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New article published on Strike-the-Root.

Let the market be your guide

Hello everyone,
I'm writing this entry from the bed. The wife and I are sitting in our wonderful market creation, a tempurpedic adjustable bed, goes from bed to "couch" at the press of a button.

My wife is reading a book "Better: A surgeon's notes on performance." In it there is a passage about the number of soldiers in Iraq that were being blinded. So the govt. in all its infinite wisdom gave out a contract for special safety sunglasses (probably a no bid contract). Guess what happened??? Eye injuries did not go down. The soldiers thought the glasses were ugly and didn't wear them. "They look like something a Florida senior citizen would wear." The author continues, " So the military bowed to fashion and switched to cooler-looking Wiley-brand ballistic eyewear. The rate of eye injuries decreased markedly."

How many ex-soldiers are now blind because the market was not allowed to work. If there was a normal bidding process that involved the soldiers, the "cool" glasses would have won out. Soldier after soldier would have said, "I ain't wearing them ugly things." and hopefully the powers that be would have made the correct decision.

Another example of the state not being in touch with reality or the market....
There have been many stories of planes, trucks, and other motor vehicles crashing due to operator fatigue. The following are excerpts from an article on cnn.com http://www.cnn.com/2009/TRAVEL/05/15/pilot.fatigue.buffalo.crash/index.html

"Her body basically said, 'I can't handle it,' " speculated Greg Feith, former NTSB air safety inspector. "I mean, we've all been there before and pulled an all-nighter. We know how that feels."

Shaw did not "reserve adequate time to travel from her home to her base in order to ensure she was properly rested and fit for duty."

With fatigue being a possible factor in the crash, the testimony at this week's NTSB hearings is reigniting industry concerns over pilot fatigue. Airline accidents caused by fatigue are listed on the "Most Wanted Transportation Safety Improvements" on the NTSB Web site.

The article then goes on to say that "While there is no way to tell if the pilot is rested when one steps onto a plane, there are Federal Aviation Administration guidelines on how many hours a pilot can work and how many hours he or she must rest."

That is simply not true. Are they even looking for a solution? Wouldn't it be in their best interest to actively search for and even fund start up companies that are working to solve this problem?

I am currently invested in a company that is working on and is close to a solution. http://www.ecnholding.com/product.php (have your audio on)

Disclaimer: It's a sub penny stock at the moment and I'm down 80%. Yes, it's the same sub penny stock that the folks in the RPIC told me to sell about a year ago... Sane people sometimes make insane investment choices...

Here is a company that is very close to solving a major problem, but govt. officials are still saying that there is no way to tell if the pilot is rested.

The sad thing is that I will probably have a fatigue detection device in my car before the FAA even knows it exists.

I guess the only thing a passenger on a airplane can do is talk to the pilot when they get on the plane and make their own decision regarding his/her vigilance.

$8798 per Taxpayer to Payoff Deficit

Last month the nonpartisan Tax Foundation published their annual survey about taxes and the budget deficit. The amount of deficit per taxpayer is currently $8798, a 400% increase in two years. From pages 7 & 8 of their report (emphasis added):

Americans were asked again this year if they would be willing to pay their share of the budget deficit in order to balance the budget. While in 2007 this figure was only $1,789 per individual tax return, this year that number has ballooned to $8,798 because of the bailouts and the Troubled Asset Relief Program under the Bush Administration, as well as the stimulus and fiscal year 2009 omnibus spending bills under the Obama administration. Only 6 percent are willing to pay the additional $8,798 in federal taxes to eliminate the deficit; 81 percent are unwilling.

To those who said they were willing to pay higher taxes to cut the federal deficit, we asked a follow-up question: “If you paid that extra $8,798 in additional taxes, how do you believe today’s Congress would use it?”

Just under half of respondents (48 percent) believe that the government would use the money to increase spending and not pay off the deficit, while only 17 percent believe the government would use it to pay off the entire deficit. Just under one-third of respondents (32 percent) believe the government would pay off part of the deficit and increase spending with the rest.

Half the people willing to pay the additional amount don't even believe the government will use it to reduce the deficit. Then why the hell bother?

$8798 of debt per tax payer. According to Wikipedia, the average household income in the US is just over $50,000. A married couple with two kids and income of $50,000 pays about $3,200 in payroll and income taxes, a little more or less depending upon the state (in Michigan it would be $3,170). A married couple with no children pays around $6,600 and a single person pays $9,000. $8,798 represents a 100% to 300% increase in the tax rate to pay off the deficit.

I'm repeatedly told this is the best country in the world and this is the best government possible. But look at the results! This is the best? $8798 of debt per taxpayer. Every time I state the government should be abolished, I get idiotic questions such as, "Who'd educate the children?", "Who'd pave the roads?", "Who'd stop crime?", "Who'd feed the poor?". WHO THE HELL CARES!! It's time for those advocating for this "great" system to start actually providing rational justification for it. Not only would those things be provided in anarchy, it wouldn't cost an average of $9,000 in tax and $8,800 of debt.

The state owns your children

"A Minnesota judge is expected to decide whether a family can refuse chemotherapy for a 13-year-boy's cancer and treat him with natural medicine, even though doctors say it's effectively a death sentence."

http://news.yahoo.com/s/ap/20090515/ap_on_he_me/us_med_forced_chemo

I'm a Libertarian but . . .

Once again we have someone claiming to be in favor of free markets as long as they're regulated. Aelfscine states:

I'm generally in favor of a free market, except that I don't believe that's that's what we've been having. I think we've been having a rigged free market, and that's when I think government intervention is needed.

If a market is rigged, by definition it isn't free.

So how is our market rigged and who's doing the rigging? Aelfscine uses healthcare and financing as two examples. Yet these are two of the most regulated and un-free markets in this country. The govt intervenes in almost every aspect of these industries. Licensure laws, advertising laws, patent laws, etc make these industries the exact opposite of a free market. Harry Browne has shown numerous times (e.g. here, here, here, and here) how govt intervention has destroyed the best health care system in the world into the useless mess we have today. The govt has rigged those markets. More intervention is the last thing we need.

His examples with credit cards are just as bad.

however, your credit isn't good enough to get multiple cards - maybe you're young and starting out. If your credit card company just randomly decides to triple your interest rate, you are screwed, and the 'free market' can't help you.

Randomly decides? Every credit card account I have or had (and I've had dozens) has an agreement. That agreement states what the interest rate will be as well as when and why it will change. There's nothing random about the rate changes.

Claiming some can't get multiple cards is absurd. I know individuals with $100,000 of credit card debt, no business profits and little other income, yet they keep opening new credit card accounts. I know children with credit cards. One kid kept getting pre-approved offers when she was 7 years old. If someone can't get a second credit card, it isn't because the market is free. It is because of govt intervention and heavy regulation.

He ends with an extremely absurd statement:

we are currently undergoing a free market 'correction' and shady mortgage companies are going down in flames . . . . . . . . If someone had stepped in and broken up the problem before it got this bad, the free market could have had a correction without getting it all over everyone' faces.

With FNMA, FHLMC, FHA, FHEO, FHAP, FDIC, ECOA, SIPC, SOX, HUD, FCRA, PATRIOT, FRB, PTI, CRA, HMDA, etc. just how much more regulation is required. Just one of those laws or organizations creates an unfree market and I've listed close to 20.

The last thing we are currently undergoing is "a free market 'correction'". Those who can't figure that out may be beyond hope. For those who are figuring that out, you may want to read Tom Woods new book Meltdown.

New Credit Card Bill: Friend or Foe to the Unsecured Debt Seeker?

Here's some stuff in the new credit card bill. Sounds good on the surface, but I am certain that this will reduce the amount and increase the price of credit long term, making all borrowers worse off than they were before…. Cigarettes say “SMOKING WILL KILL YOU” and people still light up…. The road to hell is paved with good intentions...

_Require anyone under 21 to prove that he or she can repay the money before being given a card, or have a parent or guardian promise to pay off the debt if he or she defaults. Youth will be locked out of paying for an investment in themselves… training, classes, travel that could help them increase their earning potential.
_Require lenders to give customers 45 days notice before increasing rates and mail their bills 21 days before the balance is due. This one isn’t so bad, but in 45 days I could skip town. In this market 45 days is a long time. The Bretton Woods agreement broke down over a weekend.
_Ban fees if customers want to pay their bills by phone or online. Who is going to pay for the customer service rep to answer the phone and the extra people in the mail room? We are!!!
_Prohibit over-the-limit fees unless a cardholder elects to be allowed to go over their limit. I agree with this one, but I don’t think it will help too much. Like the “are you sure you want to delete?” message on a computer. You get so used to it that you don’t even think when clicking… until it’s too late. Doh!
_Require lenders to say how much time it would take and how much money in interest would be paid if only the minimum monthly payments are made. I don’t see anything too wrong with this the extra ink is negligible.
_Require that gift cards remain valid for five years. What? Why? If it’s my card and I make it, it should be under the terms that I want (as long as the terms are explained in simple language all over the card) Gota be difficult for retailers to plan inventories for cards that last that long.

What do you guys think? (mind you I'm against the govt. having any authority to do any of this... Caveat Emptor (let the buyer beware))

On a side note... when are we going to respect private property? I hate how the Chrysler bond holders are being vilified in the media... You can't just get out of contracts with govt. pressure. The debt is the bondholders' property and they can do what they please with their own property. I'm not a religious man by any means but to borrow from a wristband, WWTSD? What Would Tony Soprano Do? He would break their knee caps and then refinance as usurious rates of interest. Bust a deal and there will be/should be some pain.

I could not make this stuff up if I tried

"It's a system that does not work in theory-- at all-- but in practice we make it work because we have to make it work." - John Dugan, Comptroller of the Currency

The quote is after 6:25 in this interview:
http://www.npr.org/templates/story/story.php?storyId=103908284

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Judge Richard Posner, former University of Chicago law professor and so-called "free market champion" mentions several industries where deregulation and privatization are good things: telecommunications, surface transportation, oil pipelines, highways... "It's just banking is special."

Hear the comment starting at 6:25. http://www.onpointradio.org/2009/05/richard-posner-on-a-failure-of-capitalism

Some other great Posner quotes from the interview:

"Conservatives believe that the depression is the result of unwise government policies. I believe it is a market failure. Without any government regulation of the financial industry, the economy would still in all likelihood be in a depression. We are learning from it that we need a more active and intelligent government to keep our model of a capitalist economy from running off the rails. The movement to deregulate the financial industry went too far by exaggerating the self-healing powers of laissez-faire capitalism."

"The depression has hit economic libertarians in the solar plexus because it is largely a consequence not of the government's over regulating the economy and by doing so fettering free enterprise, but rather of innate limitations of the free market."

I quit listening after 10 minutes.