Random Observance of the Day, Crony Capitalism and Kleptocracy Reign Supreme, and New Mises Article and Liberty Web Alliance Acceptance

I drove my grandmother to a plastic surgeon today so she could get a mole removed.  On our way there, I mentioned a few of the pieces I had published this week and out of the blue (well not exactly, I mentioned something about econ) she asked me if interest rates were going up anytime soon because she was making pennies on her CDs.  I broke the news of course that Bernanke would rather bailout the banks and the government by keeping interest rates low till 2013.  Now I didn't use those exact words, but I probably should have since it's the truth.  Needless to say, she wasn't very happy, and nor should she be.  There is a good Rothbard quote as a footnote in Man, Economy, and State:

Did Keynes realize that he was advocating the not-so-merciful annihilation of some of the most unfit-for-labor groups in the entire population- groups whose marginal value productivity consisted almost exclusively in their savings?

David Rosenberg has an interesting prediction for Bernanke's next move, which will undoubtedly include bankrupting retirees.  The market has some pretty big expectations for "Operation Twist" coming soon:

Market participants now think the Fed will likely announce a plan to sell short-dated Treasury debt and use the proceeds to buy long bonds after its meeting later this month.

But Rosenberg thinks the great bearded one may go further, via Zerohedge:

1. Just go back to August 9th. The Fed was supposed to make a more emphatic comment in the press statement about "extended period" as it pertained to the length of time the Fed would stay ultra-accommodative on the rates front. Bernanke went much further than anyone thought with his pledge to keep the funds rate at the floor at least to mid-2013.
2. Ben Bernanke has shown repeatedly that he is willing to take risks and be very aggressive.
3. Everyone knows that the Dow finished the August 9th session with a huge 430 point gain after the FOMC press statement was fully digested. Not only that, but when Bernanke held his two-day meeting in mid-December of 2008 and unveiled QE1, the Dow soared 360 points. And last November, the day after that two-day meeting when Bernanke made it clear in his Washington Post op-ed article how key it was to ignite the stock market, the Dow jumped 220 points. It may all be just for a near-term trade, but in an industry where every basis point counts, who wants to be short knowing all that?
4. At that August meeting, we know both from the statement and minutes that additional rounds of unconventional easing were discussed. And Mr. Bernanke made it very clear at Jackson Hole that they would be on the table again at the coming meeting
5. The Fed would like to be out of the picture during the election campaign (especially if Richard Perry ends up winning the GOP nomination).
6. The Fed has cut its GDP forecasts at each of the past three meetings.
7. The stock market is actually little changed from where it was at the last meeting and we know based on that Washington Post op-ed, that it is equity valuation (specifically the Russell 2000) that Ben wants to see rally. Sanctioning lower bond yields is just a means to that end.
8. There is no fiscal stimulus to bolster the economy, with the odds very high that the Obama jobs plan — some in his own party object to the package as per yesterday's New York Times — will be dead-on-arrival on the House floor. The Fed is the only game in town.
9. Financial conditions have tightened nearly 100 basis points since the spring and deserve a policy response.
10. Bernanke announced at Jackson Hole that this coming meeting was going to be a two-day affair, not one day. The last time he did this was back in December 2008 and that was when he invoked QE1. There has to be a reason why it is two days, and it must be because he wants to build the case for three dissenters. The Board is being sequestered for a reason!

So what are Bernanke's other options you may ask:

1. Expand the balance sheet further and simply buy more bonds (at the longer end of the curve).
2. Eliminate the interest paid to commercial banks on excess reserves (to try to spur lending).
3. Announce an explicit ceiling on the 10-year note yield (say 1.5%), which the Fed has done in the distant past. Based on Bernanke's prior rhetoric, this would seem to be a preferred strategy (though the Fed relinquishes control of the balance sheet).
4. Buy foreign securities (bail out Europe and weaken the U.S. dollar — talk about killing two birds with one policy stone).
5. Announce an explicit higher inflation target or perhaps a lower unemployment rate target (i.e. reinforce the DUAL mandate).
6. As Mr. Bernanke stated for the record in November 2002, the Fed does have broad powers to lend to the private sector indirectly via banks, through the discount window. It could offer fixed-term loans to banks at low or zero interest, with a wide range of private assets (including, among others, corporate bonds, commercial paper, bank loans, and mortgages) deemed eligible as collateral. For example, the Fed might make 90-day or 180-day zero-interest loans to banks, taking corporate commercial paper of the same maturity as collateral. Such a program could significantly reduce liquidity and term premiums on the assets used as collateral. Reductions in these premiums would lower the cost of capital both to banks and the nonbank private sector.

Lend to the private sector more aggressively?  Isn't that the job of the federal government with all its success promoting green energy (*cough* Solyndra *cough*)?

Whether this move happens will remain to be seen but if Bernanke attempts to do this, he may be throwing in his nomination for the "best central planner in the world" contest.  Who knows, maybe he will give Benito Mussolini and Alan Greenspan a run for their money.  All he needs to do is inflate another bubble to beat Greenspan.  I bet Bernanke carries a picture of Mussolini in his wallet next to his mother and children who he's continually trying to bankrupt.  I mean, why shouldn't we trust him to pick which industries deserve some newly printed greenbacks?  He has done a stupendous job with the economy thus far.  Don't give me that smirk, in the words of Paul Krugman, it could always be worse!!!

For some more crony capitalism and more proof of the irrefutable intelligence our great leaders posses, check out this revelation:

Treasury Secretary Timothy Geithner ignored President Barack Obama’s order to consider dissolving Citigroup, a new book by Pulitzer Prize-winning author Ron Suskind claims.

Here is a genius idea, let the TBTF banks....fail!  What an unorthodox solution!  Instead of having the government bail it out and then tell it to break apart, look at how much time and effort we can save by just letting them fail! Shocking!

And of course Turbo Tax Timmy is over in Europe most likely assuring the powers that be that U.S. taxpayers will be there to buy up Euro bonds should they ever come to fruition:

Meanwhile Bernanke will just loan Euro banks money, thus perpetuating the sham.  And you wonder why this type of stuff happens ***caution for disturbing imagery***:

Today in Greece - A man pours a flammable liquid on his body to set himself on fire outside a Piraeus bank branch in Thessaloniki in northern Greece September 16, 2011. The 55-year old man had entered the bank and asked for a renegotiation of his overdue loan payments on his home and business, according to police, which he could not pay, but was refused by the bank (Reuters).

And yet the wonderful politicians in Greece will still opt for austerity rather than outright default.  How much more money is gonna be wasted before the inevitable happens?  How many more incidents like this are gonna occur?

Enough with all the doom and gloom, time for some good news.  I have a Mises Daily up today entitled "TSA and Unproductive Labor."  An excerpt:

No business wants the blood of a deadly crash or hijacking on its record. Such would mean a blemish on its record and a substantial loss of market share. At the same time, private airports would not waste money on inefficient personnel positions. A balance between efficiency, safety, and overall productiveness would be aggressively pursued. Like all market operations, equilibrium is never truly reached, but its pursuit yields results that satisfy customers and raise the standard of living for all those involved. When it comes to the TSA, Americans have become complacent in the degrading treatment they are forced to experience in order to fly. As the abuses continue however, public outcry will only increase. Yet the worst part of the TSA isn't the civil-liberty violations; it is the squandering of taxpayer funds for an operation that could be adequately provided through private firms. The use of airplanes and flight has brought about incredible advancements in transportation, communication, division of labor, and overall productivity. Increased mobility of the citizenry and increased mobility of capital always pose a danger to the state. The threat of foreign attacks has only increased the parasitic notion that such advances in human life must be controlled by our "leaders." Resources are funneled from the productive private sector to fund inefficient jobs that both grow the size of government and guarantee votes.

Even better news as Miller's Genuine Draft has been accepted as a member of the Liberty Web Alliance! Abhi Samuel, whom I worked with over the summer, wrote an incredible welcome for me and the blog:

Miller’s blog has perhaps one of the catchiest names I have ever come across – and it is apt! Besides the wit, what you can enjoy most about this blog is, well, the genuineness of Miller’s drafts.
In a media world ridden with lies, and a blogosphere overwhelmed by all sorts of content, it is hard to come across good and truthful content. Here at Liberty Web Alliance, we help with that. Miller’s blog not only has a wealth of information but incredibly detailed analysis that is hard to find in many places.
But you’ll get to know that as your read his blog.

So let me tell you about Miller. I had the opportunity to work with Miller this summer. He worked with my organization through IHS - so as for credentials he’s got the backing of one of the premiere liberty-friendly organizations in the nation.

I can tell you all the good stuff about him – that he’s humble and honest and so on… but that’s just half the story. So, let’s get to the interesting stuff.
Miller drives one of the lousiest cars in the world (I think he’ll agree). I once invited him and other friends over for drinks and as his car ambled up my driveway I noticed he had the largest collection of the most vociferous liberty bumper stickers I had ever seen. He advertised everything from the Ron Paul Revolution to Rothbard to Radicals for Rand (yes, I made that last one up).

A Radicals for Rand bumper sticker would be pretty sweet!  Thanks again for the awesome write-up Abhi!

I will end with another case of idiotic public policy in choosing bank bailouts over the public:

MADRID—The Spanish government said Thursday it will temporarily reinstate a tax on its wealthiest citizens, putting an end to weeks of debate over a controversial measure designed to help close one of Europe's largest budget gaps while easing widespread voter discontent with spending cuts.

Expect a great deal of wealth to leave Spain if the tax is enacted, if it hasn't left already of course.

Update- On the lighter side of things, here is the list of the best analogies compiled by English teachers from actual student papers.  Here are some of my favorites:

The plan was simple, like my brother-in-law George. But unlike George,
this plan just might work.

He was as lame as a duck. Not the metaphorical lame duck, either, but a
real duck that was actually lame, maybe from stepping on a land mine or
something.

The ballerina rose gracefully en pointe and extended one slender leg
behind her, like a dog at a fire hydrant.

He was deeply in love. When she spoke, he thought he heard bells, as if
she were a garbage truck backing up.

Behold the glories of our education system.  I can only assume most of these come from public schools.

Update 2- As I mentioned before, I am gonna keep try and keep track of developments in the natural gas field.  Here is the latest off Carpe Diem:

The study reached four conclusions:

1. "The potential supply of North American natural gas is far bigger than was thought even a few years ago. As late as 2007, it was thought that the United States would have to become increasingly dependent on imported liquefied natural gas, owing to what appeared to be a constrained domestic supply. That is no longer the case. It is now understood that the natural gas resource base is enormous and that its development – if carried out in acceptable ways – is potentially transformative for the American economy, energy security, and the environment, including reduction of air emissions. These resources have the potential to meet even the highest projections of demand reviewed by this study.

Thanks to the advances in the application of technology pioneered in the United States and Canada, North America has a large, economically accessible natural gas resource base that includes significant sources of unconventional gas such as shale gas. This resource base could supply over 100 years of demand at today’s consumption rates.

2. Surprising to many, North America’s oil resources are also much larger than previously thought. These oil resources offer substantial supply for decades and could help the United States reduce, though not eliminate, its reliance on imported oil. The United States and Canada together produce 4% more oil than Russia, the world’s largest producer. Realizing the potential of oil, like natural gas, in the future will depend on putting in place appropriate access regimes that can allow sustained exploration and development activity to take place in resource-rich areas.

3. Natural gas and oil resources will be needed even as energy efficiency reduces demand and lower carbon alternatives become more economically available on a large scale. Moreover, the natural gas and oil industry is vital to the U.S. economy, generating millions of jobs, widely stimulating economic activity, and providing significant revenues to governments.

4. Realizing the benefits of natural gas and oil depends on environmentally responsible development. The nation can realize the benefits of these larger resources by ensuring they are developed and delivered in a safe, responsible, and environmentally acceptable manner in all circumstances."

And North Dakota seems to be the main benefactor of much of the boom: