or something quaint in Portugese.) To nobody’s surprise, half of all the arable land in Brazil belongs to 1% of the inhabitants, many of whom speak Deutsch.

Those who are not in the business have no conception of what it takes to turn scrub land into even pasture land, far less fertile fields. We spend a lot of time eying Potash here in the Bar, although it has certainly lost a lot of luster with me after the Brazilian ploy. From long experience, my surmise is that land currently being prepared for cultivation in Brazil will revert to scrub land in short order; I am quite certain that Brazil has vegetation similar to our smut grass, cacti, cedar, mesquite, broomweed, and others which engulf untended land in a very few years and return it to the wild within a decade or so. It is a constant battle to keep such pests at bay, and all of them devour nutrients and water. The mess over the sacred Cedar Waxwing in Central Texas placed a moratorium on cedar abatement programs for about a decade, and hundreds of thousands of acres are now covered thickly with cedar (which led to immense increases in allergic reactions) and mesquite. It turned out that Waxwings can live very happily many places and most of them migrated, I suppose because there isn’t nearly as much insect life left. Insects like crops and livestock, and there isn’t enough grass left to feed many cows and Boer goats.

Sure, beef is up and the demand is up, but range land requires fertilization, control of brush and weeds, and planting better quality grasses chosen to thrive in a specific climate. Crop land requires fertilization, control of brush and weeds, irrigation in many cases, erosion control following plowing, planting, cultivating, harvesting, and off-season maintenance. The last I heard the topsoil in the jungles which are being cleared is so thin that perhaps two crops can be grown before it reverts to wasteland. Land that is nourished and cared for needs to be planted in rotation and allowed to lie fallow on schedule. Unless the farmer puts as much back into it as he takes out, yields diminish rapidly — and then there are the Greens howling against pesticides, insecticides, herbicides, and artificial fertilizers.

The sub-equatorial climate of Brazil permits two crops a year. That may double the output, but it also doubles all of the ancillary costs other than land purchase. A diligent man can raise enough crops on an acre of land to feed a family…but I wouldn’t hunt for tenant farmers in the cardboard shacks crowding the cities. Perhaps 20% of the cane currently under cultivation is on land owned by foreigners, but can the indigenous personnel left continue operations? Ex-pat labor isn’t dumb, and the loss of income may well lead to increased anger against foreigners and/or an increase in activity of The Shining Path sort. One traditional solution is enslavement of the resident Indians.

Brazil will find it cannot go it alone. It simply does not have the know-how, the personnel, or the investment capital, and it doesn’t have my sympathy, either. “Brazilian land for Brazilians” now costs a great deal more, but the source of revenue dried up, and their rulers did it all by themselves.

I have little sympathy for Agribiz and they will get off quite lightly losing their investment at this stage — unless they know that there are always “exceptions” in dictatorships that create Blagojevich-type expenses, and doubtless they can hire a native front man. I rather think it is probably quite easy to work with Hugo Chavez if sufficient money changes hands under the table and on paper a firm is owned by Garcia, Rodriguez, Chavez, and Hernandez. Oh, sorry…that’s one of the loopholes Brazil just closed. I’m wondering again how those who made a hostile bid for Potash are feeling about now, because the premise was that Brazil would become the new bread basket of the world and require lots of it…

I’m glad that I passed up a rather attractive-appearing silver mining operation elsewhere in Souse America because between drug wars, the occasional coup d’etat, manana, and the chances of nationalization that didn’t sound like a good place to send my precious money even if the proffered rewards at present are quite appealing. I wouldn’t invest in a casino in Cuba, either, if an opportunity arose; any bunch that can run an excellent agrarian system into the ground isn’t my idea of a good candidate to provide a thriving industrial economy, although I admit cheerfully that no one in Cuba has nationalized American hotels and casinos in over fifty years, but only because Fidel and Raul have been in charge and don’t hold with Americans and their evil activities. Brazil didn’t even manage to attain a good agrarian economy.

Maybe I just need to get with the program…”American land for Americans!” We could nationalize everything that belongs to foreigners, particularly the Chinese, Japanese, and others holding large amounts of our debt, and proceed to “USA buildings for USA-uns.” Grab the cash, the inventory, and subsidiary holdings, and then take back the land given to Indians. Gee, maybe we could even repatriate all the land suitable for agriculture and oil leases the Feds have grabbed…”40 acres and a mule,” anyone?

Regards,
Linda Brady Traynham
Whiskey & Gunpowder

August 31, 2010

“Eet Eez Ze Costom of Ze Contry, Signore” was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Reports are that economic “growth” slowed from 3.5% to 1.9%. Just off hand can any of you think of anything that is growing other than the deficit, regulations, politicians salaries, and voter outrage? If we take those numbers as representative of the full faith and credit of the United States you may choose to view that as a modest 1.6% decrease which shouldn’t bother anyone. Not so for those of us who turn numbers into percentages automatically. That is a drop of over 40%! (40% would be 1.4, 50% is 1.75%, and anyone who really cares can work out what to do with the remaining .2, which is 1/7th of 40%…Contrition; not everyone shares a passion for arithmetic, which is a pity because that subject is a great deal simpler than Boolean Algebra and far more useful.) That certainly sounds like an additional painful pothole in “just another bump in the road.”

Now to the report which should cause rejoicing in the streets for those not part of management of big corporations, Bankstas, and government. As a prank perhaps we should send Turbo Timmy and Helicopter Ben recipes from Gilroy, California, the Garlic Capitol of the world, because the vampires of stimulus, taxation, and “quantitative easing” are surely recoiling in horror over learning that 12% of manufacturers/corporations/retailers are raising prices, encouraging the Inflation Monster. Far, far worse from their viewpoint, however, twice as many, 24%, are lowering prices. “Why?” should be obvious to anyone other than a Keynesian: because their goods are competing for ever-scarcer dollars (Timmy’s fine product being locked away in banks and what I can only describe as money-laundering schemes, and the terrified populace is loathe to part with their greenbacks), and if businesses want to sell much they have to slash prices. I keep reminding everyone to peruse the classifieds to see what luxury goods are real bargains and what sectors are down (in the last two years, bass boats, farm machinery, vehicles, cattle, horses, trailers, motor homes, hay, and building materials, among others. Today Charles picked up a hundred sheets of brand new plywood at two-thirds retail, no sales tax!)

This is marvelous for the rest of us — at least those who have some cash set aside for buying opportunities, upgrades, and replacements. There is no reason to suppose other than very poor results from “Back to School” sales, Hallowe’en, and Christmas. “Tax Free!” weekends never do more than shift timing on purchases. Those, combined with possible higher-than-usual end of the year selling for tax reasons* should cause a giant “Ka-WHUMPF” of collapse in January, just in time for the reality of “Health Insurance Policies are Taxable as Income and Your Taxes Got Raised, Too” to deliver a giant dose of reality to Main Street and the ‘burbs.

It gets difficult to keep up with all the dangers in this video arcade; have you thought about the coming crash in the commercial real estate market and the fate of the bond market, recently, to say nothing of increasing hostility from China? There are a lot of loaded freight trains headed into the yard at full speed and Timmy and Benny are pulling all the wrong switches. If you have been following the advice dispensed for some years from the Agora crew, if only the freebies from The Daily Reckoning, Gary North, Whiskey & Gunpowder, and Taipan Daily, you should be in good shape to take advantage of many of the disasters headed our way.

“Mrs. Traynham! You ought to be ashamed of yourself for rejoicing over coming catastrophe!”

Really? Do you think so? I didn’t cause any of it and my reasoning is conservative and flawless. Until Mr. Market gets his several cwt. of flesh he isn’t going to calm down; until taxes are lowered and regulations scaled back we aren’t going to see job creation or start-up operations; leaner corporations are learning happily exactly how dispensible a lot of former employees were and eyeing others thoughtfully in terms of pink slips; until the “off budget” “entitlement” programs are scaled back vigorously there is no way out of the dilemna; and until all of these things happen at once, the USA will continue to skid down the economic slope increasingly faster. Some of us have been insisting that mixed inflationary and deflationary results are inevitable all of this century, and Howard Ruff and others began several decades ago.

Far worse times for all save the “elite,” are inevitable, so take advantage of the process where you can.

Again, begin preparing now by reducing expenses to compensate for known increases which will reduce discretionary income severely in 2011, including withholding on the value of your employer-provided health insurance plans, higher income taxes, and capital gains taxes increasing over 50%. Replace or repair household items that will hurt far more a year from now. My dishwasher died at this opportune time; how old is your hot water heater? Your water softener system? Given our demographics at W&G a fair number of you are homeowners, and a reasonable surmise is that most of you aren’t stuck in upside down mortgages. Putting money into a house you will lose would be most unwise, but if you’re perhaps ten or twelve years from paying off a mortgage at rates that aren’t too painful the rest of this year will be an excellent time to take care of any deferred maintenance and make modest upgrades.

My reasoning is that you’re likely to be in that house for a long time since the market is bad and going to worsen and demands that at least energy “efficiency” be brought up to code before you can sell or even rent are going to catch most people unawares and dead in the water. Replacing windows and adding more insulation, alone, is a very pricey project…and what if the Inspector demands a new roof and appliances to say nothing of rewiring a house? Codes change all the time, and so do requirements. If you have to tear anything apart for any reason, use that opportunity to put it back together right. The same holds true for car repairs; ask your mechanic what else could be replaced economically while he has your car in a bunch of pieces.

Odd how events favor those who think long term and expect the worst…when several tons of tree fell across the ranch house last year in a five-minute storm it would have been so easy to call the roofers and have the damaged rafter repaired and new shingles put on in return for the entire settlement check minus the deductible, but nothing out of pocket. Problem is, that gets a ten or twelve year roof, and next time a tree fall might not fall on it fortuitously at just the right time to balance age and insurance checks. The same funds covered materials for a fifty-year roof that meets the new standards for sale or rent that hadn’t even been mentioned at the time, if we provided the labor. True, “We have the technology” as dear Charles loves to quip, but more to the point we have enough deferred maintenance around Mildew Manor from the fifteen years Mother was a widow without making any short-sighted decisions ourselves.

One of the most dangerous trends in the last two or three decades is how few households attempt to fix anything, even granting that increasing regulations make simple tasks all but impossible in many cases. Still, most plumbing problems can at least be diagnosed and a large number can be corrected without “professionals” and permits, for just one example. The really big problem is that something like 86% of you live in the cities now, under Big Brother’s watchful and greedy eye.

I won’t say that any idiot can nail shingles on a roof because I have never tried. I will attest that a couple of even mildly competent and muscular men can 1) screw down 1″ thick OSR; 2) nail on 1″ thick styrofoam “Thinsulite” the same dimensions using special nails with little rubber gaskets to stabilize long enough to; 3) cover the result with sheets of Galvalume and screw them in place with ludicrously expensive screws; and 4) trim the edges neatly to conform to the previous roof and install flashing. This is roughly as difficult as making a peanut butter sandwich, although more time-consuming and expensive. Charles instructed and supervised, Asia and Clay did the work, our electricity bill has seen a pleasant drop, and the new roof is 100% waterproof and should require no maintenance before 2060, if then. “Bad” deflation is when your assets are worth less; “good” deflation is getting all of the materials at deep discounts.

The time is coming fast, dear readers, when if you can’t make repairs and solve problems yourselves you may well have to live with maintenance problems. I will leave you with some wise words from one of my favorite Editors, Taipan Daily’s Justice Little:

“In another theme that has long run through these pages, your humble editor’s solution is to focus on the small things, the personal things… to opt out of the system in as many ways as possible.

“For yours truly that means no mortgage debt, no credit card debt and no auto loan debt. It means no financial accounts at major banking institutions, instead using independent brokerage houses, smaller local banks, and megabank alternatives like EverBank. It means a readiness to profit from systemic breakdown, via the shorting of exposed financial players and/or the purchase of silver and gold. And, in general, a habit of minimizing accidental patronage of the system to as great a degree as possible.”

Splendidly put, Justice.

Regards,
Linda Brady Traynham
Whiskey & Gunpowder

August 17, 2010

* Being a cynic of the first order, it is my opinion that the stock market “rally” of ’10 is almost entirely an entirely artificial one caused by using Timmy’s fine product to purchase stocks, and I had to stop and work out if it made sense for the government to sell stocks to pay itself Capital Gains taxes, thus proving I can be magnificently dim-witted when I put my mind to it. Of course it does! That completes washing suspect funds all snowy clean. The Feds put up the money to buy the stocks, then sell them to…themselves? The Fed? Agreeable banks/mutual funds?…paying blameless-appearing taxes to themselves, and “justifying” higher bonuses. Yuss…expect higher than usual “tax” sell-off this December. LBT

It’s Delightful, It’s Delirious, It’s Deflation was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

I read recently that a garbage collector in Seattle makes over $109K, a splendid example of “jobs that Americans won’t do,” and Oakland has fired 10% of their police who can’t get along on an average $162,000 plus lavish benefits. The “labor” dispute is over whether the cops should be required to match the 9% contribution Oakland makes to their pension funds in return for a one-year freeze on lay-offs or hold out for a three-year freeze. Their very generous pension benefits.  But that’s okay, because the Police Chief resigned in disgust and the department announced that it won’t even investigate 44 types of crime ranging from poisoning animals to grand theft.  The Supreme Court has already held that the police have no obligation to protect any particular citizen.

Our basic problem is that everyone feels “entitled:”

1. Congress feels “entitled” to pass devastating laws its members are not obliged to abide by, and a great many members feel that flouting any inconvenient laws is a perquisite of office;

2. The professional welfare class feels “entitled” to food, housing, medical attention, “earned income credits” for one day’s work, and at least four dozen other goodies paid for by others;

3. Government workers feel “entitled” to lavish salaries, all public holidays, more than generous vacations, sick leave, and “family” leave, all of which can be turned into money, and virtual freedom from being fired no matter what they do or how little they do;

4. Unions, Farma, Pharma, banks, Wall Street, et al., have demonstrated that they are “entitled” to massive payoffs for campaign contributions;

5. Nidal Hassan, the mass killer at Ft. Hood, appears to be “entitled” to draw his $6,000/mo salary while sitting in a civilian clink;

6. Queen Michelle apparently feels “entitled” to a half-million dollar tax-payer funded vacation in Spain for herself, one daughter, a bunch of her dear friends, and, of course, an enormous entourage, only having had eight vacations plus a trip to England in the last eighteen months, poor dear;

7. Teachers feel “entitled” to far more money for far less work–and far fewer working days–for job performance that would get anyone else fired;

8. Illegal aliens feel “entitled” to everything the welfare class gets plus citizenship and the right to desecrate our flag, trespass, run drugs, murder ranchers, and clog our jails and hospitals;

9. The Secretary of the Treasury and the Head of the Fed have demonstrated that they are “entitled” to counterfeit and launder money through their favorite banks; and

10. The few, the employed, the tax-paying are deemed “entitled” to pick up the tab for all of this. Well, not exactly, since half of all employed Americans pay no income taxes at all.

The Federal government is broke, most of the State governments are in the red, cities are unable to pay their bloated bills, and everyone involved pretends that the “budgets” they can’t fund also cover pension plans. Well, except Congress, which pretends there will be money for “off budget” pensions, Social Security, Medicare, and Medicade and “deems” the budget to have been passed, using Geithner’s funny money to make payoffs. Pay bills. Whatever.

Something has to give, something other than those of us who have been raped all of our lives. Everyone else’s choice is that #10 should continue to “spread the wealth,” but we have reached the point where we are dropping out, avoiding taxes, not even trying to increase our incomes, and definitely feeling that charity begins at home. The milk of human kindness has definitely curdled and we don’t believe Al Gore, either.

There are only five ways to handle having overspent recklessly for fifty years: raise taxes (and everything the top 20% make wouldn’t pay the bills), lower expenses (unthinkable), cut taxes, borrow more from increasingly unwilling lenders, or ignore the whole mess as long as possible. Problem is…ALAP is now. Somebody other than # 10 has to start ponying up or scaling down.

Which leaves our tax lords with four choices of who the sacrificial victims shall be:

A. The welfare classes, solid D voters and known to be more than a little violent (over 40,000,000 are on food stamps now);

B. The Unions and other special interests, solid Statist voters and always willing to fund campaigns ($50 Bn last cycle) for fractions of pennies on the dollar for what they will receive;

C. Illegals, with a proven record of violence and virtually guaranteed to vote for the left; and

D. The Social Security crowd, with the Baby Boomers nearing their mid-sixties, more likely to vote R or I than D, who submitted tamely when told there will be no COLA for three years “because there is no inflation.” There is, at least 3.5%, and even if there weren’t, chances are we will see rampant inflation in ’11 and ’12 and beyond. Age of eligibility is ooching up and the latest proposal is seventy, and never mind that many do not have the stamina or health to work until then or are employed by firms which do not allow that.

Another hit is on the way. If you aren’t drawing genuine SS you may not know that Medicare is not optional. Well, I do not have to pay them over a hundred dollars a month, which is going up, along with co-pays on medical services and prescriptions, because the government will be delighted to keep my entire check if I refuse. And whee! As of 1/1/11 my Medicare “entitlement” will be treated as “income” and will have funds withheld from it for new taxes…and guess who gets to set the “worth” of that niggardly policy? Not anyone who is going to analyze my use and gloat, “She almost never goes to the doctor more than twice and she only uses one Rx!” Does anyone here believe A and C will be charged taxes on Medicare/Medicade?

Obviously, the sacrificial classes of choice remain small business, the elderly, farmers/ranchers, and those without political connections. The real question is: who is next, because we can’t cover the demands at all levels from Fed to village? Gotta love tiny Bell, CA, pop. under 39,000, whose Mayor was paid over three-quarters of a million, with a hundred thou’ for the part-time City Council members. So useful to be able to raise your own salaries…

B is clearly going to get a pass so long as the system manages to stagger onward, the Obama-Pelosi-Reid axis will push “amnesty” through one way or another in order to meld C and A…and sooner or later we will either have a total breakdown of the economic system or civil war. The cynical, power-hungry class knows this, and their plan is to increase regulations, increase “law enforcement” groups and use of US troops for “crowd control,” expand their powers of confiscation, and do everything possible to break the middle class which made the old America possible. The whole thing is a dull version of Atlas Shrugged with dangers even the brilliant Ayn Rand did not foresee, including making it illegal to grow and process our own food.

As one vivid book title states, Everything I Want To Do Is Illegal. Well, almost everything. Evading taxes is illegal; avoiding them is not. You all know that it is not possible to collect enough tax money even to get public debt to manageable proportions. The higher taxes are, the less we indulge in behavior that results in a greater level of confiscation. I smile when I consider how far tax revenue is below projections this year, and I urge you to do your best to starve the tax beast.

Here is a bright little idea of my very own in addition to buying nothing you can get from a tax-free source (Craig’s List, for example) and buying only those things you can eat or protect yourself with. I am on record endlessly as advocating pulling down to one telephone per household, cancelling cable TV, and ridding yourself of every other expense you can which carries numerous taxes.

You have slightly over 4 1/2 months to figure out what you are going to cut to cover having your health insurance plan treated as “income” and showing up on your withholding in January. The first thing to do is analyze your family’s use patterns. Unless you have elderly members or someone on dialysis or in need of major surgery that “free” insurance is almost certainly a rotten deal just as it is. If you simply pay the bill an office call will be $100 or less and your doctor might agree to a reduction because you’ll save him large administrative expenses.

What is your deductible? Work out how many times a year, on average, anyone actually goes to the doctor.  If you’re looking at a $2,000 deductible, see if that is enough to purchase a catastrophic health care plan and one for prescription drugs. Next, ask your boss what the “value” of your health package will be deemed to be for tax purposes. If the figures are as I expect for many of you, see if you can negotiate a raise in return for dropping health care. He may well be glad to cooperate, and if he is au courrant on politics and the firm you work for has 50 or more employees some beancounter somewhere has already worked out it will be much cheaper to pay the fine than to provide government health insurance for you–at which point you will be stuck with Obamacare, if nothing changes.

Yes, I’m serious! Insurance was never meant to cover routine expenses; its purpose is to protect you against the extraordinary. If you buy your own health care plan, well, that obviously isn’t “income,” now, is it? It is clear out-go. A raise you get in return is income, but it will be real income, not mythical. The Obama scheme is rather like taxing us on air to breathe, something we’ve always had. I would mind paying taxes on a raise if I were going to get one in the next three years, which I’m not, but I am infuriated by the idea of having to pay taxes on the Medicare I didn’t want in the first place because I have Tri-Care…which is secondary to Medicare, the Army really believing in taking care of its own.

On average you could be looking at a $500/month bite in new taxes on your insurance alone, and unless someone is undergoing months of rehabilitation it is very unlikely your bills add up to that. If they do, either live with the consequences of your current plan or find a catastrophic care policy that covers therapy following surgery. Add up your premiums, your deductible, your co-pays, and the new tax, and I will be very surprised if you can’t come up with a better solution unless you are well up in years. When John died I was offered COBRA for myself and Andrew, then 20. At $840/month! Ludicrous. In three years Andrew and I were ill once, and it cost us $100/each to see the doctor, including shots in lieu of a prescription antibiotic. $840/mo X 36 months = $32,400, and my refusal saved us over thirty thousand dollars. AFTER tax dollars. Since dental and opthalmologists (Andrew has flawless teeth and sight better than an eagle’s) weren’t covered anyway…

We’re all hoping for a change in control of Congress after the elections, but despite some naive Legislator’s attempt to get Pelosi and Reid to agree to propose no new legislation, only “housekeeping,” after that Tuesday (riotous laughter; Dubya was stupid enough to fall for, “How dare you contemplate vetoing the stimulus package when you know Obama wants it and he won big and can have it in three months?” but I assure you any “lame duck” Congress will be working overtime vindictively right up until the third week of January of 2011) a lot more bad things are coming down the pike. If they push through “Cap and Trade” the estimated tab is an additional $300/month for most households. If you do not work out where to get the money for these new expenses who will? It will hurt less if you do it before you have no choice.

Regards,
Linda Brady Traynham
Whiskey & Gunpowder

August 12, 2010

Choosing Whose Blood to Shed was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.