Mark McHugh

Archive for July, 2011|Monthly archive page

Don’t Get Sucked In!!! (It’s only a movie)

In Open Thread on Friday, July 29, 2011 at 8:33 am

Now is not the time to panic.

Sure there’s a “The sky is falling!” sentiment in the air, but I’m telling you, like most of the things your TV tells you to worry about, it’s simply not real.

Over the last five years, I’ve learned where to look to find panic and uncertainty and I’m telling you, it’s just NOT there.  This is pure theatre.

Stocks are more than 25% above their 52-weeks lows, so sure, they can afford to show some big red days to scare you.  So what?


If you short anything, you’re most likely gonna get your face ripped off very shortly.

Just be warned.

(Sorry I don’t have time to explain this better right now)


Fun with Dick and Jane’s Addiction

In Open Thread on Thursday, July 21, 2011 at 8:56 pm

Here’s the most useful bit of folk wisdom I can pass along:

Do it once, you’ll like it.  Do it twice, you’re hooked.

It was imparted to me regarding heroin, and it shriveled any curiosity I might have ever had regarding the stuff.  No rush is worth the kind of self-inflicted slavery that that addiction brings.  An addict’s life quickly spirals into a series of twisted rationalizations, trying in vain to recapture the euphoria once felt.  There is never an exit strategy, just soulless renditions of  Perry Farrell’s refrain ( I’m gonna kick tomorrow!!!).  Darwin eventually provides one, but not before the addict’s selfishness has done permanent damage to everyone they once cared about.

The easy money endlessly pumped out by the Fed and squandered by the government has been compared to a heroin addiction.  It’s an appropriate metaphor.  Sure  it makes pain vanish in the short-term, but after a while it’s no longer a question of achieving some desired effect, it’s something we need to survive.  And although no one actually believes this, America seems powerless to stop this monster.  Why?   Meet America’s closeted heroin addicts:

See Dick.  See Jane,  See the chart.  See the recession.  Bad recession Bad.  See the Fed.  See the Fed cut.  Cut Fed cut!  See Dick and Jane refi.  See the next recession…..

What I’m getting at here is that the Fed has responded to every recession in the last thirty years exactly the same way…cutting rates.  Nothing’s shocking about that, but here’s the really important part:   In every case, the thirty year fixed mortgage pre-recession lowest rate, was higher than the post recession highest rate (these are quarterly averages).   So what was an unbelievably low rate before a recession became an unthinkably high rate thereafter, again and again and again. 

See Dick and Jane think houses are great investments.  Little do they realize that 65% of the price appreciation of houses over the last thirty years came from the heroin provided by the Fed and congress.  That $2000/mo. McMansion payment that gets a buyer a $400,000 mortgage at 4.41%, would only fetch a $137.000 mortgage at 17.5% (click here if you don’t believe me). 

If you’re thinking, “That can’t happen!” guess what?  You’re hooked too. 

See Dick and Jane TEA party?  May I suggest the slogan, “Give me Liberty, but don’t let my house go any further underwater!”  Apparently no one has explained to Dick and Jane that  they are the biggest beneficiaries of this “nanny state” thing they detest.  97% of all US mortgages are either written or guaranteed by the government.  While the debate over the debt ceiling rages on with all the substance of a “Tastes great! – Less Filling” commercial, the stash that keeps house prices propped up isn’t even on the table.   Fannie and Freddie are not subject to the debt ceiling and have unlimited credit lines.  Maybe that’s why you’ll never catch the dragon.

See Dick and Jane rob Grandma.  Anyone even vaguely familiar with the behavior of  junkies knew this was coming.  Fannie and Freddie are unfunded liabilities, social security is not, but good luck explaining that to a strung out whore.   Social security has been overfunded to the tune of $2.5 T.  In 2010, the US government collected 4.5 times as much revenue from social security than it did from corporations (both data points can be verified here). 

You can’t fix the housing market, you can only give the housing market another fix.   After that it’s just a matter of learning to tolerate abominations.Darwin’s coming.

Raising Taxes Absolutely Promotes Job Growth

In Open Thread on Wednesday, July 13, 2011 at 11:53 am

Disclaimer: I’ll admit the title is a tad misleading. 

I am astounded how many people DON’T get this. 

The idea that raising taxes kills growth stems from the realm of pure fantasy.  It’s idiotic. 

Consider this:

You run any small to medium size business (good for you).  We’ll say you run a good little trucking company, OK?  You’re not Lebron James.  You’ve got no extraordinary skills, but you’re still OK.  You should make a nice living and I don’t begrudge you that for one second.  Here’s the problem, if the tax law says you can keep as much money as you can make and your tax rate won’t change,  people act differently.  They pay their workers as little as possible, they won’t hire, they won’t maintain or replace the trucks.  In short, they will take, take, take expecting the world to cower in fear of them because they represent “jobs.”   It’s the sweatshop mentality.

That’s exactly where we are now.  The rich get richer and the poor get food stamps.

Let’s change Joe Trucker’s landscape.  Once his income exceeds $500,000 (just as an example), Joe will pay a 75% tax rate on every dollar above $500,000.  Greedy Joe made $2 million last year, so if he does the same this year, he only gets to keep $375,000 of the second $1.5 million.  Joe’s gonna keep and scream “it’s not fair”, “you’re killing small business you fools!”, “I’m a JOB CREATOR GODDAMMIT!  WITHOUT ME YOU CAN”T EXIST!!!”

You get the picture….

If you simply say, “shut the fuck up, Joe.  All you do is truck stuff around….big fuckin’ deal.”  Joe will pout.  So what?  After the hissy fit, Joe will realize that no matter what he does, he can’t keep all the marbles.  If he continues treating his employees like shit and letting his fleet deteriorate, while his competitors adapt to the new policy by buying new trucks, hiring and providing better service, Joe will lose everything.  He’ll become a walking, talking joke without a friend in the world…..

And Joe knows this (he’s pretty smart, remember?)

Joe’s not going to start paying Uncle Sam a million a year in taxes (don’t be stupid).  Joe will act in his own best interest given the circumstances.  He will build value in his business, instead of trying to wring every last nickel he can out of it.  He’ll buy new trucks, he’ll hire….

In short, he’ll do exactly what everybody wants him to do.

So raising taxes, doesn’t help the government’s spending problem, because changing tax policy doesn’t raise revenues.  It does however change behaviors.  The government has no choice but to cut spending, and that’s a good thing.  Total government spending (Federal state & local) is now over 40% of US GDP.  The notion that the private sector can support that much weight is insane.

The government’s role in “job creation” is not to hire more people.  It is to create an enviroment to make others hire.  Their approach has been ass-backwards and is destroying the country.  Tax policy is the stick that moves the horse.  Use the fucking stick, you morons.

Seriously, how can it be that nobody gets that?


I just gotta add this: 

Horses, Carrots and Sticks

Everybody (even politicians and Ivy-league economists) knows that making horses do what you want involves carrots and sticks.  Most of us on this side of the rainbow understand how they should be employed, but Wall Street has brainwashed Washington.  They’re stuffing the horse full of carrots, using the stick to beat anyone who questions them and wondering why the horse won’t move.

Think we should give them more carrots?

News Flash: There’s ALWAYS Been a Gold Standard

In Open Thread on Tuesday, July 12, 2011 at 2:44 pm

You may think the price of gold swings wildly….that’s really not true.

You just have to view it through the right lens.  I think CQCA Business Research has found a great formula for pricing gold: Using the US monetary base.

If you check out this post and the chart, you’ll see that the monetary base = about 1.75 Billion Ounces of gold, or right about where it was in the early 1970s.   That was the beginning of a 2000% move.  I think the coolest thing about the chart is that it shows how gold has pretty much stayed in a range with monetary base, between .5 Billion to 2 Billion ounces.  When it went below .5B it was time to sell and when it went over 2B it was time to buy, buy, buy,buy,buy.  It’s around 1.75B now…..nowhere near time to sell.

If you ever find yourself with access to a time machine, don’t go to America in the early 70s to buy gold, it was still illegal for US citizens to hold.  I might  reccommend  January 1, 1975, and trust me, it’s so you could relive the disco-era.  That’s when US citizens could own gold again, and it was $185 an ounce.  It would quaduple over the next five years.  Not bad…

But when I look at this chart, I realize that gold was much more expensive in 1975 in terms of monetary base.  So maybe I’ll pass on the time traveling.

Right here, right now, there’s is no other place I’d rather be….

~ Jesus Jones

If you’ve been following the debt ceiling talks, you know there’s still no grownups in the room.  Gold’s got a looooong way to run. 

Check out CQCA Business Research .  There’s a whole lot a fresh thinking posted there.

Update:  CQCA will be added to the blogroll.  I have been remiss in adding many of the people who have helped me.  To those supporters who would like, just leave a comment saying so and I’ll be glad to add you to the blogroll too.

Who Voted to Increase the Debt Ceiling (List from 5-31-2011)

In Open Thread on Saturday, July 9, 2011 at 12:31 am


I haven’t put together that list yet (I do this for free), I’ll get to it as soon as I can

Thanks mainstream media, for once again providing a blogger with the opportunity to pick up your slack (a search for “debt ceiling vote results” proved fruitless…surprise, surprise).  So here’s the complete list of US Representives that thought it was a good idea to raise the US National debt ceiling on May 31, 2011.  The voting public will express their opinion November 6.

Until then, enjoy the lap dances at CNBC. 

Despite the propaganda blitz, only 19%   of Americans actually wanted their representatives to vote to raise the debt limit, according to Gallup.  47% did NOT want the limit raised.  The other 34% are too lazy to form an opinion (good luck getting them to turn out on election day).

Meanwhile the red guys and the blue guys continue their charades.  “Raise taxes on the rich!” “Cut spending!”

Here’s the joke:  When all is said and done, the public debt ends up in the very private bank accounts of the super-rich (this is true everywhere on planet Earth), so the rich want the debt ceiling raised, not the poor, not the vanishing middle class.  They set up the system that way.  The last thing they want to happen is a US debt default.   The poor are already  good at being poor, the rich not so much.   If we don’t raised the debt ceiling congress will have to cut spending and attempt to tax the rich.  If there’s one thing rich people hate, it’s paying taxes (count on that).  Guess what they’ll do to avoid taxes?  Spend like hell.  And presto! we will suddenly find the “private sector spending” that has eluded all these morons.  Since there will be no new tax dollars flowing to Washington, they will have to cut spending even more…..Not raising the debt ceiling will accomplish what everyone says they want, so why not not do it?  Congress never bothered to to pass a budget for 2011, so all’s we’re really asking them to do is show the same lack of initiative regarding our debt enslavement.  Is that too much?

The only places people seem to believe “taxing the rich will ruin everything…..” and “we have to raise the debt ceiling”  are inside my TV and in the trollosphere.  I’m actually proud of my countrymen again.  We’re moving beyond the red-team-blue-team brainwashing and learning to hate politicians for the vermin they are.

So with no further adieu, here’s the list (so far) of cretins willing to admit that they think they’re smarter than those they represent:

Alabama – 7th Terri Sewell
Arizona – 4th Ed Pastor
Arizona – 7th Raul Grijalva
California – 10th John Garamendi
California – 12th Jackie Speier
California – 13th Fortney Pete Stark
California – 14th Anna Eshoo
California – 15th Michael Honda
California – 16th Zoe Lofgren
California – 17th Sam Farr
California – 27th Brad Sherman
California – 28th Howard Berman
California – 30th Henry Waxman
California – 34th Lucille Roybal-Allard
California – 35th Maxine Waters
California – 39th Linda Sanchez
California – 51st Bob Filner
California – 5th Doris Matsui
California – 6th Lynn Woolsey
California – 9th Barbara Lee
Colorado – 1st Diana DeGette
Colorado – 7th Ed Perlmutter
Connecticut – 1st John Larson
Connecticut – 4th James Himes
Connecticut – 6th Christopher Murphy
Florida – 17th Frederica Wilson
Hawaii – 1st Colleen Hanabusa
Hawaii – 2nd Mazie Hirono
Illinois – 1st Bobby Rush
Illinois – 2nd Jesse Jackson, Jr.
Illinois – 4th Luis Gutierrez
Illinois – 5th Mike Quigley
Illinois – 7th Danny Davis
Illinois – 9th Janice Schakowsky
Indiana – 7th Andre Carson
Kentucky – 3rd John Yarmuth
Louisiana – 2nd Cedric Richmond
Maine – 1st Chellie Pingree
Maryland – 2nd C.A. Dutch Ruppersberger
Maryland – 3rd John Sarbanes
Maryland – 4th Donna Edwards
Massachusetts – 1st John Olver
Massachusetts – 2nd Richard Neal
Massachusetts – 3rd James McGovern
Massachusetts – 4th Barney Frank
Massachusetts – 5th Niki Tsongas
Massachusetts – 7th Edward Markey
Massachusetts – 8th Michael Capuano
Massachusetts – 9th Stephen Lynch
Michigan – 13th Hansen Clarke
Michigan – 15th John Dingell
Michigan – 5th Dale Kildee
Minnesota – 4th Betty McCollum
Minnesota – 5th Keith Ellison
Mississippi – 2nd Bennie Thompson
Missouri – 1st Wm. Lacy Clay
Missouri – 5th Emanuel Cleaver
New Jersey – 10th Donald Payne
New Jersey – 12th Rush Holt
New Jersey – 13th Albio Sires
New Jersey – 8th Bill Pascrell, Jr.
New Jersey – 9th Steven Rothman
New Mexico – 1st Martin Heinrich
New Mexico – 3rd Ben Ray Lujan
New York – 11th Yvette Clarke
New York – 12th Nydia Velazquez
New York – 14th Carolyn Maloney
New York – 16th Jose Serrano
New York – 17th Eliot Engel
New York – 18th Nita Lowey
New York – 21st Paul Tonko
New York – 4th Carolyn McCarthy
New York – 8th Jerrold Nadler
New York – 9th Anthony Weiner
North Carolina – 12th Melvin Watt
North Carolina – 13th Brad Miller
North Carolina – 4th David Price
Ohio – 10th Dennis Kucinich
Ohio – 11th Marcia Fudge
Oregon – 3rd Earl Blumenauer
Pennsylvania – 14th Michael Doyle
Pennsylvania – 1st Robert Brady
Pennsylvania – 2nd Chaka Fattah
Tennessee – 5th Jim Cooper
Tennessee – 9th Steve Cohen
Texas – 18th Sheila Jackson-Lee
Texas – 20th Charles Gonzalez
Texas – 30th Eddie Bernice Johnson
Texas – 9th Al Green
Vermont Peter Welch
Virginia – 11th Gerald Connolly
Virginia – 3rd Robert Scott
Virginia – 8th James Moran
Washington – 2nd Rick Larsen
Washington – 6th Norman Dicks
Washington – 7th Jim McDermott
Wisconsin – 4th Gwen Moore


Previously:  Why everyone hates you: A guide for politicians

The dirty secret of the debt ceiling debate: No one wants Treasuries

Understanding the National Debt (Sesame Street edition)