A Lovely Question: Why Is Interest Income, Perhaps 10 Percent of GDP in the Past, Trivial to Savers but Ever So Important to Banks?

Jeffrey Snider wants to know, here:

I think everyone understands that credit is vital to businesses, but they also intuitively understand that customers are probably more vital (and the largest problem for businesses of all sizes since 2008). I don't think Chairman Bernanke can claim that interest income is trivial and therefore not really a consideration, both in an empirical sense (the numbers don't bear that out, especially at the margins) or, perhaps more importantly, in the perceptions of the voting public. If he does, then why is such a trivial amount to savers so important to banks? It cannot be the money multiplier effect since bank net income (the pivot in this trade-off) plays no role in that presumed multiplier - ZIRP is a technique of expanding bank balance sheet capacity. It is the method of circulation that is at issue here, and the Fed and its global central bank cousins are placing all their chips on circulating money indirectly through credit creation. If that is a superior option, then they should be able to demonstrate it.

Obama's New Campaign Slogan

A Volt in every garage and a condom in every pocket.

ObamaCare Inspires Fear For The Sake Of Making A Contract, Violating The Law

This is what ObamaCare does: It threatens with a fine the person who fails to make a contract with an insurance company.

"[I]n the freedom of choice there ought to be a kind of equality between the contracting parties. ...[N]o fear should be unjustly inspired for the sake of making the contract, or, if such fear has been inspired, that it should be removed."

-- Hugo Grotius, On Contracts, The Law of War and Peace, Book 2, 12, X (1625)

ObamaCare Violates Centuries of Contract Law: The Mandate is Equal to Duress

It's so simple a child could tell you that, but to date no legal wizard from Harvard, Yale, Chicago, or Stanford has been able to put his finger on it quite so well as this wonderful stroke of genius distilled in a newspaper from the American heartland of genius, Virginia:

From Hugo Grotius in the 17th century through William Story in the 19th and up to the present, legal doctrine has held that contracts are not valid unless they are entered into by mutual assent. If one party signs a contract as the result of fraud or under duress, it cannot be valid. But if Congress compels people to buy insurance policies — not as a precondition of exercising a privilege such as driving, but as a consequence of having been born — then, the [I]nstitute [for Justice] argues, this would undermine centuries of contract law.

All those law degrees, wasted.

If they were smart they would ask for their money back.

Now why didn't The Heritage Foundation realize this back in 1989 and save us from all this trouble from HillaryCare through RomneyCare and ObamaCare?

After all this time America is still little more than a backwater in the intellectual history of the West. Progressivism. Bah! Humbug!

This is an Unpaid Ad for The True Born Sons of Liberty

GO TO HELL, BARACK.

Oil Price To Crash By Fourth of July?

Chris Cook thinks so, maybe even to $60, here:

In my analysis, absent a massive, and sustained, shortfall in oil supplies – which I cannot see occurring, since all involved have every interest in ensuring it does not occur – the oil price will, as I have already forecast, fall dramatically by the end of this year’s second quarter at the latest. It’s not a matter of if, but when it will happen.

That implies gold at $900 the ounce.

I can wait four months.

Q4 2011 GDP, Second Estimate, Up .2 to 3.0 Percent, Q3 at 1.8 Percent

So reports the Bureau of Economic Analysis, here.

The revision up does not move the needle up on overall 2011 GDP, which was a pathetic 1.7 percent.

Occupy Portland Vandalizes Two Banks and a Starbucks

Anti-capitalists, they call themselves:

Police said they received an e-mail that said it was from "Some Of Those Responsible" and read in part, "about an hour and a half ago (around ten pm, Tuesday night) a group of anticapitalists rolled up on the US Bank at SE 39th and Main and smashed out its windows and ATMs." ...

Police said a second e-mail was received after the Key Bank branch and Starbucks locations were vandalized, which read in part, "wherever capital chooses for its bunker, we will be there to attack it in the night." It was signed "For freedom, for equality, for anarchy".

Story, here.

A Chase branch and a Wells Fargo branch were vandalized last November (story here).

Santorum Voters in Michigan Heavily Self-Identified as Democrats

By a margin over Romney voters of 35 points, according to FoxNews exit polling here:

Santorum voters were also union members by 15 points over Romney voters.

Only 24 percent of Santorum voters thought abortion should be legal, and 77 percent of Santorum voters thought of themselves primarily as abortion issue voters, with only 13 percent of Romney voters seeing themselves that way.

Deficits and the economy mattered more to Romney voters than Santorum voters by 16 and 17 points.

Despite Santorum's view that mainline Protestants aren't really Christians, Romney and Santorum pretty much split that vote with Santorum winning Protestants by two points. But Santorum lost the Catholic vote by a 7 point margin.

Romney excelled among females, the over 65 demographic, those making over $200,000 a year, college graduates and post-grads, the somewhat conservative, those somewhat opposed to the Tea Party and those favoring legalized abortion.

Self-identifying moderates went for Romney 45 percent to Santorum's 31 percent. The somewhat conservative went for Romney by an even larger spread, 50 to 32.

The Washington Post here reported that 1 in 10 Republican voters yesterday self-identified as Democrats:

Early exit polls in Michigan seemed to show that the negative campaigning had weighed on the state’s Republicans. Less than half of voters there said they backed their candidate “strongly.” About one in seven said they made their choice because they dislike the other options — four times the proportion that said so in this political season’s first votes, at the Jan. 3 Iowa caucuses.

The polls also showed that a large number of Democrats had, in fact, crossed party lines in Michigan. About one in 10 of Tuesday’s voters identified themselves as Democrats in exit surveys. That was a higher figure than in any of the other early GOP contests.


About 978,000 votes were cast in Michigan's primary yesterday.

Wins in Michigan and Arizona Give Romney 2 to 1 Lead in Delegates over Santorum

The Wall Street Journal here provides a handy delegate tracker:

Hey Romney! Is Obama's An Extreme Left-Wing Crusade To Bankrupt Us Or Not?

Sen. John McCain couldn't bring himself to talk this way in 2008, but he had to in 2010 to get re-elected to the US Senate:

"President Obama is leading an extreme left-wing crusade to bankrupt America,'' McCain says in one of the radio ads his campaign is airing.

Romney Views Republican Base As Angry Mob With A Beef Against Obama

Except he's not going there.

Remarks quoted here:

“It’s very easy to excite the base with incendiary comments,” he told reporters. “We’ve seen throughout the campaign that if you’re willing to say really outrageous things that are accusatory and attacking President Obama, that you’re going to jump up in the polls. You know, I’m not willing to light my hair on fire to try and get support.”

But you already knew that:

O’Reilly: Is he a socialist?
Romney: You know, I prefer to use the term that he’s just over his head.
O’Reilly: Yeah, but you got to look at his economic plan. An economic plan that’s top down, federal leadership, getting us out of the recession--- he spent trillions of dollars on that. And people say, Listen, the guy’s a socialist — it’s class warfare that’s what he’s gonna wage against you if you get the nomination: You’re a rich guy, you’re out of touch. Is he a socialist?
Romney: Uh, you know, I consider him a big-government liberal Democrat. I think as you look at his policies, you conclude that he thinks Europe got it right and we got it wrong. I think Europe got it wrong. I think Europe is not working in Europe. And I’ll battle him on that day in and day out. But I’m probably not going to be calling him names so much as calling him a failure.


Like John McCain before him, who refused to criticize Obama or even question his political beliefs, Romney is out of step with the American people, the majority of whom believe "socialist" is a fitting moniker for President Obama:

Rick The Chameleon Santorum: Slams Cross-Overs in January, Courts Them in February

What a difference a few weeks can make, as reported here:

In stark contrast to his campaign's more recent courtship of Democrats, in January Santorum told Democrats that if they wanted to vote for a Republican, they should switch their party affiliation.

"It's the Republican nomination, not the independent nomination or the Democratic nomination," he said on the call. "If you're a Democrat and you want to be a Democrat, then vote in the Democratic primary, not the Republican. If you want to vote in the Republican Party then become one."

At the time, Santorum's main criticism was of Romney's success in the New Hampshire primary, where 53% of Republican primary participants did not identify themselves as Republicans. In the weeks following Romney's win in the Granite State, Santorum repeatedly cited that statistic in arguing that his rival's supporters was [sic] out of step with the mainstream GOP electorate. Now Santorum is hoping non-Republicans will help give him the edge in Romney's home state [of Michigan].

Rick The Snake Santorum Wants MI Democrats To Pick The Republicans' Candidate

So reports The Detroit News today here, claiming Santorum is making robocalls to Michigan Democrats to get them to turn out and vote for him:

"Michigan Democrats can vote in the Republican primary on Tuesday," said an unidentified man on the call, which Talking Points Memo said was left on someone's answering machine in Trenton. "Why is it so important? Romney supported the bailout for his Wall Street billionaire buddies, but opposed the auto bailouts. That was a slap in the face to every Michigan worker, and we're not going to let Romney get away with it. On Tuesday, join Democrats who are going to send a loud message to Massachusetts' Mitt Romney by voting for Rick Santorum for president.

"This call is supported by hard-working Democratic men and women and paid for by Rick Santorum for president."


Isn't Santorum's opposition to auto bailouts a slap in the face to Michigan workers?

Roy Brewer Archives Show Some of Hollywood Ten Really Were Commies

From The LA Times Magazine:

The archives shed light on another mythologized piece of Hollywood history: the hearings held by the House Committee on Un-American Activities. I grew up hearing about the Hollywood Ten—filmmakers railroaded by congressional witch-hunters in 1947, ostensibly because they were liberals.

According to that familiar narrative, they rebuked the committee when subpoenaed. If there’s a “profiles in courage” touchstone in Hollywood, this is it. Those who did testify, such as Brewer and Reagan, are regarded as Judases.

However, a letter from John Huston found in the files says this story is a well-constructed myth. And if anyone would know key facts about those days, it would be Huston, a non-Communist liberal Democrat who opposed the hearings because he believed it was unconstitutional to require a citizen to state his political beliefs.

Writing on the filmmakers who refused to answer questions from congressmen, Huston recounted, “Some of them had already testified in California, and their testimony had been false. They’d said they were not Communists, when in truth they were. To have admitted it now would have been to lay themselves open to charges of perjury.”

Huston said that at the time of the hearings, they convinced him they were standing up for principle—the “freedom of the individual,” as he put it. However, as he later learned (and wrote in the letter), “they were really looking after their own skins. Had I so much as suspected such a thing, I would have washed my hands of them on the spot.”

Don't miss the rest of this riveting account about Ronald Reagan's anti-communism by John Meroney, here.

A book is forthcoming.

Rules of the Road in Michigan

Come to an intersection and stop.

Wait a long time until you see someone coming from your left.

Then turn right, in front of said someone, and drive 10 mph slower than the speed limit, 15 if the someone tailgaits.

Union state. No sense of urgency. No sense of courtesy.

Game to Obama.

Make No Mistake About It: The Federal Reserve Is The Enemy Of The People

From another insightful meditation by Jeffrey Snider, this time on the consequences of trying to make the artificial financial economy and the real economy one:

The Federal Reserve has gone far beyond TARP into ZIRP (zero interest rate policy). ZIRP is a direct tax on savers, figuratively taking money out of the pockets of those who have acted responsibly in the real economy, transferring it to the banking system (especially the largest investment banks, the very banks responsible for most of the credit creation and monetary imbalance of the past asset bubbles) that was negligent, reckless and complicit in this disaster. Monetary policymakers, the gatekeepers to the realm of the monetary or financial economy, now intentionally and directly penalize real economy actors in favor of financial economy actors. They do so with this narrative that as the financial economy goes, the real economy will follow. Very few people seem to challenge this as backwards, certainly not anyone in a policymaking role.

Oil is Now Fairly Priced

Crude is almost $110, and gold is almost $1,774, so about 16 barrels buys an ounce of gold, just one barrel pricier than the ratio of 15:1 thought to be indicative of the historic relative fair value.

Yelling "Stop" is No Longer Good Enough

Because "Stop" preserves the damage done and doesn't roll it back.

Marxism Won In America: The New Deal and Great Society Stem From Socialism

So says R. Christopher Whalen here:

[D]espite America’s pretensions to being a free market, democratic society, the Marxian world view won the battle for ideas in the 20th Century. The New Deal and Great Society efforts to increase the scope of government in America all stem from the socialist ideas of FDR and his political heirs in both parties.

A genuine conservatism and a truly conservative Republican Party must stand for dismantling both.