Cupcakes coming soon

One last bout of gorging before the heart attack?

Bernanke: Fed May Launch New Round of Stimulus

No one saw it coming!

Federal Reserve Chairman Ben Bernanke told Congress Wednesday that a new stimulus program is in the works that will entail additional asset purchases, the clearest indication yet that the central bank is contemplating another round of monetary easing.

 "They’ll continue to print money. Maybe they’ll call it QE3, or Cupcakes, or something else." -- Jim Rogers, May 2011.

Happy Fourth of July!

I saw an interesting article in The Weekly Standard. A couple of lines made me laugh, and cry:

the “stimulus” has added or saved just under 2.4 million jobs — whether private or public — at a cost (to date) of $666 billion. That’s a cost to taxpayers of $278,000 per job. In other words, the government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the “stimulus,” and taxpayers would have come out $427 billion ahead.

I like to cite statistics to point out incompetence as much as anyone, but this gave me pause. Yeah, cutting a $100,000 check to 2.4 million people would have cost less money and been more stimulative in the short term, but what about the long term?

The $100k payment would be a one time deal. The job created by forking over $278,000, on the other hand, will hopefully be there for a long time. It is conceivable that the people hired or spared might, after some period of time, however long it is, produce more than $278,000 worth of products and services. Or am I kidding myself? (The banks are hoarding most of the stimulus, corrupt officials and others took a large chunk, and most of the jobs that were created were low paying service jobs.) Just something to think about.

Anyway, it's fourth of July. It's time to get back to what's important: blowing up Chinese made fireworks to celebrate our independence.

S&P: If you don't borrow more, we'll lower your credit rating

From Bloomberg:

Standard & Poor’s would cut the U.S. credit rating to its lowest level and Moody’s Investors Service said it will probably reduce its ranking if the government fails to increase the debt limit, leading to a default. 

Why is the rating still AAA? Imagine you have a friend who has to borrow more from his creditors so that he can make his interest payments. Does he have good credit? How stupid are the creditors for lending him more? Do they really expect him to pay the loan off?

It's widely expected that the US congress will raise the country's debt ceiling by the August deadline (whether this is a firm deadline is another question). Then we'll have another QE, though it'll be called something else. (Jim Rogers offered the name "Cupcakes.") And maybe they'll raise the debt ceiling another time when it's reached yet again. But this can't go on forever.

The US will default on its debt. It probably won't be because the debt ceiling has been reached. They'll find some other way. Maybe we'll get a new currency. Thomas G. Donlan of Barron's mentioned how the US defaulted twice in the last century:

In 1933, the government defaulted on its debt backed by gold by abrogating the gold clause in Treasury securities.

Then, in 1971, Richard M. Nixon explicitly defaulted on this gold exchange standard, withdrawing the American promise to pay gold for dollars held by foreign governments.

And what happened? Nothing. Third time's a charm?

Financial gurus like Marc Faber advocate buying some gold every month. Silver too, while you're at it. That sounds like a good idea.

I'm not quite sure why some people buy silver exclusively. The usual explanation is that they can't afford gold. But if you can afford silver, you can afford gold. Most precious metals dealers sell half ounce gold coins, tenth ounce gold coins, and gram gold bars. A 2.5 gram gold bar, for example, is around $130 at current prices (plus the dealer's premium), about four ounces of silver.

Unlike many of the precious metals bugs, I don't expect to make huge profits from my gold and silver. But I do expect that the amount of stuff I can exchange my gold for today will be around the same a year from now and maybe a decade from now. I don't have such expectations with the dollar.

Laughter at the White House

From the White House:

Over the last 15 months we’ve created over 2.1 million private sector jobs. (Laughter.)

Too bad most of those were minimum wage, McDonald's type jobs. Or is that why they're laughing?

Apple's Concert Piracy Patent Should Worry You

It's recently been reported that in 2009 "big brother" Apple (AAPL) filed a patent application for a device that can disable video recording at certain venues.

The NY Times says:

The recording industry could easily use this technology to disable a camera during a music concert by blasting an infrared signal from the stage and in turn disabling an iPhone from recording the concert for purposes of sharing it online, violating copyright laws.

But the mainstream media doesn't ask any questions. Nor do they tell you the implications.


Here's a question. What's the point if it's really for concerts? Let's say you go to a concert and record what's going on around you and on stage, and then you post it on Youtube and Facebook, etc. Who are you harming?

Watching a poor quality video of a concert on the internet hurts no one. The band isn't missing out on ticket sales because no one thinks that watching a video of an event is an adequate substitute for being there in person. No one thinks, "I'll skip the concert because I can watch someone's iPhone recording of it."

If ticket sales aren't affected, then the venue and other parties involved also don't miss out on any revenue.

But what if the concert is being filmed for a DVD? Wouldn't an iPhone video of the same concert on Youtube hurt DVD sales? Maybe. But I can't imagine it would have any noticeable effect. Compare a high quality, professionally filmed, multi-angle production with a low quality, consumer grade video from one angle. Is the latter really competition for the former? Would it prevent a potential customer from buying the high quality version because he's happy with the low quality? For example, compare this pro video with this attendee video. Here's another example: pro and attendee.

Notice, most important of all, that both types videos are available on Youtube anyway. And the professional quality ones have more views.

So what's the video disabling patent really for?

If Apple will use such technology to disable video recording other manufacturers will follow suit. Increasing numbers of new devices will have this technology. As old devices become obsolete, they'll get replaced by new ones. Eventually, the majority of the people will own devices that will have their video disabled at certain venues/events. Then the fun begins.

Wouldn't it be nice if big agribusiness could disable video recording at their facilities? Then we wouldn't get articles that say stuff like this:

For years videos of egregious farm animal cruelty, foodborne illnesses, unsafe employee working conditions, and pollution have painted a very different picture from the once glorified story books when consumers thought farm animals lived in bucolic safety as portrayed by Old MacDonald's Farm. The past few years have uncovered graphic details of farm life that humane organizations discovered to be revolting, inhumane, and deleterious to both the health and safety of animals and humans.

Agribusiness is already trying to claim that it's a violation of their copyright if someone films unsafe working conditions and so on at their facilities.

The TSA is constantly being embarrassed by videos of their security lapses and abuse of airline passengers. You think they'll have a use for video disabling technology? And once it's employed, will they say something like, "we don't abuse people--if we did, there would be videos of it on the internet." I bet that's what they'd do. They turned off their body scanners last Thanksgiving because of a planned protest. And then it was claimed that the protest "fizzled" because no one complained about being scanned--because they weren't. How's that for propaganda?

What about police departments all over the country? If these things are installed on cop cars, might they lower their liabilities from brutality lawsuits? Many cases will go away or be settled for less if there's no video and it's the cop's word against the victim's.

How about some tinpot dictator installing these devices on tanks and so on? That's a nice way of getting rid of all those pesky videos of human rights violations.

You get the idea.

I'm not saying Apple is to blame. They and their competitors will produce this technology because if they don't, someone else will. And I don't think you can fight it. When all recording devices have disabling technology installed (perhaps because of a law that mandates that the technology be installed--here's a prelude), you won't be able to vote with your wallet.

These are happy times we live in.