I hear a lot of ads advising investors to put gold in their IRAs or 401ks.  Seems like a terrible idea.  The big benefit if retirement accounts is to defer income. Gold generates no income, and actually incurs storage and transaction fees.  Gold can also be very volatile.  In the 1970s and 1980s we saw gold go from $35 to $800 and back down to $300. Gold did not have a net inflation adjusted gain for 25 years.   Gold may or may not be good investment but a retirement account is not the place to own it.  If it does go down and it is in a taxable account at least you can offset other gains with it.  If it goes up you may be able to get a capitals gains treatment.

Tax deferred accounts are the best place to put secure income producing investments.  It is even somewhat of a waste to put stocks with the intention of producing long term gains as along as those gains are taxed at a reduced number. High yield stocks are a different consideration.

Self reliance used to be a cherished American virtue.  Many today consider it synonymous to being anti-social.

Debbie Wasserman Schultz seems to be a liability for the Democrats.  Claims that the Republicans are anti-women and anti-immigrant are just old school demonizing. Only the sycophants drinking the party’s bathwater from a distant past do not see such statements as either silly or offensive. The independents seek solutions, sometimes poorly, and are likely to be put off by such caustic stereotypes.  At a time when the party should be steering center she is turning left.

Republicans seem to struggle to control the narrative.  Part of this is the inability to stick to a cohesive message stated clearly.  It does them no good to attack their own party members who are actually proposing adult solutions to long term problems.  The perfect is the enemy of the good.  Perhaps this primary process will coalesce into a winning strategy.

Democrats win more by solidarity than by popularity.  However much they may speak against an incumbent they will rally to their party when the final election comes.  Republicans are divided by an assortment of litmus tests that has destroyed their effectiveness and unity.  Whoever their candidate is they must be able to unite a very diverse party to be effective.

This early in the game polls are pretty worthless.

I just finished reading Dance of the Furies- Europe and the Outbreak of World War I by Michael Neiberg.  It is an excellent companion to another book he wrote about WWI:  Fighting the Great War.  Michael is a history professor with a focus on World War I,  and my nephew. His other books about World War I include The Second Battle of the Marne, Warfare and Society in Europe, The Eastern Front and The World War I Reader.

Fighting the Great War was a broad view of the military campaigns.  The carnage of WWI was a confluence of history and technology.  Picture the Civil War with machine guns, high power artillery, tanks, airplanes and poison gas.  Yet medical care had little improved.  The carnage was incredible and the war ended from an exhaustion of resources and people.  For many European nations WWI was more significant and devastating than WWII. Britain and France lost twice as many soldiers in WWI than WWII.

Dance of the Furies focuses on Europe outside the military campaign.  Neiberg researched volumes of civilian correspondence and finds a Europe that did not want nor expect this war.  The conventional academic wisdom is that WWI was an inevitable outbreak of nationalistic and jingoistic developments.  Neiberg argues that while these attitudes existed it did not explain the outbreak of the war.  Few people felt these attitudes justified war.

There had been violent acts and smaller conflicts that had been mediated without leading to war.  The success in preventing war by mediation for decades gave a sense of comfort that war was a very avoidable outcome.  The assassination of Archduke Franz Ferdinand by a Serbian national seemed a relatively minor incident in the scope of the European concerns and few expected it to lead to WWI.

But efforts to mediate the harsh terms the Austro-Hungarians placed on Serbia after the assassination failed and war ensured. Few people, however, believed it would last very long. Shop keepers hung signs on their stores that they would soon return.

The book notes the impact on the civilians: inflation, unemployment, critical shortages of foods and commodities. 800,000 people fled Paris. “3,000,000  in France and Belgium were homeless by the end of the year (1914)”.

Few soldiers from any army understood why they were fighting. The news from the German, British and French papers was controlled and bereft of any current information on the state of the conflict.  The American papers were sought even though they were weeks old because it had more information on the war than their local papers allowed.

Few civilians understood what was happening until the casualties started, and they were significant.  At the Battle of the Marne, not far from Paris, “200,000 wounded men from the battle came into a stunned and unprepared city…. more men had been wounded in this one battle than had been present at either Gettysburg or Waterloo.”

Tales of atrocities, some verified and some rumored, dissolved any reluctance the fighters may have harbored at the onset of the conflicts.  Neiberg suggests that the nationalistic sentiment many suggest caused the war was more the result of the conflict.  Every country thought they were fighting a defensive war, as difficult as that rationalization is to understand today.

Though few expected or wanted this war, once it started it took on a life of its own.  Attitudes hardened and were sustained long after the war ended.  The war was a decision of a dozen leaders.  Michael referred to it as a Cabinet War.

Thus the war developed from a political structure where the leaders were distant from their constituencies and where a free press was the first casualty.  There was little civilian support for the war from either side and few made plans for either the duration or depth of the losses.

WWI may have been an avoidable war but the outcome just laid the basis for WWII.  The nationalist hostilities may have been a result of the first world war but it led to the second. Yet the utter exhaustion and devastation from WWI led to appeasements that ultimately made WWII far more costly than it would have been. From one perspective WWII seems like a continuation of WWI.

Economist Scott Grannis in Calafia Beach Pundit (a recommended daily read) writes “Why The Recovery Continues to be Subpar”  (May 27,2011):

excerpt:

Monetary “stimulus” that involves very low short-term interest rates and lots of bond purchases can’t create growth out of thin air. Easy money hasn’t done anything to strengthen the economy.

Fiscal “stimulus” that involves massive borrowings to fund huge transfer payments, make-work projects, and subsidize state and local budgets also can’t create growth out of thin air. Taking money from those making a lot of it (e.g., corporations which have generated record profits) and handing it out to those not doing very much (e.g., by extending unemployment benefits, funding “shovel-ready” projects, and keeping union and public-sector employees on the job) not only can’t create new growth, it destroys growth by creating perverse incentives.

Printing money, making money cheap, borrowing to force-feed spending—it’s all an exercise in futility and ultimately counterproductive. Growth only comes when money is spent on things which increase the productivity of labor. Our standard of living rises only if our collective efforts result in more output for a given number of hours of work. Government has a dismal record when it comes to making productive investments, because the incentives are not properly aligned; the profit motive is missing. Force-feeding money to the economy only results in more speculative activity, since it’s easier to bet on rising gold and commodity prices than it is to risk setting up a new company and hiring new people. Soaring deficits don’t create new demand, they only create fears of huge future tax hikes and that dampens animal spirits today.

What has been working to create growth is the inherent dynamism of the U.S. economy, and the tireless efforts of entrepreneurs and workers who strive to improve their lot in life. Businesses have been busy restructuring, laying off nonessential workers, cutting costs, and boosting their profits. The economy has shifted massive amounts of resources from the troubled financial, housing and construction sectors, and into the up-and-coming mining, technology, and manufacturing sectors. The economy is growing despite the best efforts of politicians to create growth. Financial markets have recovered not because the economy is in great shape, but because the economy is much better today than markets feared.

HKO comments:

Loose monetary policy is counteracted by fiscal policy that inhibits growth. For a long time the Fed has been able to counteract misguided fiscal policies from Congress with easy money. This no longer works because the deficit has become too large at the same time that the onslaught of the threat of new taxes, onerous regulation, the health care bill, and the bully pulpit war on wealth from this reckless administration is strangling the economy.

When the stimulus wears off and quantitative easing ends we are left with an anemic recovery and a huge debt.

During the turmoil that gave birth to the state of Israel in 1947 and 1948 over 700,000 Jews were ejected from the Arab states from Libya to Iraq.  Jews had lived in those countries for thousands of years. All of their property was confiscated.

Void of resources the new state of Israel absorbed those refugees and quickly made them citizens. Helen Thomas’s blindingly ignorant statement that the Jews in the Middle East should go back to Germany ignores not only the many Jews that had lived in the Arab world but the Jews that have had a presence in Israel for 3,000 years.

I do not believe that one UN resolution condemned the ethnic cleansing of the Jews in the Arab world in 1948, and this was so soon after the Holocaust that the ashes were still smoldering.

Many of the Palestinian refugees that cause such anguish amongst their supporters left in the anticipation of returning after the Arab armies extinguished the Jewish state.  Some were driven out by the fears and fortunes of war.   Many Arabs stayed in Israel and remain there today with rights of citizenship. It was not until the overwhelming Israeli victory in 1967 and the failure of the Arab invasion in 1973 that the idea of returning began to dim.

It was around that time that the idea of a Palestinian state and a Palestinian people took root.  In the early days of the British Mandate the Jews in Israel as well as the Arabs of the area were referred to as Palestinian.

As the Palestinians under the leadership of Arafat and the PLO became a distinct entity, they tried to exercise political power in Jordan.  After using Jordan as a base for terrorist activities including a few attempts on Jordan’s King Hussein’s life, the Jordanian army expelled the PLO from their country.  Over 2,000 Palestinians were killed by the Jordanian army during this expulsion in a period known as Black September. This became the name of a terrorist sub group of the PLO.

I do not recall any UN resolution condemning the Jordanians for their action against the Palestinians.  I do not know of any Israeli operation that has killed as many  Palestinians in such a short period of time.

The Palestinians took root in Lebanon, inciting a civil war in what was largely a Christian Arab state. After using Lebanon as a base to attack Israel, the Israelis invaded Lebanon to defend their northern border and to support the Lebanese Christians in their opposition to the Palestinians.  After a brief incursion from the United States under Reagan (we quickly withdrew  in 1983 after 241 Marines and servicemen were killed in a suicide bombing of their barracks) and world outrage precipitated an Israeli withdrawal, Lebanon was transformed from the peaceful nation it was to the Hezbollah hell hole and terrorist base it has become.

Hundreds of thousands of Palestinian were working in Kuwait when Iraq invaded that sovereign kingdom.  The Palestinians largely supported Saddam Hussein, and Saddam offered $25,000 incentives to Palestinian suicide bombers.   After Desert Storm removed Hussein from Kuwait, almost all of the Palestinian workers in Kuwait were ejected.

I do not recall any UN resolution protesting this action.

The suffering of the Palestinians has been largely the result of their own leadership and their fellow Arab nations.  They are the victims of a culture of death that places more value on killing Israelis than building their own civilized society.  They are the victims of enablers that do not hold them accountable for their own dysfunctional society, and who perpetuate their myth that their problem is the intransience of Israel and that any amount of land will satisfy their blood lust.

This is not to ignore violence that the Israelis have committed against Palestinians.  It is hard to avoid civilian casualties when they are used as fodder to control a narrative.  I am sure there are actions the Israelis wish they could undo.  I  doubt that the Palestinians feel the same.

The Palestinians were offered a state in 1948, and in 1967 and ever since.  It has been continuously rejected.  To consider borders from 1967, before the rise of Hamas and Hezbollah, before the rise of the Iranian theocracy, and thousands of other changes is as ludicrous as considering that the United States return to the southern borders of 1848 to solve the problem of illegal immigrants from Mexico.

The rise of the State of Israel came at a cost not only to the Israelis but to the people displaced by a half century of conflict.  Sixty years later Israel is now a fact on the ground.  The biggest obstacle remaining to a Palestinian state is the Palestinians themselves.

I confess that I do not count myself among the Thomas Friedman sycophants.  I have read some of his books and I just find him trying so hard to be “intellectually balanced” that he often ignores the obvious and the reality all together.  It belies an attitude that there is a truth that only he possesses and the rest of us are intellectually primitive ideologues not to see the obvious road he so generously bestows on us in his New York Times columns.

His column from the New York Times on 5/24/11, “Lessons from Tahrir Square” is a prime example of an attempt to disregard the obvious in order to make a balanced argument.

when it comes to ossified, unimaginative, oxygen-deprived governments, the Israelis and Palestinians are right up there with pre-revolutionary Egypt and Tunisia. I mean, is there anything less relevant than the prime minister of Israel going to the U.S. Congress for applause and the leader of the Palestinians going to the U.N. — instead of to each other?

As for Bibi, his Tahrir lesson is obvious: Sir, you are well on your way to becoming the Hosni Mubarak of the peace process. The time to make big decisions in life is when you have all the leverage on your side.

This idea of drawing an equivalency between Israel and the Palestinian efforts toward peace is absurd.  Not to discount counterproductive actions taken by the Israelis there is no equivalency.  Start with the results.  Israel by any objective observance has built a nation; a modern productive, democratic nation.  The Palestinians have turned down the opportunity to have a nation for 50 years.  Israel has built hospitals, schools, industry, museums and a vibrant culture. The world has spent more money on the Palestinians that they spent to rebuild Europe after WWII and what do they have to show for it?

The Israelis do not parade school children around in suicide vests and take pride in teenage suicide bombers. Those who commit such atrocities, which are rare,  are not heralded as heroes but cause a deep shame for the nation.  There is no call to wipe out the Palestinians.  Claims of “genocide” against the Palestinians are laughable.  Populations do not grow during genocides.

Israelis do not rain down rockets on civilian population. When combat operations do require engagement in civilian areas, which is often given how the Palestinians will use civilians as fodder to create a misleading narrative  of oppression, the Israeli troops take great effort to avoid and minimize civilian casualties.

Israel has a Muslim minority with rights of citizenship. They vote, sit in the Knesset, own property and enjoy religious freedom.  You can hear their call to prayers loudly broadcast from a PA system in the Temple Mount right next to the Jews’ holiest site; the western wall.  In discussions of a Palestinian state it is assumed to be ‘Juden free’.   Jews are expected to be uprooted.

The comparison with Mubarak’s role escapes any sense of reality.  Unlike Mubarak, Netanyahu was freely elected. The Knesset debates with an intensity that makes our Congress look like they have been lobotomized.  Israel has provided a home for the Jews who were thrown out of Egypt in 1948; what have the Egyptians done for the Palestinians?  There is no need to riot in Israel; they can just vote.  Illiteracy and the resulting unemployment is absent in Israel, and this is while being in a semi-permanent state of war.

To even suggest that Bibi has all the leverage on his side is incomprehensible.  Yes they have a strong military, but honestly Thomas, have you looked at the fucking map? Have you read the press about Israel in Europe or even that paper that you call home?  Have you noticed how the UN has treated Israel?  Is there any other nation that faces an existential threat that is unchallenged on the floor of the UN?  To suggest that they should unilaterally forfeit any semblance of security to satisfy your retarded sense of equivalency is ridiculous.

So called intellectuals like Friedman think that such equivalency is a sign of a superior thought process.   The inability to distinguish right from wrong or the unwillingness to support a side that supports the freedom of its citizens and its right to defend itself is not a sign of a higher intellect.  Moral equivalency does not make you smarter; it makes you a coward and a fool.