Posts Tagged ‘John Mauldin’

My wife and I were watching Surviving the Cut on Netflix recently. If you have not seen it, I encourage you to go take a look. It is a reality TV show that follows soldiers in various military branches as they attempt to make it into the elite ranks of their respective service. It is incredible to watch these young men pushed to the complete edge of human endurance.

Why do these men do this? Because they believe they are the best in their respective branches, and they want to prove it. I have an amazing respect for men like this. During the second episode they follow members of the Air Force as they try to become members of the Air Force Pararescue. One of the training test involves men having to stay under water for a significant period of time. This is after hours of other training tests and little sleep. One of the men passes out under the water during the training and has to be dragged from the pool. The guy stops breathing and turns blue. Once he finally comes to, his first concern is whether or not he is going to be eliminated from the selection process. Not am I all right, but am I still able to continue enduring incredible physical pain.

Almost instantaneously I thought of the difference between men like this, and the worthless cowards that make up of the majority of our politicians in Washington, DC. These clowns make 6 figures and do not have a job that is 1/1000th as difficult as our special forces. I realized in that moment that I am fundamentally done with most of them, and I am beginning to wonder at what time you will be, too.

Especially when you take this into effect. From my favorite economist, John Mauldin, on the recent fiscal cliff deal.

Pork Barrel #1: Tax Breaks for Offshore Loans. Section 322 of the bill provides an “Extension of the Active Financing Exception to Subpart F.” “Active financing” is a fancy phrase that allows manufacturers and banks to defer taxes when they engage in special types of financial transactions. In short, it rewards firms to loan money to foreigners instead of American companies.

For example, the active-financing exception permits big banks like Morgan Stanley to avoid the 35% corporate tax rate on interest income from money lent overseas. Multinational companies with financing arms, such as Ford and General Electric, will benefit from this exception to lower their tax bills.

The exception is worth a mountain of money to a handful of corporations. It even has its own lobbying coalition – the Active Finance Working Group – which serves as a prime example of how important the 20 or so companies that benefit from the exception consider it.

Pork Barrel #2: Tax Breaks for Offshore Jobs. The fiscal-cliff deal gives huge tax breaks to American companies that sell their products through overseas affiliates.

Called a “pass-through” exemption, this loophole allows American companies to set up a new corporation in a tax haven, like the Cayman Islands, and to sell that new offshore company its valuable patents owned by the US parent company.

The royalties on overseas licensing of that patent that are earned would then be subject tono taxes.

Pork Barrel #3: Luxury Condos for Wall Street. Section 328 of the bill extends tax-exempt financing for the “Liberty Zone,” the area around the former World Trade Center, for another year. This tax break is supposed to help fund reconstruction after 9/11, but some have found that the bonds have mostly helped finance new luxury apartments, not to mention the construction of Goldman Sachs’ new headquarters.

Pork Barrel #4: Boxcars of Free Railroad Money. Section 306 of the fiscal-cliff bill gives a juicy tax credit to railroad companies to provide maintenance on their own lines. This credit costs about $165 million per year and will survive another year.

Pork Barrel #5: Thank you, Hollywood. The fiscal-cliff bill renews “special expensing rules for certain film and television” productions.

Movies and television studios can deduct up to $15 million of their costs if more than three-fourths of a project’s production takes place in the United States. The incentive will cost an estimated $266 million in 2013.

Pork Barrel #6: Tax Breaks for Hedge funds and Private Equity. The mainstream media characterized Mitt Romney as an evil, job-killing private-equity pirate and loudly criticized the favorable tax treatment -called “carried interest” – that he enjoyed on his Bain Capital profits.

The bottom line is that hedge fund and private-equity moguls will continue to be taxed relatively lightly after the new fiscal cliff legislation.

The profits from investing other people’s money – AKA carried interest – will continue to be taxed as long-term capital gains for hedge fund and private-equity managers.

Pork Barrel #7: The Answer, My Friend, Is Blowing in the Wind. It is no secret that the Obama White House is very friendly toward the green-energy industry, so it should not surprise you to learn that there is a big tax credit for the wind power industry. The fiscal-cliff deal gives wind producers a 2.2-cent tax credit for every kilowatt hour they generate in their first 10 years of operation. In broad terms, this credit is worth about $1 million for every large wind turbine.

Those are just the most egregious pork recipients, but the list is a lot longer and includes:

  • Mine rescue team training credit (Sec. 45N)
  • Fifteen-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements (Sec. 168(e))
  • Election to expense mine safety equipment (Sec. 179E)
  • Temporary increase in limit on cover-over of rum excise taxes to Puerto Rico and the Virgin Islands (Sec. 7652(f)); and
  • American Samoa economic development credit (Section 119 of the Tax Relief and Health Care Act of 2006, P.L. 109-432, as modified).

These giveaways of taxpayer money make my blood boil, as they should for you too. We’re at the endgame of the government’s wasteful spending, and they have yet to address it. Washington’s debts are going to explode and crush our government; they’re also going to distort the free markets for years to come. [My emphasis added]

I see nothing wrong with most of these projects and support them. Who isn’t for mine safety? And expensing of development costs makes sense. I am all for fixing railroad lines. But why on tax-payer money? Why isn’t my business given special tax treatment? Or yours? Aren’t the jobs I create valuable jobs? At what point do we stop subsidizing income for those who are politically connected, and leave the rest of us to catch as catch can?

This, by the way, is the bill that Rep. Graves failed to vote on. I called his office after the vote and asked why he missed it. I was told the Congressman was really sorry and doesn’t like to miss votes. I’m sorry, I send you there to vote on this crap, preferably AGAINST it. Too much to ask, I guess. It does make my blood boil, especially when you contrast what these individuals continue to do with what our elite servicemen do on a daily basis. An Air Force Pararescueman is expected to stay awake for days during training sometimes getting only an hour or two sleep a night, but it’s too much trouble for my congressman to make sure he votes on important legislation at 2 AM (or whatever time that vote happened, I know it was early in the morning.)

The good news, I think, is that America may be starting to get tired of it. A recent Rasmussen poll showed that only 32% of people think their member of Congress deserves reelection. Usually, in polling, people often have a significant dislike of congress, but still think their member of Congress is just fine. I was this naive a couple years ago.

Yes, Congressman Graves, I’m talking about you. I’m done. 

I was pretty quiet about this last year. I did vote against Graves in the primary, and I fully intend to do so in 2014. I still voted for him in the general, but I no longer defend him, to anyone. As far as I’m concerned, he is just another politician like the rest of them. The only positive thing I think he is capable of doing is ensuring my second amendment rights. That’s it, I have no confidence that he will represent anything of principle. As for Roy Blunt, who by the way, has pretty much the same rating as Graves on the FreedomWorks Key Votes, I am completely done with him in both the primary in 2016 and the general election. We only need to hold one body of congress from the socialist-democrat-communist horde.

I’ll leave you with this closing thought from the conclusion of George Friedman’s book The Next Decade. 

I genuinely believe that the United States is far more powerful than most people think. Its problems are real but trivial compared to the extent of its power. I am also genuinely frightened, not about America’s survival, but about the ability of the United States to keep the republic by its founders. The demands and temptations of empire can easily destroy institutions already besieged by a public that has lost both civility and perspective, and by politicians who are capable of neither the exercise of power nor the pursuit of moral ends.

Four things are needed. First, a nation that has an unsentimental understanding of the situation it is in. Second, leaders who are prepared to bare the burden of reconciling that reality with American values. Third, presidents who understand power and principles and know the place of each. But above all, what is needed is a mature American public that recognizes what is at stake and how little time there is to develop the culture and institutions needed to manage the republic cast in an imperial role. Without this, nothing else is possible. The situation is far from hopeless, but it requires an enormous act of will for the country to grow up.


I love John Mauldin. He is probably one of the smartest economic minds alive today. If you like economics I suggest you subscribe to his newsletter at Mauldin is brilliant because he is capable of synthesizing a large amount of theory, statistics, and research into a cohesive whole. He was one of two economists to call the collapse of 2008 months before anyone else (while all the “experts” were convinced there was no top to the market.)

In his newsletter from July 23, 2012 Mauldin shared the Hoisington Quarterly Review. Two paragraphs that you must read if you don’t have the time to check out the whole thing:

“Three recent academic studies, though they differ in purpose and scope, all reach the conclusion that EXTREMELY HIGH LEVELS OF GOVERNMENTAL INDEBTEDNESS DIMINISH ECONOMIC GROWTH. In other words, DEFICIT SPENDING SHOULD NOT BE CALLED “STIMULUS” as is the overwhelming tendency by the media and many economic writers. While government spending may have been linked to the concept of economic stimulus in distant periods, such an assertion is unwarranted, and blatantly wrong in present circumstances. While officials argue that governmental action is required for political reasons and public anxiety, governments would be better off to admit that traditional tools only serve to compound existing problems.” 

“Reinhart, Reinhart and Rogoff dealt with the idiosyncrasies of countries of different sizes and their abilities to engage in different policy actions (such as devaluations and subsequent inflation) by limiting their samples to advanced countries. In the second study “Government Size and Growth”, Bergh and Henrekson found that to the extent there are contradictory findings of the relationship between the size of government and economic growth they are explained by variations in definitions and the countries studied. The Swedish economists focused their study on the relationship in rich countries by measuring government size as either total taxes or total expenditures relative to GDP. Using a very sophisticated econometric approach under this criterion, they revealed a consistent pattern showing government size has a significant negative correlation with economic growth. Their results indicate “an increase in government size by ten percentage points is associated with a 0.5% to 1% lower annual growth rate.”

Dear politicians and Obama supporters, read the above two paragraphs until you actually understand them.

The professor Obama loves, Derrick Bell, “I live to harass white folks.” Barack Obama, “White folks greed runs a world in need.” The Vetting: Obama’s Supreme Court and Critical Race Theory Folks, you really need to be reading this stuff so you know who this President is. Derrick Bell and Eric Holder’s ‘Nation of Cowards’

To Bell, racial equality—whether in the law or the academy—was a myth. The civil rights movement had been largely futile, because racism was deeply ingrained in American institutions. The answer—though not the solution—was continued resistance. Bell therefore celebrated those, like Louis Farrakhan, who were “willing and able to ‘tell it like it is’ regarding who is responsible for racism in this country.”

More on Critical Race Theory.

“So here’s what we’re left with, in simple terms. Racism cannot be ended within the current system; the current system is actually both a byproduct of and a continuing excuse for racism. Minority opinions on the system are more relevant than white opinions, since whites have long enjoyed control of the system, and have an interest in maintaining it.”

Bell, via Kagan, on Critical Race Theory: The Constitution is the Problem

In November 1985, the Harvard Law Review published an article by Derrick Bell that was a “classic” in the development of Critical Race Theory. The article was edited by then-student Elena Kagan, and was cited by Prof. Charles Ogletree in support of her nomination to the U.S. Supreme Court by President Barack Obama in 2010. The article makes clear that Critical Race Theory sees the U.S. Constitution as a form of “original sin”–a view later embraced by Obama as a state legislator, and reflected in his actions and appointments. The following is an excerpt from the non-fiction portion of the article; much of what follows is a fictional story that Bell intended as a parable of racial “fantasy.”

Psycho-racist nut Louis Farrakhan’s Nation of Islam newspaper threatens Glenn Beck. For all the worry about Warren Buffett’s secretary and her taxes you would think his companies would have their taxes all buttoned up. Guess not. Another outstanding economics piece from John Mauldin: There will be contagion. You should be reading everything this guy writes.

For a guy who is supposedly such a leader and model American, Barack Obama sure has an awful lot of anti-Semitic friends.

The alarmism about voter ID laws being racist is ridiculous. I’m of the opinion that the only reason the Democrats oppose them so vigorously is because they know they are losing the ability to cheat and the end is near. Here is proof from Georgia that they have no negative affect on voter turnout.

Election data in Georgia demonstrate that concern about a negative effect on the Democratic or minority vote is baseless. Turnout there increased more dramatically in 2008 — the first presidential election held after the state’s photo-ID law went into effect — than it did in states without photo ID. Georgia had a record turnout in 2008, the largest in its history — nearly 4 million voters.