Tuesday, August 30, 2011

Federal Government Sues Old Dominion Freight


THIS SUITS INVOLVES the feds suing Old Dominion Freight for terminating a trucker who self-reported his alcohol abuse problem. The government however defines alcoholism as a disability which is not a fireable offense. Can you imagine the liability of having a drunk truck driver of an 18-wheeler relapsed, driving a big rig on the Interstate? This person does not need to be driving professionally for a living, even if he's on the wagon. He may have reported himself, but he still doesn't need to be doing this kind of driving.

When I hear stories like this, I have to wonder, how much longer this country---which once was free---can take this kind of senseless meddling and defining by government bureaucrats. Read the story; decide for yourself.

Monday, August 29, 2011

After The Deluge In Nags Head

GRIZZLY KILLS HIKER IN YELLOWSTONEWASHED AWAY: Billy Stinson and his daughter, Erin, sit on the steps where their cottage once stood in Nags Head, N.C., Sunday. Hurricane Irene destroyed the cottage, which was built in 1903 and was on the National Register of Historic Places. (Scott Olson/Getty Images) From the WSJ Photos

Sunday, August 28, 2011

Tim Keller, What Sends Us To Heaven, Hell?

NYC After Irene Sure Looks Better Than Nashville After Its Epic Flood


NOT TO MAKE LIGHT OF WHAT the East Coast has gone through during Irene. Nevertheless these two pics my daughter-in-law sent from near Central Park today shows there was not as much damage as anticipated. Not by a long shot. Thanks L!

More Irene photos from WSJPhotos

Saturday, August 27, 2011

Not Politically/Intellectually Correct, Still Correct In the Eternal Sense

As Manhattan Closes Down Saturday Noon, Forecasters Say Threat Overblown


Hey, but whadda ya expect with a nanny, micromanaging mayor?

Udates and live feed coming from Upper West!

Thursday, August 25, 2011

Fire Season Starts With A Vengeance


UNTIL LAST WEEKEND, it seemed as if Jackson would escape its annual fire season due to late snowfall stretching into early June this year. Nevertheless things have dried out considerably in August and last Saturday a dry lightning strike in the Gros Vente Wilderness brought on fire season with a vengeance. By Sunday the Red Rock fire had blown up to over 3,000 acres. Today it's doubled again to almost 6,000.

A thick blanket of smoke hangs over the valley--which may blow out briefly in late afternoon winds---but essentially will remain here until sustained rains douse or snow flies in the fall. Outdoor activities are not recommended for anyone with upper or lower respiratory conditions. Hiking yesterday was like breathing hard in a room full of smokers. Very unpleasant and inescapable.

Wednesday, August 24, 2011

In Memory Of A Truly Good & Godly Man

NASHVILLE — Billy Grammer, a singer and guitarist whose 1958 recording of “Gotta Travel On” became a crossover hit and led to a long career on the Grand Ole Opry, died on Wednesday in Benton, Ill., the town where he was born. He was 85 and lived in Sesser, IL.
A Grand Ole Opry spokeswoman, who confirmed the death, said Mr. Grammer had a heart attack in March.

“Gotta Travel On,” adapted by Paul Clayton and others from a British folk tune, was a million-seller and the first hit for Nashville’s Monument Records and its founder, Fred Foster, appearing on the pop, country and rhythm & blues charts. Since then it has been covered by, among others, Jerry Lee Lewis, June Carter and Bob Dylan, who recorded it for his 1970 double album, “Self Portrait.”

Mr. Grammer named his band after the song, calling them the Travel On Boys. On May 15, 1972, hired to perform at a presidential campaign rally in Laurel, Md., for George C. Wallace, the band was playing Mr. Wallace’s usual exit song, “Under the Double Eagle,” when Mr. Wallace was shot and paralyzed from the waist down.

Mr. Grammer also designed and produced flat-top acoustic guitars under his own name through a company he started in the 1960s. He donated his first model to the Country Music Hall of Fame in 1969, and in 2004 Sotheby’s sold an abalone inlay acoustic model played by Johnny Cash for $131,200.

A regular at the Grand Ole Opry for decades, Mr. Grammer delivered the invocation for the opening of its new hall in 1974 with President Richard M. Nixon in attendance. He also appeared on Ed Sullivan’s and Dick Clark’s television shows.

His other hits included “Bonaparte’s Retreat.” A much sought-after session man, he recorded with Patti Page, Louis Armstrong, Eddy Arnold and others.

Billie Wayne Grammer was born in Benton on Aug. 28, 1925, the eldest of 13 children of Archie and Stella Grammer. Part of a southern Illinois farming and coal-mining family, he spent his childhood on a farm, fishing the Wabash River and dreaming of becoming a mechanical engineer.

After high school he served in the Army and took on an apprenticeship as a toolmaker. He made his way to Washington, where he was hired in the bands of Hawkshaw Hawkins and Grandpa Jones. He also appeared as a guitarist on Jimmy Dean’s television show. He then formed his own band and began performing as a solo artist.

He learned to love music as a boy listening to his father play the violin. “Dad kept putting fiddles in my hands,” Mr. Grammer wrote in an online autobiographical sketch, “but I had guitaritis.”

Additional reporting by The New York Times.

This man's son is one of my dearest friends in Dallas. He helped bring me to the Light, God's Only Son.

Where Do I Send My Check? Roger Williams, Donkey Whisperer, Is Running For Congress


SAW THIS @ HOT AIR and think it's effective, down-to-earth and great, great fun.

Sure, I want to know more about Williams besides the fact that he's Gov. Rick Perry's former Secreatry of State. But on the surface, he's my kinda guy. Though I think both donkeys AND elephants can be stubborn as mules and big-time feeders at the troughs (of public monies).

Branson's Necker Island Before and After The Inferno

THIS PIECE TODAY IN THE DAILY MAIL on Virgin Atlantic CEO Richard Branson's Necker Island playground retreat and the catastrophic inferno that recently destroyed it is worth a read. Is it also a cautionary tale of excess and decadence for the rich and famous? It's a rhetorical question of course.

Sure he'll try to rebuild and the booze and partying will go on as if nothing ever happened. But if it were me (Yes, I know it's really I), I'd do a little inner inventory to see if there might not be a deeper message to this catastrophe than just the whims of Mother Nature---and Hurricane Irene. There's always a feedback loop in our lives that often starts as a whisper, becoming louder, until it sounds like a scream. SOMEONE is trying to get Branson's attention, you think? And he---Mick Jagger's decadent aging look-alike---fails to listen at his great peril.

Just saying.

Monday, August 22, 2011

Why Warren Buffett Is Wrong On Over-Taxing the Rich

10 HIGHEST PAYING COLLEGE DEGREESTHIS ARTICLE BY JEFFREY MIRON @ CATO gives a good explanation as to why Warren Buffett--President Obama's informal economic guru----is wrong in wanting to summarily raise taxes on the rich. Of course, Buffett advocates this because it seems intuitively correct. Many economists however play the devils advocate, as to why conventional wisdom is really magical thinking. An excerpt from Miron's piece:

So raising capital tax rates will not make the super-rich---who are relatively few in number---pay their "fair" share; it will encourage capital flight, driving factories and innovation abroad. The rich will still get their high returns, but U.S. workers will have fewer jobs and lower wages.

Buffett errs, most fundamentally, by focusing on outcomes rather than policies. The right question is which policies promote differences in incomes that reflect hard work, energy, innovation and creativity, rather than reward the unethical, the politically connected and the tax-savvy.

In economics, as in sports, we should adopt good rules and insist that everyone play by them. Then we should stand back and applaud the winners.

Several Recent Rescues On The Grand

CLIMBING THE GRAND HAS NEVER APPEALED ME, though it certainly does many of my friends and acquaintances. (One of my closest friend's husband is attempting it this next weekend.) It requires an advanced body of physical fitness and experience----in both high altitude hiking and technical climbing often on sheer rock and ice cliffs---than I care anything about getting. (Most mountaineers hire Exum Guides to achieve their bagging the summit aspirations.)

In addition to the best training and guides, climbers sometimes must turn back, correcting their efforts mid-course, due to sudden nasty weather rolling in causing a treacherous climb to become a deadly undertaking. Many climbers have chosen to forge ahead in such adverse conditions never to return to tell the stories.

Not my cup of tea by a long shot. There's plenty of fabulous hiking on high, dry, steep ground to keep me occupied here for decades to come.

This season with above average snowfall which continued well into May, many these ultra-difficult peak climbs are even more challenging than usual.

Over the past few days, two rescues by the National Park Service (NPS) of experienced hikers/climbers took place on or near The Grand. Thought it would be interesting link to the news source that details how these fortunate climbers got into and out of trouble. No one died and rescues were accomplished just before darkness set in--- 'pumpkin time'--- when helicopters and rescuers are required to ground their efforts until morning.

Both maneuvers involved dangling injured/compromised climbers from a 100' rope fastened inside of helicopters. I'm sure at the point you're rescued---often freezing cold, injured or very sick---being flown in a basket is an appealing prospect to the alternative. However, this possibility is another reason I have zero, ZERO I TELL YOU!, interest in climbing some of these peaks now or ever. Still I admire the brave, highly motivated souls who go for it.

BTW, most if not all these rescues are now billed to the hikers, rather than taxpayers, with tabs which can skyrocket into the tens of thousands of dollars.

Below, Are we having fun yet?

Sunday, August 21, 2011

Sunday, First Corinthians Thirteen




1 If I speak in the tongues[b] of men or of angels, but do not have love, I am only a resounding gong or a clanging cymbal. 2 If I have the gift of prophecy and can fathom all mysteries and all knowledge, and if I have a faith that can move mountains, but do not have love, I am nothing. 3 If I give all I possess to the poor and give over my body to hardship that I may boast,[c] but do not have love, I gain nothing.

4 Love is patient, love is kind. It does not envy, it does not boast, it is not proud. 5 It does not dishonor others, it is not self-seeking, it is not easily angered, it keeps no record of wrongs. 6 Love does not delight in evil but rejoices with the truth. 7 It always protects, always trusts, always hopes, always perseveres.

8 Love never fails. But where there are prophecies, they will cease; where there are tongues, they will be stilled; where there is knowledge, it will pass away. 9 For we know in part and we prophesy in part, 10 but when completeness comes, what is in part disappears. 11 When I was a child, I talked like a child, I thought like a child, I reasoned like a child. When I became a man, I put the ways of childhood behind me. 12 For now we see only a reflection as in a mirror; then we shall see face to face. Now I know in part; then I shall know fully, even as I am fully known.

13 And now these three remain: faith, hope and love. But the greatest of these is love.

Saturday, August 20, 2011

Saturday Yumm, Fire Grilled Flatbread Pizza

....with figs, Serrano ham, blue cheese, olive oil and sage (at 508 GastroBrewery in Soho) (Agaton Strom for The Wall Street Journal)

I love figs, and also the idea of the sweet with salt and tang. There are many combinations of concoctions this photo conjures up for my culinary mind....like grilled pears with feta and prosciutto. And on and on, on, on. Photos always spark my visually-inclined creativity more than mere recipes.

Friday, August 19, 2011

Tamny Tells It Like It Is On Rick Perry's Recent 'Treason' Slam-Dunk Of Bernanke



Though Rick Perry presumably stumbled upon "treasonous" in his comments about Bernanke, by its strict definition, the adjective arguably sticks. After that, while it would be foolish to suggest that Bernanke means the economy harm (that gives him way too much credit), the economic numbers since his arrival are pretty ugly and have to please our enemies. RealClearMarkets.


As is well known now, Texas Governor Rick Perry unleashed some choice words about Fed Chairman Bernanke in Iowa on Monday. Not surprisingly, Perry's comments inflamed the commentariat, with a mix of positive and negative reviews.

Karl Rove, ever eager to defend a former president whose administration he advised not so well, observed that Perry's utterances weren't "presidential". Whatever the validity of Rove's comment, it would be interesting to get his take on how "smart" it was for George W. Bush to appoint Bernanke in the first place.

The Wall Street Journal's editorial page, though supportive of Perry, suggested that the governor "was wrong to use the words 'almost treacherous, treasonous' in referring to Mr. Bernanke." According to their editorialists, "those words ought to be reserved for specific acts of betrayal against America, and the Fed chief is certainly a patriot." That's fine as it goes, but then if it's agreed that Bernanke's policies have had a role in the dollar's evisceration since his arrival as Fed Chair, and if it's also agreed that the dollars Americans accept for their labors speak to an implicit trust in the issuer, it's arguable that Bernanke's acts constitute a certain betrayal, and as such, are treasonous.

Moving to the left, Binyamin Appelbaum of the New York Times referred to Perry's outburst as "horrifying", while the vastly overrated Nouriel Roubini, still clinging to his 15 minutes after an economy call that he got right for all the wrong reasons, viewed what Perry said as "criminal". Both doubtless buy into the absurd notion that Perry's words were more than rhetoric, and they simply need to grow up.

John Podhoretz perhaps penned the biggest howler in suggesting that "independent voters" are "going to come away with the vague impression that he [Perry] might be for lynching someone, and people generally don't like that sort of thing." Perhaps I'm naïve, but I want to meet the voters dim enough to come away with that impression, then petition Congress to rescind their voting privileges.

Back to reality, Perry's words hit a nerve because he spoke honestly about what many voters feel. As Keynes long ago noted, currency devaluation is the best way to inflame society, and voters are mad. In doing what he did, Perry summoned a bit of rhetorical flourish, though it was nothing more than that. People need to relax.

Of course some on the right, correctly confused by all the fuss owing to their similarly negative views about easily the worst Fed Chairman in history, pointed out that Vice President Biden did worse in referring to the Tea Partiers as terrorists. It says here the right needed to relax there a bit too, but since Biden uttered the word, a simple comparison springs to mind.

Osama bin Laden was a terrorist by all accounts, and by many accounts the terrorist act that he helped orchestrate on 9/11 inflicted great economic damage on the United States beyond the generalized horrors of that day. But were bin Laden's actions worse for the economy than those of Ben Bernanke? Let's see.

On 9/11 the price of gold was trading around $286/ounce, a gallon of gasoline (according to the Energy Information Administration) went for $1.53, and the U.S. unemployment rate stood at 5%. One year later, with the economy having absorbed the bin Laden body blow, gold traded at $317/ounce, a gallon of gas sold for $1.35, and unemployment had risen to 5.7%.

So while gas actually ticked downward somewhat, it's fair to presume that the risk aversion wrought by Osama's act had some kind of negative impact on the dollar such that gold was trading higher. And with levels of employment a function of investor willingness to commit capital, it's not unrealistic to suggest that fear of another terrorist attack informed the decisions of investors in such a way that they pulled back on the way to rising unemployment. Bin Laden certainly did some damage, though it would be impossible to quantify how much.

Moving to Bernanke, while no sane human being would suggest he's a terrorist, many are understandably frustrated with the job he's done at the Fed. But rather than a terrorist, Bernanke is merely hopeless at his job for his embrace of nearly every discredited economic fallacy under the sun.

Bernanke's Fed is charged with keeping inflation low alongside unemployment. Though it's a terrible economic shame that the Fed has anything to do with either, that's what our central bank is charged with.

Looking at the numbers, Bernanke took over in February of 2006. At the time an ounce of gold was selling for $569/ounce (notably, gold spiked from $480 upon his nomination; this jump presumably the markets pricing in what was ahead), a gallon of gas retailed for $2.24, and unemployment had fallen back down to 4.8%. Not great numbers, particularly those of gas and gold, but somewhat calm.

Fast forward 5 ½ years later, however, and the situation is ugly. Gold, the most devaluation/inflation sensitive of all market indicators has more than tripled to over $1,800/ounce, the price of a gallon of gasoline has jumped to $3.58, and the rate of U.S. unemployment has nearly doubled to 9.1%. In the real world our blundering Fed Chairman would be gone by now, but in a Washington largely oblivious to market discipline, Bernanke has failed upward; graduating to "the world's foremost Great Depression scholar" despite economic instincts that suggest he would have felt right at home in the Hoover and FDR administrations that gave us the 1930s.

Back to Perry, though his use of "treasonous" as it applies to Bernanke was probably unscripted, and uttered without much thought given to its meaning, it doesn't seem wrong when applied to our central bank head. Bernanke hasn't committed willful treason, not all of our malaise is his doing, but his actions and their impact on the dollar surely constitute a betrayal; the impact certainly more economically painful than what Osama was able to inflict on us nearly 10 years ago.

(John Tamny is editor of RealClearMarkets and Forbes Opinions, a senior economic adviser to H.C. Wainwright Economics, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). He can be reached at jtamny@realclearmarkets.com).

Wednesday, August 17, 2011

Organic Gardener In The Neighborhood


DRIVING BACK FROM COURT MEDIATION THIS MORNING, I spied this weed-eating beast in the yard of a neighbor. She was munching with impunity on various wildflowers mulched near the front door. It was a toss-up between the columbine, bluebells, hanging geraniums and summer ferns. I stopped the car, got out and tip toed in to take a few pics. When she saw me, she hardly missed a beat before going back to her petit dejeuner. These can be the meanest, orneriest, and even most dangerous creatures on earth---like camels---if they take a mind to, so I kept a safe distance.

Grizzly Grizzly Fishing Story From Russia That Makes Me Shudder

SOMETIMES A BLOGGER HAS TO DO WHAT A BLOGGER HAS TO DO. This is the one I hate to post; actually the one I can't help publishing.

I should entitle it But By the Grace of God Go I. I say that because I've had more than my share of up-close-and-personal grizzly encounters over the years, as have several of my friends---in and around the Bridger-Teton Wilderness of Wyoming where these magnificent animals still roam wild and free. But if I never see another bear---grizzly or otherwise---it will be too soon.

I always carry bear spray when hiking and fly fishing and now mostly go out with experienced fishing/hiking partners---preferably off-duty park rangers---who are bear savvy and equipped for most eventuality.

Still when I read this kind of thing on Drudge, I go into cringe mode.

This is a frightening story! It happened in Russia to a young girl and her step-father who apparently had been fly-fishing, left a rod on the river, then went back to retrieve it. They never returned, as an anxious sow grizzly with three cubs killed them both---one slowly and the other instantly with a blow to the neck. The young woman who died slowly was able to use her cell phone to call her poor mother and report what was happening.

Can you imagine being the helpless mother on the other end of the line, listening to this horrific ordeal of her daughter, then desperately calling her husband and getting no answer?

One of the finest fly fisherman I know in Jackson Hole is leaving this weekend for a 10-day fishing trip in Russia. I'm sure he and his companions/guides are aware of the dangers and will be cautious and armed. Still, it should be a sobering, cautionary tale.

You can read this sad, sad story here.

Tuesday, August 16, 2011

Perry Comment On Bernanke At the Fed Draws Ire From Bushies


AFTER NEW PRESIDENTIAL CANDIDATE RICK PERRY slammed Chairman Ben Bernanke's quantitative easing policies at the Federal Reserve yesterday as near 'treasonous' several of former president George W. Bush's erstwhile administration took offense and gave Perry a dressing down at the wood shed. (You may recall it was Bush 2 who disastrously appointed Bernanke to the Fed and then began the first round of quantitative easing under pressure from then Sec. of Treasury Hank Paulson who got down on bended knee to beg then House Speaker Nancy Pelosi.)

Karl Rove was the first to get a bee in his bonnet, blasting Perry with both barrels on Fox News (via GOP12):

“It's his first time on the national stage, and it was a very unfortunate comment. You don't accuse the chairman of the federal reserve of being a traitor to his country and being guilty of treason and suggesting that we treat him pretty ugly in Texas — that's not, again, a presidential statement … Governor Perry is going to have to fight the impression that he's a cowboy from Texas. This simply added to it.”
Well, I disagree Mr. Rove. Evidently, Mr. Perry thinks, as I do, that the Federal Reserve under Mr. Bernanke has done great damage to the economy as he operates powerfully and willfully under the radar of any accountability from any branch of government. The fact that Mr. Perry is making an issue of this travesty so early on tells me he knows what's going on and is willing to replace Bernanke should he be elected president.

You can read more criticism of Perry's ambush of Benanke at Politico.

Meanwhile, you might consider taking it as a very good sign that Perry is the first candidate that's even brought up the subject of the Fed---with the exception of Ron Paul and Newt Gingrich both who'd consider completely abolishing it. These are topics Americans need to focus on, the sooner the better.

Meanwhile, with this kind of reaction, Rick Perry must be doing something right though he's certainly not endearing himself to his old political rival George W. Bush et al.

Monday, August 15, 2011

Sunrise Football Practice In Hays, Kansas

IS THERE ANY BETTER TIME for a high school football team to workout during these hot August days than at the dawn's early light?

Sunday, August 14, 2011

Sunday, The Highest Degree of Knowledge

Joshua Tree Under the Milky Way from Henry Jun Wah Lee

HEART-KNOWLEDGE, we must always remember, is the one thing needful. It is something which schools and universities cannot confer. It is the gift of God. To find out the plague of our own hearts and hate sin–to become familiar with the throne of grace and the fountain of Christ’s blood–to sit daily at the feet of Jesus, and humbly learn of Him–this is the highest degree of knowledge to which mortal man can attain. Let any one thank God who knows anything of these things. One may be ignorant of Greek, Latin, Hebrew, and mathematics, but they shall be saved.
~ J.C. Ryle

Thursday, August 11, 2011

The 2012 Presidential Race Just Got Much More Fun and Vastly More Interesting

GOING TO A FRIEND'S TONIGHT TO WATCH the presidential debate. No matter who actually wins or loses this one, all bets are off until Gov. Rick Perry officially throws his hat in the Republican race for president. Not only do I think Perry, above with wife Anita, can win the nomination, I also think he can beat Obama---assuming the president runs again---next year.

Of course Mike Huckabee---a southern conservative like Perry---is disgruntled and critical. Makes no difference. Perry will be a formidable candidate and strong contender even though he skips Iowa.

The 2012 presidential race just got a lot, lot more interesting.

Tamny: Maybe Many Of Our Current Economic Woes Are Bush's Fault After All



I HATE TO POST THIS. I really do. It's not what conservatives like to see or hear. This is nothing new, mind you. But it bears repeating: Bush and Obama both did their share to get us into the fiscal mess we're in today. If you don't believe me, then John Tamny has a little review of the historic facts to help us remember. You see, Bush gave us a falling dollar (which made food, gas and precious metals more expensive), the first bailout and---worst of all---Ben Bernenke as Fed chairman. Read on and you will hear, the midnight ride of Paul Revere.....

By John Tamny for RealClearMarkets

To say that President Obama is economically illiterate is to state the obvious. But what's not said enough is that to a high degree he's doubled down on Bush economic errors of the bailout and weak dollar variety, not to mention his inheritance of Bush's cruelest economic blessing whom he re-appointed: Ben Bernanke.


Partisan Republicans love to point out that President Obama always blames his predecessor for the limp economic outlook, while never looking inward. They have a point about Obama being hopeless on economic matters, but the reality is far more nuanced.

If honest they would acknowledge the greater truth that much of what ails us today actually is George W. Bush's fault. Indeed, it was his administration that instituted a bailout culture that tautologically restrains recovery for failed ideas being propped up at the expense of good ones.

Secondly, it was the Bush administration's jawboning of China, along with tariffs on steel, softwood lumber and shrimp that signaled to the markets its preference for a weaker dollar. As is always the case, a falling dollar authored a rush to the real; specifically a recessionary rush into the dead money sector that is housing.

Lastly, the Bush administration, cheered on by happy talking Republicans who said at the time of his nomination that our present Fed Chairman understood inflation to be a monetary phenomenon, "gifted" Obama with Ben Bernanke. Bernanke, a walking talking economic fallacy holds powerful economic levers, and his machinations weigh more negatively on the Obama economy than anything else.

So while it's once again popular today among Republicans to bemoan Obama's economic illiteracy, to a high degree he's simply mimicking the policy failures of Bush on bailouts, the dollar, plus he re-nominated Bernanke as our nation's most powerful central banker. Sadly for Obama, particularly given the looming elections, is that his Fed Chairman on Tuesday implicitly or unwittingly promised the American people at least two more years of economic pain.

The answer why is basic economics. As most economists, and as most sentient non-economists know, price controls meant to hold down the natural price of anything lead to scarcity. Looked at in terms of apartments, when governments restrain rental costs they create a disincentive among apartment developers to build more of them. Why build more apartments if regulations will disallow profitable rental of same?

Considering the Fed, its control over the short rate for credit is a price control like any other. And the Fed, with its actions never restrained by basic economic logic, has promised to keep the rate it sets at "extraordinarily low levels" until 2013. Translated, the Fed will use its powers to keep interest rates below the natural levels that would prevail if the short rate for credit were floated.

What this logically means for those desirous of credit is that they'll suffer scarcity in much the same way those in the market for apartments in rent-controlled cities do. If the reward for saving is artificially low, and there is no credit without savers, there will be less credit.

Evidence supporting the above claim is already here. As William Ford (former Atlanta Fed president) wrote recently with AIER research fellow Polina Vlasenko, aided by Fed efforts to keep it low, the 10-year Treasury is yielding near 2% versus an average yield of 7% during the nine previous economic recoveries.

Unnaturally low yields by definition drive away savers, not to mention that those foolish enough to save aren't being compensated with the income that they'd normally receive. There are no jobs without individuals saving first, and absent these artificially low rates that punish those who might provide capital to job creators, Ford and Vlasenko contend that the unemployment rate would be 6.8%.

Price controls on interest rates are serving as capital formation repellents, and with the Fed promising to maintain them for another 21 months, job creation will be subdued. What the Fed misses here is that the best interest rate is one set by unfettered markets given the simple truth that a free interest rate matches the needs of lenders and borrowers. Zero interest rates don't compensate lenders, thus making credit scarce on the way to once again, reduced job creation.

Sadly, the story gets worse. In order to keep rates artificially low, the Fed will essentially have to conduct another round of quantitative easing that promises to weigh on the value of the dollar. Investors are by definition in the business of buying future income streams, but if their capital commitments made with an eye on returns are to be met with devaluations that will reduce the value of those returns, logic says they'll continue to seek out the hard assets of yesterday as an inflation hedge.

Back in April, I wrote a column titled "Don't Wait For GDP, $1500 Gold IS the Recession", and the point there was that the weak dollar that $1500 gold signified ensured that more and more limited capital would flow into inflation hedges, as opposed to the innovative ideas and income streams of tomorrow. $1772 gold signals even worse, as in an even more pronounced flow of capital into defensive plays over the innovators who author economic progress.

After that, a Fed Chairman who tells anyone dim enough to listen that he's one of the Great Depression's foremost scholar labors under a fundamental misunderstanding about recessions. Bernanke believes that economies need support during downturns, and as such, he's using the power of the Fed to prop up the failed business concepts that would otherwise vanish were market forces allowed to work their magic.

This too promises to weigh on economic growth in that far from bad things, recessions are good for cleansing the economy of the failures to ensure that winning ideas receive capital in abundance. In that very real sense it should be said that recessions are in fact the periods of malinvestment that we're experiencing right now thanks to a falling dollar, while the inevitable downturn that results from this, and that will be called a recession, should be referred to as our economic rebirth.

Put more simply, the "recession" that Bernanke is cruelly trying to help us avoid is in fact a signal of an economy on the mend as the malinvestment and misuse of labor is reversed. But ever eager to "support" the "weak economy", Bernanke is in fact prolonging the pain for his fine tuning delaying the reorientation of capital to higher uses that would author a more powerful rebound.

When you combine the impact of Bernanke's actions, it becomes apparent that one man negatively weighs on our economic health more than any other policy, president, or Congress. For the Republicans who cheered his nomination, they should hang their heads in shame.

As for Obama, assuming he even wants to be reelected the single best move to cheer voters would be to fire our hapless Fed Chairman at the earliest possible moment. That, or wait until the weekend before the 2012 elections. Sending Bernanke back to academia would surely boost the spirits of voters acutely suffering from his gargantuan errors, and would put past "October Surprises" to shame.

Wednesday, August 10, 2011

Climbing Snow King Today

A STEEP, INTENSE CLIMB within the town limits of Jackson. Some of the best athletes in the Valley train here several times a week during summer months. I love to workout on Snow King because it wears you out and doesn't take all day. And there's no driving time to the trailheads.

Vertical rise: 1,571'

Tuesday, August 9, 2011

Front Porch Lecture At the Murie Center in Moose

THERE ARE SO MANY INTERESTING THINGS TO DO during summers in Jackson Hole that it exhausts me even to contemplate them all. Unfortunately I usually wear myself out doing outdoorsy things like hiking and fly fishing such that I'm too tired do many other, more sedentary offerings. Today I made an exception and went with a good friend and fellow-mediator to the Murie Center in Moose to hear a lecture on environmental conflict resolution. It was a lovely afternoon gathering in the front yard of the late Mardy and Olaus Murie home. Brought back many memories from my early days in Jackson Hole when I would occasionally dine with the old timers, Shirley and Frank Craighead and Mardy Murie out on Antelope Flats near Moose. That was the day of real old Wyoming. Today I went back to a vestige of those earlier times. Great fun and almost no mosquitoes!

Surprise: Bernanke Does the Right Thing


CAN'T REMEMBER WHEN I'VE BEEN SO PLEASANTLY SURPRISED in a good way by a federal official who actually hung tough and did the right thing. Saying it was time for the economy and markets to stand on their own two feet, the Fed chairman said he would not do anymore fiscal interventions in the near future, except to keep interest rates low for a while.

The stock market obviously was pleased though it will remain volatile. Good for Bernanke and good for us. He's finally acting like a devotee of Hayek. Our country will become stronger only if we let nature take it's course. Sure there will be some large bumps along the way, but this can only strengthen us and make us tougher.

So Ben, cut the apron strings and let us learn to walk and run again in free markets.

Bove: U.S. Closer To Junk Bond Status Than AAA

INTERESTING INTERVIEW WITH DICK BOVE ON CNBC, AND ONE I AGREE: The US credit rating would be even worse than its recent downgrade from Standard & Poor's if the nation was judged as a private company, banking analyst Dick Bove told CNBC Tuesday:

Speaking amid the hotly contested debate over whether the US should have lost its coveted triple-A rating in favor of the new Double-A plus, Bove said the US balance sheet and the burdensome national debt tell a clear story.

"You've got a company which is losing about $1.4 trillion this year, probably will lose somewhere around a trillion dollars over the next couple of years. It owes $14.4 trillion (and) over the next five years that will get up to $20 trillion," the Rochdale Securities analyst said.

"So there's no likelihood whatsoever that this particular company is able to pay down from its own resources the amount of debt that it has, nor is there any likelihood that it's going to get rid of its deficit," he added. "If that was a real company, of course, that would be a junk bond."

Read the whole thing.

Monday, August 8, 2011

I'll Take Tamny's Take On Our Economic Mess Any Day



WHILE ONE (IT TURNS OUT KEYSIAN) STOCK SERVICE I subscribe to couldn't wait yesterday to blame Reagan and Bush's deficit spending for the current mess we're in---and no, I would never renew my subscription now that I know its true colors-- and a silly John Kerry blames the Tea Party, I find John Tamny's explanation the most sane, sensible, balanced and non-partisan of all.

As markets roil from years of government meddling---on both sides of the Atlantic and both sides of the political aisle---it's a sound analysis that you won't find in the NY Times or other MSM outlets that says again government meddling is the problem, not the cure. When oh when will we ever learn? Here's an excerpt from today's full piece at Forbes online:

World markets cascaded downward last week, and the usual culprit was government error. Much as compound interest compounds, so do governmental mistakes and their impact on the global economy.

Despite this simple truth, a business media that’s never understood what it reports on continues to buy into the absurd suggestion that government action will cure what ails us. As a front page Wall Street Journal report from Friday not-so-shockingly observed, “markets spiraled downward” under “the strain of the global economic slowdown and the failure of policy makers to stabilize financial markets.” Lost on the business media is that the slowdown and weak markets are explicitly a function of governments trying to stabilize markets rather than let unfettered price signals reprioritize capital allocations so that real recovery can take shape.

First up here is Italy, and the debt problems of its government. Supposedly the country’s struggles are weighing on the markets, and while that’s true, it’s true in the way Lehman’s bankruptcy brought pain to markets solely due to a mistaken bailout of Bear Stearns months before.

Back in the spring of 2008 the wrongheaded bailout of Bear created a presumption among financial institutions that they were all “too big to fail” such that they needn’t clean up their increasingly toxic balance sheets, and worse, it led to an expectation among the CEOs of all healthy banks that they would be the recipients of “Jamie” deals were they to save institutions hurtling toward bankruptcy. This describes what’s happening in Italy very neatly.

Thanks to a very wrongheaded initial bailout of Greece months ago, the signal to other listing governments was that a Greek bailout meant that every government would enjoy similar treatment. So rather than slash spending right away to avoid default, non-Greek governments continued their profligate ways on the assumption that they’d get a “Greek” deal.

In that sense we should view Greece as Bear Stearns, and Italy as Lehman Brothers for Italy not fixing its problems right away just as Lehman failed to. But much as Lehman became a crisis owing to uncertainty about how its collapse would be handled, so does an Italy that delayed necessary austerity weigh on markets today due to vast exposure to its debt.

Alfred Jay Nock long ago made plain that when you mess with market forces you get much worse in the end, and that describes the Italian situation quite well. Not allowing free markets to discipline Greece on the way to default gave us Italy, and failure to let Italy be disciplined simply ensures much greater threats down the road. Contagion? Yes, but only in the sense that bailouts are contagious for perpetuating that which ails us.

Considering global currencies, with the dollar and euro growing weaker by the day, monetary authorities in Japan and Switzerland labor under the false impression that following the world’s two leading currencies down this most impoverishing of roads is the way to prosperity. Missed here is that the yen and franc are only strong insofar as the dollar and euro are incredibly weak. Looked at in gold terms, there’s a global run on paper currencies of all shapes and sizes taking place that promises to make a bad situation worse.

To put it simply, when investors commit capital through the purchase of stock and bonds, they’re buying future income streams. But with policy around the world in favor of currency devaluation, investors increasingly see the investment in stocks and bonds that allows companies to expand and create jobs is a fool’s errand. Why invest if any returns will be eviscerated by devaluation? Devaluation very clearly means less investment, and with reduced investment less company formation and job creation.

Looking to the hapless U.S., though Establishment media figures early last week lauded or vilified the budget deal for being either the path to small government or the road to hell, wise minds saw it for what it was: a complete joke. Indeed, it only took a few hours for budget experts to find out that far from austere, the deal hands a wasteful government more increasingly worthless dollars to destroy on government programs; the spending cuts a distant object that future Congresses will doubtless ignore.

Some on the right, including this writer, have suggested that the deal is an embarrassment to the Republicans who claim to love small government, and as such the deal ensures an Obama victory in 2012 for an angry Republican base sitting out the looming election. That alone is enough to scare the markets, but really, assuming Tea Partiers are so dim as to offer the GOP their votes ever again, can anyone honestly say the Republicans would do better once in power? Markets surely priced in the greater likelihood something last week, either an Obama victory or the GOP retaking the White House and maybe the Senate, but with both sides utterly clueless as to how economies grow (lest we forget, all this carnage began under Republicans), it’s possible investors sold down the political implications of the budget deal out of disgust for both parties.

One thing’s for certain, however, and that’s that the size and burden of our government will continue to grow. This is hugely problematic because as my H.C. Wainwright colleague David Ranson puts it, the private sector that is most often disciplined by the exacting nature of markets in its allocation of capital is always in competition with the always wasteful federal government when it comes to access to credit.

And with our political class having exhibited zero willingness to enforce real cuts in spending, a government that by definition consumes and destroys capital is set to do a lot more damage. It can’t be stressed enough that there are no entrepreneurs without capital, but with politicians in both parties having revealed yet again a sneering contempt for real spending cuts, the growth capital necessary for economic expansion will continue to dwindle in amount.

In the near term, the markets knew full well what an aloof commentariat failed to understand about the budget deal, and with the latter ensuring more nosebleed spending in return for spending cuts that will never materialize, the dollar continues to fall; it’s collapse aided by the hapless weak dollar advocate Tim Geithner remaining in place at Treasury. And with the weak dollar the single best way to wreck an economy for it driving limited capital into the tangible safe havens of yesterday, the economic weakness we’re now suffering promises to get worse.

Quite scarily, the slower growth that the falling dollar tautologically foretells promises a pile-on effect, or more clearly, renewed Federal Reserve activity of the quantitative easing variety. That the Fed could not engineer yet another dose of easing that will weaken the economy further without the consent of the White House and Treasury means that the dollar will continue to fall, with more and more investors going on strike in order to avoid more destruction of the capital they might have otherwise committed to growth initiatives.

Sadly, it only gets worse from there. Indeed, a Fed that has redefined deflation (its true definition is the substantial rise in the value of money, something we’ve not seen since the late ‘90s) to mean falling asset and consumer prices, will intervene to prop up that which shouldn’t be. To state the obvious, capital assets and consumer goods prices rise and fall all the time, and their fluctuations are essential for telling the markets what economic concepts should receive capital in abundance, and which ones should be starved of it.

But afraid of a deflation that is quite simply not deflation, the Fed will use all of its powers to prop up the housing and mortgage assets that necessarily need to fall in order for a recovery to take shape. Put simply, it’s essential that the value of failed ideas plummet so that capital can be reoriented to the concepts that will actually create wealth. The Fed is supporting what the markets, if left alone, would allow to die, and the economic result of its interventions is pretty horrifying.

All of which brings back to the even more horrifying notion that the state should intervene in order to protect or bail out that which the markets have left for dead. This is certainly what the global economy has suffered these last few years, and it goes far in explaining the increasingly shaky nature of the economy.

For one, there is no state. Governments have no resources, so for those same governments to prop up the losers, they must by definition shackle the winners. All of this with our money.

After that, for governments to use that which they’ve taken from us to “stabilize” the markets is once again for those same governments to author our continued economic decline; one that the stock markets last week revealed in living color. That’s the case because governments can only “stabilize” the failed ideas which, if left alone, would be properly starved of capital so that better ones could receive it. More to the point, governments can only prop up and stabilize the failed ideas of the past that the markets are looking to rid us of; all this with capital taken from individuals and businesses that are succeeding.

Adam Smith once warned against stationary economies; stationary economies serving as capital repellents for the inability of the individuals who comprise them to progress. In today’s case, we have much worse. Indeed, far from stationary, our economies are moving backwards on our dime through the subsidization of that which is failing despite failure always and everywhere serving as the father of progress. If failure didn’t exist, we’d have to invent it, but governments have sought over the last four years to buy off or regulate away its existence with predictably negative results.

So with failure a dirty word to the politicians around the world whose machinations against it hold the economy down, the global economy is presently in reverse. And with it in reverse, investors are rendering their harsh judgment.

Sunday, August 7, 2011

Sunday: From John Stott Memorial Service

THE REVEREND J. I. Packer preaches The Word of God from Hebrews at the late great evangelical pastor, John Stott's memorial service. As he should Packer preaches Christ crucified WHO is the same yesterday, today and tomorrow.

Packer also speaks of those liberal thinkers who would mis-proclaim the truth of the Gospel and change it to another message.

Friday, August 5, 2011

Twilight Over Jackson Lake, Mt. Moran



YESTERDAY MORNING I begged out of a lovely dinner party in town scheduled for Friday night, then quietly drove up to Moran to scout trout water on my own later in the afternoon. Much to my suprise, I ended up running into another group of friends from my old stomping grounds in the Buffalo Valley, and ended up having an old home week reunion at Signal Mountain Lodge restaurant last night! It seems I couldn't escape some socializing in my quest for the elusive trout after all, but I definitely ended up in a great group as twilight descended!
Without doubt, my favorite mountain in the Teton range is Moran, above, viewed from the Oxbow of the Snake.
Half moon over Signal Mountain.

Markets To Bounce, But Longer Term To Go Down

IBD EDITORIALS: THIS TOO SHALL PASS......MARKETS SEND A STINGING REBUKE TO WASHINGTON LET'S FACE IT, our nation, our world is going---has gone---into a long-term economic contraction. How long it lasts---months, years, decades---is open to endless speculation. I for one think market contraction with spurts of trading rallies will go on for at least a decade, since we've been in a 40 expansion.

As a student of the markets who is very fortunate to have several wise mentors, I have a few basic observations:

1. None of us should listen too seriously to the myriad talking heads. Period. Most are extreme and only play into our greatest fears and greeds.

2. The era of buy and hold with no thought of market timing is gone forever. We live in the age of short-term traders markets and for better or worse it requires much greater skill in hedging than the average retail investor can muster without a lot of support and re-education.

3. Investors need to invest and hedge many of their investments with options. If we don't know what that means, we need to learn. These markets are far too volatile to do otherwise.

4. For the more sophisticated investors, as much money can be made in down markets as in up. But the average investor doesn't work that way and usually only makes money in up markets and gets wiped out in downturns.

Simple and obvious but not easy. The best thing that could happen today---Friday---is for the market to go down more this morning, then turn around and begin to rally this afternoon ahead of the closing bell. The rally will probably go on for a while making lower highs, then lower lows.

Basically I agree with Marc Farber.

Thursday, August 4, 2011

Financial Markets Wishing President Obama A Happy 50th Birthday!


COME ON GUYS, DON'T YOU KNOW, President Obama didn't need this kind of stock market bloodbath on his birthday?! His 50th, no less!

Give him a break. Cut him some slack! He's already been called off the golf course long enough for the 'manufactured debt ceiling crisis.' Now this! Look what you're doing to his handicap! Don't you know you're here to serve his needs and not vice versa?

So get a grip, and play a little nicer. Can't you come up with a little bounce in the closing minutes of this dreadfulest of dreadful sessions? Or are you going to hold out for another bottle of Keysian booze in the form of QE3? Either way, it's not very civilized to mess with the president's golf score. If you don't behave, you'll be put on Big Sis's terrorist/no fly list!

Meanwhile, gold is going through the roof as the dollar continues its slide into oblivion. Are we having fun yet, Mr. President?

Wednesday, August 3, 2011

Parody: Bernanke, The Fed and The Toilet

SEWARD, NE—CLAIMING HE WASN'T afraid to let everyone in attendance know about "the real mess we're in," Federal Reserve chairman Ben Bernanke reportedly got drunk Tuesday and told everyone at Elwood's Corner Tavern about how absolutely screwed the U.S. economy actually is.

Bernanke, who sources confirmed was "totally sloshed," arrived at the drinking establishment at approximately 5:30 p.m., ensconced himself upon a bar stool, and consumed several bottles of Miller High Life and a half-dozen shots of whiskey while loudly proclaiming to any patron who would listen that the economic outlook was "pretty damned awful if you want the God's honest truth."

"Look, they don't want anyone except for the Washington, D.C. bigwigs to know how bad stuff really is," said Bernanke, slurring his words as he spoke. "Mounting debt exacerbated—and not relieved—by unchecked consumption, spiraling interest rates, and the grim realities of an inevitable worldwide energy crisis are projected to leave our entire economy in the toilet for, like, a generation, man, I'm telling you."

"And hell, as long as we're being honest, I might as well tell you that a truer estimate of the U.S. unemployment rate is actually up around 16 percent, with a 0.7 percent annual rate of economic growth if we're lucky—if we're lucky," continued Bernanke, nearly knocking a full beer over while gesturing with his hands. "Of course, if everybody knew that, it would likely cripple financial markets across the entire sucking globe, even in various emerging economies with self- sustaining growth."

After launching into an extended 45-minute diatribe about shortsighted moves by "those bastards in Congress" that could potentially exacerbate the nation's already deeply troublesome budget imbalance, the Federal Reserve chairman reportedly bought a round of tequila shots for two customers he had just met who were seated on either side of him, announcing, "I love these guys."

Numerous bar patrons slowly nodded in agreement as Bernanke went on to suggest the United States could pass three or four more stimulus packages and "it wouldn't even matter."

"You think that's going to create long-term economic growth, let alone promote job creation?" Bernanke said. "We're way beyond that, my friend. There are no jobs, okay? There's nothing. I think that calls for another drink, don't you?"

While using beer bottles and pretzel sticks in an attempt to explain to the bartender the importance of infusing $650 billion into the bond market, the inebriated Fed chairman nearly fell off his stool and had to be held up by the patron sitting next to him.

Another bargoer confirmed Bernanke stood about 2 inches from her face and sprayed her with saliva, claiming inflation was going to "totally screw" consumer confidence and then asking if he could bum a smoke.

"Sure, we could hold down long-term interest rates and pursue a program of quantitative easing, but c'mon, we all know that's not going to make the slightest bit of difference when it comes to output, demand, or employment," Bernanke said before being told to "try to keep [his] voice down" by the bartender. "And trust me, with the value of the U.S. dollar in the toilet, import costs going through the roof, and numerous world governments unprepared for their own substantial debt burdens, shit's not looking too good for us abroad, either."

"God, I'm so wasted," added Bernanke, resting his head on the bar.

Later in the evening, Richard Kampman, a truck driver who was laid off in 2010, said Bernanke approached him in the men's restroom and attempted to strike up a conversation about various factors contributing to the current financial crisis.

"He stumbled up to the urinal and started mumbling on about the depressed housing sector or something," said Kampman, who claimed Bernanke had to use both hands on the wall to steady himself. "Then after a while he just sort of stopped and I couldn't tell if he was laughing or crying."

"Then he lost it all over the sink and the mirror," Kampman added.

Customers at the bar told reporters the drunk and disruptive Bernanke refused to pay for his drinks with U.S. currency, claiming it was "worthless." Witnesses also confirmed that near the end of the evening, Bernanke put money into the jukebox and selected Dire Straits' "Money For Nothing" to play five times in a row.

"This is what it's all about," said Bernanke, who reportedly danced alone in the middle of the dark tavern.

Tuesday, August 2, 2011

The American People...

US ONLY THREE YEARS FROM BEING GREECE? ...HAVE JUST BEEN GRANTED ANOTHER CASE OF BOOZE BY OUR LEGISLATORS. We've been told that unless we drink it---and drink it fast---global disaster will ensue. And most of us believed it. So we're opening the bottle and taking another drink or two. Is it really in our best interest? How long do we really think it'll be before the inevitable fiscal hangover sets in again and we'll be needing more, more, more to keep up our habit?

Monday, August 1, 2011

Today's WSJ: Best Commentary On Last Night's Debt Compromise I've Seen



IF A GOOD compromise is one that has something for everyone to hate, then last night's bipartisan debt-ceiling deal is a triumph. The bargain is nonetheless better than what seemed achievable in recent days, especially given the revolt of some GOP conservatives that gave the White House and Democrats more political leverage.

The big picture is that the deal is a victory for the cause of smaller government, arguably the biggest since welfare reform in 1996. Most bipartisan budget deals trade tax increases that are immediate for spending cuts that turn out to be fictional. This one includes no immediate tax increases, despite President Obama's demand as recently as last Monday. The immediate spending cuts are real, if smaller than we'd prefer, and the longer-term cuts could be real if Republicans hold Congress and continue to enforce the deal's spending caps.

The framework (we haven't seen all the details) calls for an initial step of some $900 billion in domestic discretionary cuts over 10 years from the Congressional Budget Office (CBO) baseline puffed up by recent spending. If the cuts hold, this would go some way to erasing the fiscal damage from the Obama-Nancy Pelosi stimulus. This is no small achievement considering that Republicans control neither the Senate nor the White House, and it underscores how much the GOP victory in November has reshaped the U.S. fiscal debate.

No wonder liberals are howling. They have come to believe in the upward spending ratchet, under which all spending increases are permanent. Not any more.

The second phase of the deal is less clear cut, though it also could turn out to shrink Leviathan. Party leaders in both houses of Congress will each appoint three Members to a special committee that will recommend another round of deficit reduction of between $1.2 trillion and $1.5 trillion, also over 10 years. Their mandate is broad, and we're told very little is off the table, but at least seven of the 12 Members would have to agree on a package to force an up-or-down vote in Congress.

If the committee can't agree on enough deficit reduction, then automatic spending cuts would ensue to make up the difference to reach the $1.2 trillion minimum deficit-reduction target. One key point is that the committee's failure to agree would not automatically "trigger" (in Beltway parlance) revenue increases, as the White House was insisting on as recently as this weekend. That would have guaranteed that Democrats would never agree to enough cuts, and Republicans were right to resist.

Instead the automatic cuts would be divided equally between defense and nondefense. So, for example, if the committee agrees to deficit reduction of only $600 billion, then another $300 billion would be cut automatically from defense and domestic accounts (excluding Medicare beneficiaries) to reach at least $1.2 trillion.

This trigger is intended to be an incentive for committee Members of both parties to agree on more cuts, but defense cuts of this magnitude would do far more harm to national security than they would to domestic accounts that have been fattened by stimulus. This is the worst part of the deal, and Mr. Obama's political goal will be to press Republicans to choose between tax increases and destructive defense cuts. The GOP will have to fight back and make the choice between domestic cuts and harm to our troops fighting multiple wars.

While the "trigger" includes no revenue increases, the committee itself could agree to raise taxes to meet the $1.2 trillion deficit reduction target. This means GOP leaders Mitch McConnell and John Boehner have to be especially careful in their choice of appointees. No one from the Senate Gang of Six, who proposed tax increases, need apply. The GOP choices should start with Arizona Senator Jon Kyl and House Budget Chairman Paul Ryan, adding four others who will follow their lead.

One reason to think tax increases are unlikely, however, is that the 12-Member committee will operate from CBO's baseline that assumes that the Bush tax rates expire in 2013. CBO assumes that taxes will rise by $3.5 trillion over the next decade, including huge increases for middle-class earners. Since any elimination of those tax increases would increase the deficit under CBO's math, the strong incentive for the Members will be to avoid the tax issue. This increases the political incentive for deficit reduction to come from spending cuts.

Mr. Obama's biggest gain in the deal is that he gets his highest priority of not having to repeat this debt-limit fight again before the 2012 election. The deal stipulates that the debt ceiling will rise automatically by $900 billion this year, and at least $1.2 trillion next year, unless two-thirds of Congress disapproves it. Congress will not do so.

Given how much the current debate has damaged the public perception of Mr. Obama's leadership, this will be a relief at the White House. This is part of the negotiating price that Mr. Boehner had to pay because of the back-bench revolt that showed he couldn't guarantee a debt-limit increase with only GOP votes. This gave Democrats more leverage.

The same supposedly conservative Republicans and their talk radio minders may denounce this deal as a sellout, but we'll be charitable and assume they've climbed so far out on the political ledge they don't know how to climb back without admitting they were wrong. They're right that this deal doesn't "solve" our fiscal crisis, but no such deal is possible as long as liberals run the Senate and White House.

The debt ceiling is a political hostage the GOP could never afford to shoot, and this deal is about the best Republicans could have hoped for given that the limit had to be raised. The Jim DeMint-Michele Bachmann-Sean Hannity alternative of refusing to raise the debt limit without a balanced-budget amendment and betting that Mr. Obama would get all the blame vanishes upon contact with any thought. Sooner or later the GOP had to give up the hostage.

The tea partiers pride themselves on adhering to the Constitution, which was intended to make political change difficult. Yet in this deal they've forced both parties to make the biggest spending cuts in 15 years, with more cuts likely next year. The U.S. is engaged in an epic debate over the size and scope of government that will play out over several years, and the most important battle comes in the election of 2012.

Tea partiers will do more for their cause by applauding this victory and working toward the next, rather than diminishing what they've accomplished because it didn't solve every fiscal problem in one impossible swoop