Friday, September 28, 2012

To laugh or cry...

...Ah, the travails of competent Government.  Fund and incentivize alternative energy sources for vehicular transportation, then propose Orwellian solutions to the "problem" of declining gas tax revenues.  Budget 300 Million for a special committee to investigate the feasability of such a system, then eventually say it was all simply some sort of mistake, but make the case that additional revenues would have to come from "somewhere".

It would be hilarious, if not part and parcel of modern Governance.

The White House on Thursday walked back a proposal to tax people based on how many miles they drive. 
The proposal was included in a draft of the administration's Transportation Opportunities Act, but a White House spokesman said it "was not an administration proposal." 
"This is not a bill supported by the administration," White House spokeswoman Jennifer Psaki said. "This was an early working draft proposal that was never formally circulated within the administration, does not take into account the advice of the president’s senior advisers, economic team or Cabinet officials, and does not represent the views of the president.”
The legislation the White House is distancing itself from calls for creating a Surface Transportation Revenue Alternatives Office within the Federal Highway Administration. It would be tasked with creating a "study framework that defines the functionality of a mileage-based user fee system and other systems."
House Transportation Chairman John Mica (R-Fla.) has indicated that he did not think a tax-per-mile proposal was politically palatable, but said Congress would have to look for ways to supplement declining gas tax revenues.

Thursday, September 27, 2012


Asian stocks rose as a drop in Chinese industrial profits increased
pressure on Premier Wen Jiabao to step up measures to support growth
in the world’s second-largest economy.

...various (and highly publicized) alterantive energy companies aside, which country has a more likely chance to engage in "malinvestment" given a stimulus package?  My guess is that any Chinese "stimulus" will enjoy the same efficacy and efficiency (and hey, since we are all Keynsians now, lets throw in "better money multiplier" too!) as aid to African despotic regimes.

Like Hayek said:

The popularity of inflation and credit expansion, the ultimate source of the repeated attempts to render people prosperous by credit expansion, and thus the cause of the cyclical fluctuations of business, manifests itself clearly in the customary terminology. The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression. People rebel against the insight that the disturbing element is to be seen in the malinvestment and the overconsumption of the boom period and that such an artificially induced boom is doomed. They are looking for the philosophers' stone to make it last.

Tuesday, September 25, 2012

International Community

What does that mean?  If a nation controls the rules, currencies, laws, and holds almost the exclusive right to engage in warfare (while concomitantly holding the ability to guarantee physical, kinetic victory in war anywhere in the world in a matter of days), are the "members" of its flock a "community"?

Mind you, dear reader, I am making no judgements here.  This blog is about reality, not its obfuscation.

Washington, Sept 22 (PTI) The US supports Pakistan's sovereignty, Secretary of State Hillary Clinton said, reminding Islamabad that all sovereign nations carry certain obligations like preventing threats to neighbours and the international community.

    Substance over form

    With the constant rhetoric and political propaganda utilized to communicate the complete and total commitment of Euro-zone authorities in saving the Euro-zone from further crisis, you would think there would be less display of commitment and more explication of what precisely will happen given certain adverse events.

    All this display behavior has already been perfected by the animal kingdom.  One of my favorite examples is the Fiddler Crab, which simply displays the size of its main claw to potential rivals.  There is no communication regarding other factors (such as overall body mass, observable speed, etc.) its simply just "hey, look at this claw...might do some big damage".  I find this amusing for predictable reasons, as it parallels what the Euro-area chiefs are doing with predictable results.  They are waiving a big claw and proclaiming that is sufficient to silence the skeptics.


    Tremors going off all over the Sovereign map.  The historical fissures and fault lines await more of this tectonic pressure.

    Most vulnerable are those regions that enjoy a special status and are full of inhabitants that self-identify not as "x nation" but as "x people or ethnic group".

    MADRID - Catalonia government president Artur Mas has called early elections for the powerful northeastern region, a vote that will likely be seen as something of a referendum on independence from Spain.
    In a regional parliamentary debate Tuesday, Mas set the date for Nov. 25.
    Mas called the elections more than two years ahead of schedule after the central government in Madrid last week rejected a demand to grant Catalonia special fiscal powers.
    Days earlier, Mas led a massive rally in Barcelona that was seen as a show of strength for the region's pro-independence camp and a warning to Madrid.

    Monday, September 24, 2012

    Comparative Advantage... a concept as old as society.  One of the major themes in the coming decades will be the ability to supply "freedom" and "anonymity" for business and personal transactions.  This is becoming more and more difficult in most of the world, which is precisely where the value will come from.  The below is just an example.  Hopefully be this issue will attract the attention of the SCOTUS.  In the coming years,  there will be existing countries or newly formed sovereigns that will offer these services.

    Motorists can be held indefinitely at toll booths if they pay with large denomination bills, according to a federal appeals court ruling handed down Wednesday. A family of drivers -- Joel, Deborah and Robert Chandler -- filed suit last year arguing they were effectively being held hostage by the Florida Department of Transportation (FDOT) and the private contractor in charge of the state's toll road, Faneuil, Inc.

    Under FDOT policies in place at the time, motorists who paid with $50 bills, and occasionally even $5 bills, were not given permission to proceed until the toll collector filled out a "Bill Detection Report" with data about the motorist's vehicle and details from his driver's license. Many of those who chose to pay cash did so to avoid the privacy implications of installing a SunPass transponder that recorded their driving habits. They were likewise unwilling to provide personal information to the toll collector, but they had no alternative because the toll barrier would not be raised without compliance. FDOT policy does not allow passengers to exit their vehicle, and backing up is illegal and usually impossible while other cars wait behind. FDOT dropped the Bill Detection Reports in 2010.

    Friday, September 21, 2012

    Scenario planning

    One of the things I constantly do is think about the future, the way society will be organized, and the relevant conflicts and resources that will form the basis for the competitive actions of nations when defending their "interests".  This is similar to "brainstorming" in the creative fields with the only constraint being the usual limitations of human achievement.

    So, what are the implications for "the masses" when government no longer needs them for military applications or to produce the necessary amount of food to sustain a given population?  Throughout history, there has been this tension between ruler and ruled which was largely based on the use or threat of force by the general populace.  What happens if technological progress renders this tension impotent?

    This is a very serious question for the way sovereign nations will organize themselves for the future, and, given the technological advancement of the past 20 years, this is something to consider when investing for the long-term.

    Thursday, September 20, 2012

    From Dragon to Bear

    The biggest risks in the world have transferred from the "Paper Dragon" of China to Russia, which has played its hand wonderfully during this Arab Spring.

    As the direct beneficiary of marginal changes in Middle East oil demand, you can be certain that Russian interlopers have been operating in the region for some time in order to secure the necessary volatility.

    The situation is reminiscent of the events leading to the battle of Adwa, with Russia countering the West's influence whilst simultaneously securing pipelines and stable demand in China and Europe.

    Compared to the flailing responses of the U.S., these are masterstrokes.

    New Sovereign States

    I cannot verify this, but the below is not exactly a new experiment and is fraught with problems.  Chief of which is the expropriation (or "sovereign reversion risk" as the fledgling State is subsumed back into its "parent" once it has displayed sufficient economic activity)

    However, as I have stated here many times in the past, this type of activity will only increase as "Liberty" will have increased value as a "scarce resource" for countries and their citizens to exploit.  It is likely this flexibility in legal access and jurisdiction will have as much value as hard resources in the next 20-50 years.

    TEGUCIGALPA, Honduras (AP) -- Investors can begin construction in six months on three privately run cities in Honduras that will have their own police, laws, government and tax systems now that the government has signed a memorandum of agreement approving the project.

    Monday, September 17, 2012

    A colleague rejoins... previous post and points out that the riots include about 10,000 participants in total, barely a blip of humanity in a country with 1.2 Billion people.  However, its not the size of the protest, but its content that matters here.  Would 10k citizens receive the same tolerance were they protesting the Communist Party?

    Some photos from the proceedings.


    It's interesting to observe the official responses from the PRC with respect to the Diaoyu islands (a 4 square mile collection of rocks in the Pacific) protests.

    And yes, this does echo the Falklands...with quite similar economic circumstance and subsequent official posturing.

    Saturday, September 15, 2012


    I have written extensively about this silly little fed policy. Asset swaps do nothing to stoke demand. Instead, that perversely remove it by devouring (comparatively) high yielding assets and disbursing cash to chase whatever assets that remain (substantially benefitting equities). The net effect is increased volatility with deflationary pressures.

    The recent troubles Libya...

    ...immediately reminded me of the killing of Robert Burnes in Kabul in 1841. It was a different "empire" at the time, but the use of various forms of moral outrage as pretext for political killings is certainly not a new development.

    Friday, September 14, 2012


    Several experiments in sovereignty are occurring around the globe. I will comment on this as well very soon.

    After 2500 miles...

    ...I am finally back in New Orleans.  I will comment at length regarding global developments in short order.

    Suffice to say, I have a rather tendentious rendering of Fed announcements...