Tuesday, April 17, 2012

So What’s The Matter With Just A Little Bit More Police State?

When the framers of our Constitution sat down in Philadelphia the realized they had to put substance and structure to the lofty goals of the Declaration of Independence or all the effort and sacrifice of the Revolution would be lost.
Part of their wisdom and genius was the concept of separation of powers. No one branch of government would be allowed to accumulate enough power to be able to unilaterally deprive the citizens of their rights and liberties.

Having dealt with King George they recognized that one of the hallmarks of tyranny was the restriction of movement. We still recognize it today. Countries like China, Cuba, Iran and North Korea severely restrict the movement of their subjects both internally and externally. You can’t just pack up and leave one of those places just because you feel like it. Even saying you would like to can have harsh repercussions. In fact this freedom of movement is one of the defining distinctions between a citizen of a free nation and the subject of an authoritian state.
That’s not to say that the free movement of a citizen cannot be restricted, but it can only be done under due process of law. The legislative branch passes a law, the executive branch charges a violation of that law and the judicial branch finds guilt. Then and only then (with the exception of other court orders) can a person have their passport revoked or the issuance of one denied. In any case it is the power of the judicial branch having made a legal finding that becomes the basis for the restriction.

Well that is up until now. I have often said that I hold both political parties in contempt and Senate Bill 1813 is exemplary of why. Our elected officials in Washington are either venal, stupid or both. Put forth as a Highway repair and financing bill it, as is often the case, has its “and other purposes” clause. In this case the “other purpose” is to enable the IRS (a branch of the Treasury Dept. and hence the executive) the unilateral authority to revoke or deny a passport on the mere accusation that the individual might owe the IRS some taxes.

If this bill passes in the House and is signed by the President the free movement of citizens can and will be restricted not by a judge making a decision on probable cause or actual guilt of a crime, but by a faceless bureaucrat to whom there is no appeal and no redress of grievance. This is an unconstitutional usurpation of the authority of the judicial branch by the executive branch plain and simple, and our elected representatives are allowing it to happen.
It’s long been known and sadly tolerated, that IRS code is Napoleonic law, under which the citizen is not innocent until proven guilty, but guilty until he proves himself innocent. But then only if he’s very lucky and has a very good lawyer.
Are we still free citizens of a republic anymore? Or are we like sheep being led to the slaughter  of  transformation back into the subjects of a tyrannical state? How long until even questioning the IRS’s authority to restrict your freedom of movement is cause to restrict your freedom of movement?

This shouldn’t be a question of left vs. right or Democrat vs. Republican. It’s much more basic than that. It’s a question of liberty vs. tyranny and do we as citizen still have the gumption to stand up and fight to persevere what’s left of our liberties before they are all gone?

So Lets Have Another Little War

In the name of maximizing domestic production, the good little socialist President of Argentina has decided to nationalize a Spanish owned oil company YPF and setting of a diplomatic confrontation with Madrid. Just what the Spanish need in the wake of Iran announcing that it will cut off oil shipments to Spain is serial failure Argentina expropriating another source of oil it desperately needs even if it economy is contracting. The government in Madrid has promised that it have “forceful response.” This is of course open to a variety of interpretations but it’s unlikely that Spain can handle having $5 Billion sucked out of its economy at the point of it already facing imminent collapse.

Never mind that Spain was the first if not the only European nation to come to Argentina’s aid during their latest currency failure. But I guess this is how Argentina’s President Fern├índez and would be Avita Peron thanks Spain for its help.

If there is any country in South America that has mimmicked Europe’s failed welfare stateism it is Argentina. Just how many times does it’s economy have to collapse before it becomes apparent that this socialism crap just does not work?

Meanwhile back in Spain where unemployment is at 23% and youth unemployment is over 50%, the Cental government is talking about taking over the financies of the provences because their even more out of control than the cental government’s. Now looking down the barrel of another $5 billion hole in its GDP one can only imagine the anger and panic set in motion by this little backstabing from Argentina. So much for Ibero American solidarity.

Neither can the dithering hands of the EU in Brussels be happy at this. One more unpredictable turn of events threatining the EU ponze scheme. If it all was not so economicly dangerous it would be hilarious.

Well it’s not like Spain could actually go to war with Argentina but I’d bet they wish they could. One would have to wonder just how Obama will stick his bumbling fingers into this pie and make things even worse. But then I’m sure his refering to the Malvinas Islands as the Maldives has so endeared him to the hearts of the Argentines.

Sunday, April 15, 2012

Do French Elections Matter On This Side Of The Pond?

Just about a month ago in the wake of the latest Greek bailout both French President Sarkozy and former French Finance Minister and now IMF head Christine LaGrande were declaring in lockstep, that “the problem is solved” and “economic spring is in the air.”

Well here we are a month on and the Spanish stock market is all but collapsed, the Italian’s are but a step behind with trading in Italian banking stocks having to be halted on a daily basis lest they fall to zero on any given day.  Credit Default Swaps (CDS) on Spanish debt are spiking dramatically as yields rise to the dreaded 7% level.  Look soon for shorting of European banks to be banned once again.

Both Sarkozy and LaGrande it would seem are betting heavily on successful Spanish and Italian bond auctions this coming Thursday.  If the bid to cover ratio comes in at something resembling Bear Sterns final attempt to stay afloat (30% of bond face value) all bets are off for a peaceful summer in the Euro zone.

While LaGrande’s tenure at the IMF may be resting on the auction’s outcome, for all intents and purposes, successful or not Sarkozy’s goose seems to be already cooked.  All that is left is for the actual ballots to be counted before the fork is stuck in and the declaration of  “its done” to be pronounced.

So why should we care that the French, not know for their political acumen, are about to elect a far left wing Socialist in the person of one Francois Hollande?  Hollande is taking the all to predictable socialist path, while paying lip service to deficit reduction he campaigns on expanding government spending and subsidizing hundreds of thousands of new government jobs, all financed of course by massive increases in taxation.  With his ever-increasing lead in the polls, little wonder that over here, Obama is on the same track.

This brings us of course to the realm of unintended consequences.  Up to this point the technocrats in Brussels have managed to forestall the looming disaster only through the close alliance between France’s Sarkozy and Germany’s Chancellor Merkel.  Sarkozy’s passing from the political stage all but guarantees the end of this Franco-German alliance.  Hollande has made no secret of his contempt for Merkel and Germany’s resistance to the issuance of so called Euro Bonds to finance the ongoing deterioration of the PIIGS.

The EU has already rised dithering until the last moment before reaching so-called solutions to an art form. Any break in Franco-German cooperation may well make any further agreements, particularly in regards to Spain, all but impossible.

The triggering of CDS over the latest Greek bailout and 70% haircuts for the bond holders is a far from settled issue as most of the outstanding bonds are covered under British law not Greek, and as such don’t allow for such losses of principal without triggering the CDS.  The issue is already in the courts.  If a similar credit event occurs in Spain or Italy it will be disastrous not only for European banks but for US banks as well.  Particularly for Bank of America, which has underwritten the vast majority of Europe’s CDS.  They don’t have the capital to pay off on all those insurance policies and quite frankly they never did.  Such an event would of course bring to the fore that most toxic of political questions in the run up to our own elections.  Is Bank of America To Big To Fail?  If it fails the cascade into the rest of the US financial structure may be catastrophic, if it is, and the Administration, the Congress and the FED return to the well one more time with another, even more massive round of bailing out the banks and quantitative easing and its incipient inflation, how will the American voters react?

Obama and company are of course hoping that any such event can be held off until after the election.  If they loose that bet Obama will join Sarkozy in the cooking pot before November gets here.  Even if they win that very risky bet, I doubt that Obama’s or any administration could survive the political backlash of either a deflationary implosion of a massive bank failure or an inflationary explosion brought on by the US taxpayer being put on the hook for Europe’s failure by bailing out the To Big To Fail once again.

But then the creation of new and dreadful wars has always been the political elite's one size fits all solution to financial crisis.