First Ever! bionic mosquito Interview

No, I didn’t interview myself.

Recently I was interviewed by the “Political Badger.”  For those interested, the Q&A can be found here.

Paul Craig Roberts: The Elite Don’t Want War

Well, that’s not exactly what he writes, but his commentary supports this conclusion.

When it comes to economic and financial assessments, Paul Craig Roberts and I don’t often see eye-to-eye (not that he would notice or care) – he describes the financial problems well, but then goes on to outline his own central-planning solution.  However, on foreign policy and empire, I often find myself in agreement with him. 

He has written a piece posted today at LRC, entitled “Can Putin’s Diplomacy Prevail Over Washington’s Coercion?”  I offer a few quotes from his post that resonate well with or otherwise compliment my view of where we (7 billion of us) stand at this moment.

To summarize my view (at least the portions relevant to PCR’s commentary and this post): the puppet-masters have concluded that the US government has grown too big (and dangerous) for its britches.  While this decision comes with the unfortunate (for the elite) consequence of slowing down or even stepping back from their desires of a centralized, one-world, state, it comes with the benefit of avoiding the risk of a global nuclear holocaust – one that even the elite have no means to survive (don’t tell me about bunkers until you have a solution for the day after…or the next 300 years).

So, here goes:

…President Putin has asked the Russian legislature to repeal the authorization to use force that was granted in order to protect residents of former Russian territories that are currently part of Ukraine…

Putin has placed his future and that of his country on a bet that Russian diplomacy can prevail over Washington’s bribes, threats, blackmail, and coercion. Putin is appealing to Western Europeans. Putin is saying, “I am not the problem. Russia is not the problem. We are reasonable. We are ignoring Washington’s provocations. We want to work things out and to find a peaceful solution.”

Putin’s hope for diplomacy over force rests on Germany and France. Both countries face Europe’s budget and employment woes, and both countries have significant economic relations with Russia. German business interests are a counterweight to the weak Merkel government’s subservience to Washington. Washington has stupidly angered the French by trying to steal $10 billion from France’s largest bank.

I have written often about the possibility of the coming alliance amongst Germany, Russia, China, and maybe even Japan and Australia.  Events daily demonstrate baby-steps in this direction.  Roberts suggests that Putin is betting that Germany and France will ultimately consider the self-interest of their own countries (in the language of national politics), respectively.  Sooner or later they will, as there is no salvation via an “ally” whose primary economic strength lies in exporting funny digits on a banker’s computer screen.

If his bet is a bad one and Europe fails not only Russia but itself and the rest of the world by accommodating Washington’s drive for world hegemony, Russia and China will have to submit to Washington’s hegemony or be prepared for war.

There are a few more places left for proxy wars, I guess – Africa?  South America?  The pickins are slim.  But is there anymore appetite in the west?  Is there the financial capability?  Is there the military capability to “win”?  Events of the last several years seem to indicate “no.”

As neither side can afford to lose the war, the war would be nuclear.

Eventually it will – on purpose (if not to “do” means to “die,” how might political and military leaders act?) or by accident (trigger fingers get itchy when the rhetoric gets hot; there are enough reported such near-miss incidents during the cold war to not dismiss this possibility).

As scientists have made clear, life on earth would cease, regardless of whether Washington’s ABM shield works.

This includes the elite.  No way out, unless they have a plan to get a few hundred million of us (in order to support the lifestyle they enjoy today) and all of their toys and beaches to Mars.

This is why I oppose Washington’s policies and speak out against the arrogance and hubris that define Washington today. The most likely outcome of Washington’s pursuit of world hegemony is the extinction of life on earth.

Yup.  This is why the elite are pulling the leash.  Unless there is no such thing as the elite….

New Majority Leader Signals Major Shift in Republic Party

After Eric Cantor’s defeat in the primary to an upstart, apparently Tea-Party type, the Republican members in the House decided to heed the lessons from such a high-profile defeat.  They selected, as new majority leader one Kevin McCarthy, from the hinterlands of California.

Do you want a hint at the shift?  Check out the picture.

Bowe Knows…

Humor me while I reminisce about the old days and one of the most remarkable athletes I have ever seen in any sport (no, not him, or him…how old do you think I am?).  Bo Jackson.  Baseball or (American) football, he was outstanding in both sports – he could have been an all-time Hall-of-Fame candidate if not for blowing out his hip and further subsequent complications.

One of the more memorable episodes of the flash of light that was Bo Jackson was a series of commercials by Nike, “Bo Knows” (if you like a heavy guitar, listen to Bo Diddley on this commercial).  In this series, the cross-training abilities of Bo are explored in numerous sports.  Bo knows them all (well, Gretzky doesn’t think so).

I know none of you come here to read about such things.  I take this opportunity to reminisce on the simpler, pre-911 days of my youth – or, let’s say, my less-aged.  The topic, as you have likely surmised from the title of this post, is Bowe Bergdahl and the controversy surrounding his release.

I will begin by stating that I have no idea of the truth of the circumstances behind his capture or release; behind any actions he may or may not have taken.  None of it.  The story is a controlled one.  But the controversy – even outrage – is based on the narrative provided, and it is this narrative that I will examine.

The feigned controversy is in regards to the trading for terrorists:

Mike Rogers, chairman of the House Intelligence Committee said he was "extremely troubled" and that "This fundamental shift in U.S. policy signals to terrorists around the world a greater incentive to take U.S. hostages". This sentiment was repeated by Congressmen Buck McKeon and James Inhofe, who released a joint statement saying that terrorists now have a "strong incentive" to capture more soldiers.

Pretty laughable.  Like they didn’t have reason already?  Actually, this might preclude the reason they have to kill US soldiers, and capture them instead.  You would think this is a good thing.

What is the real reason for the hostility – hostility in the politicians, the media, and much of the public?  It is because Bowe knows (at least reportedly)….

Bowe knows the truth behind the US government’s foreign interventions:

The future is too good to waste on lies. And life is way too short to care for the damnation of others, as well as to spend it helping fools with their ideas that are wrong. I have seen their ideas and I am ashamed to even be american. [sic]

A soldier “ashamed to be an american” is a sin worse than death – what does this say to the countless millions who stand cheering and weeping when returning soldiers are paraded at sporting events, or when the fighter planes fly overhead at parades?  If the soldiers are ashamed, what does this say for those doing the worshipping?  Are they dupes?  No, better to be hostile.

One More Wealth-Skimming Consequence of Boom-Bust

When it comes to inflation – the monopoly-enabled money-printing / credit-creating type – there are many benefits to those receiving on the front end (politicians, bankers, crony-capitalists, etc.), and many costs to those receiving on the back end…wait, that didn’t come out right…although it paints the proper picture.  I think you get my meaning.

I will comment on an aspect that gets little, if any, attention – at least within the universe of what I have read on the topic: the tax benefits to the state.  I will take this in two forms – one somewhat more obvious, and another that may not be so.

First, to the more obvious (and at least somewhat more commented on): inflation stimulates (or attempts to stimulate) economic activity more than otherwise would occur.  On the back of this false, boom activity rides tax receipts – real wealth taken from the productive sector to the government sector.  That this will be partially offset (and certainly reduced) in the subsequent and certain bust is somewhat irrelevant; all politicians in elected democracies live for today.

Second, perhaps the less obvious: tax-loss carry-forwards in various forms.  Some examples and definitions will help:

Tax Loss Carry-Forward:

A tax loss carryforward takes place where a business or individual reports losses on a tax return up to seven years after the loss occurred. Frequently the logic behind this is to reduce tax liability during a year where the income or profits are high if losses were experienced previously. The tax loss carryforward reduces the overall tax liability during the high-earning year by incorporating the earlier loss as a reduction to taxable income.

In the boom, artificially high profits were earned.  Tax is paid on these in the immediate year earned.  In the bust, lower profits and, inherently, losses are incurred.  These losses do not result in a refund of prior years’ taxes paid (paid due to the boom that will always result in the bust); the losses do not result in a payment from the treasury to the taxpayer at the marginal (negative) tax rate in the current year.  Instead, the taxpayer must carry-forward the loss, helpful only in future years and only if a profit is achieved in the future.  So, on a timing basis, the treasury comes out ahead.

Consider; the boom ensures a subsequent bust: condition precedent is the boom; condition subsequent is the bust.  But the logic of the tax code is the opposite: the losses associated with the bust cannot be retroactively applied to the taxes paid during the preceding (and causing) boom.  Instead, they must be carried forward – to a boom not associated with the current bust.

Of course, if the business goes bankrupt in the bust, there is no profit in the future against which to apply the loss.  The treasury comes out net ahead.

Net Operating Loss:

A period in which a company's allowable tax deductions are greater than its taxable income, resulting in a negative taxable income. This generally occurs when a company has incurred more expenses than revenues during the period.

The net operating loss for the company can generally be used to recover past tax payments or reduce future tax payments.

The terms of the tax relief and how it can be applied varies by jurisdiction but usually the NOL can be applied to the past few years (two to three) and much more to the future (seven to 10) years.

Similar in concept to a tax-loss carry-forward.  Note that the retroactive period is much shorter than the prospective period.  I often hear of businesses that carry as an asset a tax loss.  This suggests that the prior 2-3 years where not useful in recovery, and that the hope is for the future ten years to offer the possibility of application.

Once again, the treasury is paid taxes on income, while the taxpayer has to wait to gain benefit from losses.

Writing off Investment Losses.  Note: this is taken from an article at the end of 2008 – a year of significant investment losses for many, and a bust period following a significant boom (similar to the dot-com bust several years earlier):

The IRS allows a taxpayer to use up to $3,000 in net capital losses to offset ordinary income. Capital losses of more than $3,000 ($1,500 if married, filing separately) must be carried over to the next year, though they can be carried over indefinitely.

Take the example of someone with $500,000 in capital gains and $1 million in capital losses. After subtracting the gains from losses, he has $500,000 in excess capital loss. He can use only $3,000 of that loss to offset ordinary income, such as salary, that year.

The taxpayer, having previously enjoyed the gains from the boom (and paid taxes for the privilege), now faces substantial capital losses due to the inevitable bust following the preceding boom.  Can he go back to the returns of the boom years and apply these losses to the earlier periods?  No.  They can only be applied to future years, and only up to the amount of the future capital gains plus $3000 per year.

So, the poor sap in the above example must either dive back into the market and hope for the best (the next boom), or wait 167 years to recover.

These are just a few examples.  Different jurisdictions have different rules.  Sometimes the losses can survive a bankruptcy, sometimes not.  But most, if not all, tax laws are skewed in favor of the treasury – leveraging the inevitable bust following the boom to the benefit of the state.

To summarize: the bust is tied to the preceding boom, yet the tax benefits (if you will) of the bust must wait for the next boom (if any benefits are even realized; often, the benefits can die unused for various reasons) – the treasury is always one cycle (if not permanently) ahead.

Book Recommendations for the Pope

Apparently the Pope is speaking once again about the failures of the economy.  There is little reason at this point for a line-by-line critique; I have done that before – search for Pope Francis at this blog.  I only offer the following book recommendations:

He said: “At the centre of all economic systems must be man, man and woman, and everything else must be in service of this man.”

Read Human Action.  A properly functioning economy does put man and woman at the center, with producers in service of consumers (and not the other way around, as we suffer under today).  For an easier read that gets to the same place, try Man, Economy and State.

During the interview, Pope Francis - who has not shied away from speaking out since he took over as the head of the church - denounced the influence of war and the military on the global economy.

He said: “Since we cannot wage the Third World War, we make regional wars. And what does that mean? That we make and sell arms.

“And with that the balance sheets of the idolatrous economies -- the big world economies that sacrifice man at the feet of the idol of money -- are obviously sorted.”

I wish he wouldn’t use “we” unless he means to include himself.  In any case, it isn’t just for profits that government and the military-industrial-complex pursue war.  Read Crisis and Leviathan.

Finally, there appears not a word about the evil institution at the root of the problems the Pope decries.  In this regard, read this.

(Tom Woods, can you forward this note please?)