Learning how to fly

  I was advised that to make her fall in love, I had to make her laugh. 
  But every time she laughs, I’m the one who falls in love. 

What I like best

Like is what happens between Love and Hate. 
Like is for strangers

The New York Times versus the New York Times

Sometimes, the New York Times is not that bad

by David Henderson

I have known Hoover colleague, economist Paul Gregory, for about 5 years, and gotten to know him better in the last 3. An expert on Russia's economy and increasingly on China's economy, he has written two articles on those topics for Econlib. I had no idea, until reading this New York Times article, "Lee Harvey Oswald Was My Friend," earlier this month, that he had known Lee Harvey Oswald, the Communist ex-Marine who murdered John F. Kennedy. The whole piece is fascinating. Here are three paragraphs that make the case for Oswald's motivation and why Gregory finds it implausible that someone would conspire with Oswald:

On the Saturday morning after Kennedy was killed, I was sitting in my small apartment in Norman when a Secret Service agent and the local chief of police arrived and took me some 20 miles down I-35 to Oklahoma City for questioning. As we drove, I began telling them about how I met Oswald, the evenings driving around Fort Worth, the Dallas Russians and how a college kid got caught up with an accused assassin. After they escorted me into a nondescript conference room in a downtown building, the agents homed in on the question of the day, which, of course, has lingered over the past 50 years: Did I think Oswald worked alone or was part of a larger conspiracy? I told them simply that, if I were organizing a conspiracy, he would have been the last person I would recruit. He was too difficult and unreliable.

Lies and Lying Liars

Lying as a democratic virtue of petty economists and politicians 

By Steve Landsburg

 When a politician misleads the public with distorted or flat-out fictional data, or uses eight minutes of national TV time to smear the character of the careful scholar who dared to report an inconvenient set of facts, you can always count on Paul Krugman of the New York Times to leap to the defense of truth and honesty — or, alternatively, to jump on the bandwagon if the politician happens to be a Democrat.

Here, you see, is what happened this week: Salim Furth, an economist at the Heritage Foundation (and a graduate of the University of Rochester, where I knew him to be a thoughtful and honest researcher) testified before the Senate budget committee, where he presented data from the Organisation for Economic Cooperation and Development (OECD) showing that most European governments have recently increased their spending. (This isn’t surprising for several reasons, one of which is that governments often spend more in recessionary times.)

Enter Senator Sheldon Whitehouse of Rhode Island, who spent eight excruciating televised minutes lambasting Furth and questioning his honesty, by reading out OECD numbers that differed dramatically from what Furth had reported. Some choice comments:

Dr. Furth, I am very concerned about your testimony….

When I look at the graph, for instance, which you source to the OECD — did you actually look at what the OECD says?….

They’ve actually written what the numbers are. And here’s what the numbers actually are, according to the OECD….

I am concerned that your testimony to this committee has been meretricious…I am contesting whether you have given us fair and accurate information.

And then there’s another eight minutes of reading out numbers that are, Senator Whitehouse keeps reminding us actually from the OECD, as opposed to these other numbers reported by Furth, which Furth claims are from the OECD, but obviously can’t be, because Whitehouse has the actual OECD numbers right here, and look how different they are — all of this interspersed with a barrage of attacks on Furth’s character and integrity. (See the video below, if you have the stomach for it.)

Now here’s the thing: There are a couple of legitimate reasons why Furth’s and Whitehouse’s numbers don’t agree. The first is that they’re for different time periods. Furth’s are for the years 2007-2012, while Senator Whitehouse’s are for the years 2009-2016. That’s right, 2016. Which brings us to the other reason these numbers differ: Furth’s come from the historical record, while Senator Whitehouse’s come from somebody’s ass.

The shameful silence of the French elite

France's Blood Libel Against Israel

By Guy Milliere

On September 30, 2000, at the beginning of the Palestinian terrorist offensive against Israel called since then the "second intifada," a particularly violent clash took place at the Netzarim junction in the Gaza Strip. As shots were exchanged between Arab militiamen and Israeli soldiers, cameramen from various television channels were nearby, filming news reports. One of these reports quickly spread around the world and became a ubiquitous tool for anti-Israeli Arab propaganda. It showed a young boy huddling against his father, the two unsuccessfully trying to protect themselves from gunfire: the son appeared to have been killed. The commentary accompanying the images was overwhelming. The last words of the voice-over, uttered in a stricken tone, were: "The child is dead".

The child, Mohammed al-Dura, immediately became a "martyr" -- and a symbol. The Israeli army clearly dared to kill defenseless people, even children!

The report was considered indisputable: it had been broadcast on the main French public channel, France 2, and validated by a noted journalist, Charles Enderlin.

Be Careful What You Wish For

The Game is Rigged

By Mark E. Grant

Rick Santelli at CNBC asked the question and he asked me for a simple answer so I gave it to him. Rick wanted to know how Greece had raised almost $5 billion in a Treasury Bill auction and I explained; simply. The debt was almost entirely bought by the Greek banks, who are bankrupt and funded by the government of Greece through the EU and the ECB in various ways, and they pledged the Bills right back to the ECB and they got their money back. It was a Ponzi scheme of sorts, which I stated, which allowed the ECB to lend money to Greece through the Greek banks. Greece is out of money and Germany is deciding what to do about Greece so in the meantime the ECB funded the country. Rick went on to state that “the game was rigged” and he is one thousand percent correct; the game was rigged.

At least we didn’t have to listen to the Greek Prime Minister calling it a great victory for Europe like we did with the Spanish one but that may be the best thing that can be said for the situation. The ECB violated their rules and strictures and did it at the behest of the European Union you may be sure which only proves, once again, that the ECB is about as independent as a three year old is of his mother. You can say the three year old is his own person but I assure you that each and every mother on the planet would roll her eyes at you. This then is one of the main problems with Europe these days; there are laws and regulations that are defined to be exactly what the EU wants them to mean at any point in time so that there are in effect no laws and no regulations and just political expediency.

Charity with other peoples money

Free To Die?

By W. Williams

Nobel Prize-winning economist Paul Krugman, in his New York Times column titled "Free to Die" (9/15/2011), pointed out that back in 1980, his late fellow Nobel laureate Milton Friedman lent his voice to the nation's shift to the political right in his famous 10-part TV series, "Free To Choose." Nowadays, Krugman says, "'free to choose' has become 'free to die.'" He was referring to a GOP presidential debate in which Rep. Ron Paul was asked what should be done if a 30-year-old man who chose not to purchase health insurance found himself in need of six months of intensive care. Paul correctly, but politically incorrectly, replied, "That's what freedom is all about — taking your own risks." CNN moderator Wolf Blitzer pressed his question further, asking whether "society should just let him die." The crowd erupted with cheers and shouts of "Yeah!", which led Krugman to conclude that "American politics is fundamentally about different moral visions." Professor Krugman is absolutely right; our nation is faced with a conflict of moral visions. Let's look at it.

If a person without health insurance finds himself in need of costly medical care, let's investigate just how might that care be provided. There are not too many of us who'd suggest that we get the money from the tooth fairy or Santa Claus. That being the case, if a medically indigent person receives medical treatment, it must be provided by people. There are several possible methods to deliver the services. One way is for people to make voluntary contributions or for medical practitioners to simply treat medically indigent patients at no charge. I find both methods praiseworthy, laudable and, above all, moral.

Another way to provide those services is for Congress to use its power to forcibly use one person to serve the purposes of another. That is, under the pain of punishment, Congress could mandate that medical practitioners treat medically indigent patients at no charge.

I'd personally find such a method of providing medical services offensive and immoral, simply because I find the forcible use of one person to serve the purposes of another, what amounts to slavery, in violation of all that is decent.

I am proud to say that I think most of my fellow Americans would be repulsed at the suggestion of forcibly using medical practitioners to serve the purposes of people in need of hospital care. But I'm afraid that most Americans are not against the principle of the forcible use of one person to serve the purposes of another under the pain of punishment. They just don't have much stomach to witness it. You say, "Williams, explain yourself."

Say that citizen John pays his share of the constitutionally mandated functions of the federal government. He recognizes that nothing in our Constitution gives Congress the authority to forcibly use one person to serve the purposes of another or take the earnings of one American and give them to another American, whether it be for medical services, business bailouts, handouts to farmers or handouts in the form of foreign aid. Suppose John refuses to allow what he earns to be taken and given to another. My guess is that Krugman and, sadly, most other Americans would sanction government punishment, imprisonment or initiation of violence against John. They share Professor Krugman's moral vision that one person has a right to live at the expense of another, but they just don't have the gall to call it that.

I share James Madison's vision, articulated when Congress appropriated $15,000 to assist some French refugees in 1794. Madison stood on the floor of the House to object, saying, "I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents," adding later that "charity is no part of the legislative duty of the government." This vision of morality, I'm afraid, is repulsive to most Americans.

Making up news

Never a dull moment 

Economic Escherism.

Gary Becker: Conservative Intellectual Of The Welfare State

By Lawrence Hunter

In a recent Wall Street Journal op-ed, Nobel laureate and Hoover Institution economics professor Gary Becker made a telling comment that revealed the intellectual poverty of Establishment Conservatism in America today:

It is a commentary on the extent of government failure that despite the improvements during the past few decades in the mental and physical health of older men and women, no political agreement seems possible on delaying access to Medicare beyond age 65. No means testing (as in Rep. Paul Ryan’s budget road map) will be introduced to determine eligibility for full Medicare benefits, and most Social Security benefits will continue to start for individuals at age 65 or younger.

Becker is an intellectual heavyweight whose views are enormously influential inside the Washington conservative establishment.  It is, therefore, distressing that rather than offering a post-welfare-state vision for America based on more freedom and less government, Becker offers Establishment politicians suggestions on how to preserve and protect the welfare state—suggestions that only would exacerbate the government failure he laments.

The government failure Becker observes is sown into the very fabric of the redistributionist, interventionist welfare state that created Social Security and Medicare as gigantic government Ponzi schemes.  The dire fiscal straits confronting Social Security and Medicare are merely the surface manifestations of the deeper, inherent contradictions of the majoritarian welfare state.  The welfare state undermines economic growth by perverting incentives to work, save, invest and produce, and replaces these virtues with incentives to take leisure, consume, borrow and parasitize on the rest of society.  Having encouraged man in the worst of his natural vices, the welfare then must try to control these vices with higher taxes and more onerous laws and regulations.

To avert constant fiscal crisis, welfare-state politicians raid the granaries to redistribute society’s seed corn as feed to the entitled masses.  The welfare state thus undermines future economic crops, which in turn leads to economic malnourishment and eventually economic starvation—that is if the welfare state is not first destroyed by its own enraged recipients whom the welfare state no longer can support in the style to which they have become accustomed.  As a preeminent scholar of public choice economics, Becker should understand these grim realities rather than urging politicians to seek some oxymoronic optimal redistribution through more government coercion.

Rather than going to the heart of the problem with the redistributive welfare-state — coercive government redistribution and all of its instrumentalities are morally wrong and economically self-destructive even for the supposed beneficiaries—Becker would lead us to believe a bit of tinkering and fiddling about the edges of a fatally flawed design can make the welfare state sustainable.  Becker-type “solutions” to fixing up the welfare state, which currently abound among establishment conservatives, are nothing more than disguised efforts to build an economic perpetual motion machine, to hang the superstructure of the welfare state from a sky hook, to thwart the Second Law of Thermodynamics by sneaking Maxwell’s Demon onto the congressional budget committee through the backdoor to sift and sort budget priorities. This isn’t sound economic design; it is Economic Escherism.

Stripped to its essence, Becker’s “solution” for Medicare and Social Security is just another scheme to save the welfare state by expanding the base of the Ponzi pyramid on which it rests—can you hear the words “tax reform” tinkling faintly in the background?

If Social Security and Medicare were structured as real, asset-based retirement-insurance plans in which benefits were an actuarially sound function of workers’ contributions to the plans throughout their working years, there would be no need (no right) for government to determine when workers retire nor would government have any legitimate interest in restricting workers’ payback from the plans on the basis of their means (wealth and income) at retirement.  In other words, Becker’s “solutions” reveal a fundamental commitment to coercive redistribution—the central organizing principle of the welfare state—and to the preeminence of the fiscal interest of the state over the financial interests of individuals—the central normative value of the welfare state.

Since George W. Bush poisoned the well on personal retirement accounts, the GOP has abandoned any effort to transform Social Security and Medicare into an asset-based retirement system based on workers’ real private investment in real assets they own. Paul Ryan made a gesture in that direction with his voucherized Medicare proposal, but he couldn’t see beyond his green eyeshade as Chairman of the House Budget Committee.  So he made the mistake of designing and justifying it as a budget-cutting exercise that actually expanded the reach of the welfare state and increased the government’s control over seniors’ health care choices.

Rather than transforming Medicare and Social Security into post-welfare-state retirement-insurance programs, Becker-style fixer-upper schemes serve only to expand and deepen dependency on government through tax hikes, price controls, rationing, means testing and benefit cuts, what I referred to in an earlier column as “perestroika reforms” to preserve the welfare state as we know it.  It is the GOP’s attempt to transform the New Deal into its own version of The Great Society with a stern Republican face, and it is destined to fail, politically as well as fiscally.

Politicians are addicted to spending and the power it brings them, which in turn has addicted the American people to government. Republican politicians think they can feed their own addiction to power by suddenly forcing dependent Americans, especially American seniors, to go through cold-turkey-austerity rehabilitation and then minding their P’s and Q’s on the dole. It won’t work. It will only cause social backlash.

When people perceive conservatives’ alternative to the welfare state to be a sort of Collectivism-Lite with an authoritarian twist, they will reject the conservative establishment’s thin gruel and demand the real deal from liberals whom they will vote into office by a landslide.

It is time conservatives woke up to the fact that average Americans are not interested in ravishing Social Security and Medicare, turning them into welfare programs, being forced to work into their seventies and receiving a lower rate of return for their efforts than they already are scheduled to receive.  If they don’t wake up, the political blowback will blow the conservative Grand Old Party away. The result will be an even more liberal Democratic Party unleashed to expand the welfare state, deepen dependency on government, launch Blitzkrieg class warfare and take America further down the path to ruination.

In short, intellectuals and politicians can’t save the welfare state by making it a worse deal for people; they will only make America a worse place to live if they try.

Read It and Weep

Obama’s Jobs Bill

An infernal mish-mash of taxes, subsidies, and regulations.

By Richard A. Epstein 

The dim news about the current economic situation has prompted the Obama administration to put forward its latest, desperate effort to reverse the tide by urging passage of  The American Jobs Act (AJA), a turgid 155-page bill. The AJA’s only certain effect is to make everything worse than it already is by asking Congress to tighten the stranglehold that government regulation has already placed on the economy.

That sad fact would certainly elude anyone who accepted the president’s justification for the AJA when he sent the bill to Congress. This bill, he said, will "put more people back to work and put more money in the pockets of working Americans. And it will do so without adding a dime to the deficit." How? Why, by closing "corporate tax loopholes" and insisting that the wealthiest American’s pay their "fair share" of taxes.

What is so striking about Obama’s shopworn rhetoric is its juvenile intellectual quality. His explanation for how the AJA will create jobs is a non-starter because he does not explain how we get from here to there. As in so many other cases, the president thinks that waving a wand over a problem will make his most ardent wishes come true, even when similar earlier efforts have proved to be dismal failures. This dreadful hodgepodge of a bill will likely be dead-on-arrival in Congress, but it remains a patriotic duty to explicate some of its worst provisions.

The most evident feature of the AJA is that it is a combination of ill-conceived, disparate measures. The wandering quality of the bill makes it impossible to cover all of its silliness, but it is possible to focus on some of the core job provisions, all of which kill the very jobs that the AJA is supposed to create.

One does not have to dip very far into the bill to find trouble. Section 4 of the AJA imposes "Buy American" restrictions on the use of funds appropriated under this statute for work on public buildings. "[A]ll the iron, steel and manufactured goods" used on such projects are to be fabricated in the United States. There are obvious administrative difficulties in deciding what counts as a "manufactured good" for the purposes of the act. But don’t sweat the small stuff. The fatal problem with this form of jingoism is that, in the name of economic efficiency, it forces American taxpayers to pay more for less. That upside down logic may seem sensible to a die-hard Keynesian, but not to ordinary people who realize that deliberate overpayment for inferior goods makes no more sense in the public sector than in the private one.

The End of Sound Money

Τhe Triumph of Crony Capitalism

by David Stockman

The triumph of crony capitalism occurred on October 3rd, 2008. The event was the enactment of TARP — the single greatest economic-policy abomination since the 1930s, or perhaps ever.

Like most other quantum leaps in statist intervention, the Wall Street bailout was justified as a last-resort exercise in breaking the rules to save the system. In the immortal words of George W. Bush, our most economically befuddled President since FDR, "I've abandoned free market principles in order to save the free market system."

Based on the panicked advice of Paulson and Bernanke, of course, the president had the misapprehension that without a bailout "this sucker is going down." Yet 30 months after the fact, evidence that the American economy had been on the edge of a nuclear-style meltdown is nowhere to be found.

In fact, the only real difference with Iraq is that in the campaign against Saddam we found no weapons of mass destruction; by contrast, in the campaign to save the economy we actually used them — or at least their economic equivalent.

Still, the urban legend persists that in September 2008 the payments system was on the cusp of crashing, and that absent the bailouts, companies would have missed payrolls, ATMs would have gone dark and general financial disintegration would have ensued.

But the only thing that even faintly hints of this fiction is the commercial-paper market dislocation. Upon examination, however, it is evident that what actually evaporated in this sector was not the cash needed for payrolls, but billions in phony book profits, which banks had previously obtained through yield-curve arbitrages that were now violently unwinding.

At that time, the commercial-paper market was about $2 trillion and was heavily owned by institutional money-market funds — including First Reserve, which was the granddaddy with about $60 billion in footings. Most of this was rock solid, but its portfolio also included a moderate batch of Lehman commercial paper — a performance enhancer designed to garner a few extra "bips" of yield.

As it happened, this foolish exposure to a de facto hedge fund, which had been leveraged 30-to-1, resulted in the humiliating disclosure that First Reserve "broke the buck," and that the somnolent institutional fund managers who were its clients would suffer a loss — — all of 3 percent!

This should have been a "so what" moment — except then all of the other lemming institutions who were actually paying fees to money-market funds for the privilege of getting return-free risk decided to panic and demand redemption of their deposits. This further step in the chain reaction basically meant that some maturing commercial paper could not be rolled over due to these money-market redemptions.

But this outcome, too, was a "so what": nowhere was it written that GE Capital or the Bank One credit-card conduit, to pick two heavy users of the space, had a Federal entitlement to cheap commercial paper — so that they could earn fat spreads on their loan books.

Regardless, the nation's number one crony capitalist — Jeff Immelt of GE — jumped on the phone to Secretary Paulsen and yelled "fire"! Soon the Fed and FDIC stopped the commercial-paper unwind dead in its tracks by essentially nationalizing the entire market. Even a cursory look at the data, however, shows that Immelt's SOS call was a self-serving crock.

First, about $1 trillion of the $2 trillion in outstanding commercial paper was of the so-called ABCP type — paper backed by packages of consumer loans such as credit cards, auto loans, and student loans. The ABCP issuers were off-balance sheet conduits of commercial banks and finance companies; the latter originated the primary loans, and then scalped profits up front by selling these loan packages into their own conduits.

In short, had every single ABCP conduit been liquidated for want of commercial-paper funding — and over the past three years most have been — not a single consumer would have been denied a credit-card authorization or car loan. His or her bank would have merely booked the loan as an on-balance sheet asset — rather than off-balance sheet asset.

Evil or Stupid ?

"Missing" global heat may hide in deep oceans

By Reuters

The mystery of Earth's missing heat may have been solved: it could lurk deep in oceans, temporarily masking the climate-warming effects of greenhouse gas emissions, researchers reported on Sunday.

Climate scientists have long wondered where this so-called missing heat was going, especially over the last decade, when greenhouse emissions kept increasing but world air temperatures did not rise correspondingly.

The build-up of energy and heat in Earth's system is important to track because of its bearing on current weather and future climate.

The temperatures were still high -- the decade between 2000 and 2010 was Earth's warmest in more than a century -- but the single-year mark for warmest global temperature was stuck at 1998, until 2010 matched it.

The world temperature should have risen more than it did, scientists at the National Center for Atmospheric Research reckoned.

They knew greenhouse gas emissions were rising during the decade and satellites showed there was a growing gap between how much sunlight was coming in and how much radiation was going out. Some heat was coming to Earth but not leaving, and yet temperatures were not going up as much as projected.

So where did the missing heat go?

Computer simulations suggest most of it was trapped in layers of oceans deeper than 1,000 feet during periods like the last decade when air temperatures failed to warm as much as they might have.

This could happen for years at a time, and it could happen periodically this century, even as the overall warming trend continues, the researchers reported in the journal Nature Climate Change.

"This study suggests the missing energy has indeed been buried in the ocean," NCAR's Kevin Trenberth, a co-author of the study, said in a statement. "The heat has not disappeared and so it cannot be ignored. It must have consequences."

Trenberth and the other researchers ran five computer simulations of global temperatures, taking into account the interactions between the atmosphere, land, oceans and sea ice, and basing the simulations on projected human-generated greenhouse gas emissions.

These simulations all indicated global temperature would rise several degrees this century. But all of them also showed periods when temperatures would stabilize before rising. During these periods, the extra heat moved into deep ocean water due to changes in ocean circulation, the scientists said.

White lies

Times Atlas 'wrong' on Greenland ice

 

Leading UK polar scientists say the Times Atlas of the World was wrong to assert that it has had to re-draw its map of Greenland due to climate change.

By Richard Black, Environment correspondent, BBC News

Publicity for the latest edition of the atlas, launched last week, said warming had turned 15% of Greenland's former ice-covered land "green and ice-free".

But scientists from the Scott Polar Research Institute say the figures are wrong; the ice has not shrunk so much.

The Atlas costs £150 ($237) and claims to be the world's "most authoritative".

The 13th edition of the "comprehensive" version of the atlas included a number of revisions made for reasons of environmental change since the previous one, published in 2007.

The break-up of some Antarctic ice shelves due to climate change, the shrinking of inland waters such as the Dead and Aral Seas, and the drying up of rivers such as the Colorado River are all documented.

But the glossy publicity sheets begin with the contention that "for the first time, the new edition of the (atlas) has had to erase 15% of Greenland's once permanent ice cover - turning an area the size of the United Kingdom and Ireland 'green' and ice-free.

"This is concrete evidence of how climate change is altering the face of the planet forever - and doing so at an alarming and accelerating rate."

The Scott Polar group, which includes director Julian Dowdeswell, says the claim of a 15% loss in just 12 years is wrong.

"Recent satellite images of Greenland make it clear that there are in fact still numerous glaciers and permanent ice cover where the new Times Atlas shows ice-free conditions and the emergence of new lands," they say in a letter that has been sent to the Times.

"We do not know why this error has occurred, but it is regrettable that the claimed drastic reduction in the extent of ice in Greenland has created headline news around the world.

"There is to our knowledge no support for this claim in the published scientific literature."

Many of the institute's staff are intimately involved in research that documents and analyses the impacts of climate change across the Arctic.

As such, they back the contention that rising temperatures are cutting ice cover across the region, including along the fringes of Greenland; but not anything like as fast as the Times Atlas claimed.

"It is... crucial to report climate change and its impact accurately and to back bold statements with concrete and correct evidence," they say.

The Times Atlas is not owned by The Times newspaper. It is published by Times Books, an imprint of HarperCollins, which is in turn owned by Rupert Murdoch's News Corporation.

A spokesperson for HarperCollins said its new map was based on information provided by the US National Snow and Ice Data Center (NSIDC).

"While global warming has played a role in this reduction, it is also as a result of the much more accurate data and in-depth research that is now available," she said.

"Read as a whole, both the press release and the 13th edition of the Atlas make this clear."

Big time crooks

Buffett's Berkshire Owes $1 Billion In Back Taxes

 

By Newsmax editor

Billionaire investor Warren Buffett triggered a major debate over taxes recently when he wrote in The New York Times that he should be paying more to the federal government. He called on Washington lawmakers to up tax rates on the rich.

But it turns out that Buffett’s own company, Berkshire Hathaway, has had every opportunity to pay more taxes over the last decade. Instead, it’s been mired in a protracted legal battle with the Internal Revenue Service over a bill that one analyst estimates may total $1 billion.

Yes, that’s right: while Warren Buffett complains that the rich aren’t paying their fair share his own company has been fighting tooth and nail to avoid paying a larger share.

The story of Berkshire's years-long tax battle, which is generally known in business circles, took on new life this week when a group called Americans for Limited Government (ALG) reported that, according to Berkshire Hathaway’s own annual report, the company is embroiled in an ongoing standoff over its tax bills.

That report, in turn, was cited in an editorial in The New York Post.

“Obvious question: If Buffett really thinks he and his 'mega-rich friends' should pay higher taxes, why doesn’t his firm fork over what it already owes under current rates?” the Post opined.

“Likely answer: He cares more about shilling for President Obama -- who’s practically made socking “millionaires and billionaires” his re-election theme song -- than about kicking in more himself.”

Using only publicly-available documents, a certified public accountant (CPA) detailed Berkshire Hathaway’s tax problems to ALG. AlG President Bill Wilson cites the company’s own 2010 annual report, which states at one point that “At December 31, 2010… net unrecognized tax benefits were $1,005 million”, or about $1 billion.”

“Unrecognized tax benefits represent the company’s potential future obligation to the IRS and other taxing authorities,” ALG explained in its report. “They have to be recorded in the company’s financial statements.”

“The notation means that Berkshire Hathaway’s own auditors have probably said that $1 billion is more likely than not owed to the government,” the ALG report explained.

That $1 billion represents about 0.2 percent of the company’s $372 billion in total assets, according to ALG.

As Wilson points out, “On one hand Buffett advocates for paying more taxes, but when it comes to his own company’s taxes, he has gone through great lengths to pay less. That’s rich.”

Here's the key section from Berkshire's report:

“We anticipate that we will resolve all adjustments proposed by the U.S. Internal Revenue Service (‘IRS’) for the 2002 through 2004 tax years at the IRS Appeals Division within the next 12 months," the report states. "The IRS has completed its examination of our consolidated U.S. federal income tax returns for the 2005 and 2006 tax years and the proposed adjustments are currently being reviewed by the IRS Appeals Division process. The IRS is currently auditing our consolidated U.S. federal income tax returns for the 2007 through 2009 tax years.”

Wilson also points to a prior tax fight the company fought. “Apparently, this is not the first time that Berkshire Hathaway has tangled with the IRS. They fought a 14-year battle over the dividends received deduction. That case was just resolved in 2005,” Wilson reports..

“Although the prior case was settled in Buffett’s favor, it demonstrates a decades-long pattern of behavior by Buffett to minimize his taxes. That’s the important part of the story,” Wilson writes.

And Buffett this week is at the center of another tax controversy, according to The Wall Street Journal. His recent decision to invest in Bank of America "represents another tax-avoidance triumph for the Berkshire chief executive," the Journal wrote in an editorial Wednesdy.

It turns out that U.S. corporations are subject to a top federal income tax rate of 35 percent, the second highest in the world. But Berkshire won't pay anything close to that on their investment in BofA preferred shares.

"Berkshire will hold the investment in a property-casualty insurance subsidiary. Such corporations can exclude from taxation 59.5% of the dividends they receive from an investment in another corporation," the Journal reported. "This exclusion is intended to prevent double- or even triple-taxation as money is earned by one company, paid to another company and then ultimately paid out to shareholders. The policy makes sense; we only wonder why the exclusion isn't 100%.

"With the exclusion for Mr. Buffett and his fellow shareholders, Berkshire will enjoy an effective tax rate of 14.175% on the $300 million in dividends it will receive each year from Bank of America," the Journal reported.

These new revelations about Buffett's tax practices have only furthered enraged conservatives at the hypocrisy being shown by the famed "Oracle of Omaha."

Writing in the conservative website Human Events, John Hayward added that analysts should look at the "value of the time IRS agents have invested trying to collect it – they don’t work cheap, and we pay their salaries – and the resources Buffett’s people have invested fighting back. All of which would have been saved if Buffett simply practiced what he preached, and willingly handed over his fortune to the brilliant and compassionate 'leaders' he commands the rest of us to support without resistance.

"Warren Buffett is no different from the other liars and frauds orbiting Barack Obama​. His hypocrisy just runs billions of dollars deeper. When it comes to 'shared sacrifice,' you do the sacrificing, and they do the sharing," Hayward writes.

http://www.newsmax.com/Headline/buffett-irs-back-taxes/2011/09/01/id/409520?s=al&promo_code=CF64-1

The sound of a falling "settled" theory

 Science getting settled

 New, convincing evidence indicates global warming is caused by cosmic rays and the sun — not humans

by L. Salomon, Financial Post
The science is now all-but-settled on global warming, convincing new evidence demonstrates, but Al Gore, the IPCC and other global warming doomsayers won’t be celebrating. The new findings point to cosmic rays and the sun — not human activities — as the dominant controller of climate on Earth.
The research, published with little fanfare this week in the prestigious journal Nature, comes from über-prestigious CERN, the European Organization for Nuclear Research, one of the world’s largest centres for scientific research involving 60 countries and 8,000 scientists at more than 600 universities and national laboratories. CERN is the organization that invented the World Wide Web, that built the multi-billion dollar Large Hadron Collider, and that has now built a pristinely clean stainless steel chamber that precisely recreated the Earth’s atmosphere.

In this chamber, 63 CERN scientists from 17 European and American institutes have done what global warming doomsayers said could never be done — demonstrate that cosmic rays promote the formation of molecules that in Earth’s atmosphere can grow and seed clouds, the cloudier and thus cooler it will be. Because the sun’s magnetic field controls how many cosmic rays reach Earth’s atmosphere (the stronger the sun’s magnetic field, the more it shields Earth from incoming cosmic rays from space), the sun determines the temperature on Earth.

The hypothesis that cosmic rays and the sun hold the key to the global warming debate has been Enemy No. 1 to the global warming establishment ever since it was first proposed by two scientists from the Danish Space Research Institute, at a 1996 scientific conference in the U.K. Within one day, the chairman of the Intergovernmental Panel on Climate Change, Bert Bolin, denounced the theory, saying, “I find the move from this pair scientifically extremely naive and irresponsible.” He then set about discrediting the theory, any journalist that gave the theory cre dence, and most of all the Danes presenting the theory — they soon found themselves vilified, marginalized and starved of funding, despite their impeccable scientific credentials.

The mobilization to rally the press against the Danes worked brilliantly, with one notable exception. Nigel Calder, a former editor of The New Scientist who attended that 1996 conference, would not be cowed. Himself a physicist, Mr. Calder became convinced of the merits of the argument and a year later, following a lecture he gave at a CERN conference, so too did Jasper Kirkby, a CERN scientist in attendance. Mr. Kirkby then convinced the CERN bureaucracy of the theory’s importance and developed a plan to create a cloud chamber — he called it CLOUD, for “Cosmics Leaving OUtdoor Droplets.”

But Mr. Kirkby made the same tactical error that the Danes had — not realizing how politicized the global warming issue was, he candidly shared his views with the scientific community.

“The theory will probably be able to account for somewhere between a half and the whole of the increase in the Earth’s temperature that we have seen in the last century,” Mr. Kirkby told the scientific press in 1998, explaining that global warming may be part of a natural cycle in the Earth’s temperature.

The global warming establishment sprang into action, pressured the Western governments that control CERN, and almost immediately succeeded in suspending CLOUD. It took Mr. Kirkby almost a decade of negotiation with his superiors, and who knows how many compromises and unspoken commitments, to convince the CERN bureaucracy to allow the project to proceed. And years more to create the cloud chamber and convincingly validate the Danes’ groundbreaking theory.

Yet this spectacular success will be largely unrecognized by the general public for years — this column will be the first that most readers have heard of it — because CERN remains too afraid of offending its government masters to admit its success. Weeks ago, CERN formerly decided to muzzle Mr. Kirby and other members of his team to avoid “the highly political arena of the climate change debate,” telling them “to present the results clearly but not interpret them” and to downplay the results by “mak[ing] clear that cosmic radiation is only one of many parameters.” The CERN study and press release is written in bureaucratese and the version of Mr. Kirkby’s study that appears in the print edition of Nature censored the most eye-popping graph — only those who know where to look in an online supplement will see the striking potency of cosmic rays in creating the conditions for seeding clouds.

CERN, and the Danes, have in all likelihood found the path to the Holy Grail of climate science. But the religion of climate science won’t yet permit a celebration of the find.

Financial Post