Reader Mail – 07/29/2012 To 08/04/2012

JP commented on Intrade Flaw - The Time Value Of Money.
I like this article, but it makes the flaw of treating a near-risk-free return of 2% as unacceptable. Stocks and gold have a different risk profile and time horizon. Also, if odds collapse to 0.01, you get paid early, which is a possibility.

The intrade counterparty risk is something I am intrigued by. Theoretically, there should be no counterparty risk from bankruptcy, assuming they are ethical and simply acting as a clearing house. Then again, look at MF Global to test that theory.

If you're willing to buy a bond that pays 2% interest, you're an idiot. You'll get ripped off by inflation.

Some Treasury bonds yield 2%. The Federal Reserve manipulates interest rates, keeping them much less than true inflation. Treasury yields are not the result of a free market.

Whenever you use Intrade, you are lending Intrade money at 0% interest. You are an unsecured Intrade creditor, if Intrade declares bankruptcy, or if Intrade pulls a Corzine. Intrade gets to use your money interest-free from now until the contract expires.

Does Intrade have the same capital requirements as other businesses? Is customer money segregated? Even if it's supposed to be segregated, Intrade's executives can always lie!

Even if Intrade did credit a couple percent interest, that still is much less than true inflation.

Would you buy an unsecured Intrade bond that paid 0% interest? Would you buy an unsecured Intrade bond that paid 4% interest? If you answered "yes" to either of those questions, you are an idiot.

Intrade does not credit people with interest. If you're making a prediction for a 1-2 week time period, lost interest doesn't matter much.

For 1-2 year predictions, like the Presidential election, the loss of credited interest is significant.

That also causes longshots to be overpriced, if they have a dedicated fanbase. Ron Paul's Intrade odds were decent, but he had no realistic chance of winning. Intrade's capital requirement rules meant that it wasn't profitable to sell Ron Paul on Intrade, even though it was overpriced.

Even if I had advance knowledge 2 years ahead of time, regarding who will be the next President, a physical gold investment would probably be superior to an Intrade bet. When performing the comparison, remember to include the Intrade default risk, the odds that Intrade will steal your money and declare bankruptcy. If you were a futures market customer, your default risk was 16% in 2011! (MF Global was 40% of the futures market, and MF Global customers lost approximately 40% of their equity.)

If you look at recent price history, gold has been giving great returns, with practically no risk. When was the last time the FRN-denominated price of gold decreased over a 3 year holding period?

Frank commented on Do Disabled Veterans Deserve Respect?.
Wow!! So WWII, WWI, Indian wars and revolutionary wars all corruption? I fail to see the logic. I was pointing out military corruption by showing how they purchase weapons they don't need or use in a time of war or for wars they know they won't fight such as the cold war. I don't believe a war needs to get hot for things to becime strained. The Soviet Union faught wars even when they wouldn't profit, Vietnam and China fought, etc. Is there a standard for good wars with you other than self defense such as independence or lack of resources?

Most wars in the past 50 years have been more about corruption than about protecting freedom.

Only self defense or independence is appropriate. That's the Non-Aggression Principle.

Murdering Native Americans also counts as corruption. You should read about how the US government made and broke treaties with the Native Americans, and then murdered most of them.

Frank commented on Do Disabled Veterans Deserve Respect?.

IraqII - Iraqi Freedom : Hubris, Multiculturalism

Afghanistan - Enduring Freedom : REVENGE, Hubris, Multiculturalism

Somalia : Multiculturalism, Prop-up corruption in UN

Iraq I - Desert Storm : Petro Dollar (Gold Standard Fallout),$5 million payment to Bush Sr. from the Kuwaitis, several million on the back end I'm sure, Saudis as well,

Saudis offered $16,000 to every serviceman who deployed but Bush wouldn't let them take it but he got his.

Panama : Blackmail of several US congressmen, money laundering evidence disapearing

Grenada : Show of strength against commies, over-kill on Cuban Army Engineers

Vietnam : Corrupt draft board, military, etc.

Korea : UN prop

I understand but I was showing that even when they fight a war they can't help but show how corrupt they are by purchasing weapons they don't need for their war. All of these wars were supported by the public some were even popular by majorities so corruption is something the public has put up with more than we would like to think. The public IS corrupt so we shouldn't be surprised these wars are created by the same senators and congressmen who brag about taking back more in public money than they pay, getting something for nothing then everyone gets hurt.

That's my point about the "military-industrial complex". One big "benefit" of war is the lucrative military contracts. It's an excuse to spread pork around.

The average worker doesn't realize how bad the corruption is. Even if they do, they're powerless to do anything about it. It's wrong to blame the average slave for the crimes of their leaders.

If the mainstream media did their job, it wouldn't be so bad. The mainstream media is just a propaganda arm for the criminals.

School is about training people to be obedient slaves, rather than real education.

However, I managed to discover the truth. The Internet is a big help, if you know where to look. However, as just one person, there isn't much I can do.

If I had to analyze the population, there's 1% criminally insane people, the Bernard Madoffs. There's a couple percent that have evil tendencies, but aren't that skilled. These are typically the middle managers. There's 1% highly skilled workers, and a couple percent who try to work productively. The middle will follow the example set by others. In our society, evil is held as the role model, and that's what everyone aspires to be.

Right now, due to a corrupt job market and corrupt economy, the skilled workers aren't able to match up with jobs that use their skills. That exacerbates the economic problems.

Matt K commented on Time-Warner Cable Gross Negligence.
I have been with Time Warner for 10 years in in southern California and the DVR boxes are horrible. Also for over a year everytime i call and complain they tell me that there is a new Samsung cable box available...i think YA!!! gather all my boxes and run down to TW which is about a 45min trip for me, i get there and ask for my new Samsung box and they look at me like a deer in the headlights they have no clue what im talking about. Now whats really lame is I nor the people at there 800 number call center can actually contact the local TW place to see what boxes they have in stock. These Scientific Atlanta Explorer 8300HDC **POS** is all they have i finally dumped them and got DirecTV and let me tell you how nice there equipment is, its so much better and you can plug it right into your network and get a huge selection of VOD plus pandora and other app's
The DVR service is a ripoff.

I got a Mangavox 515h HDD DVR. That's superior to the Time-Warner cable box service. There's no subscription fees!

It's awesome! I had to order from Amazon. Retailers don't carry it, because they want to sell subscription-based Tivo services.

Justin commented on I Have A Comment Spam Problem Again.
Move the check box randomly around on the x axis to futz with their click bot. Make a rule that any comment with a link in it is spam and auto remove it. First two ideas I had.

The spammer isn't a click bot. It's sending appropriate javascript to simulate a cick.

Some legitimate comments have links. Then, I have to read through my spam box.

Looking around, I can add ReCaptcha. Another possibility was "You can't post a comment unless referred to by another post."

sth_txs commented on The Federal Reserve Is Evil!.
Meanwhile, the Austrians over at Mises are belittled though just about everything they have said has come to pass.

But hey, you can't have a populace that thinks private property (including your money) and private contracts are what makes a better world? That would give the statist no power.

Anonymous Coward commented on The Federal Reserve Is Evil!.

Uncle Ben does have a nice beard!

I think FSK is just jealous he can't fly around in a helicopter dropping money on his mates.

You may want to look at the video below in which Ron Paul questions Timmy over interest rate fixing, Libor and the intermediaries in bond buying.

If money printing directly by government is thought to be bad, while is getting a private bank to do the same thing and then letting a load of middle-men profit from it better?

Why do a bunch of middle-men make profits on government bonds, when China can buy them direct?

Anonymous Coward commented on The Federal Reserve Is Evil!.

In the video below, you can see what a nice beard Dr Bernanke has.

Why do people concentrate on the madness of doing the same thing again and again (money printing) and then wondering why it causes booms and busts, and not the man's beard?

Einstein said doing the same thing time and time again and expecting a different result is the definition of madness. So people say the Federal Reserve is crazy.

I say no. The man has a nice heard. That is all you need to know.

Anonymous Coward commented on Real GDP Is Crashing, 2000-2011.
The whole economy is distorted by government and banks sucking money out of the real economy.

Taxes are too high. I read that German companies spend as much effort looking for ways to legally avoid tax as in actually growing their businesses. This is plain wrong.

Because of interest rates, companies have to pay back loans quickly. This distorts what they do. It means everything shifts to short term profits, instead of long term thinking.

We need to do what Ellen Brown and Bill Still recommend - we need debt free money. That would be better than crushing, exponentially growing interest rates.

The whole thing is a fraud. Money creation and debt is a system that is designed to crash into the ground. The real, productive economy can never have exponential growth which is needed to kept up with the debt interest.

Anonymous Coward commented on Real GDP Is Crashing, 2000-2011.

> Lawyer salaries count as part of GDP.

The legal system is completely broken.

When a woman leaves a man, the man has to pay a sum comparing to _x_, where x is a year's salary in legal fees, even for cases where the law is "clear cut" and for a situation that happens thousands of times across the land.

Lawyers mess up, but are still paid a fortune. Witness the beautician in the UK, that paid lawyers to handle her court case but lost. She couldn't afford lawyers for the appeal and so handled the case herself. She won over a simple contract matter against a construction company. So why did the lawyers keep their money if they messed up the first case? Money for nothing. Why couldn't the highly paid lawyers read a contract?

While women (see Daily Mail) are imprisoned for having part-time jobs with variable income while claiming housing benefit, others game the system. The others have free lawyers (paid for by tax-payers' money) to go to tribunals to increase their welfare benefits. Some women are on 60, 000 pounds a year in combined benefits (see Big Issue job scam) and have free lawyers to get them more government money. But other women are more honest and take up part-time work. They get sent to jail for doing real work.

The welfare system favours those that understand the system and game it. Lawyers jump on the bandwagon and get their big fees to get more government money for those playing the system.

Honest people that don't understand the system are jailed.

Anonymous Coward commented on Real GDP Is Crashing, 2000-2011.

> Lawyer salaries count as part of GDP.

The law and justice no longer exists in the United Kingdom.

Everyone must be equal under the law. This no longer applies.

People were jailed for stealing bottles of water in the riots.

However bankers that steal millions and billions are above the law.

David Laws MP had a government Treasury post for a short while. It was revealed he made a false claim on his expenses. The media made excuses for him. He didn't want to admit he had a gay partner.

It is a very nice perk to be able to buy a bigger house on your MP expenses. David Laws was already a millionaire due to his time working in banks. He didn't need to do this at all.

OK, so David Laws MP got off scott free. It was said by the mainstream media if he was honest about his gay lover we could have claimed the same amount of money.

I can see why there is good reason not to prosecute this man.





anon commented on Real GDP Is Crashing, 2000-2011.

For your consideration:

In 2000, the average pump prices for a gallon of gas was ~1.50 and we'll say that the average cost per ounce of gold was $300 (it averaged lower for most of that year). This means that each gallon of gas cost ~ 0.005oz of gold in 2000.

In 2012, a recent gold price was ~1600oz and a recent pump price for a gallon of gas was ~3.50, which works out to a current gallon of gas costing ~0.002oz of gold.

Did gas become worth 40% of what it used to be worth in 12 years? Did gold become worth > 5x as much in real terms in 12 years?

It still doesn't match, a 40% decline in the gold-price of gasoline, vs. a 75% shrinkage in the gold-sized economy.

There have been improvements in drilling, but not enough to account for 40%.

If you want to be scientific about it, you should pick a whole bunch of commodities, and not just gasoline. If you look at a 10 year chart of gold/silver/copper/platinum, they line up pretty closely.

I use gold for simplicity. GDP/gold has decreased nearly every single year!

Another possibility is that the gold price was suppressed from 1975-2000. The central banks used up their gold reserves, causing it to increase more than other things.

anon commented on Real GDP Is Crashing, 2000-2011.

It'd be more scary if it did match exactly, but in any case you're being sloppy with terminology.

To compare apples to apples it's either:

- gold-price of gas in 2012: 40% of what was, vs per-capita g.d.p in gold: 25% of what it was

- gold-price of gas in 2012: 60% shrinkage from what it was versus per-capita g.d.p in gold: 75% from what it was shrinkage

Take your pick of comparisons (40% to 25% or 60% to 75%), remember both figures are cumulative over 12 years so the annualized difference is even smaller. Still a discrepancy, but you'd expect a discrepancy unless everything was standing still.

Comparing precious metals commodities to each other isn't that enlightening because for the most part their prices tend to be fairly strongly correlated (never lockstep, but usually within a reasonable envelope). So if your interest is "what could I buy with N units of metal M at time T" you don't learn as much by comparing two metals (the rates fluctuate, just not that much) as you do by comparing a metal to something entirely unrelated.

I picked gasoline because gasoline consumption is a good proxy for economic activity in the USA (country of discussion), due to the way it correlates with transportation (to/from work, moving goods around the country). You could also look at pork bellies, electricity prices, and so on.

What's going on is interesting but it's nothing so simple and dramatic as a 75% drop in GDP over 12 years; if that happened it wouldn't be a debatable thing. (Hint: it's not like 3 out of 4 supermarket shelves are barren everywhere you go...).

I'd be more impressed by an analysis involving a whole bunch of commodities. Add corn, sugar, oranges, etc. to your analysis. Those prices should match gold more closely than gasoline, but I don't have a good source for prices.

Also, when the economy shrinks, people use less gasoline.

Supermarkets are only a small fraction of the economy. There also are State food subsidies. There also is a hidden type of economic shrinkage, lower quality. A box of Russell Stover chocolates used to be 16 oz. Now, it's 12 oz, and the quality is lower. That's a 25%+ decrease, but there's still stuff on the shelves.

GDP/gold has decreased every single year since 2000. That is significant. GDP/gasoline also decreased, albeit not by as much. My overall point is still correct. In real terms, the economy is shrinking by a lot. Even 1%/year annualized is significant shrinkage.

If you want a more extreme example for your point, pick natural gas. It's the only commodity whose FRN-denominated price hasn't skyrocketed in the past few years. To be most scientific, a basket of commodities would be best as the inflation index.

For me, "Gold is money!" is a definition. There are manipulations and fluctuations in the gold price. Over a 10+ year range, it should even out. Gold and gasoline should converge over longer periods of time.

anon commented on Real GDP Is Crashing, 2000-2011.

Just going off of some standard commodity price indices we have this, measured in gold:

Agricultural Raw Materials: $97.9 in 2000 (~0.33oz) => $132.45 in 2012 (~0.083oz)

Food Price Index: $82.12 in 2000 (~0.27oz) => $168.84 in 2012 (~0.11oz)

Beverage Price Index: $76.96 in 2000 (~0.26oz) => $160.38 in 2012 (~0.10oz)

Industrial Inputs Price Index: $77.36 in 2000 (~0.26oz) => $163.36 in 2012 (~0.10oz)

Crude Price Index: $52.78 in 2000 (~0.18oz) => $171.02 in 2012 (~0.11oz)

Agricultural Raw Materials: ~25% of 2000 price (~75% shrinkage)

Food Price Index: ~38% of 2000 price (~62% shrinkage)

Beverage Price Index: ~39% of 2000 price (~61% shrinkage)

Industrial Inputs Price Index: ~39% of 2000 price (~61% shrinkage)

Crude Price Index: ~61% of 2000 price (~39% shrinkage)

Make of it what you will.

Those "Price Indices" are calculated using the same flawed methodology as the CPI. Try again with something else.

I'm looking for "corn", "sugar", "cotton", "pork bellies", etc. I meant the raw futures prices, and not some State statistic that's manipulated.

What I make of it is "You're a troll who's ignorant about economics."

Here is an example of what I meant. Corn Jan 2000 - $200. Corn Dec 2011 - $646. That's a change from $200/$300=0.66 to $646/1600=0.40. That's comparable to the example you gave for gasoline.

Sugar #11 Jan 2000 - 6.17. Sugar Dec 2011 - 23. 6.17/300=0.0206, 23/1600=0.0144. That one is only a 30% decline.

Ironically, the best example in that chart is crude oil (NYM). Jan 2000 - 25.6. Dec 2011 - 98.3. 25.6/300=0.0853, 98.3/1600=0.061, only a 29% decline.

That page also has metal.

Silver - 543.3 to 2791.5 - 543.3/300 = 1.811; 2791.5/1600=1.744, practically unchanged.

Copper - 86.3 to 343.6 - 86.3/300 = 0.288; 343.6/1600=0.215, 25% less

Platinum - 430.2 to 1400 - 430.2/300 = 1.434; 1400/1600=0.875, 40% less

The bottom line is that, no matter what commodity you use as your inflation index, real GDP is crashing. I've used gold every time I made that post, so I'm consistent.

Looking at most of them, the commodities seem closer to the gasoline example than gold. However, when I looked at silver/copper/platinum, those tracked gold more closely.

This link is interesting. Knight says they lost $440M due to the software problem. If Knight lost $440M, someone else made $440M!

However, Knight's excuse is fishy. They said "We released new software that day, which caused the glitch." If you release new trading software, you should be watching it closely and be ready to pull the plug if there's a problem.

Justin commented on Knight Trading Software Problem.

My theory is it was just a stop run so they could get more favorable positions.

The amount of money Knight lost on the trades is more than they would have made triggering stops.

Anonymous Coward commented on Knight Trading Software Problem.

I started programming from a very young age as a hobby long before I started work in the software industry.

My first job was working for a software company producing risk management software for banks.

At first I was so pleased to finally work with PROFESSIONALS, as I thought of myself as only a hobbyist amateur.

Within a few months, I realized their software was buggy and the company was sitting on a couple of software disasters. I realized that no matter how hard I worked and how much good software I wrote, I would only be subsiding all the other crap.

There was one software developer there with a reputation for shoddy work. He got promoted and put on one of the new whizzy products.

I got stuck in maintenance of an old software product, which I thought was stupid as at that time I had a reputation for very high quality work. Clients often recommended my work. I left that company.

I didn't think they made good use of their resources.

I noticed another common misconception cited in many articles. "Knight has until settlement, T+3, to come up with the money for the bad trades."

That is false. For clearing and settlement, positions are marked-to-market at the end of each day. In fact, they now do intraday mark-to-market.

Knight doesn't get the perk of waiting. They had an immediate margin call. They would have already been shut down, if they couldn't come up with the money.

Anonymous Coward commented on The HIV/AIDS Conspiracy Theory.
I once worked in a science laboratory which tested a lot of its members for HIV. One worker had a positive HIV test, despite the fact that everyone in the group was perfectly healthy. At the same one of the scientists said it was a false positive and the some other virus (maybe a cold virus) must have cross-reacted.

I don't keep in contact with these people anymore, but I never heard of anyone becoming sick.

I don't know what this means and I'm not saying it means anything - I am just recalling what I recollect.

sth_txs commented on The HIV/AIDS Conspiracy Theory.

I read this many years ago:

That book is interesting. Why would scientists be offended, by the publication of that book? It should be acceptable to publish a hypothesis, even if it later turns out to be wrong. That sounds a lot like the hate against Andrew Wakefield, for publishing "Vaccines may cause autism." Even if it is false, it shouldn't be wrong to speculate. (That's another good post to put in the "Conspiracy Theory" FAQ section.)

Eddie B commented on The HIV/AIDS Conspiracy Theory.

You have conspiracy theory mixed up with the Leonard Horowitz group Whom claim that HIVAID$ was created as a lethal soup to kill off certain people.

Actually the Rethinking AIDS movement dissents or challenges the mainstream theories of HIV/AID$ which we believe is also some sort of conspiracy rant made up by Robert Gallo and the U.S. Center for Disease Control.

If you want to get in tuned witht he dissident movement join us here: and ask all of the questions that you want. If not, please do not call us Conspiracy theorists, we challenge those who deny that Robert Gallo and Luc Montagnier isolated a retrovirus HTLVIII/LAV, We challenge the fact that no HIV Test Kits has ever had scientific validation, by means of direct Virus(HIV) Isolation, and That AID$ is even a legitimate Syndrome.

There are two issues you are confusing.

1. Does HIV really cause AIDS? Is it a "causation confused with correlation" fallacy? Are scientists reluctant to consider that possibility, because they don't want to admit they made a mistake and squandered billions of dollars of State research money?

2. Is AIDS part of a secret depopulation agenda?

I mentioned (1). I never mentioned (2) in that post.

Both (1) and (2) are examples of conspiracies. I'm willing to seriously consider (1). I don't consider (2) to be very likely.

Insiders and their scientists aren't omnipotent. They aren't going to intentionally release a virus that crashes the population, because that would threaten their gravy train. Insiders like a large group of complacent slaves. If a lot of slaves start dying, that threatens the status quo.

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