Government Pensions

On March 3rd of this year, with the Dow Jones Industrial Average trading at 12,300, we made a prediction with respect to public pensions. Dow futures for this morning are now hovering around 8,000.

90% of pension funds were deemed healthy in the year 2000. In 2006, the number had dropped to 58%.

So with the market down 35%, what percentage of government pension funds are healthy going into November? That is a number you probably won’t be able to find. Here is some color commentary in any case. Pension fund assumptions continue to include an average annual rate of growth of 8%.

As this unfolds, the strong federal government that the Founders feared will print money to pay government pensions, with the end game being inflation, a tax on everybody to pay for the actions of those who abandoned truth for political expedience.

Hey, Here's My First Bong!

I suspect that Barack’s trip to Hawaii was all about rummaging through his grandmother’s attic, looking for some record of a domestic birth. It is entirely possible that he does not know where he was born.

So let us suppose that nobody takes Obama to task over his birth certificate, and it turns out that he was born in Kenya, or cannot prove otherwise, and he ends up as President.

Obama would preside over a period of economic pain, and would be unable to make good on his promises. He will probably be seen as a Governor Blagojevich of Illinois , with a 13% approval rating, as his proposals fail one after another.

There will be organized political groups opposing Obama that will gain in power as his approval ratings fall. These groups would have a legitimate claim that the Executive Branch of the government was not Constitutionally seated and is illegitimate.

Early 21st Century American history will likely be far less interesting if Obama can produce an authentic birth certificate.

Keep looking Barry!

Gold Prices

Here is an article that supports the theory that gold prices are held artificially low by hedge funds dumping assets. As the majority of these funds’ assets are likely in dollars and stocks, a fall in the dollar would damage their balances more than a fall in gold prices. So selling gold is a logical survival move. Central bankers, hedge fund managers, and Western governments are all on the same side of this issue.

Despite the relatively low gold prices, there remains a shortage of coins. Meaning to me that the big boys are liquidating bars.

That Piece of Paper

I had to get my birth certificate re-issued and it took a couple days. A sitting Senator could probably get one in an hour.

Providing a digitized image of a piece of paper with the certificate number blacked out, with the statement that any alteration invalidates the certificate smells bad.

Barack’s defense on his Fight the Smears website is weaker still:

"Smears claiming Barack Obama doesn’t have a birth certificate aren’t actually about that piece of paper — they’re about manipulating people into thinking Barack is not an American citizen."

No Barack, it really is about ‘that piece of paper’. You should know this as a Constitutional law professor. Just produce it, and allow access to the hospital records, and this one is all behind you.

This could get interesting.

Taking Some Time Off

In the service, there is a saying shared between supervisors:

“My wife she, my kid he, my dog it.”

It is a generic terms used to explain what is probably a BS excuse for a subordinate who is not going to be at work today. For example:

NCO #1: “I need Private Jones to help me clean the bathroom.”
NCO #2: “Ah, good old reliable Private Jones, he called last night. Guess what? My wife she, my kid he, my dog it.”
NCO #1: “Surprise, surprise.”

I have experienced this conversation many, many times in both the military and the private sector. I have not witnessed the extension to grandmothers in critical times however. This is a new one to me.

Call me a skeptic.

Rivrdog asks a really good question:.

“Is the dollar going up or are the rest of the currencies going down?”

I’ll give it a shot. To try to answer the question we would have to agree on a universal currency. This is easy for drunken sailors, who are known to identify three currencies: dollars, beers, and spacebucks.

Fifteen or twenty years ago, a drunken sailor could buy twenty-four Old Milwaukee bottles for $4.29. Those same beers have tripled in price among both dollars and spacebucks since, leading one to believe that both dollars and spacebucks have been going down for quite a while now.

If you look at the number, formerly known as ‘M3’, until we stopped tracking it so the Treasury Secretary could print money for his friends without a clear paper trail, we appear to have printed in the neighborhood of $300 billion new dollars each and every year since going off of the gold standard. While this, along with some creative accounting, has allowed the government to publish rosy numbers, it also created inflation. This inflation, along with do-gooder taxes and fees unfairly levied against drunken sailors, are primarily responsible for the rise in the cost of beers.

So the drunken sailor says:

“All this money is losing value, dammit.”

But, I’d argue that the world has changed in the past two months. The prospects of a hanging makes men act differently then they might otherwise. Two months ago, gold was the universal currency. As the money supply, formerly known as ‘M3’, increased faster than the discoveries of new gold deposits, gold prices steadily climbed, peaking around $1050 some months ago.

Now, despite the installation of liquid coolers for the printing presses, gold prices are down, and the dollar is up, relative to both other currencies and gold. This does not make sense, unless there is an injection of gold supply into the system (unlike oil prices, where there is a perceived reduction in demand).

I argue that this injection of supply is from one of two sources:
1) Fancy investment bankers seeking liquidity by selling gold so that the mob connections that their Clientele enjoys do not get new instructions.
2) Central Bankers selling off national gold reserves in an attempt to support their currencies.

So, my theory is that gold remains the universal currency, and is being held at an artificially low level relative to other currencies, by the injection of new supplies of gold reserves by fancy people as they position themselves for whatever they perceive is coming next.

So in conclusion, Brick Oven forwards the theory that:

1) World currencies are down hard because they are worse off then we are.
2) The dollar is held artificially high relative to gold for some nefarious reason, but is still down.
3) Gold is held artificially low relative to the dollar for some nefarious reason.

American fundamentals remain strong going forward because:

1) We have a surplus of farmland
2) North America has hundreds of years of liquid fuel in the form of oil shale coming.
3) We are relatively lightly populated.
4) There are millions of very good people here, that are not apparent when viewing the political classes.

Buy: rural farmland, gold, silver, and yes, beers.

Collectivism

Collectivism can work economically if you have an intelligent, more or less homogeneous population, preferably with some sort of faith-based work ethic. 20th Century Europe and Scandinavia proved this. But collectivism tends to be harsher towards ethnic minorities than capitalism, especially in trying times. Russia and Germany are examples.

In times of economic surplus, some degree of collectivism is achievable because all parties are provided with their basic needs. And, while some may grumble about this or that, the reality is that from a materialistic standpoint, the poor today are better off than the middle class of two generations ago.

The question remains as to how our newly diverse society would respond to a call for collectivism in a time of economic shortage, where the median household wealth may fall below that of the middle class of two generations ago. I learned in school that we would celebrate diversity. Perhaps we will get a chance to put that theory to the test.