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The U.S. Supreme Court, based on the urging of the Obama administration, has ruled that any prisoner – even those arrested for offenses such as dog leash laws, peaceful protests, or driving with an expired license – can be subject to a routine strip search upon entering prison.

Yawning or having goose bumps have been added to the list of things acts which might get you labeled as a potential terrorist.

Senators Ron Wyden and Mark Udall recently made a statement that Americans would be “stunned” if they knew how the American Government is interpreting, applying and using the Patriot Act:

The National Security Agency is building a $2 billion dollar facility in Utah which will use the world’s most powerful supercomputer to monitor virtually all phone calls, emails, internet usage, purchases and rentals, break all encryption, and then store everyone’s data permanently.

A former head of the program held his thumb and forefinger close together, and said:

We are, like, that far from a turnkey totalitarian state.

Indeed.

CATO Institute economist rails on GOP spending (bigger under Ryan than when Bill Clinton left office) and implies that Nixon and Bush2 were two of the worse presidents of all time. Quite fascinating:

The interview starts at the 5:45 into show.

Watch Tuesday, April 3, 2012 on PBS. See more from PBS NewsHour.

The Republican Party is no longer the party of the past. Not even Ronald Reagan would recognize it. The Cato economist makes some interesting comments about the size of government. But remember, that for the Cato Institute the federal government should do little more than run the military.

Wealthy donors damaging the government in the UK as well . . .

Originally aired on ABC TV’s 7.30: 29/03/2012

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Bill Shorten: Minister for Employment and Workplace Relations.

http://www.mrjohnclarke.com

Carl worked as a portfolio manager managing approx. $120m at the time of his retirement in 2007. He now currently manages his personal investments on a full time basis.

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We are moving into the height of the political cycle over the next few months.  It is apparent that the Republicans will nominate Romney and he will battle Obama for the right to be president of the U.S.  Over the years I have received emails and had discussions with many people, some of whom I only know via the deep reach of the internet, about my political beliefs.  These often confuse people because they are not clearly liberal or conservative, and usually not moderate.  However, my beliefs do have themes that at times seem to align me with liberals, conservatives, and even radicals.  In individual conversations I have encouraged people not to stereotype me, but to engage in discussions about issues.

One of my beliefs is that with the growth of the population, the introduction of technology into every aspect of our lives, the continually increasing complexity of how we communicate, and the growing desire to impact systems at all levels, our species is experiencing radical change at a pace that most of us have difficulty absorbing.  At the individual level of existence, how we feel in our own skin can be anywhere from terrifying to electrifying, either creating excitement for life or fear of living.  Thus we seek small groups that we can identify with that are having similar internal experiences as ourselves.  We may seek to join a group of people who feel threatened by change, or who are challenged and invigorated by change.  These groups come into conflict with each other and are becoming more and more vocal.  They have new ways of contacting others who may have a similar experience at an even larger level of organizing through the internet, and if so inclined can link directly with those who are organizing around their shared inner experience of how the world works.

These are very interesting times.  Some folks believe the political process is more polarized than ever.  I believe that is relative to our age and political experience.  There is certainly a polarization going on between the two major parties and within the major parties.  My experience goes back to the 60′s and remembering the street battles, the loss of life at Kent State, Jackson State and other places, the yelling and the left wing suggesting we abandon families and other institutions that they claimed to be dysfunctional.  At least today many of the violent political responses to differences are thus far rare.   I disliked the rhetoric of the left in the 60′s, and experience the rigid positions of the far right  today as being little different in the goal of dominating the political system and equally distasteful.

I believe in equality.  Equality really means what it says.  All people should have equal access to all systems of organizing without bias of age, sex, religion, nationality, race, or any other way that we attempt to differentiate ourselves from others.  I believe in justice.  All citizens of the U.S. should have the right to a system that allows us access to stating our case and bringing forth the opportunity for justice when there is the possibility of a wrong that has been committed.  I believe in protecting the environment.  This is a no-brainer and I am often amazed by those who see the environment as only being something to take from and not protect.  If we want to survive as a species, we must take all necessary steps to protect the environment.  If we want to have a high quality of life, we must protect the environment.

I believe in managing our resources, both financial and environmental.  Financially there is one relatively simple rule to abide by.  As we are witnessing right now, it is important to pay as you go except in times of great emergency.  By most economic standards, the U.S. government, while accumulating debt, kept the debt at manageable levels until the year 2000.  Beginning in 2001, our nation’s will to pay for war and medical programs collapsed.  We allowed our government to lower taxes when they should have remained the same and eventually increased to pay for the cost of the wars our government entered.  Once we paid for our defense and medical expenditures, taxes could be lowered.  Now we are faced with a nation that has no choice but to dramatically reduce its defense and dramatically change how Medicare functions.   Sometime in the next 4 years, the U.S. is going to have a financial crisis.  It is almost inevitable.  The only thing that can postpone it without huge changes to the tax system, the way we manage issues of defense, and a revamping of our government sponsored medical systems is if the economy allows for low interest rates to continue.  If interest rates start climbing, it will impact the cost of our federal debt and will most likely lead to the financial unraveling of the U.S. government and, of course, the U.S. economy.  At that point in time, massive changes to our tax system and our expenditures will take place or we will have the destruction of the dollar by rampant inflation.

I also believe in what I think of as selective regulation.  If you ever want to study, or work within an area that brings
forth all of the psychological difficulties of trying to create or manage wealth and all of its implications, spend time working in or studying the financial sector.  Having spent 40 plus years in the financial sector, I know that it needs to have the tightest regulations possible to prevent systemic risk, the outright stealing of money from customers or the legal manipulation of the system to benefit the company and not the customer.  History demonstrates regularly that human beings are not capable of managing their desire to accumulate wealth no matter what the cost to the larger system.

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Paul Kasriel will be retiring from The Northern Trust Company on April 30. In the last month of his tenure, he plans to share some of his parting thoughts on economics.

He begins with this humdinger:

“Now, on to Mary Matalin. I saw her on one of the cable news shows on Wednesday defending Republican presidential candidate Mitt Romney’s planned car “elevator” in his new La Jolla home in terms of job creation. Ms. Matalin argued that by installing this elevator, Romney would be creating new jobs for the economy. How might Bastiat, the 19th century French political economist, have reacted to Ms. Matalin’s argument? My suspicion is that he would have made a distinction between what Ms. Matalin “sees” and what is “unseen.” Ms. Matalin sees the additional workers manufacturing and installing the elevator. What she apparently does not see are the workers who otherwise would have been hired for some other unrelated project had Mr. Romney forgone the installation of the elevator and rather invested, or saved, these “elevator” funds. Ms. Matalin, a Republican partisan, appears to have bought into the Keynesian fallacy often trumpeted by Democratic (or is it Democrat?) partisans that an increase in saving implies less total spending in the economy and diminished job creation. If Mr. Romney chooses to forgo the installation of a car elevator in favor of, say, purchasing some additional financial assets, in effect, he is transferring some of his purchasing power to another entity – a business, another household or a governmental body – that has a greater urgency to spend currently than does Mr. Romney. So, although Mr. Romney would be hiring fewer workers to manufacture and install a car elevator, the recipient of Mr. Romney’s investment funds would be hiring additional workers to produce whatever they were purchasing. (This concept of transfer credit comes from the Austrian school of economics, whose pupils greatly admire Bastiat.)The only way Mr. Romney’s decision to forgo the installation of a car elevator would not lead to a creation of jobs is if Mr. Romney chose to increase his saving by holding more bank deposits and/or currency, in which case would result in a decline in the velocity of money.

So, boys and girls, like Bastiat, keep your eyes open. Try to see everything when analyzing economic issues. Ms. Matalin was not incorrect to argue that Mr. Romney’s decision to install a car elevator in his new abode would create new jobs. But what she apparently failed to see is that new jobs would have also been created if Mr. Romney had chosen to forgo the purchase of the car elevator and instead invested those funds. Increased saving in general does not result in decreased aggregate spending. Rather, it merely changes the composition of who is engaging in the new spending.”

Rather intriquing . . .

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Source:
Kasriel’s Parting Thoughts – Mary Matlin’s Economics
Paul Kasriel
The Northern Trust Company March 29, 2012
http://bit.ly/H49XEs

Source: 2012 Presidential Election
ProCon.org, March 7, 2012

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Fascinating set of charts from the quarterly J.P. Morgan Asset Management deck.

Its as a good a time as any to open up the conversation: Why is Congress’ approval rating at record lows? Why are so many people at such political extremes?

What  say ye?

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Click to enlarge:

Source:
Guide to the Markets, Q1, 2012
J.P. Morgan Asset Management.

No one seems to remember the second part of Occam’s razor as rumored¹ to be stated by Albert Einstein: “Everything should be made as simple as possible, but not simpler.”

That is an issue I am encountering quite frequently these days. We see it in discussions about markets, politics, sports, economics, indeed, just about any field where questions of an unknown future drive debate. This morning, I want to briefly discuss the issue, pointing out a few recent examples. My advice is to be wary whenever you see this approach.

First, let’s understand what Occam’s Razor actually means: When we select among competing explanations for any given unknown, we prefer that which offers the simplest explanation of any effect. This includes that which makes the fewest assumptions, and requires the least logical contortions. However, one should proceed to simpler theories until simplicity can be traded for greater explanatory power. This is especially true when it comes to explaining complex events with lots of moving parts.

Consider the following statements:

Politics: No modern president has ever won a second term when the unemployment figure was 7.3% or more.²

Markets: The average Bull Market lasts 31 months.³

Sports: The new line up of (Choose: NY Knicks Jeremy Lin/Carmelo Anthony or NY Jets Mark Sanchez/Tim Tebow) locker room disruption.

Credit Crisis: High levels of leverage existed prior to the crisis without incident.⁴

Apple (2004-10): Has a very high P/E.

Affordable Housing Policies: Allowed lower income people to purchase homes they could not afford.

Note that I did not include any conclusion based upon these single variable analyses. But these are the simple, recognizable memes circulating the intertubes. They lay traps for the unwary. The conclusions the authors of these draw are:

1. The incumbent will lose in November
2.Sell your stocks
3. The Knicks and Jets cannot win a playoff
4. Leverage was not a factor in the credit crisis
5. Don’t Buy Apple
6. It was all Barney Frank’s fault

These are all probability questions. When doing these analyses, we do not know what the future outcome will be. Certitude in the face of probable outcomes is discouraged, as is gross over-simplification.

I have addressed many of these over the years (I want to get to the leverage issue soon).

Some people work backwards: They start with their conclusion, than set about hunting for any data that supports it. This is the worst form of confirmation bias. The preferred method is to research all of the relevant data, and see what conclusion that leads you to.

Bottom line: When it comes to investing, the errors of single variable analyses, oversimplification and bias all can be very expensive. Recognize these flaws when you encounter them in any sort of commentary, and adjust your expectations accordingly.

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Previously:
Single vs. Multiple Variable Analysis in Market Forecasts (May 4th, 2005)

Hume, Causation & Science (January 14th, 2012)

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1. Provenance: There is some question as to the whether Einstein actually said this, according to (Quote Investigator)

2. Unemployment rate by year (BLS)

3. This Bull Market Is Hard to Pin Down (NYT)

4. Bethany McLean: The meltdown explanation that melts away (Reuters)

Lobbyists write legislation, they take your representatives out to lunch (they can pay for it if both diners are standing, not sitting), they throw fundraisers, they abide by absurdly specific rules to avoid appearance of graft and bribery, but nonetheless, Lobbyists influence your government for the benefit of corporate interests.

Join United Republic and stand with those who want to get money out of politics, so YOU can decide how your Government should work.

Capitol Hill’s the toast. You’re the butter. Spread. It. On.

Uploaded by SofaPundit on Mar 15, 2012

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