A Modern Day Bastiat, Portugal Barely Hanging On, Silver at a New High, and Etc.

John Tamny invokes Bastiat concerning Fannie Mae and Freddie Mac in his RealClearMarkets column today:

Better than that, we as always live in a world of finite capital, so when government-backed entities are able to vacuum up funds to subsidize home ownership, this must by definition depress other sectors of the economy with capital needs that don't match the government's ability to raise it. If Fannie and Freddie cease to exist, the markets for credit will be less distorted on the way to a more growth-oriented environment in which the best concepts - as opposed to those most politically connected - will attract investment.

In regard to workers needing to be flexible and housing holding them down:

Indeed, by virtue of them earning low incomes, it's essential for the poor to be completely mobile. Capital moves at the speed of light and without regard to where low earners own homes. So for the federal government to subsidize their housing purchases is for government bureaucrats to commit a very cruel act whereby those most in need of mobility are essentially landlocked by the proverbial ball-and-chain that is housing.

Ever wonder how gasoline acts as a capital good and consumer good at the same time and increases in price so soon when the Fed starts printing?  Robert Wenzel explains:

Over the last 12 months, the gasoline index is up 13.4 percent, according to the BLS. Since gasoline is used by both the capital goods sector and the consumer sector, it should come as no surprise that gasoline tends to lead price climbs. When the Fed prints money, it tends to go into the capital goods sector, which causes capital goods users to bid gasoline away from the consumer sector.When the money ends up back in the hands of consumers, they bid the gasoline away from capital goods users, who then need more Fed printed money to bid higher than the new consumer bidding.

Now for some news on the next of the PIIGS down the bailout pike, Portugal.  The yield on a ten-year bond just reached an all time high of 7% and now the EU and IMF are ready to bail it out:

The EU has a rescue plan ready for Portugal, but it is dependent on Lisbon asking for the aid and making that request to both the EU and the International Monetary Fund. Portugal remains adamantly opposed to asking for assistance. "Portugal is drowning. It's not going to be able to hold on beyond the end of March," the euro zone source said.

 Just for comparison, here is Ireland's 10-year bond yield:

Mish details major Euro debt here.

As for silver prices, according to Zerohedge, it is at its highest price since 1980:

Kudos to Wisconsin Governor Scott Walker on trying to eliminate collective bargaining rights for state workers.  Senate Democrats in Wisconsin did the cowardly thing and tried to leave without voting on the bill, thus avoiding the inevitable.  While Walker's plan is good, it excludes police and firefighters.   Walker needs their electoral support, so this is no surprise.  Still, I thought police and firefighters do their job for the good of the public, not for the pay.