Denny Crane on Gun Control – A Classic

The lefts’ ridiculous position on control. How many more words need to be wasted explaining why. Answer: None. A picture or a video is worth 1000 words. When you watch the following video, you will, in the words of the greatest trial lawyer Denny Crane, say to yourself, “It’s that simple.”

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VIRGINIA: A COMPLETE REJECTION OF THE LEFT

Watch for the media to write this off. Virginia is back as a solid red state. Click here for results from the SBE.

Here’s the list:

Ken Cuccinelli, the ultra ultra conservative Attorney General

Bob McDonnell, the mostly conservative Governor

Bill Bolling, the sometimes conservative Lt. Governor

I predicted that Obama was the best thing that happened to us. Why? Because McCain would have destroyed the party. This is how you come back. Now if we can just get rid of Alan Grayson–get his law firm out of Virginia, that is.

Alan Grayson & Collateral Damage

Some of my readers (all two of them) have commented that they’ve missed my articles. I have been involved in a rather lengthy and involved court case. That case also involves Alan Grayson. He sued my client claiming the client was merely “collateral damage” to his congressional campaign. Well, we won. And 550+ people still have jobs because we did win. There’ll be more soon. In the meantime, here’s one article in the Am Law Litigation Journal:

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Rare Jury Verdict in Virginia Qui Tam Case Clears Defense Contractor

By Ben Hallman

October 30, 2009

When U.S. Representative Alan Grayson launched his successful run to represent Orlando in Congress last year, he touted his role as a plaintiffs lawyer in negotiating an $8.9 million settlement agreement in a whistle-blower suit against a government contractor. We’re not political consultants, but we’re going to guess that Rep. Grayson won’t be campaigning again on this one. The settlement fell apart, and last Wednesday, after a six-day trial, a federal jury found the contractor, IIF Data Solutions, not guilty of fraud.

IIF is a Virginia-based defense contractor that provides information technology and other services, primarily to the U.S. National Guard. In 2006, Thomas Ubl, a former IIF employee, sued the company under the False Claims Act in Alexandria, Va., federal district court for allegedly lying to get on a list of approved government contractors. According to two IFF defense lawyers, Christopher Kachouroff of Dominion Law Group in Virginia, and Robert Cynkar of Cuneo Gilbert & LaDuca in Washington, D.C., IIF had hired an outside consultant to help it with its application to get on the GSA “schedule.” (Once on the schedule, contractors are eligible to bid on government contracts.) Cynkar and Kachouroff told us that Ubl, while an employee at IIF, had helped work on the application, which became the basis for the lawsuit.

Here’s where the story almost ends. The U.S. government declined to join the suit, and in May 2008, on the day before trial, the defense team reached a settlement agreement with plaintiffs’ lawyers Victor Kubli and Alan Grayson. Grayson boasted of the deal on his campaign Web site: “The Bush administration refused to prosecute, and then it refused to allow any government officials to appear as witnesses at trial. Grayson persevered nevertheless, marshalling other witnesses, experts, and documents. The lawsuit reached its exciting conclusion in a settlement agreement that Grayson negotiated in the courthouse, inside the judge’s chambers, on the day that the trial was scheduled to begin.” Click here (third item) for Grayson’s campaign-friendly description of the settlement.

The negotiations may have been exciting, but the lawsuit wasn’t concluded. The agreement provided that it was “void without government approval,” and the government objected to several aspects of the deal, including the percentage of the award Ubl and his attorneys claimed they were entitled to receive, and withheld consent. Kachouroff and Gilbert took over the case. McKenna Long & Aldridge, which had been lead counsel, took a smaller role. Kachouroff said that Charles Patten, founder of the company and a former National Guardsman, told him that he wanted to fight it out in court, that he felt he had done nothing wrong.

At trial, the defense argued that under the FCA, fraud occurs when a party is paid for its services, and that IIF had received nothing but rave reviews from clients. A key witness, the defense lawyers said, was a senior National Guard official who testified on IIF’s behalf. “You know a fraud case is frivolous when the supposed victim of the fraud not only does not cancel any of the company’s contracts, but continues to seek their services,” Kachouroff said.

The plaintiff sought $140 million in damages, which would have been trebled under the False Claims Act. We left a message with his office last Friday morning, and will update this post if it is returned. We also left a message for Kubli at his office in Germantown, Maryland

Your Sins Remain Unresolved.

“Come unto me, all ye that labour and are heavy laden, and I will give you rest.” Matthew 11:28

ROUND 2: Mike Shedlock vs. Peter Schiff

Between the first and second rounds, the WSJ published its own take on this piece here. The crowd around the Octagon is surprisingly quiet. There are no cheers when the opening bell rings. Peter Schiff’s left eye is swollen shut and he’s got a little blood mouse swelling under his right. Getting off his chair, the staggering giant Peter Schiff moves forward with determined vigor.  He stops abruptly motioning for Shedlock to come to him. Unfortunately, Schiff looks a bit punch drunk. Schiff’s latest response begins with subtle ad hominem attacks rather than addressing the issues. And when he addresses the issues, he does so without regard for Austrian economics or use of principles. I am disappointed–very disappointed. I had hoped Schiff would either produce a plausible argument or concede. I did not expect him to back pedal and rely on market timing. INMO, market timing is an excuse. One call always time life by saying that we’re all going to die someday. Predicting when, however, is critical. And so it is that the crowd is not cheering this fight. Round 2 goes to Shedlock. Schiff will get one more opportunity in round 3 but it doesn’t look so good for him right now. I am a Shedlock fan but I am also a Schiff fan. I wish Schiff would adjust his fighting style. I have posted Schiff’s entire response here:

A Response to My Critics

By: Peter Schiff, Euro Pacific Capital, Inc.

  My popularity on television and the internet has led a very small money manager to use his popular financial blog to promote his fledgling business by attacking the recent poor performance of my long-term investment strategy. The post is causing quite a stir and compels me to provide some badly needed context. To achieve his ends, this individual has distorted much of what I have been saying and writing, and has twisted the facts to support his own preconceived conclusion. In essence, his piece is nothing more than an overt advertisement (and a highly deceptive one at that) to use my popularity to advance his career. In so doing he has given my critics, particularly some who have been embarrassed by their roles in the “Peter Schiff was Right” video, their moments of retribution. In addition, some members of the press who have never been among my greatest fans are seizing the opportunity to discredit me as well.

The crux of the blogger’s arguments are that my beliefs in “decoupling, hyperinflation, and that the dollar is going to zero” have been completely discredited by the events of 2008, and that the resulting investment losses suffered by my clients last year confirms the fatal flaws in my approach. In addition to mischaracterizing many of my beliefs, he also is confusing short-term market fluctuations with long-term economic trends. First of all, the hyper inflation issue is a straw man at best. While I often talk about the possibility of hyper inflation, I have always said that it would be a worse-case scenario that would play out over many years. The fact that it did not appear in the first year of the economic crash (2008) does not invalidate my position. I have always maintained that this worst-case scenario will likely be avoided by what will ultimately be a dramatic shift in policy once our leaders come to their senses. However, until then the dollar will likely lose a substantial portion of its value. Second, I never said that the dollar would go to zero, either in 2008 or any year thereafter. I have said that in the event of hyper inflation the dollar’s value would approach zero. My actual forecast in my book “Crash Proof” was that the Dollar Index would fall to 40 (currently about 85), with a realistic worst case scenario, assuming very high but not hyper inflation, of 20 or lower. Third, the blogger points out that because the decoupling theory (foreign economies improving while the U.S. falters) that I wrote about in “Crash Proof” has yet to occur, that the theory itself was ridiculous. In my book I wrote that this process would not occur overnight, that initially our creditors would come to our aid, and in so doing our problems would become manifest abroad. I wrote that it would take time for the world to realize that what had been decoupled from the economic train was not the engine but the caboose. In fact, that is precisely the way it is playing out. Chapter Ten of “Crash Proof” is specifically focused on the need to keep funds liquid to take advantage of the buying opportunity that would initially develop once our stock market began its collapse. I specifically mentioned that when U.S. stocks began to fall, we could expect sympathetic declines overseas. While I did not know the precise timing of those events, I advised readers to prepare. I did not expect the huge dollar rally of 2008. But to discredit my long-term view of the dollar based on an eight month move is absurd. So while I believed that a weak dollar would cushion the temporary decline I expected in foreign stocks, a strong dollar ended up exacerbating it. In the meantime, I believed that the high dividends these stocks were paying would make it easier to ride out any correction.

The problem was that the dollar fell so far leading up to the crisis (in 2005-2007) that by the time the crisis finally erupted the dollar was poised for a bounce. Central to the argument that my investment thesis is wrong is the belief that the crisis is over or that the recent trends will continue until it is. But the crisis is just beginning and the movements thus far in the dollar, commodities, and foreign stocks, are mere head fakes. Once the speculators have been flushed from the markets, the underlying long-term trends I have been following should return in earnest.

To illustrate the flaws in my investment strategy the blogger has posted a client’s statement that shows a loss in excess of 60%. In addition, he claims to know of other Euro Pacific clients who have experienced similar losses. The inference of course is that most, or all, of my clients must have suffered similar losses, and the existence of such losses proves that I am wrong. In fact, some have gone a step further, claiming that such losses prove that I am a fraud. First let’s deal with the one client’s account. I have been following several key investment themes for the past ten years. The basis for my strategy is that recent U.S. prosperity has been false, and that the consequences of the bursting of our bubble economy would ultimately play out in a substantial decline in the value of the U.S. dollar, higher commodity prices, the re-monetization of gold, and foreign equities substantially outperforming U.S. markets. From an investment perspective, those themes played out extremely well in the eight years from 2000-2007. Recently we have seen a sharp, and I believe temporary, reversal of these trends. Those that came late to the party (at least based on where we are today) now have to ride out a particularly difficult correction. For example, the account in question belongs to the son of a long-standing Euro Pacific client, who is still adding funds to his accounts.

Without specially commenting on the performance of the father’s account, it must have been compelling enough to finally persuade the son to come on board himself in early 2008. However, as is often the case, by the time he came on board, foreign stocks and commodities were about to sell off, and the dollar was about to begin its unexpected rally. Following such a sharp correction, the son now regrets his decision and must blame me for my part in helping him make it. Perhaps as a stockbroker I should have persuaded the son to wait for a correction. However, while this clearly would have been the right call with the full benefit of hind-sight, it was certainly not as clear given the information I had at the time. However, I never held myself out to be a market timer. My advice was always geared to long-term investors. Given the thousands of clients that I have, and the large number who joined near the recent dollar peak and market tops, it’s no wonder that a few have contacted this blogger to complain; especially since he has actively sought them out. Of course, the fact that the overwhelming majority of my clients are not complaining, to him or anyone else for that matter, says a lot more about what is really going on. To the extent that the long-term trends I have been following continue, I am confident that even those whose short-term timing was bad will still do well in time. This is especially true if they take advantage of this pull back by adding to their accounts, either with new funds or by re-investing their dividends. However, to examine the effectiveness of my investment strategy immediately following a major correction by looking only at those accounts who adopted the strategy at the previous peak is unfair and distortive.

Since I have been advising investors to follow these trends for ten years, I will leave it to the public to draw their own conclusions as to how long-term followers of my strategy have fared. However, for those who only recently adopted my approach in 2007 or 2008, the road has been a lot bumpier than they or I thought it would be when they climbed on board. Yet if these long-term trends re-emerge, though the journey may be different than planned, the ultimate destination will remain the same. The blogger in question implies that all of my clients are down by levels similar to the account he cites. He has asked me to refute his allegations by providing broader performance figures for more clients. But, since Euro Pacific Capital is a brokerage firm and not a Registered Investment Advisor, I am prohibited by regulators from providing any details on the investment performance achieved by my clients. The blogger in question makes his challenge knowing full well that I am legally prevented from accepting it. He then uses my failure to refute his false claim as validating its accuracy. In addition, to look only at the performance of foreign stocks, while ignoring other aspects of my investment strategy only tells part of the story. What about gold, foreign bonds, short positions in financials, home builders and subprime mortgages (or merely avoiding long exposure to those sectors), or other investments people have made, either at Euro Pacific or elsewhere based on my insights? What about dividends earned, or gains realized on closed positions? Mainstream economists, journalists, and investment professionals have never liked my message and have never resisted the temptation to shoot the messenger. When my investment strategies were performing well, I got little credit for it. Instead, all the attention was focused on the apparent failure of my dire economic predictions to materialize. Now that the economy is collapsing along the lines that I correctly forecast, criticism is being focused on the recent poor performance of my investment strategy (a fact that I have never tried to hide). Of course by the time my investment strategy is once again in step with my economic forecasts, an event that I believe will occur sooner than most people think, it will likely be too late for most people to do adopt it. My critics have often referred to me as a stopped clock. I believe that the accusation is best leveled at the accusers. Having been wrong for so long, they are now enjoying their brief moment in the sun. They should enjoy it while it lasts. For now, they are creating fodder for some future “Peter Schiff was Right” piece where those who now criticize my investment performance will look just as foolish as those who once criticized my economic forecasts. For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar, read my just released book “The Little Book of Bull Moves in Bear Markets.” Click here to order your copy now. For a look back at how I predicted our current problems read my 2007 bestseller “Crash Proof: How to Profit from the Coming Economic Collapse.” Click here to order a copy today. More importantly, don’t wait for reality to set in. Protect your wealth and preserve your purchasing power before it’s too late. Discover the best way to buy gold at www.goldyoucanfold.com. Download my free Special Report, “The Powerful Case for Investing in Foreign Securities” atwww.researchreportone.com. Subscribe to my free, on-line investment newsletter, “The Global Investor” athttp://www.europac.net/newsletter/newsletter.asp.