Sunday Breakfast Links

Monetary policy goes after the middle class.  As the people in NY said, “I can’t eat an iPad.” ($AAPL)

This is what real budget cutting looks like.  Anarchists take to the streets in London.  No doubt, it will come to the US if legislators really cut the budget. So far they haven’t yet. Until they take on government pensions and entitlements, they haven’t done a meaningful thing.  The rest of the budget is window dressing.

Nice discussion of inflation or unemployment.  Conventional knowledge is we can’t get true inflation without a decrease in unemployment. Stagflation happened in the late 1970’s, high inflation and unemployment.  The combination was known as the “misery index”. ($WIP)

RIP Geraldine Ferraro.  What ever you thought about her politics, she was the first female candidate for VP and broke some glass ceilings. I thought she was unfairly tarred and feathered by the Mainstream media during the Clinton/Obama primary campaign.

Random thoughts from Thomas Sowell.  Don’t mention the word, “Municipal Golf Course” to him.  Older companion piece by writer David Mamet.  He has called T. Sowell the greatest philosopher of our time.

Two great games in the NCAA last night.  How ’bout those Bulldogs! If you look at the summary stats on the box score, you’d have thought Florida won. Kemba Walker the most outstanding player of the tourney to me so far. Similar in size to Isiah Thomas, but plays a very different style of game.

At Take A Report, there is an unconfirmed rumor that reactor Number 1 in Japan has melted down.  Ugly. ($EWJ, $FXY)

US Home Sales even worse than they look.  Part of this is due to all the machinations of the US government, trying to hold prices higher.  Part due to unemployment and a stagnant economy.  Like Barry Ritholz, I am not too alarmed by the low level of building permits and housing starts.  There is a huge supply of homes to work through. Many of these homes are built in places that are still severely depressed.  Las Vegas, Arizona, and Florida to name a few of the states that had a huge oversupply.  Markets like Chicago have a lot of listings, but Chicago’s ills are self inflicted.  Since the legislators of the state seek to mimic the economic policy of Detroit, eventually it will look like Detroit. ($BZH, $DHI, $LEN, $KBH, $RYL $TOL, $HOV)

A counter point on the real estate picture from Casey Mulligan. tip of the hat to a reader.

Still taking some time to think about our people in the middle east. This is what close air support really looks like. A-10 Thunderbolt in action. The other plane that you can use is an AC-130 Spooky gunship. When I was at the USAFA, we were in Jack’s Valley in the mess tent for lunch. A C-130 buzzed us at tree top level. The entire tent swayed at least two feet in each direction. My stomach wound up in my throat.

Here is what one military person I know said,

“There are 4 elements of power that one nation uses to affect the decision cycle of another nation….Diplomacy, Information, Military, Economic….those are the levers Obama has to adjust decisions and influence nations.

Generals understand this. The surge in Iraq was about putting a rule of law in place. People all over the world have a desire to improve their lot in life…whether that be status, money, influence or a better looking spouse….they want to improve. In free market economies that have systems where laws are enforced, hard work is the path to an improved lot in life. Where there is corruption and no rule of law, then corruption is the path to a better lot. Corruption breeds terrorists (see southside gang members) because that is how they percieve that they can improve their lot in life. By putting in place a system that enforces laws, that enforces contracts, now the magic of the free market will solve the problems of violence as hard work becomes the path to improving one’s lot in life. So, free market Democratic republics, such as the USA, have only ever invaded another country WITHOUT BEING PROVOKED OR NOT AS PART OF AN ALLIANCE once….that is when we invaded Iraq {although some feel that the terrorists attacks by muslim extremists over the last 20 years were provocation). The point is, greed stops fighting. Most folks would rather screw their enemies in a business deal, once they are capitalists, then shoot them. I think that might be what is happening in the mideast.” ($SWHC)

Greg Mankiw says that even terrorists have downward sloping demand curves!