Telephone Game

I remember the first time I played the telephone game. It was in the fifth grade. The beginning statement was from an ad our teacher had found. It said, "Go on a trip with Bill and Betty." I was one of the ones that changed it as it made its way across the room. I heard it wrong. It became, "Bill and Betty went on a trip." It continued on until everyone started laughing as they heard it. It had changed again. Then the final person went in front of the class and said "Bill and Betty went on a trip and kissed." He turned very red as he said it. Care to guess what his name was? Yes, there was a Betty in the class! 

As Abraham Lincoln once said, "There are a lot of fake quotes on the Internet." As the election season progresses we will see a lot of emails about the various candidates. It has already started. Obama is not too popular in certain circles. You may have noticed. I do not like him myself, but that is not the point. If you repeat a story about someone and it turns out to be untrue you have sinned. Yes, sinned. 

In the last presidential election I received a forwarded email from a friend, who alas has gradually become an acquaintance over issues like this. I forget exactly what the email said, but as soon as I read it I doubted it. I did some very simple research on Google. The email that he had forwarded about Obama was untrue. You’d think that he would have been grateful to have this pointed out so he could avoid this error in the future. I was wrong. His attitude was that while this story was untrue, others similar to it were true so it did not matter. 

To be frank, there are scriptures that indicate this is not wise. 

James 3 tells us:

Don't be in any rush to become a teacher, my friends. Teaching is highly responsible work. Teachers are held to the strictest standards. And none of us is perfectly qualified. We get it wrong nearly every time we open our mouths. If you could find someone whose speech was perfectly true, you'd have a perfect person, in perfect control of life. A bit in the mouth of a horse controls the whole horse. A small rudder on a huge ship in the hands of a skilled captain sets a course in the face of the strongest winds. A word out of your mouth may seem of no account, but it can accomplish nearly anything—or destroy it! ...

Moses tells us the same in Ex 21:1-3

"Don't pass on malicious gossip. "Don't link up with a wicked person and give corrupt testimony. Don't go along with the crowd in doing evil and don't fudge your testimony in a case just to please the crowd. And just because someone is poor, don't show favoritism in a dispute.

Or maybe this from Eph 5:3-4

Don't allow love to turn into lust, setting off a downhill slide into sexual promiscuity, filthy practices, or bullying greed. Though some tongues just love the taste of gossip, those who follow Jesus have better uses for language than that. Don't talk dirty or silly. That kind of talk doesn't fit our style. Thanksgiving is our dialect.

I know this may be overkill in terms of scriptures, but this is a crucial issue. Gossip is often mentioned in the Bible. Click here for some more examples. 

If you are going to forward an email, or share on Facebook, a little research might be in order. 

Of course we can trust Weird Al, so his advice in this this video is completely true.  

Nigel Farage

The Awful Ryan Budget

While I have already blogged about this, the cacophony of voices against the Ryan budget as harsh, I felt that talking about it again is needed. 

Here is an example:

Mr. Ryan’s proposals would substantially phase out the federal government’s role in providing basic social insurance for older people by sharply reducing Medicare and by eliminating almost all nonmilitary discretionary spending.

No, that was the Rand Paul proposal. The Ryan budget grows government spending by 4% a year while the Obama budget, voted against in rare unanimity by the House and the Senate, grows the budget at 5% a year. Neither is sustainable. Here is the Veronique de Rugy Chart I used before. 

The Ryan budget does NOT cut spending, it reduces the increase in spending. 

The problem in the long term is health care. The cost of health care grows each year by about 7%. 

The projected growth rate of 7.5 percent for overall healthcare costs contrasts with expectations for growth of 2.4 percent in gross domestic product and a 2.0 percent rise in consumer prices during 2013, according to the latest Reuters economic survey.

Look at this chart and think about what that means for a minute. 

Most developed countries spend 8 to 12% of GDP on healthcare. The US spends 15%. If health care costs continue to grow at 7.5% then in ten years the cost will double. Since the economy is also growing at 2% this will not result in a doubling of the percentage spent on health care. This will take longer, 15 years or so. Does anyone think that 15 years from now the United States will spend 30% of GDP on health care? As Herb Klein, advisor to Nixon, once said, if it can't continue it won't continue. 

Here is how the NY Times blogger I quoted earlier put the Ryan proposal:

On Medicare, Mr. Ryan’s proposal is very simple. He wants to cap increases in spending on Medicare below the rate at which health care costs increase. By his own estimates, the share of Medicare spending relative to the size of the economy would shrink sharply over the coming decades.

What the blogger fails to realize is that we have no choice. Yes this means Dad may not get that second double bypass operation; Mom may not get her new knee. The reason is simple. We do not have the money. In fact Obama's proposal for health spending and Ryan's proposal are almost identical in terms of total growth. 

Here is the conclusion to the blog post:

Under such a Ryan-Romney approach, big risks – such as severe ill health and the danger of other calamities – would be shifted from society to individuals. Large corporations in health care and finance and perhaps in other sectors would benefit. So, too, would the people who control those favored legal entities.

This is the exact opposite of the truth. The Ryan proposal would keep the health care for large expenditures but reduce everyday health care expense. In fact the Ryan proposal is woefully inadequate. We do not have the money even for his proposal. Using false optimistic economic assumptions the Ryan proposal balances the budget in 26 years—in other words, not at all. 

Large cuts in spending now are better than draconian cuts later. I am not sure why so few can see this. Each party has their own ideological blinders. As much as I dislike tax increases, the choice we face is large tax increases, even larger budget cuts, or societal chaos when investors quit buying government bonds. Yes those cuts must include defense. 

Remember, what can't continue won't continue. Act now or suffer later.

Suicide of a Superpower

While I am not a big Pat Buchanan fan, I thought this interview was worth recomending for others to watch. 

The Pain in Spain Falls Mainly on the Sane

My favorite movie is My Fair Lady. The scene where Eliza Doolittle has learned to talk without her cockney accent is one of my favorite scenes. The sheer exuberance of the scene is a lot of fun to watch. I have a feeling that the current situation in Spain is not going to be fun to watch. 

Already the smart money has left Greek banks, and many Greek citizens have taken their savings out of the bank for the proverbial mattress. 

The Financial Times reports:

Greece’s four largest banks received a €18bn transfer on Monday as the first instalment of a recapitalisation plan agreed as part of the country’s second bailout by the EU and the International Monetary Fund.

(If you do want to see the article without registration google "financial times" "Greek Banks to receive" Note that this is from Mish Shedlock.) 

Of course when the Greek banks fail this money will never be repaid. Maybe not even in drachmas, the traditional name of the pre-Euro Greek currency. How much will a Greek exit cost? This is Bloomberg's guess:

The cost of Greece exiting the euro would be unmanageable and probably exceed the 1 trillion euros ($1.25 trillion) previously estimated by the Institute of International Finance, the group’s managing director said.

Of course this money does not exist so it will have to be printed. 

Although the "powers that be" in Spain deny it, Spain is on the edge of just such a bank run—the next domino to fall. 

ABC News tells us: 

Bankia is considered key to the country's financial system, and a failure would contaminate the entire banking sector.

The plight of Bankia - which holds some 10 per cent of the nation's bank deposits - has added to the concerns over the massive debt crisis gripping Spain and the rest of the eurozone.

Bankia president Jose Ignacio Goirigolzarri has sought to reassure investors and the public about the future of the struggling bank at a press conference called the day after it announced huge losses, and asked for a government rescue.

How much will it cost if Spain leaves the Euro? This is so frightening there is no official estimate that I am aware of. 

In addition to Spain's banks, Spain's provinces are in trouble too. 

Here is Mish Shedlock's view:

The crisis in Spain is rapidly coming to a head. This crisis has nothing to do with Greek "contagion" as is widely believed. Spain dug this hole by itself. Spain's immediate unsolvable problems are a bankrupt banking system coupled with bankrupt regions that have no way to pay bills. Spain's regional governments need to roll €35.7 billion and there is current deficit of €15 billion.

The president of Spain's Catalonia Region said it faces refinancing needs of €13 billion and is "running out of options refinance its debt".

Catalonia accounts for about one fifth of the Spanish economy.

Moreover, Spain's Valencia region set off alarm bells on a six-month €19 billion bond issue because it may be forced to pay a 7% return, more than two points above what Greece is paying for their junk bonds.

As I mentioned last week, in the short term, this is good for the dollar. 

But in the long term, 

What can't go on, won't go on.

Update on Sunday, June 10, 2012 at 7:10PM by [Positive Dennis]

There is a downside to posting articles in advance. This weekend a bailout of Spanish banks was announced. It was 50 75 125 billion. The amount kept growing as the weekend progressed. Maybe the "powers that be" are right and kicking the can down the road will work one last time.