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Saturday, July 26, 2014

One Reason to Buy American

Last year Consumer Reports shocked the world by rating the 2014  Chevy Impala its best-tested sedan. Impala Number One

It is a great looking car, and I'll definitely look to buy one when I'm on the market again. Proof that GM can do something right, despite the Chevy Cobalt ignition recall scandal.  Americans want to buy American--just give us a reason!

The Mighty Whig always looks at American vehicles first when looking to buy.  It just so happens I own three Japanese vehicles right now, because I liked them a little better and they fit my price range. 

Memo to Harley Davidson: build me an affordable bike! 

Friday, July 25, 2014

Terrorist Threat at Our Southern Border

Since 9/11, we've heard periodic rumours about terrorists entering our country via the porous southern border. So far, this has never happened.  To my knowledge, authorities have uncovered no known plot to infiltrate terrorists into the U.S. via Mexico.  Why? 
  • Just flying into the country had been easy enough.  (Not so now, though.)
  • Mexican gangs have no good reason to cooperate with terrorists.  They are in the money-making business.
  • Mexico is not a good place for Islamic terrorists to blend in.
  • Too much could go wrong: being exploited by smugglers, being captured by US law enforcement, etc.
In recent years, we've heard of one crazy plot by an Iranian-American used car salesman to kill the Saudi Ambassador in DC by contracting the Mexican Zetas. He traveled to Mexico to do this, but only made contact with a DEA informant, who set him up for a sting.  Would the Zetas have actually tried to do this?  I doubt it.  They are under enough pressure as it is.

Hard to believe from the news coverage, but it is actually MUCH harder to cross the southern border illegally than it used to be.  Before 9/11, apprehensions were one million a year.   Recently it has been in the low 100,000s.  This year there's been a spike that might bring us closer to 500,000.  Most of the surge has been in Texas's Rio Grande valley, which didn't used to be that heavy.  (The Tuscon area had been the worst.)
U.S. Border Patrol Apprehensions, Fiscal Years 1976-2013

Thursday, July 24, 2014

Slamming Russia with Sanctions

Russia may have overplayed his hand.  The Malaysian Airline MH17 shootdown has brought the EU and America together on imposing harder sanctions.  Ambrose Evans-Pritchard argues here in Russia outgunned in economic showdown that Moscow can no longer rely on natural gas blackmail to get its way.  Its major energy firms need access to international credit, and Washington is poised to shut that down. 

We'll see if the WH pulls the trigger. 

It is hard to believe that MH17 was shot down intentionally, but Russia bears much of the blame in letting this crisis get out of hand.  For no good reason, either: if Putin had played the long game, the Ukraine would in time have been back in his camp, just like it had after the failed Orange Revolution in 2004.  The country is just too tied to Russia economically and culturally, and besides, the EU has its own problems to deal with, and can't afford another welfare case.

Putin may have miscalculated so badly as to sacrefice his hold on power.  Stratfor's George Friedman compares his actions to the "harebrained schemes" of a certain premier in the 1960: Can Putin Survive?

Tuesday, July 22, 2014

Restore the Gold Standard! (Part I)

This morning we at Mighty Whig will begin an occasional series advocating the restoration of sound money through some version of the venerable gold standard.  The Federal Reserve's monetary policy under Greenspan and Bernanke has been disastrous.  Yellen, too, is said to be a weak dollar woman.  Fed policy created the real estate bubble, has inflated commodity prices, and has failed to stimulate the economy.  But the real problem is our fiat money system. We now are so used to its instability that people just assume another crash is around the corner! (See Jamie Dimon's of J.P. Morgan's comments not too long ago.)

Amazingly, in the last presidential election, no candidate criticized publicly the Fed's absurd "quantitative easing" policy (buying bonds to put more dollars in circulation), which did nothing to stimulate the economy or cut unemployment.   We just assume weakening the dollar is normal behavior now.

The Fed has lost the confidence of so many Americans because it now tries to run the economy.  (Never successfully.)  Perhaps realizing this, Yellen pledges to "taper" quantitative easing, i.e., bringing us slowly off the heroin needle.  

I'm posting a long piece from 2009 by James Grant lamenting the damage done by money with no bounds. Requiem for the Dollar  Worth reading to begin the discussion.

Upcoming:   My review of Steve Forbes's new book "Money," which makes a strong case for a new gold standard. 

Monday, July 21, 2014

The Central American Immigration Machine

Illegal immigration from Central America begets more immigration.  Anthopologist David Stoll explains this in a recent WSJ op-ed: Behind the Border Pile Up.   Remittances sent back by U.S. immigrants--about $12 billion a year to Guatemala, El Salvador, and Honduras, or about 10-15 percent of their national incomes--distort the local economies by making land prices higher.   So more young men have to travel to the US to find work to afford the rising prices, and the cycle continues.  Stoll:
But migration itself produces victims, such as wives hoping for the deportation of their husbands, and they are far from the only ones. Where I work in Guatemala, remittances have inflated the price of land to astounding levels; most families are unable to buy property unless they can place at least one wage-earner in the U.S. So every family is under pressure to send someone north. Migrants must borrow at least $5,000 to pay human smugglers. Many pay 10% monthly interest and put up family land as collateral. So they're betting the farm. When something goes wrong, they lose it.
Certainly the remittances help improve the local standards of living in these poor countries.  But they come at a human cost: family break-up, etc.  Reuniting the family in the US often leads to more problems:
One way to hold the original family together is for the mother and children to come north. But family reunification is no panacea even when it can be done legally. When an earner remits to his wife and children in Central America, the money goes much further than it does in the U.S. Once everyone reaches El Norte, even two parents working for the minimum wage may not be able to support a family. So their children get an education in downward mobility and relative deprivation, which is one reason immigrants brought here as boys run a high risk of being sucked into gangs. [My emphasis.]
 

Wednesday, July 16, 2014

Border Crisis Destroys Amnesty Bill

Poor border enforcement and Obama's 2012 decision to not deport some illegal immigrants has killed the Senate's amnesty bill and the so-called "Dream" Act.  The Democratic party has suffered heavily from a big influx of illegal immigrants in the past.  Two flotillas of boat people from Cuba in 1980 and 1994 hurt President Carter and then-Arkansas governor Bill Clinton.  In the following article,  Michael Barone explains how the fallout of the illegals is extending to other states; governors are refusing refuge:  Political Fallout from Illegals

At least some politicians are rediscovering that the United States is a sovereign nation with a responsibility to its citizens.  That's one happy consequence of this sad episode.

Maybe another happy consequence is that the open border crowd has been silenced, for a while. 

Don't believe the reports that all of the sudden Central Americans are fleeing gangs, poverty, and crime.  Those have been constant factors for years.  So, what has changed?  The decision to not deport and the promise of amnesty.

Something to consider:  our country is not growing full-time jobs anymore. See this piece by Mort Zuckerman last week: The Scandal of Part-Time America We can't guarantee the American dream even for longtime citizens, let alone unskilled immigrants.  That's the dispiriting reality of the post-industrial US economy.


Tuesday, July 15, 2014

Cheap Money Bad for the Poor, Good for the Rich

Rich Karlgaard argues here that only the superrich are really benefiting from the global boom in cheap money.  (Not just a boon for the rich, but for overleveraged governments too.) If you aren't in a position to ride the stock market wave, you're out of luck.  Here, he uses columnist Paul Krugman as a punching bag.  Why aren't people on fixed incomes getting up in arms about this?  Perhaps they will with the next bust. 

Paul Krugman Is Dumber Than We Thought

Krugman’s July 11th NYT laugher provides yet more evidence the Nobel Prize winner … just … makes … stuff … up.

Consider this Krugman assertion:
The really big losers from low interest rates are the truly wealthy — not even the 1 percent, but the 0.1 percent or even the 0.01 percent.
Krugman says the rich sock their money in low-yield bonds. But he fails to consider the obvious. Stocks have almost tripled since March 2009. Urban real estate is in a boom. Art is in a boom. If you believe Krugman, it must be the poor folks who are feeding these asset bubbles. Because the rich, Krugman says, are stuck in low-yield bonds.

This is utter nonsense. The excess liquidity created by U.S. monetary policy does not wind up in the hands of the poor. It winds up in the hands of the rich. The rich then put it into stocks, real estate, hedge funds, and art.

It’s actually the poor and lower middle classes whose wealth — such as it is –lies fallow in no-interest bank accounts (or wealth-eroding cash if they have no bank account at all). It’s not the rich, but middle-class retirees that try to eke out a living on low-yield interest rates.

Krugman has it exactly, 180-degrees wrong. Cheap money is a transfer payment to the rich. It is a tax on the poor. The rich-poor divide grew vast under the cheap money policies of Ben Bernanke. This trend will surely accelerate under Janet Yellen.

I recently spoke at a global real estate conference in Singapore. Around the world, large cities are seeing inflated prices. The investment bankers who attended the conference, and who represent the interests of the global rich, didn’t know whether to pinch themselves in glee or dig a shelter for the coming bust. But for now, cheap money has fueled a boom.
How many poor people invest in REITs, Dr. Krugman?

Krugman has so twisted himself in defending the Obama Administration’s fiscal and monetary policies that he is now 180-degrees opposite of truth. He looks to Antarctica and sees the North Pole.
Cheap money has been terrible for the poor. It has been God’s gift to rich asset holders. Just the opposite of what Krugman says it is.

Takes your breath away, doesn’t it?

Monday, July 7, 2014

NSA Vacuums Up Info on Average Folks

The Washington Post analyzes the information Snowden stole about how the NSA's PRISM program--which targets terrorists--also captures communications from private citizens guys:  Ordinary Americans Targeted.  To its credit, the article mentions how some terrorist networks were uncovered by this method. A few comments:

--Anyone using the internet should proceed with the understanding that his information is being used, constantly.  When I use my email in a foreign country, I always expect that the local intell service can look at it whenever it wants to. 

--I don't care that the NSA finds out information about innocent foreigners.  No one is targeting them, accusing them of anything, or using this info against them.    But they don't have a "right" to privacy based on our laws.

--I am not particularly concerned about the NSA incidentally looking at my email communications.  I know what my rights are, and what legal barriers it operates under.

--I am much more concerned about what Google does with the information it stores on me.  But in the US, we give private companies at lot more leeway than we do the government.  

No one in the US wants the NSA to stop targeting terrorists' networks.  But we haven't figured out a way yet to order this important function and ensure Americans' liberties are being respected.

Friday, July 4, 2014

Does Moscow Control the Anti-Fracking Movement?

Hydraulic fracturing has been a game changer for the oil and gas industry.  It has been a huge boom to the gas industry, which has led to significantly lower carbon emissions.  But it is a major industrial operation, and it arouses criticism.   A propaganda film from 2010 "Gasland" caused many people to equate fracking with drinking water igniting into flames.

Russia wants to preserve its monopoly on supplying gas to Europe. A few weeks ago the Secretary General of Nato Anders Fogh Rasmussen said Russia is secretly working with Green NGOs to spread disinformation about fracking in order to stop European domestic production:  NATO Chief Says Russia Teaming with NGOs.  The excellent Bjorn Lomberg, author of "The Skeptical Environmentalist," lays out the geopolitical stakes here: Break Putin's Gas Monopoly

Glad someone finally said it.  Why else would Romania of all places have one of the most activist anti-fracking movements in Europe?   Russia must be reviving its old networks.  Of course, ideologically, the Marxist left intellectually emigrated to the green movement a long time ago.

  



Wednesday, July 2, 2014

Marijuana: Really a Wonder Drug?

Marijuana has undergone a remarkable image makeover: from dangerous drug to miracle cure. States are now legalizing it without any regard for the harm it causes, which have long been known.  Here's a good article from the New England Journal of Medicine that reviews what we know about its health effect, what we might suspect but can't prove, and what might be beneficial about the drug.  Marijuana's Adverse Health Effects 

One thing that has stood out to me: marijuana today is responsible for lots of emergency room visits, and is far more powerful (higher THC content) than it used to be. 

Tuesday, July 1, 2014

Snowden Aided by Russia From the Start?

Edward Jay Epstein is hard on the Snowden trail, destroying the myth of the lone, improvising whistleblower.  More and more, it appears he had help from a foreign power, probably Russia, to facilitate his trip to Hong Kong.  (This is the thesis of British intelligence reporter, Edward Lucas, too.) Publicly, Putin has admitted Snowden got in touch with Russian diplomats when he came to Hong Kong in May last year.

Snowden's work for the NSA probably from the start was intended as a penetration operation.  Here's a lengthy quote from Epstein's latest piece:
While important details about Edward Snowden's activities in Hong Kong remain shrouded in secrecy, the conventional portrait of his stay there and in Russia as one of improvisation and serendipity is at odds with the precision of his well-planned thefts. 
Until March 15, 2013, Mr. Snowden worked at the NSA base in Honolulu for Dell, the outside contractor which supplied technicians to work on the NSA's backup system. From this vantage point, he had access to the NSA Net, from which he pilfered most of the documents he later gave to journalists including the ones about NSA domestic operations that have preoccupied the world's media. 
But he quit Dell and moved to Booz Allen Hamilton, the outside contractor that ran the computer systems in the NSA's Threat Operations Center. Here he could get access to the crown jewels, the lists of computers in four adversary nations—Russia, China, North Korea and Iran—that the agency had penetrated. He later told the South China Morning Post that his whole reason for making the job switch was to get "access to lists of machines all over the world the NSA hacked."  
He carried out that theft, which included stealing passwords that gave him access to secret files, with great precision. There is no reason to assume that his getaway was any less deliberately planned.
Read the whole piece here:Snowden's Hong Kong Getaway