Thursday, December 22, 2005

here's how thety get us

That's the benefit side, the costs of which are borne by the tens of millions of milk consumers who're forced to pay maybe $20 or $30 more per year than they'd have to pay if there weren't congressionally-mandated minimum prices. Which one of us is willing to bear the expenses to go to Washington or state capitols to try to unseat legislators who created the opportunity for the dairy industry to rip us off? Individually, we correctly conclude that it's cheaper just to pay the $20 or $30 more a year and get on with our lives. Plus, since milk consumers have diverse interests, it'd be costly to organize us to fight the dairy interests and their congressional allies
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1 comment:

Anonymous said...

Menace to Society

The Daily Reckoning

Rancho San Jose de los Perros, Nicaragua

Monday, December 26, 2005

---------------------

*** Plenty of presents under America's Christmas tree this
year...almost
too wonderful...

*** What happens when the credit flows less like Kool-Aid - and more
like
tar?

*** The top financial newsletters of 2005...Christmas in the
tropics...and
more!

---------------------

You are receiving this email as a part of your FREE Subscription to The
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July 09, 2005. Should you wish to unsubscribe
please follow the instructions at the bottom of this email.

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There were plenty of presents under America's Christmas trees this
year.
If you go by appearances, the whole nation is richer and getting
richer.
House prices are still going up. So are stock prices. Shoppers are
still
spending money. So far, our worries seem pointless.

America is evolving into a new, post-industrial economy, say
economists.
This new economy can handle far higher debt loads. People can live in
bigger houses with bigger mortgages (see below). And the trade deficit
really doesn't matter.

We don't doubt that some companies, and some investors, can flourish in
this new economy. They will come up with new and better products...and
outsource the making of them to lower-cost parts of the world. What we
doubt is that the economy as a whole can prosper when most of its
citizens
have to go further and further into debt to make ends meet.

When people spend money they've borrowed - as opposed to money they've
earned - it has effects that are almost too wonderful. Companies can
sell
more products domestically without an offsetting labor cost; so they
become more profitable (temporarily). And more people go to work in the
retail sector (and in housing) helping each other spend their money.

On the surface, it sure looks like the society is richer...more
profits...more spending...more sales...more people working...more PSPs
under the Christmas trees. But whence the source of this wealth? Is it
real?

Incomes per hour are not going up - they're going down. And the average
man...as we recall the data...has no more real spending power per hour
worked than he did 30 years ago. Is he richer? Hmmm...his house went up
in
price. His wife went to work. Interest rates went down...finance
companies
invented new ways to lend him money...so he can spend more. But what is
it
that brings him the extra spending power? Is he really benefiting from
this new, post-industrial economy? Does he get a share of the profits
from
selling iPods? Does he get royalties on Disney movies? Not likely.

And why should he? Inherently, an hour of his time is no more valuable
than that of a Chinese person. Why should he earn more? Why should he
be
richer? Whence cometh the extra loot? In the past, the answer was
simple.
The factories - representing huge, fixed capital outlays - were in his
backyard, not in China's. Now what's in his backyard that makes his
labor
so much pricier? The new post-industrial 'platform' companies are freer
to
move about. He cannot get a grip on them. He cannot force higher wages
out
of them. Nor is he in a better position to own their shares than an
investor from Paris or Manila.

He had a huge advantage when America was an industrial country - the
factory could not escape. He and other workers could unionize and
exploit
the capitalists. No more. Where is his advantage? Is he better educated
than the Chinese? Has he more oil in his backyard? Has he more skills?
Even if the platform, creative, genius companies were more profitable
than
the factories...why would they give this fellow a piece of the profits?

Not that we're getting misty eyed over the fate of the poor lumpen.
He's
had it good for a very long time. If it ain't so good in the future,
well,
that is just the way things work. But he really has no way to increase
his
purchasing power -- faced with billions of competitors in the East --
how
will the U.S. domestic market grow? How will he pay back all the money
he
borrowed? How will he keep up with payments...with spending...with
life's
little setbacks...when the credit flows less like Kool-Aid and more
like
tar?

We don't know. But we wouldn't want to hold his mortgage. And we
suspect
that the marvelous performance of the U.S. economy over the last few
years
is a trap and a swindle. It was caused not by a dynamic new economic
model, but an old-fashioned credit binge.

More news...if there is any...

--------------

Kate and Addison, reporting from an empty office in Baltimore:

Not too much to report today, as everyone is recovering from the
holiday
festivities. We're sure most people are going to take it easy this
week,
but there is one thing you should do before the New Year: check out the
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--------------

Bill Bonner, back in Nicaragua...

*** This is certainly the time of year for countdowns...top songs of
2005,
top movies...and top financial newsletters. While Dick Clark will
surely
not be counting these down, the Hulbert Financial Digest took the time
to
list the top ten financial newsletters of 2005.

And the number one financial newsletter of 2005 is...Justice Litle's
Outstanding Investments!

MarketWatch reports: "By Hulbert Financial Digest count, Outstanding
Investment's portfolios are up 47.8% over the 12 months through Nov.
30,
vs. 6% for the dividend-reinvested Dow Jones (INDU) (and 9.9% for the
dividend reinvested Dow Jones Wilshire 5000 (DWC))."

[Ed. Note: You can find the entire list of the top ten financial
newsletters of 2005 on MarketWatch.com...and for Justice Litle's
financial
predictions for 2006, see here:

Must-Know Financial Predictions for 2006
http://www1.youreletters.com/t/316412/10595362/782746/0/

*** A note from Steve Sjuggerud:

"Hang with me...[Look at] a chart of...the median price of a new U.S.
home, per square foot, adjusted for inflation.

"The results are surprising... The price of a new home per square foot
adjusted for inflation is consistent, and appears relatively flat since
1970.

"The 35-year average, neatly, has been $100 a foot. It's amazing how
consistent it's been... roughly between $90 and $110 for over 30+
years.

"New homes have steadily risen in price, so they say. That statement is
correct, but it's missing this important truth. It appears that the
size
of a new home has roughly increased at the same rate as the price of a
home, after inflation (roughly 0.1% compounded per month). So saying it
another way, the gains in median home prices over the last 35 years can
significantly be accounted for by inflation and by the increase in
square
footage."

*** Christmas comes to the tropics just as it does to the rest of the
world. We have a tree...with lights...and under it, we stacked presents
for the Bonner clan.

But there is a big difference between Christmas as celebrated by a
typical
American family and the Christmas that many Nicaraguans know.

"Most of these people are so poor they can't afford to buy Christmas
presents," a friend explained. "That's not true around here. We employ
so
many people [at Rancho Santana] that people have some money and can buy
there own presents. But if you go a few miles in any direction, you
will
find people who have almost no money at all,"

We were already struggling with superiority. Compared to the local
people,
we are fabulously rich. We come to Nicaragua carrying our presents and
expecting to celebrate as we north of the Rio Grande. It is not
especially
lavish, compared to the standards of New York or San Francisco, but
here
it must seem to the indigenes that we are like Saudi princes or Silicon
Valley moguls.

A man struggles to feel superior to his fellows. But when he feels too
superior...and knows down deep in his heart that he has done nothing to
deserve it...it chaffs him like a pair of tight underpants. He just
doesn't feel comfortable. For he feels he has an unfair
advantage...that
the playing field was tilted in his direction. So he can't enjoy his
superior position.

We cannot change the world. But we do what we can to make our own
little
corner of it as agreeable as possible. The jefes at Rancho Santana
decided
to play Santa Claus. They bought a thousand toys to be handed out to
the
local children. On Christmas Eve, we gathered the toys at the health
clinic and sent a truck with a loudspeaker through town telling people
that Santa had come to town. If we have been selling lottery tickets or
mortgages, we would have gotten rich. The children and their parents
began
lining up...Elizabeth attempted to peer into each little boy's heart to
determine whether he would prefer a set of toy trucks or a plastic
helicopter. After the present was handed over, the child's hand was
marked
with ink. But that was not enough. Soon a black market rose up behind
the
clinic...with little boys and girls buying and selling each other's
toys.

"Hey, wait," said Antonio to one little boy who looked both familiar
and
guilty. "Weren't you just in this line? Didn't you already get a
present?"

The boy held out a freshly washed hand. "No, that must have been my
brother."

The little town of Limon ran out of children before we ran out of
presents. The rest were loaded on a pickup truck and taken to a
different
town.

At least Santa put in an appearance.

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The Daily Reckoning PRESENTS: The highlight of every holiday season for
us
here at The Daily Reckoning is the annual Christmas card from our
friend,
The Mighty Mogambo. And in this holiday spirit, while can't give you a
holiday pop-up card, we give you...The Mogambo's Monday Essay (TMME)...

MENACE TO SOCIETY
by The Mogambo Guru

I had planned to use this space for another official Mogambo rant of
outrage (OMROO), about, you know, the Federal Reserve and Congress, and
how they are murdering our money, and, by extension, us. And, by
further
extension, everybody else, too.

But then I would get all worked up, angrier and angrier, more and more,
finally escalating into senseless, mindless, gratuitous use of
childish,
gutter profanities at high-decibel volumes. And nobody wants that,
especially little kindergarten children who, it turns out, get REALLY
freaked out by it, and there's suddenly a lot of screaming and crying
and
pooping in one's pants, and it's a real ugly mess, and then the
children
start screaming and crying and pooping in their pants, too. So instead,
I
think to myself, "Perhaps young grasshoppers would be better instructed
by
a genteel and refined approach!" Always willing to take the easy way
out,
I graciously turn today's lesson over to Robert Blumen on
LewRockwell.com,
and his essay entitled "Bernankeism: Fraud or Menace?"

I admit that I almost didn't read it because I already knew the answer;
Ben Bernanke is menace. And I assume that you, likewise, skipped over
it,
too, after seeing the trick question posed in the title, and thinking
to
yourself, of course, "Bah! Any child can see that the man will destroy
our
money with his insane theories! But knowing that, I can personally
prosper, making plenty big money (PBM), by buying gold, and buying
silver,
and buying oil, and buying damned near any commodity that you can name!
And then I will be rich, rich, rich! And you shall be poor, poor, poor,
and then The Mogambo and I will look out through the bullet-proof
windows
of our lovely mansions and watch you, in your filthy misery and
squalor,
rooting around in the dirt for bugs to eat, and we will laugh at you,
and
bellow 'Welcome to fiat money hell, you morons!' "

The class is suddenly silenced by my outburst. I am embarrassed, and
take
my seat as Mr. Blumen calmly goes on to say, "The first principle of
Bernankeism is that it is better to prevent deflation than to attempt a
cure after the disease has set in." Hahaha! What a chump! Not only do
they
now teach this idiocy in our schools, but Ben Bernanke was the chairman
of
the damned economics department at Princeton! My hollow laughter drips
with contempt, which is not as easy as it sounds.

If Mr. Bernanke truly DID understand economics, then he would have
known
that the REAL "first principle" of economics is that it is best to
prevent
the inflation that LEADS to the deflation!! And note the use of the
rare
"double exclamation point" to denote particular emphasis, as befits its
importance in economics.

Likewise, commenting on other areas where I also have no competence
whatsoever, it is likewise NOT true that the First Law of Holes is
"When
you find yourself in one, stop digging." The REAL "First Law of Holes"
is
"If you don't want a hole, don't dig one."

But this is not about holes, unless you think Mr. Bernanke is a real
first-class hole, if you get my drift, and if you don't, then you soon
will, as Mr. Blumen goes on to write, "Governor Bernanke and his
accomplices are obsessed with something known as 'the zero bound
problem.'
" I interrupt to explain, in case you ain't heard, that one of the new
buzzes in the lucrative profession of "economics masquerading as a
science" is the obvious notion that you can't loan money at less than
zero
percent interest. This is, and always has been, obvious: There is
nothing
cheaper beyond "free." This, then, is the "zero-bound problem." For
some
reason, this is now a big freaking deal (BFD) in central bank circles.

Proving my point, he goes on to say, "Eight of the fourteen papers and
speeches that I examined deal with this problem either as their main
point
or in passing. Bernankeism advises the central bank to avoid the
zero-bound problem by creating a constant state of pleasant and benign
inflation of around 2-3%." As I read that last sentence, all I could
hear
was a sizzling sound as my few remaining brain neurons overloaded. So I
am
not sure about this next part, as the phrase "pleasant and benign
inflation of around 2-3%" sort of made my brain freeze up ("urrrkk!")
as
my puny little Mogambo mind (PLMM) cannot accept the idea that anyone,
ANYONE, in their right mind would even think, much less say, much, much
less to say in from of witnesses, much, much, MUCH, MUCH less to
declare
it to be monetary policy, that a constant amount of price inflation, OF
ANY AMOUNT, is even benign, must less pleasant!

Working myself into a Mogambo frenzy of outrage (MFOO), I throw the
window
up, lean out, and shout, "Stop the presses, America! I, The Mogambo,
declare that anyone who would proclaim such an asinine thing is a
dangerous lunatic!" By this time I am screaming like a wounded banshee
in
my rage, and neighbors were soon crashing loudly into the room to
wrestle
me to the floor and stuff smelly rags into my mouth, trying to get me
to
stop screaming, but which only made me scream louder! Arrgghhh!

And another thing that I was screaming about is how Congress, the
biggest
bastion of butthead bozos in the history of the USA and an
embarrassment
to themselves, their families and all of us, just sits there as this
horrid little man is telling them that we are going to have constant,
simmering inflation, the kind where, little by little, month by month,
prices creep creep creep upward, but your income does not. And every
month
you have to borrow more money, or give up something else, or cut back
on
something else, or reduce your consumption of something else, and after
awhile it starts adding up and up, and then one day you get down to
rationing basic necessities, and you get angry and scared, and then
angrier and scareder.

But we are not here to talk about how I am an angry coward, as I am
tired
of hearing it. And while we are talking about it, I am also tired of
hearing how I am an ugly idiot and I stink, too. So I quickly veer back
to
the subject and say that Ravi Batra, who is an economics professor at
Southern Methodist University and author of terrific doom-and-gloom
books
with terrific titles, goes beyond the anger and cowardice thing in his
new
book entitled "Greenspan's Fraud." Anyway, he ties this all in with
what
he calls the Wage Gap, which is the difference between the rise in
wages
versus the rise in productivity.

Here Mr. Batra takes it up and says, "According to this theory, the
rising
wage gap creates exponential growth in debt, which in turn generates an
exponential rise in profits, leading to the share price bubble.
Eventually, debt growth slows, so the demand-supply gap, thus far
hidden
by the debt mountain, comes to the surface; profits plummet and stock
markets collapse."

And you can tie that in with Bill Bonner of the DailyReckoning.com when
he
correctly notes that borrowing for consumption is the equivalent of a
free
lunch to businesses, as everybody gets to sell stuff to people without
first having to pay wages to those people as workers! Money and sales
come
out of nowhere! False profits!

But none of this is in keeping with the current theory of economics,
which
is preposterous through and through. So what is this bizarre new
economic
theory that allows ever-increasing asset values? Mr. Blumen explains,
"Dr.
Bernanke accepts Milton Friedman's theory of the Great Depression. In
the
Friedman view, a contraction of the money supply brought about by loan
defaults and then bank failures turned what would have been an ordinary
recession into the Great Depression. This catastrophe could have been
avoided had Fed inflated sufficiently."

Wow! See how easy this stuff is? All the government has to do, see, is
make so much money available, see, at such low interest rates, that
(are
you following me so far?) people can't stop themselves from borrowing
the
money and goosing the economy by producing and/or distributing the
goods
and services being bought by the government itself! There is,
literally,
no upper limit on the amount of debt that people can, or will, carry!

I am laughing! Hahaha! I laugh because, and this is the important part,
this is freaking insane! How can anyone possibly think, even for a
minute,
even for a second, even for a teensy weensy micro-second, that an
economy
that has grown because of government spending and accumulation of
massive
public and private debts is going to, one day, magically, be
transformed
into one that does NOT depend on government spending and ever-higher
debt
loads? Hahahaha! Then where is the money going to come from, moron?
Hahaha! I am laughing my big fat Mogambo butt (BFMB) off here! Hahaha!
Stop! Stop! My sides are hurting from all the laughing! Hahahaha!

But, wiping the tears from my eyes, I get suddenly very serious and
note
that Ben Bernanke, the next chairman of the Federal Reserve, actually
believes this, this, this (pause for dramatic effect) stupidity! He
actually does! And he is the next a chairman of the Federal Reserve! I
keep repeating this because my mind refuses to accept the fact that we
Americans, who like to pride ourselves on how smart we are and how
wonderful we are, would do something so, so, so, so (pause for another
dramatic effect) incredibly so, so, so (a crescendo of a pause)
stoooOOOOooopid! The mind screams "Noooooooo!"

Mr. Blumen doesn't want to answer my question, but instead goes on to
send
me screaming from the room by explaining "The third principle of
Bernankeism is the necessity of 'unconventional measures.' The reader
of
the Fed's papers and speeches will find a series of increasingly exotic
plans for the dollar. From beginning to end, these methods range from
the
merely unsound to the bizarre and terrifying." Now, I don't know about
you, but being a real coward and crybaby little wuss, I don't like
things
that are classified as either bizarre or terrifying. So with real dread
in
my voice, I timidly ask, "Like what, dude?" Well, how about, for
example,
"money rains", whereby the Fed would "give money away either through
directly disbursing currency to the public or by disbursing it through
the
banking system." By this time I am sure your heart is beating like a
trip-hammer, boom boom boom at the very thought of such monetary
sinfulness! Nobody ever needs to work, because the government will give
everybody money to s end!

Then, with this wicked little grin on his face, Mr. Blumen goes on to
say
that another scam is "to make money pay a negative nominal interest
rate,
by imposing some type of 'carry tax' on currency and deposits. A tax or
fee on Reserve deposits of 1 percent per month, for example, would mean
that those deposits, in effect, pay a nominal interest rate of roughly
minus 12 percent." What?!? And note the use of two different
punctuation
marks, where I was trying to be clever and failing miserably, to
indicate
a mixture of anger, shock, disbelief, anger, fear, anger, terror,
confusion, some more anger, and the vague, tentative beginnings of what
appears to be jock itch.

But the idea is that you would spend all your money in a fit of
consumption, rather than saving it, because you would be paying a 12%
tax
on it if you did! My heart is slamming into my ribs at the very thought
that anyone would actually advance such a terrifying idea, much less
the
next chairman of the Federal Reserve.So, is it any wonder that I
strongly
advise you to buy gold? And is it any wonder that gold is doing so
well?
And is it any wonder that gold will CONTINUE to go up in the face of
this
Bernanke thing?

Until next time,

The Mogambo Guru
for The Daily Reckoning

Mogambo Sez: No news is good news, and there is nothing new in the
Mogambo
Retirement Portfolio To Amazing Wealth (MRPTAW); keep accumulating oil,
gold and silver, and things related to them. The recent declines in
prices
is just a benevolent Lady Luck being very nice to you, so that you can
leisurely walk over and pick some of these things up at bargain prices.
Don't be a chump. Do it!

Editor's Note: Richard Daughty is general partner and COO for Smith
Consultant Group, serving the financial and medical communities, and
the
editor of The Mogambo Guru economic newsletter, and a vocational
exercise
to heap disrespect on those who desperately deserve it.

The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning
and
other fine publications. If you're inclined to read more, you'll find
the
whole Mogambo here:

Paranoid Whackoid Lunatic
http://dailyreckoning.com/Writers/Mogambo/DREssays/mg122605.html

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Russ

Tuesday, December 27, 2005 at 7:50:00 AM CST

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