Posts Tagged ‘John Mauldin’

What is this? Scroll down to the bottom to read why I started doing this.

Most Important Articles of the Week:

The tyranny of algorithms is part of our lives: soon they could rate everything we do by John Harris

The choices we make over the next 5-10 years about data privacy and algorithms is going to large implications for Liberty. I’m beginning to be concerned that we are not going to make the correct choices.

Alarming Advances Made In Digital Media Manipulation from CBS New York

“It’s very concerning because as people get better with this software we’re able to not just use celebrities, they’re able to use a neighbor in a video and compromise that person,” FITECH Senior Vice President Duarte Pereira said.

The Death of Civility in the Digital Age by Mark Oppenheimer

But then, as I walked my actual dog in the chilly after-midnight air, having my nightly chat with myself, my initial cheeriness wore off, replaced by a sense of puzzlement, then sadness. What kind of world was this? Here was an educated fellow; he held a responsible job, and in my field no less; he had edited works by friends of mine and done a good job; he spoke respectfully enough on TV, where he appeared regularly as a political commentator; he was a husband, a father, presumably a law-abiding citizen. I have one good friend who regularly encounters this editor at their house of worship and says that he is amiable and courteous. I wouldn’t be surprised if in real life he’s a true mensch, who brings chicken soup to the sick neighbor upstairs in 7Q. And yet, as I knew now, he said things like “Go fuck yourself” to strangers on Twitter.

The Great Jobs Collision by John Mauldin of Mauldin Economics

You will not recognize the world in 15 years.

Last month Karen’s group issued a magnum opus report called “Labor 2030: The Collision of Demographics, Automation and Inequality.” I’ve written on all three of those subjects, but Karen teases out the connections among them in ways I’ve not seen elsewhere.

First, the bad news: Bain thinks automation will eliminate up to 25% of US jobs by 2030, with the lower-wage tiers getting hit the hardest and soonest. That will be devastating, and it’s not that far away. Remember 2006? Right now, you are halfway between then and 2030. Time flies, and this time it won’t be fun. Interestingly, though, Bain predicts that the manpower needed to build out the technology that will ultimately eliminate all those jobs will be enough to keep us all working until 2030. The Bain team is a tad more optimistic than I am. But they have their reasons.

Environment

The Ninth Circuit Just Allowed Children To Sue Trump Over Global Warming by Michael Bastasch

Stories like this make me feel so hopeless. The judiciary continues its movement to become the most powerful branch of our government. Tragically, the left has figured this out all too well.

Economics/Finance

The Strategic Investment Conference Live Blog

One of my favorite sources of investment and market analysis is Mauldin Economics. Mauldin has an impressive investment conference every year called the Strategic Investment Conference. I’m not quite wealthy enough to justify a ticket and the trip, so I get stuck with the Live Blog every year. It’s more than worth the price of entry.

Why American Workers Aren’t Getting A Raise: An Economic Detective Story by Jonathan Tepper

Interesting look at wages. Lots of statistical evidence that supports the narrative that wealthy CEOs are getting quite richer than the average worker. He hangs his hat a little too much on unions as a solution. I’m not a fan of them, but this definitely challenged my thinking a little.

Goldman Interviews Paul Tudor Jones, Gets Retelling Of The Battle Of The Little Bighorn from The Heisenberg Report

Great interview of billionaire investor Paul Tudor Jones about the Fed and what’s on the horizon for the markets.

“Let me describe to you where I think Jerome Powell is right now as he takes the reins at the Fed. I would

liken Powell to General George Custer before the Battle of the Little Bighorn, looking down at an array of menacing warriors. On the left side of the battlefield are the Stocks—the S&P 500s, the Russells, and the NASDAQs—which have grown, relative to the economy, to their largest point not just in US history, but in world history. They have generally been held at bay and well-behaved, but they are just spoiling to show their true color: two-way volatility. They gave you a taste of that in early February. Look to the middle and there waits the army of Corporate Credit, which is also larger than ever relative to the economy, as ultra-low rates have encouraged it to gain in size, stature, and strength. This army is a little more docile right now, but we know its history, and it can be deadly when stressed. And then on the right are the Foreign Currency Fighters, along with the Crypto Tribe, an alternative store of value that only exists because of the games central banks are playing; the opportunity cost of Crypto is so low, why not own some? The Foreign Currency Fighters have strengthened by 10% over the past year. Compounding the problem, they have a powerful, ascending leader, the renminbi, to challenge the US dollar’s hegemony as the reserve currency. All of these forces have been drawn to the battlefield because of our policy experiment with sustained negative real rates. So Powell looks behind him to retreat. But standing there is none other than Inflation Nation, led by the fiercest warmongers of them all: the Commodities. He might take comfort that he is not alone on the battlefield. But then he looks over at the Washington, DC, fiscal battalion and realizes they are drunk on 5% deficit beer. That’s what Powell is facing, whether he recognizes it or not. And how he navigates this is going to be fascinating to watch.”

I especially liked this comment. I’m a saver, I’m so sick of being punished by low rates. It’s absolute bullshit. People need to be taught a lesson for their irresponsible spending. Real economic growth comes from SAVING not spending:

Today, we need a Fed chair who is proactive, not reactive. Policy-wise, that means moving as quickly as possible to raise rates and restore appropriate risk premia so as to promote the long-term, efficient allocation of capital. While this will hurt a bit in the short run, it is better than the intergenerational theft that is being perpetrated now with the combination of low rates and high deficits.

EIA’s Shocking U.S. Oil Production Predictions by Robert Rapier

Overall interesting, but I couldn’t get over this:

It’s not just crude oil pipelines that are an issue. Along with oil comes associated natural gas. In some cases, producers have no outlet for this gas, so they flare it. But there are various legal limits to flaring. This week, I heard about a producer who is having to reduce production because they are bumping up against their permitted limits for flaring.

We desperately need more automobile manufacturers to push LNG automobiles and an infrastructure to support it. We literally are just burning the stuff off because there’s too much of it. That’s nuts.

What is it, really? by Rusty Guinn

Psychology and philosophy are critical tools for the investor. But in addition to being particularly ripe fields for bullshit, they also suffer from one of the same tendencies that plagues investors: people get so hung up on terminology and conventions that they start saying and doing dumb things. As always, the shrewd investor avoids that behavior himself and for his clients and capitalizes on it in others.

The Full Employment Mirage by Patrick Watson

Judging by the official 4.1% unemployment rate, US workers appear to be doing pretty well. Unlike a few years ago, almost everyone who wants a job has one. That’s an improvement.

Having “a job” isn’t the same as having a good job, of course, one that pays enough to cover your needs and lets you feel worthy and productive. Those are more elusive, although the situation is far better than it was during the recession.

But these conclusions come from data that looks at averages, and few people are average.

I thought about this because recently I’ve been helping John Mauldin write about the problems with economic data. That low unemployment rate is a key reason the Federal Reserve plans to hike interest rates three times this year (some people even think it will be four times).

That could be a serious mistake because millions of people aren’t as secure and stable as the unemployment rate implies.

The Fed should know this… because the Fed itself says so.

Housing Liquidity Crisis Coming: Debt Deflation Follows by Mike Mish Shedlock

A liquidity crisis in housing is on the way. Non-banks are at the center of the storm.

Angry Analytics by Jared Dillian of Mauldin Economics

Interesting contrarian take on interest rates. The argument makes sense. Rates can’t rise too much because it’ll put too much pressure on the budget.

The $233 Trillion Dollar Dark Cloud Of Global Debt by Alex Deluce of The Gold Telegraph

Mind-boggling amount of debt. Can someone please explain to me who in the hell is going to repay it?

The Next Enron? The End of Cheap Debt by Daniel Lacalle

Debt is one of two things, consumption denied or consumption brought forward. All debt is not bad as long as the consumption it is moving can be productively discharged.

Subsidies always encourage debt, and the green energy space will soon find out just how painful that is when interest rates rise and consumption was brought forward in an unproductive way.

The past eight years of massive liquidity and low rates have not helped deleverage, and many companies have used this period to increase imbalances and create complex debt structures. In fact:

  • Corporate net debt to EBITDA levels is at record highs. About 20% of US corporates face default if rates rise, according to the IMF.
  • The number of zombie companies has risen above pre-crisis levels according to the Bank of International Settlements (BIS).

This is particularly evident in the renewable sector where, even in the years of high liquidity and low rates, bankruptcies soared.

Health/Science

No-frills micro hospitals with as few as 8 rooms emerge as a new way to cut health-care costs by Berkeley Lovelace, Jr.

I saw one of these over in Kansas recently, just thought it was interesting. Smart idea.

The Foreign-Policy Implications of Aging by Patrick Cox

Extending healthspans would solve the financial problems posed by demographic aging all over the world, and that will reduce domestic instability everywhere. When that will actually happen is another question, though. At this point, it’s impossible to predict with any accuracy.

Hidden inside biotech laboratories, breakthroughs are happening right now that could allow it to happen very soon. My concern is that political forces, including international conflict, will interfere with the deployment of these revolutionary biotechnologies—but that’s not a prediction.

Scientists Are Getting Closer to a Pill That Can Mimic The Effects of Exercise by Marlen Cimons of The Washington Post

Interesting…

Media

TheBlaze announces new editorial policy regarding mass murders 

More news companies need to do this.

TheBlaze policy on mass murder coverage.

1. We will always refer to the killer as just that.  Killer, murderer or mass murderer.  Never ‘Shooter.’   Millions of Americans are shooters but few are killers. We will also not refer to these events as ‘mass shootings’ but rather mass murders or mass killings.  This applies to acts of terror.   They are not to be called suicide bombers but rather suicide killers or the like. We will not reveal the killer’s name or otherwise add to their fame.

2. We will NEVER publish a murderer’s propaganda or manifesto.  If it is vital to the story, we will provide a summary that indicates “according to social media postings, the killer seems to have been motivated by a belief in X,” but we will not reprint their own words or include their videos. This also applies to terrorism.  We must as a society understand how we can avoid the next killer or terrorist, but we never want to give the killer the platform, justification, attention or fame, he or she was seeking.

3. We will always hide, blur or obscure the faces of the killers with exception of “AT LARGE” killers or suspects.  We will do everything in our power, to remove much of the motivation of infamy.

Politics

Sessions greenlights police to seize cash, property from people suspected of crimes but not charged by Sari Horwitz

I can’t stand Jeff Sessions. Asset forfeiture is rife with abuse.

Social Media Freeway by Ben Garrison

The war against the free speech of the right will end badly for silicon valley.

How “Offended, Emotionally Shaken” Lawmakers Responded To This Viral Gun Speech By Nick Freitas by Daisy Luther

You may not have ever heard of Nick Freitas before, but I have a feeling we’ll all be hearing a lot about him soon. At first glance, this may seem very political, very Republican vs. Democrat.

But it’s not. It’s about logic versus emotion.

It’s about an eloquent defense of the Second Amendment and the reason that the gun control debate is stalled. And the response to this speech underlined everything that was said.

It’s about people who got so upset about historical [sp] facts that they had to leave the room instead of engaging in a discussion.

Democrats Release Tax Hike Plan by Ryan Ellis

I’m insanely frustrated with the Republicans, I’m sick of the irresponsible spending. So, of course, the Democrats solution is more spending and higher taxes.

Stupid.

Trump administration studying policy on death penalty for drug dealers by Teri Webster

And more stupid ideas from the Trump administration…

Geopolitics/Foreign Policy

‘Descent Into Hell’: China Warns of Potential War With US Over Taiwan by James Holbrooks

There’s no confusing this message. Beijing is saying that a military dustup between Taiwan and mainland China has the potential, by law, of drawing in the United States. The aforementioned “descent into hell” is quite literally a reference to war.

Lindsey Graham: Fighting A War With North Korea Would Be “Worth It” by “Tyler Durden”

Another one I can’t stand.

In any war in North Korea, Graham should be immediately drafted, put on the front lines, and given a broken gun.

US Meddling in Foreign Elections: A CIA Tradition Since 1948 by Wayne Madsen

The histrionics of much of the left and establishment right about Russia is a little comical in the context of the behavior of America for the last 70 years.

Do I want Russia meddling in an American election?

No.

Do I want America meddling in foreign elections?

No.

See, that’s called intellectual consistency.

Susan Rice gave ‘stand down’ orders to intel officers working on counterattack to Russian meddling by Chris Enloe of TheBlaze.com

Despite it being the midst of the 2016 presidential election, Susan Rice, national security adviser to former President Barack Obama, ordered national security officials to “stand down” when they were planning a counterstrike to Russian meddling in the election.

The revelation was made public this week in the upcoming book “Russian Roulette: The Inside Story of Putin’s War on America and the Election of Donald Trump” by reporters Michael Isikoff and David Corn.

LOL… So, we’re supposed to be furious and outraged at Russia and Trump, and the people in power who could’ve stopped the meddling or done something about it stood by and did nothing. I’m sure that wasn’t politically motivated at all.

Social Media

Facebook Sees 24% Drop In Average Time Spent On Site by “Tyler Durden”

Good.

Society/Culture

Millennials and the Scary Support of Socialism & Communism by Alex Deluce

Sigh…

According to the latest findings from the Victims of Communism Memorial Foundation, 50 percent of today’s American millennials view socialism or communism as the ideal political ideology. Half of them have found their heroes in dictators such as Joseph Stalin, Mao Zedong. Lenin, Che, and Kim Jong Un.

The country that grew into the wealthiest on earth through capitalism is showing alarming signs of turning away from its roots.

Much of this trend is due to historical illiteracy and a failure to teach an entire generation about the destruction that have been perpetrated by previous communist regimes. At the same time, they are uninformed about the failures and desperations experienced in current communist countries, such as Venezuela and Cuba. Today’s millennials are hard-pressed to even define socialism and communism. They feel at odds with capitalism and simply feel any alternative would be better, although many haven’t started working or become a part of the workforce thanks to the pro wall street policies practiced by the Federal Reserve.

Democrats howl after Florida Senate and House outlaw ‘free speech zones’ on college campuses by Dave Urbanski

Score one for free speech.

Oregon couple’s final days captured in intimate aid-in-dying video by Kaiser Health News

As shocking as this may be to some, I’m actually a supporter of legalizing doctor assisted suicide. It’s your life, you own it, not society.

This is an interesting discussion about the topic.

Technology

PALANTIR HAS SECRETLY BEEN USING NEW ORLEANS TO TEST ITS PREDICTIVE POLICING TECHNOLOGY by Garret Beard & Alex Castro

Someone has been watching too much Minority Report…

It’s not hard to believe that James Carville (yeah, that James Carville, the bald-headed guy that worked for the Clintons) was involved in bringing this to the people of New Orleans. Of course it was hid from the people for six years. Again, I repeat, what we do with data privacy is going to have big implications for Liberty. I’m all for making our country safer, but not at the expense of privacy.

What Am I Listening to on Audible (audio books)?

In Order to Live: A North Korean Girl’s Journey to Freedom by Yeonmi Park

Human rights activist Park, who fled North Korea with her mother in 2007 at age 13 and eventually made it to South Korea two years later after a harrowing ordeal, recognized that in order to be “completely free,” she had to confront the truth of her past. It is an ugly, shameful story of being sold with her mother into slave marriages by Chinese brokers, and although she at first tried to hide the painful details when blending into South Korean society, she realized how her survival story could inspire others. Moreover, her sister had also escaped earlier and had vanished into China for years, prompting the author to go public with her story in the hope of finding her sister.

I just finished…

A Man for All Markets: How I Beat the Dealer and the Market by Edward O. Thorp

The incredible true story of the card-counting mathematics professor who taught the world how to beat the dealer and, as the first of the great quantitative investors, ushered in a revolution on Wall Street.

Thoughts: There’s a lot to like about this book. I think it would have been better suited to have read it in paper. A lot of the investment stuff was a little more technical and I would have liked the ability to review it. From a story standpoint, Thorp’s experiences in Vegas are quite interesting. He’s an interesting guy who did some pretty incredible things with mathematics.

3/5 Stars

What is The Weekly Reads?

I read a ton throughout the week. It’s my personal belief that one of the biggest problems with America is we live in a time of information overload, but most people take little if any time to actually read the information that’s out there. Instead most people read headlines, might skim articles, and then fall back on what they think they know which really is little and is mostly emotionally driven.

Overload isn’t necessarily a bad thing if you know what you’re looking for. There’s so much great content out there, it’s literally the greatest time to be alive if you like to learn.

Anyway, I read so much I never have found a good way to share it, and I’m starting to get a little tired of social media. It’s really not a good way to disseminate information to others as it leads to echo chambers and promotes people not reading. Many would just rather argue about the headline. So, I thought using my blog would be a great way to catalogue my week of reading, offer others a chance to pick and choose some articles from here that might interest them, and filter out what I think is and isn’t important from what I’ve read.

How do I read so much?

I thought I might share what I think to be one of the greatest tools ever made. You hear lots of negatives about how smartphones have ruined mankind for eons, but any tool is only as good as the person using it.

The greatest app ever made in the history of all apps is called Pocket. You can check it out over at GetPocket.com.

Pocket is, as the name suggests, a place for you to pocket everything you come across online, then you can come back and read it. The killer feature of Pocket is that the app will actually read articles to you. On Android, it uses Google’s text-to-speech function and reads the article back at a rate that you choose. So, when I’m doing laundry, housework, going to the store, laying down to go to sleep, you get the idea, I have my Bluetooth headset on and I’m actually “reading” the articles I don’t have the time to sit and front of a computer and read.

I call it “leading”.

It’s allowed me to consume an insane amount of information over the last two years. According to Pocket, I’m in the top 1% of all users of the app. In 2017, I read 2,862,158 words which equated to 61 books.

I’ve also started using Audible which is an audiobook app, and I still try to find time when I can to read an old fashioned paper book. I tend to listen to Audible when I drive as I don’t like to fidget with my phone and it keeps me away for using it unnecessarily.

I get it. You’re busy. So am I. I still find time to read, a lot. It just looks a little different than it used to.

 

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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 http://www.mauldineconomics.com/. 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.