Shorting the Market

Equities have been way too high recently. Their recent climb is unsustainable. Talk all you want about the Obama confidence factor and the programs he has initiated. The underlying facts remain unchanged. Our financial institutions are hiding guhgillions of dollars of bad debt on their BSs and either they take the hit soon, or the government continues to backdoor bail them out and Treasuries climb higher and higher as people worry about inflation and sovereign solvency. One of these two factor is coming in to play SOON. I'd be heavily short the market over the next 3 months and long mattress manufacturers.

My Biggest Philosophical Struggle as a Libertarian - 六四

Today marks the 20th anniversary of the Tiananmen Square Massacre. When I was in 4th grade (1992) we were assigned a project in which we were to make a travel brochure for a particular country. I chose China. This was pre-internet days, so research consisted of encyclopedias and parents' memories. I was young and my memory is hazy, but I do remember encountering some strange story about the famous Tian An Men Square; something about violence and protests. In my brochure, I remember reporting that Tiananmen translated to 'Gate of Heavenly Peace'. I remember sharing that it was the largest public space in the world. I remember being so young that my parents thought it was not necessary to include anything about the violence that had taken place a few years earlier. Children shouldn't be burdened with those realities of the world.

The consequences of that night have lingered for the last 20 years. At some time shortly following the demonstrations, the Chinese leadership made a commitment to One-Party Rule and suppression of civil liberties, while freeing up economic activity and fueling the greatest exodus from poverty that has happened in the history of mankind. In essence, the government said, "We will not give you democracy, but we will make you rich". And, as a libertarian, this is the concept with which I struggle most. China's growth has been imperfect, but it has been overwhelming. "让一部分人先富起来". Let some people get rich first. That's what Deng Xiaoping said. The rising tide of prosperity will lift all boats. And it's true. The poorest of China's poor are unbelievably poor. But they are still significantly better off than 20 years ago. I read an interesting book comparing the paths of Russia versus China in their exit from communism. Russia pursued a path of democracy first, economic freedoms second. Russia's democracy today is in shambles and so is their economy. China pursued a path of economic freedom first, democracy later. And while democracy is nonexistent, their economy is written about fawningly daily. So while I wish China were a free country (and I know that someday it will be), I almost have to respect the contradiction it presents to my personal philosophies.

Since Blogger is blocked in China right now, none of my friends there can access this post. For some, it's part of the sacrifice you make when you move to an authoritarian country. But not all of my friends moved to China; some were born there. For them, they are denied access to the flavors of life by the Great Chinese Firewall. They are denied access to differing opinions, certain movies, art and music. And conversely, they are not allowed to share their unique flavor with the world either. Those of us outside of China are denied exposure to a vast array of amazing peoples because the government decides so. And I find that unfortunate.

I'm not even close to being done hashing out this philosophical struggle. This post hasn't clearly shaped either side of my conflict, but nonetheless, I wanted to express some thoughts on today's significance. The rest of the day will be filled with links to words, videos and sounds surrounding 6/4. There are ugly sides to everyone's history. This is one of China's. Hopefully they can grow up and deal with it someday soon.

More outsourcing

If you're in the mood to read a rant, he's your rant...

It's mind boggling

I'm outsourcing to Angus

Not the way it works....

Today's New York Times Editorial:

He should make clear that the overarching objectives are to create a profitable company that makes cars that people want to buy, and that are more fuel-efficient.

Listen NYT, your economic skills have never been stellar. So it's not like you let me down. But I'm telling you, you can EITHER make cars that people want to buy and hope they are more fuel-efficient OR you can make cars more fuel-efficient and hope people want to buy them. But you can't dictate doing both. You may get lucky and both happen, but you cannot dictate it so. This GM situation is a complete debacle and is only going to get worse. I've put off blogging about it because the possibilities for terribleness taking place are endless. Protectionism? Unwillingness to close politically favored dealerships? Unwillingness to close plants for political implications? Ford having to compete with the government?

The NYT's needs to realize: to create a profitable company, make cars that people want to buy at prices they want to pay. GM specialized in this for decades, they became terrible at it and have failed. Now you think you can step in and do a better job simply because it can't be that difficult to manage a car company. You're right. It couldn't possibly be difficult to analyze consumer wants, coordinate purchasing with manufacturing with distribution with sales with service, decide pay structure, designate R&D projects and advertise...while staying politically neutral. You're experience as government bureaucrats have given you all the skills sets necessary to successfully run an automotive behemoth.

We're screwed.

Line of the Day

Where that becomes troublesome, however, is the moment when government comes to be seen as the sole source of security. What we, the public, need to understand is that the best guarantor of security is not government. It's economic growth. While we want to believe otherwise, the cold fact is that government can't guarantee economic permanency. Nobody, and nothing, can.

Carl Schramm in today's WSJ

I'll be your first taker

From the NY Times:

Mr. CLINTON: When anybody asks me [whether the fact that the Clinton administration did nothing to stop the 1990s stock bubble is the main reason to be skeptical it would have done much to stop the housing bubble], ... I look at them and ask them, “Do you think this would have happened if we had been there? Look me in the face and say yes.” I haven’t found any takers yet.

I was youngish during his presidency and, in retrospect, I think he did a decent job (solely on the basis that he miraculously managed to balance the budget (how absurd does that prospect sound nowadays!!!)). But I'd be willing to look him in the face and say "YES!". If anything, Clinton exacerbated the problem with his housing initiatives and he would have been equally influenced by big banks, economic advisors, and rating agencies. Ex post it's always easy to prevent things. In fact, if Clinton thought the Bush policies were THAT bad, he should have either publicly sounded the alarm, or put down a big bet that would make millions/billions and then given that money away to the poor that he so desperately wants to help. I'm not trying to bash Clinton here, but I certainly don't think he would have done jack-poop to prevent this from happening.