Leithner&Company Pty Ltd - The Leithner Letter

Just finished reading the current Leithner Letter and have to post this diatribe delivered by Fritz Machlup (1902-1983) about Austria, his home country. Hopefully we have all learned from this debacle.

Machlup spoke directly to todayÂ?s Anglo-Saxons when he observed that the Â?[importation] of capital does not increase the productive capacity of the country but only compensates for the internal capital consumption. This was obviously the case in Austria. Money, borrowed from abroad, was lent (mostly through banks) to corporations [in order to] Â? finance investments which were in reality replacements of outworn or obsolete equipment.Â?

Further, Â?in the absence of new saving, mere shifts in demand involve economic decline; in other words, an economy which is stationary in respect to the supply of savings is declining in respect to its capital base. Or, to put it another way, quick change in the objects of consumption without the emergence of new savings is itself a form of consuming capital.Â? Machlup identified an extreme consequence of this phenomenon. Â?Austria,Â? he concluded, Â?was successful in pushing through policies which are popular all over the world. Austria has most impressive records in five lines: she increased public expenditures; she increased wages; she increased social benefits; she increased bank credits; and she increased consumption.Â? This is clearly not capitalism. Call it what you will Â? mercantilism, fascism or social justice Â? it means interventionism, privilege, corruption, violence, economic superstition and financial voodoo. Its fruits are bitter and inedible: Â?after all these achievements [Austria] was on the verge of ruin.Â?

Leithner&Company Pty Ltd - The Leithner Letter

The Leithner Letter is a great monthly read published by some investment advisors out of Australia. They specialize in extolling the virtues of Graham, Dodd and Warren Buffett's investment styles and attempt to offer a comprehensive view of what is currently taking place in the financial markets. As always taking advantage of the idiocy of the masses is the key.


We have academics to thank for MPT, business schools to thank for academics, universities to thank for business schools and politicians to thank for universities. Mssrs Buffett and Munger have for decades and to various degrees castigated them all; and a new set of circulars to shareholders, entitled Crusoe Visits Academic Island, broadens and deepens their fusillade. It shows that living standards owe little or nothing to either institutionalised research and development or Â?educationÂ? Â? particularly the bastardised (i.e., tax-subsidised) variety imparted in contemporary universities and business schools. For individuals, education (in the proper sense of the term) is indeed priceless stuff, and in particular the private returns to self-education can be great. But what about the endlessly-trumpeted Â?returns to societyÂ? that allegedly derive from mass education in state-directed institutions? These are much lower than academics and politicians blithely and relentlessly assert. Indeed, like the results of most activities organised and financed by politicians, the returns to taxpayers are much more likely to be negative than positive.

Exacerbating the Distemper of Our Times, then, are some false, destructive and just plain crazy notions that are zealously propounded by powerful politicians and their court intellectuals. These ideas, whether expressed in their military, economic or financial variants, commandeer others� property, centralise decision-making in élites� hands and generate interventionist policies. These élites� unspoken motto is �we�re smarter than you and we know better than you do what�s good for you; so shut up, step aside and let us work our wonders.� Vastly overestimating their intelligence (and underestimating the brains of the benighted), flouting the laws of human action and lacking any meaningful feedback mechanism, this arrogant élite�s policies almost always lead to tears (see in particular Bertrand de Jouvenel, The Ethics of Redistribution, Liberty Press, 1952, 1990, ISBN: 086597084; Charles Murray, Losing Ground: American Social Policy, 1950-1980, Basic Books, 1981, 1995, ISBN: 0465042333; Thomas Sowell, The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy, Basic Books, 1995, ISBN: 0465089941; and Jim Powell, FDR�s Folly: How Roosevelt and His New Deal Prolonged the Great Depression, Crown Forum, 2003, ISBN: 0761501657).

A Day Without A Mexican

A new movie set in California where people wake up and all the Mexicans are gone. Check the trailer, which I linked to.

Set in modern-day California and based on Sergio Arau and Yareli Arizmendi’s short of the same title, the much anticipated “A Day Without a Mexican,” starring Yareli Arizmendi (Like Water for Chocolate, 1992) as Lila Rodríguez, the sole remaining Latino in California after 14 million Latinos mysteriously disappear, delves into the economic, political and social implications of this disaster on the Golden State’s way of life. Experts pose questions and offer theories: Could this be a UFO kidnapping? Biological terrorism? The Apocalypse and Latinos are the chosen ones? Or perhaps they just left because they were tired of being taken for granted.

As time goes by, the State continues to deteriorate: Garbage has taken over the streets and tears are permanently painted on the faces of most citizens as the 5th largest economy in the world tumbles. The realization that what has disappeared is the very thing that keeps the “California Dream” running – cooks, gardeners, policemen, nannies, doctors, farm and construction workers, entertainers, athletes, teachers as well as the largest growing market of consumers – has turned Latinos and their return into the number one priority in the State. But as despair turns into quiet sorrow, deeply felt memories and heartfelt appreciation yield unexpected results.

HoustonChronicle.com - For some, minimum wage brings maximum misery

Great raise the minimum wage so companies can fire these people or raise prices further to pay for the increase in minimum wage. Bright idea.