My First And Only Rasslin’ Match

I remember clearly my first and only rasslin’ match. I was around 11. A friend of the family took me. I was very excited and I cheered and cheered for my selected champion. I was especially impressed with the women wrestlers. I shouted enough that the family friend was a little embarrassed. The main match ended with a low blow. The wrestler who landed it was either a good actor or clearly upset with what had happened. Naturally he lost by default. 

This was way before the days of modern wrestling and the WWE. Here is how Wikipedia describes this business:

World Wrestling Entertainment, Inc. (doing business as WWE, Inc.; NYSE: WWE) is an American publicly traded, privately controlled entertainment company dealing primarily in professional wrestling, with major revenue sources also coming from film, music, product licensing, and direct product sales. It is currently the largest professional wrestling promotion in the world, reaching 13 million viewers in the U.S. and broadcasting its shows in 30 languages to more than 145 countries. Like other professional wrestling promotions, WWE’s shows do not feature legitimate sporting contests. Instead, its programs feature storyline-driven combat sport matches with predetermined outcomes and fighting maneuvers that are worked, all promoted as legitimate bouts. 

Will the victor be Sycho Sid?  Or Stone Cold Steven Austin?  This was determined behind closed doors by the wrestling “powers that be.” Ultimately this did not matter either as all contestants were actors, not real sports figures. 

So who will win the rasslin’ match next Tuesday? Will it be Battlin’ Barack, the Kenyan wonder? Will it be Mercurial Mitt, the Boston Brute? I am not saying that the outcome is predetermined, but it really does not matter who wins as we all will lose either way—we just lose in different ways depending on who is elected. Like the computer realizes in that old movie War Games, the only way to win is not to play. 

Will I be cheering Tuesday night as I watch the returns? No, I am not 11.

Romney’s 20%

Romney has promised that if elected he will reduce federal spending from 25% GDP (Gross Domestic Product) to 20% by 2016. This would be enough for me to hold my nose and vote for him, if I believed him, but this is not consistent with his other promises.

Romney has promised no cuts in Social Security or Medicare to anyone over 55.. My joke has been that since I am 58 I support this. He has also pledged to not cut defense. About 20% of the budget goes for defense (probably an underestimate as there are parts of defense hidden in the Energy Department); about 20% of the budget is Social Security; about 15% of the budget is Medicare. So 55% of the budget is untouchable. That would thus require a cut in all other government programs by over 50%—color me skeptical. This also ignores the increase in medical costs every year.

How then does Romney say this with a straight face? As in the case with politicians of all persuasions it is a combination of cunning lies and personal delusion. Apparently Romney expects that if he is elected the oceans will cease to rise, oh wait, that is someone else.

In particular the Romney/Ryan delusion is economic growth. Here is the Anerican Thinker explanation:

One way it is possible to get near 20% of GDP for government spending by 2016 is to factor in economic growth. Unadjusted for inflation, economic growth averaged around 4% in 2010 and 2011 (factoring in inflation, the growth is much lower). Let’s say that Romney’s economic policies are effective and that growth starts to take off. Rather than 4% unadjusted growth a year, let’s estimate 6% growth. Six percent annual GDP growth is a very attainable number. The second term of the Clinton administration matched that number, and the first term also came close. Reagan’s presidency also saw about a 6% annual GDP growth per year.

Read more here.

The American Thinker is assuming 6% growth over the next 4 years. They are delusional as well. The title to their magazine is a misnomer.

In the last election I held my nose and voted for McCain as I lived in a swing state. McCain won Missouri by 7000 votes, one of them was mine. I am not sure how I would vote if I lived in Colorado, Iowa, Florida, or Ohio, especially Ohio. Since I live in California—the bluest of blue states—my vote is worthless.

As you may have figured out by now, I have a well-developed sense of the absurd.

Roseanne Barr for President! She wants to bring back the guillotine.

Our Photon Controls Are Damaged

Lord Keynes was once asked what his policies would do in the long run. He famously said, “In the long run we are all dead.” While I have mocked this answer in the past, there is an element of truth to it. When in a tough situation one might do things that otherwise would not be done. But the idea is that when things are better one could repair the damage in better times. This was actually what Keynes advocated. He wanted to have a balanced budget over the length of a business cycle. This has never been done. Instead the debt just gets higher and higher. The potential effects of this when, not if, interest rates rise is the proverbial elephant in the room no one talks about. Keynes is dead, and has no worries. We the Living have to deal with the bad economic decisions of the past. 

As I mentioned in my earlier post 3 to 7 Years, I still have hopes we can muddle through in spite of a lack of evidence that either party actually understands the mess we are in. We must take action immediately to avoid a worse crisis later. 

A lot rides on the ability of the US economy to grow. While I think the growth assumptions of the Congressional Budget Office are overly optimistic, and Ryan’s are even worse (I have not looked closely at Romney’s growth assumptions), I do expect growth.

But what if this is untrue? The last 250 years of growth may be unique in history and may not continue. The economic law of diminishing returns says this:

The law of diminishing returns (also law of diminishing marginal returns or law of increasing relative cost) states that in all productive processes, adding more of one factor of production, while holding all others constant (“ceteris paribus”), will at some point yield lower per-unit returns. The law of diminishing returns does not imply that adding more of a factor will decrease the total production, a condition known as negative returns, though in fact this is common.  

Have we reached that point? Martin Wolfe always makes you think and his article in The Financial Times is getting some buzz. 

Prof Gordon notes further obstacles to rising standards of living for ordinary Americans. These include: the reversal of the demographic dividend that came from the baby boomers and movement of women into the labour force; the levelling-off of educational attainment; and obstacles to the living standards of the bottom 99 per cent. These hurdles include globalisation, rising resource costs and high fiscal deficits and private debts. In brief, he expects the rise in the real disposable incomes of those outside the elite to slow to a crawl. Indeed, it appears to have already done so. Similar developments are occurring in other high-income countries.

The whole article is well worth reading. (You will have to register to read it.) 

While I expect growth to continue, it cannot do so forever. The advances in Nanotechnology might continue this growth spurt for a while, and then into a sustainable society. Maybe I can ask my son for a guest post on this issue as this is his area of expertise. 

But in the meantime we need to reorganize, tighten our collective and individual belts, and prepare for bad weather. In other words our photon controls are damaged and we must withdraw. 

If you do not like my clichés, use your own, but act. 

Romney Boomlet

I will don my Prophecy Podcast turban and predict that if Romney wins there will be a little boomlet. 

A lot of the investor class are sitting on money, and are not borrowing money to expand because they see the risk of another Obama term as too large. So if Romney is elected we will have a self-fulfilling prophecy and the economy will improve. This may allow the US to avoid the mini-crunch that most pundits are predicting for next year. The bad 2013 prediction of many, me included, is the combination of the expiration of the Bush Tax cuts, the expiration of the temporary Social Security tax cut, the first layer of Obamacare taxes, and the forced spending cuts—all happening at once. But if Romney is elected the Bush tax cuts will be extended, Obamacare might be repealed, and the “animal spirits” as Keynes called it, consumer confidence, will increase. 

While it is anecdotal, I have had many people tell me that they are holding off making any investments until after the election. These investor “animal spirits” will be an important factor if Romney is elected. 

But will it last? 

Unless Romney is a lot better “dancer” than I think he is, then no, the respite will be temporary. Get ready for an extended period of national decline

Did You See This Part of the Debate?

This next clip is a songified version of the VP debate. I found one aspect of the debate disturbing. Biden was wrong, he had voted for both the war in Iraq and Afghanistan. How could anyone forget something like that?