Freedom Patrol

Gold

noreply@blogger.com (Avi Kahan) — Thu, 11 Jun 2009 20:14:00 +0000

I've found when I get overly frustrated it helps me to find humor in life. My latest humorous tirade comes courtesy of gold. If you read articles or comments on gold the views could not be more divergent. On the one hand is the group of people that say gold is totally worthless. It costs money to store and guard, its heavy, it's expensive to ship, you can't eat it, you can't spend it in a store, on and on...

These people are totally right. Gold is one of the most useless things on the planet.

The other group of people are the paranoid group. They don't really fit in with everyone else. They view everything with suspicion. They don't trust the government and those funny paper bills. They don't listen to anyone. So what do they do? They buy something they can use to trade with. Something that throughout human history has been perceived as "money." They buy gold and pay a hefty price for it.

So who is right? Both of course. Gold is utterly and completely worthless and yet because of its potential use as money it costs almost $1000 for a measly ounce.

I'm a paranoid sort. I bought some gold.

I'll leave you with one of the funnier comments I've seen lately "In the olden days we built our bubbles around something, be it tulips, shares of internet companies or houses. Now a days these young whipper-snappers are trying to build a bubble out of pure confidence."

General Motors Death Looms

noreply@blogger.com (Avi Kahan) — Tue, 26 May 2009 19:10:00 +0000

I don't get upset anymore about ridiculous things that go on in the world. Instead I cheer.

The latest tomfoolery is the ongoing saga of General Motors courtesy of the New York Times. http://www.nytimes.com/2009/05/27/business/27auto.html?_r=1&ref=business.

There are two points in the article worth stressing. The first is the governments ownership stake in GM. Everyone knows governments should own car companies (there is no rational debate here). In this endeavor great strides have been accomplished as the government is set to take a larger stake in GM post bankruptcy with an ownership interest around 70%. Way to go everyone.

I personally can't wait for my new car. I'm imagining a green car that gets 200 miles to the gallon, costs $400,000 to make but only costs me $20,000 to buy due to credits, subsidies, rebates, tax relief, and other government programs. Of course the government will take a loss on the car but c'mon people it will be so green. Have a heart. I'll take 10 please.

The second point worth mentioning is the Debtor in Possession Financing the government is going to be contributing to GM. The number is estimated at 50 billion dollars..... Please. Chump Change. I don't get phased for anything less than a trillion these days.

On that note 10 year treasury yields have risen to their highest in quite some time at 3.5%. Apparently some people think the US government is spending more than it receives and are selling long-term treasuries. Blasphemy. I purpose hunting such traitors down and locking them in jail (without a trial of course).

Remember if these rates keep climbing the recovery is doomed. The stock market is a sideshow. The only thing that matters is the bond market.

The Best Ideas of the Economic Crisis

noreply@blogger.com (Avi Kahan) — Tue, 26 May 2009 15:45:00 +0000

The following is a list of the best ideas of this financial crisis.

1) It's pretty clear to everyone with half a brain that Medicare/Medical, Social Security, the Pension Benefit Guaranty Corporation, and a whole host of other government programs are woefully underfunded. The best solution? Simple. Leverage them up. With a higher debt load these programs can increase their return and solve all of our problems.

2) I heard an awfully funny rumor that Moody's and S&P were in danger of being downgraded and placed on negative watch.

3) The Dow Jones is very shortly going to need a replacement for General Motors. Some of the talk of replacements include Apple and Google. My suggestion? The United States Government. It's certainly large enough and it owns financial companies, car companies, insurance companies, and more.

4) The problem in the housing market is too much supply. All these foreclosed houses just keep adding inventory to the housing market. The solution is simple. Destroy the supply. Literally. Just take a bulldozer to the houses. Everyone is a winner. Yay.

WHO Caves

noreply@blogger.com (Avi Kahan) — Sat, 23 May 2009 17:37:00 +0000

Sigh. It appears the WHO has bowed to international pressure as previously discussed in http://freedompatrol.blogspot.com/2009/05/you-cant-handle-truth.html. In that article I pointed out that the WHO was already at a level six pandemic according to their definition and either needed to declare the emergency or rewrite their definition of a level six pandemic as continued stalling made them look more and more ridiculous everyday.

Unfortunately the World Health Organization has bowed to political pressure and has in fact decided that you can't handle the truth. Rather than declare a pandemic they have, as predicted, decided to rewrite the rules of the game in the bottom of the ninth - http://www.nytimes.com/2009/05/23/health/policy/23who.html?_r=2&ref=global-home

I'm not surprised. Maybe slightly disappointed. Mostly just resigned. After all...who is John Gault?

Jeff Macke Insane on Purpose?

noreply@blogger.com (Avi Kahan) — Sat, 23 May 2009 16:59:00 +0000

If Jeff Macke was acting insane on purpose in http://freedompatrol.blogspot.com/2009/05/jeff-mackemr-south-carolina.html then that was some of the most brilliant impromptu acting I have ever seen.

We will likely never know the answer of what exactly went down in thosse inspiring few minutes of insanity but it appears his time at CNBC is just about up.

Business Insider has confirmed with a source that Jeff Macke is done with Fast Money and CNBC. http://www.businessinsider.com/confirmed-jeff-macke-is-done-at-cnbc-2009-5

It is suspected that Macke, a cynical conservative voice on CNBC's "Fast Money" has drawn the ire of the network for his criticisms of the Democratic-controlled political environment in Washington. Jon Najarian, a fellow CNBC contributor, said the following on his Twitter site. “It does also seem that the dispute between Jeff and CNBC has resulted in the network limiting his opportunities, which is too bad for both parties as I think he can do compelling television. I suspect the stress on both Jeff and CNBC execs is immense, as he is an original cast member of their most popular show."

Macke tells the truth and draws the ratings. Unfortunately he is politically unpalatable and in this day and age nobody dares take such a position. Looks like Macke is going to follow Dylan Ratigan down the black hole.

Insanity Everywhere

noreply@blogger.com (Avi Kahan) — Thu, 21 May 2009 17:28:00 +0000

Feeling alone and confused? Questioning your own sanity?

Fear not. You are still sane. Below are a few choice quotes from Ron Paul's speech to the house floor on May 19th as well as the entertaining video. Something tells me he agrees with Macke in http://freedompatrol.blogspot.com/2009/05/jeff-mackemr-south-carolina.html

Ron Paul:

"Insanity past off as logic"

"Evil described as virtue"

"Ignorance pawned off as wisdom"

"Preventive Wars used as a road to peace"

"Socialism to save Capitalism"

Obama: Helping or Hurting the Unions?

noreply@blogger.com (Avi Kahan) — Wed, 20 May 2009 22:48:00 +0000

In what makes absolutely no sense but all the sense in the world it appears that Mr. Obama, despite being a supporter of unions, is substantially hurting their future success.

In an article from Bloomberg http://www.bloomberg.com/apps/news?pid=20601087&sid=asXxg9ZZRjv4, Hedge Fund Manager George Schultze says he will be more wary of lending to unionized companies after being burned in Chrysler's bankruptcy by the Obama Administration. In a similar article out of the Indianapolis Business Journal, http://cms.ibj.com/ASPXPages/6iframes/FrontEndArticlesDetailPage.aspx?ArticleID=38147&NoFrame=1 Indiana Treasurer Richard Mourdock said he wouldn't invest any more money in the debt of companies receiving federal funds.

Essentially what is happening is these creditors feel their legal rights under bankruptcy law have been stolen from them by the pro-labor political motivations of the government.

Normally the way it works in a bankruptcy case (simplified for easier explanation) is priority claims (taxes, lawyer fees, etc..) are paid first, followed by secured creditors, unsecured creditors, and then equity holders. Regardless, of whether you believe these unsecured creditors are being treated fairly or not, the perceived unfairness money managers, like the two mentioned above, have toward government interference will make it harder for union companies to borrow debt. In order to borrow these companies will now have to pay a risk premium to service their debt. This risk premium will increase their cost of doing business and on a macro scale force many more of them into bankruptcy than would otherwise be there.

Ironically Obama's actions are hurting the unions and the companies they work for. Makes perfect sense doesn't it?

Jeff Macke = Mr. South Carolina

noreply@blogger.com (Avi Kahan) — Wed, 20 May 2009 18:41:00 +0000

Jeff Macke sums it up quite nicely in one of the best things I've heard since Miss South Carolina.

Funniest stuff on CNBC to date. Oddly enough despite not knowing what he said I find myself agreeing with him in entirety.

Ridiculous Things in Bizarro World

noreply@blogger.com (Avi Kahan) — Wed, 20 May 2009 00:01:00 +0000

1) Timothy Geithner on whether Federal money was going to be available to cities and states - "As for any assistance, I wouldn't use the words 'bailout' or 'federal,' I would say we're in close consultation with people who are looking at ways to make sure these markets are working so states and municipalities can meet their needs."

Translation: Federal Bailouts of states and municipalities are on the way

2) Unlike the rest of us the Federal Reserve is not interested in money. Accordingly it has postponed considering Goldman Sachs, Morgan Stanley, and JP Morgan's request to repay the TARP until the week of June 8. http://www.bloomberg.com/apps/news?pid=20601087&sid=a7MkO._fo1fw&refer=home

3) Senate Passes Credit Card Bill - In a bid to further reduce credit the Senate has overwhelmingly passed "a credit-card “bill of rights” that would curb fees and limit contract changes." http://www.bloomberg.com/apps/news?pid=20601087&sid=aPFv1avGReog&refer=home . It is interesting that the government along with the Federal Reserve is doing everything it can to increase the supply of credit in the market, and then they go and pass a bill which will undoubtedly make it harder for credit card companies to stay in business and will most assuredly decrease the supply of credit. Which is it guys?

4) New Housing Starts and Permits Fall to Record Lows. Mr. Stock Market is confused all day. He can't decide whether this is a good thing or a bad thing. On the one hand it means new inventory won't increase housing supply down the road on the other it means "green shoot" recovery isn't happening at all and it still sucks to be a construction worker.

5) One of my all-time favorites....the administrations goal of making housing more affordable. To this end the federal government subsidizes houses with tax credits, deductions, the FHA, Fannie Mae, Freddie Mac, ZIRP (Zero Interest Rate Policy), 1.2 trillion of GSE debt purchase courtesy of Mr. Bernanke, and many more. My question: If you want to make housing more affordable why are you trying so hard to stop prices from falling? Isn't that what affordable means...low price?

More to come later....

You Can't Handle The Truth

noreply@blogger.com (Avi Kahan) — Mon, 18 May 2009 19:37:00 +0000

It's recently come to my attention that it is a rare person that actually wants the truth. Therefore dear reader I am offering you a choice. "You take the blue pill and the story ends. You wake in your bed and believe whatever you want to believe. You take the red pill and you stay in Wonderland and I show you how deep the rabbit-hole goes." Of course dear reader "Remember -- all I am offering is the truth, nothing more." (Morpheous speaking to Neo in the Matrix).

If you continue reading this blog I will present the truth. The truth about green shoots, media spin, and corrupt government and business practices. If you stop reading you will be happier. The choice is yours.....

Today in Bizzaro World we are going to discuss the WHO or World Health Organization. For some time now the WHO has resisted declaring a level 6 pandemic for the swine flu. Let's look at the WHO organizations own definitions for a level 5 alert and a level 6 pandemic.

"Phase 5 is characterized by human-to-human spread of the virus into at least two countries in one WHO region....

Phase 6, the pandemic phase, is characterized by community level outbreaks in at least one other country in a different WHO region in addition to the criteria defined in Phase 5."

There are now more than 8,000 officially recognized cases of the swine flu. The virus appears to double every 4 days. It has spread across the globe. So why dear reader has the WHO not declared a level 6 pandemic???

Of course I know the answer. It's because nobody wants to hear that the WHO has raised the alert level to a level six PANDEMIC. The truth is too harsh and they don't want to spread fear. Probably rightfully so as the herd might stampede.

I however am providing the truth to the rare few that want it. It's clear that according to the definition we are already at the level six stage. The WHO is stuck between a rock and a hard place. They cannot raise the alert level because the herd might stampede but by not raising the alert level they look incompetent. As far as I see it they have two choices. Raise the alert level or far more probable change the definition of a level six alert so the swine flu no longer qualifies.

Already there has been rumblings of changing the definition. The New York Times had an article http://www.nytimes.com/2009/05/19/world/asia/19flu.html?_r=1&ref=global-home in which it states that "Britain, Japan and other nations [have urged the WHO] to change the way it decides to declare a pandemic — saying the agency must consider how deadly the virus is, not just how fast it is spreading."

How this plays out is anybody's guess. The WHO can't stall too much longer. I'm a skeptic. I bet they change the definition.

Treasury Bailing Out Insurers --- Hooray We're Saved

noreply@blogger.com (Avi Kahan) — Fri, 15 May 2009 04:39:00 +0000

Today is going to be a great day. The Washington Post has revealed that preliminary approval has been granted to some of the nation's largest insurance companies for a capital infusion courtesy of TARP. http://www.washingtonpost.com/wp-dyn/content/article/2009/05/14/AR2009051403866.html?hpid=topnews

Anyone else other than me not reassured? Why stop at insurers? Rumor is trucking companies are going to be asking for bailouts next. After that retail. Where does the madness stop? Wouldn't it be nice if we could just bail everyone out? It sure sounds good. No suffering ever for anyone. Not a day goes by that I don't wish I was dumb enough to think it could work. Think of all the good things we could do (and probably will do in the future). We could pass laws stopping companies from firing people. Raise minimum wage to a million dollars an hour. Hooray we're all rich.

Anyway, aside from the ridiculousness of bailing anybody out how much money is actually left in the TARP? If we didn't live in Bizarro World it seems like this would be an easy question to answer. Instead the situation always plays out something like this.

Ron Paul: How much money is left in the TARP?

Timothy Geithner: Well Congressman Paul, first off I would like to thank you for your excellent question. I'd like to begin answering your very important question by first telling you about the overwhelming support Congress gave the Treasury when it passed the TARP. As you know, the program was necessary in order to stop the systemic collapse of the banking system.... [Here Geithner tries to use the words "systemic collapse" as often as possible].... Now this program along with many others that we have diligently instituted have done wonders for increasing liquidity in the capital system. As long as we persevere we have nothing to fear. [Wow that one is quite catchy. Geithner should seriously look into stealing it.]

Barney Frank: Congressman Paul your time is up

Ron Paul: Sigh

Now you see what just happened there? The question never got answered. Geithner said all kinds of things while managing to say nothing at all. Most likely because TARP funds are running dry and he doesn't want anyone to know it. It's much better when everyone thinks the money tree called TARP is in full bloom.

Of course who really cares if TARP runs out of money. At this point I have no doubt that they will somehow either legally pass more money through Congress or use an unconstitutional end around of Congress like they used the FDIC for in the PPIP.

Ah well, at least I can sleep better tonight knowing my life insurer has plenty of fun paper money it can throw around should I die. Goodnight All.

Barney Frank is a Genius

noreply@blogger.com (Avi Kahan) — Thu, 14 May 2009 16:57:00 +0000

Barney Frank is my personal hero. His latest crusade is one of his most admirable yet. He has determined that municipalities are paying too high an interest premium to borrow debt and that he Barney Frank is going to save them by reducing their borrowing costs.

I'm not quite sure what it means when he says that rates are too high. I assume he doesn't like the way the free market works and is unhappy with the actual numerical interest rate municipalities are paying. I'm sure he is right too. Municipalities are being screwed. After all, everyone knows the private market has a vendetta against these municipalities and the fact that they are paying unfairly high rates has nothing at all to do with the fact that they are massively insolvent and therefore huge credit risks.

But this is why Mr. Frank is so amazing and is my personal hero. He is able to act with 100% confidence without anything at all resembling logic. He, Barney Frank, hero of the people, is going to lower the cost to municipalities so all the corrupt, inefficient payments to his voting constituents can continue unabated.

Now how is he going to do this you ask? How is he going to somehow magically lower costs without any unintended consequences?

Well this is why Barney Frank is my hero and you are not. You are a skeptic who doubts the power of the almighty one. Just believe. Don't question. God knows you will be happier. Of course if you, like me, are still skeptical I'll give you the answer. He can't. He is a buffoon who has no idea what he is doing but views himself as a Messiah - a savior of those who can't defend themselves.

Which brings us to a small but interesting philosophical tangent. Barney Frank doesn't believe he is evil. Nobody actually believes they are evil. Everyone is always trying to do good. Even Hitler thought he was doing good. Eliminating the evil Jews and restoring the Aryan race to its rightful place was his crusade.

Barney Frank is not evil but he is either horribly ignorant or tremendously arrogant. Barney Frank's plan calls for the Federal Government to guarantee part or all of municipal debt. By doing this Barney will most assuredly accomplish his goal of lowering cities' borrowing costs at the same time as he massively increases the credit risk of the United States. Aside from the fact that the United States is already a banana republic, this bill, if passed, would be the single most damaging thing Mr. Frank has ever done. It destroys the Constitutional concept of Federalism, it massively increases the United States' credit risk, and it creates moral hazards as far as the eye can see.

Let's hope it passes so this charade of a U.S. AAA rating ends soon.

The Market Rally

noreply@blogger.com (Avi Kahan) — Tue, 12 May 2009 21:20:00 +0000

There has been much talk lately about the market rally that has occurred since early March. I of course missed out on the rally but just about every day I ask myself whether I should jump back onboard. I refuse because I'm a stubborn asshole and the underlying fundamentals suck but it sure is tempting. I mean who really cares what the underying economics are when the stock market is going up. The only thing that matters is what everyone else believes. This thought of course makes my head spin because I start asking myself whether reality actually matters or if the only thing that matters is other people's erroneous perceptions of reality (I call them erroneous perceptions because I have a big ego and can't be wrong). Anways said more concretely if everyone thinks things are getting better does that mean things will get better? Afer all if you think things are getting better you might go out and buy some more stuff. If you buy some more stuff things do actually get better. Therefore if the majority of people think things are getting better they will get better even if their thought was foolish in the first place. Although I like going through this mental masturbation I don’t personally buy it (yes that’s a pun). People have no jobs, no money, and no credit. Certain laws can’t be defeated by erroneous perceptions of reality. Despite the cartoon depiction Wiley Coyote started falling due to gravity the second he ran off the edge of the cliff not when he finally realized he had fallen off the cliff.

Going back to bubbles how can you not love them? I mean as long as you get out before the whole thing crumbles you’re golden. It is precisely this train of thought that leads to the formation of bubbles. Nobody else will tell you this but bubbles are completely rational things and you can make a shit ton of money from them. Just like Ponzi schemes as long as you get out at the right time you’re golden (please ignore the fact you never get out at the right time). Anyway if I was a VC and someone came to me with a legal and effective Ponzi scheme I would give them money in a heartbeat. There is nothing sweeter than being on the bottom of one of those money making machines. Of course I might never see the money again because Ponzi schemes inevitably fail but hey no risk no reward right?

It's pretty amusing to hear everyone and their mother lambaste the formation of bubbles when quite clearly it is these same people that caused the bubble to form in the first place. I can’t remember anyone ever acknowledging that they caused the bubble formation but I’m sure they are out there and the problem is really my faulty memory. As far as I can see people create the bubbles and then people whine about how they get screwed when these bubbles burst. I don’t know why Mr. Bubbles stands for this shit. If you ask me he needs to hire a better P.R. agent because he is taking it in the ass in the mainstream media. That's all for now. Always remember the enemy is dangerous. The enemy is powerful. The enemy is ourselves. We’re going to need much bigger guns.

Japan Continues Years of Insanity

noreply@blogger.com (Avi Kahan) — Tue, 17 Mar 2009 23:56:00 +0000

Despite decades of incompetence Japan is hellbent on continuing its march towards bankruptcy

BOJ May Increase Government Bond Purchases as Aso Eyes Stimulus - " The Bank of Japan may step up purchases of government bonds as Prime Minister Taro Aso prepares a third stimulus package to ease the nation’s recession.

The central bank will increase its monthly government debt purchases to 1.6 trillion yen ($13 billion) from 1.4 trillion yen, economists said. The bank yesterday said it may provide as much as 1 trillion yen of subordinated loans to banks to replenish capital depleted by falling stock prices."

Faced with an aging population and a diminishing saving rate Japan is ever so steadily approaching the end. It is no wonder that Japan's former finance minister was publicly drunk. The only way that Japan can balance their budget is by borrowing more money and continuing their death spiral. As legitimate lenders flee the government will increasingly have to buy their own bonds. Of course the idea of buying your own bonds is ridiculous. It's like saying you can stay alive forever buy eating yourself. Whether Japan ends in default or hyperinflation I cannot say. I hope for default.

First Ever Post

noreply@blogger.com (Avi Kahan) — Mon, 16 Mar 2009 00:35:00 +0000

This website and this blog are the result of a rising frustration level with governments around the globe. Previously in my life I have struggled with the question of whether to share (and thereby influence) my views with other people. I struggle no longer. My goal in writing this blog is to influence you and to persuade you.

Avi "The Messenger" Kahan