Economy

Stockman: The End is Nigh!

Mark Noonan24 Comments

Quoting former Reagan OMB director Stockman over at Pajamas Media:

…The state-wreck ahead is a far cry from the “Great Moderation” proclaimed in 2004 by Mr. Bernanke, who predicted that prosperity would be everlasting because the Fed had tamed the business cycle and, as late as March 2007, testified that the impact of the subprime meltdown “seems likely to be contained.” Instead of moderation, what’s at hand is a Great Deformation, arising from a rogue central bank that has abetted the Wall Street casino, crucified savers on a cross of zero interest rates and fueled a global commodity bubble that erodes Main Street living standards through rising food and energy prices — a form of inflation that the Fed fecklessly disregards in calculating inflation.

These policies have brought America to an end-stage metastasis. The way out would be so radical it can’t happen. It would necessitate a sweeping divorce of the state and the market economy. It would require a renunciation of crony capitalism and its first cousin: Keynesian economics in all its forms. The state would need to get out of the business of imperial hubris, economic uplift and social insurance and shift its focus to managing and financing an effective, affordable, means-tested safety net…

Stockman notes that no one in power is going to do any of the things necessary to fix the problem – last week, I read a quote attributed to the Prime Minister of Luxemburg which went along the lines of, “we all know what needs to be done, but we don’t know how to get re-elected after we do it”.  Whether or not the PM said any such thing, it is precisely why our Ruling Class won’t make the necessary changes – because to make them means that whomever does it loses the next election, big time.  I agree with Stockman on what is wrong and why it won’t be fixed – I don’t agree in his laying a great deal of the blame for changing the budget dynamic on Reagan, mostly because Stockman still carries a grudge from waaaay back when…Reagan rejected some of Stockman’s policy ideas in the mid-80’s and Stockman hasn’t quite gotten over it, but his claim that Reagan brought us to fiscal irresponsibility is absurd given that Social Security – the first step in complete fiscal irresponsibility – came about nearly 50 years before Reagan.  That said, the basic thrust that things are collapsing and that it has been a bi-partisan effort to wreck things is completely true.

What do to?  Stockman advises to get out of stocks and bonds and in to cash – not so sure that is the way to go because our cash is already devaluing and will do more so as time goes on with Bernanke continuing to print.  Still, getting out of debt and having as much cash on hand as possible is a good idea – gold, silver and a supply of canned goods also isn’t a bad idea, either.  The main thing is to be prepared for a very rough time, and not too long in the future.  How long?  I don’t know.  No one does.  Could happen tomorrow – could hold off for five years.   Something will trigger the final collapse – our entire economic world is based upon fake money and debt and in a very real sense, the amount of debt in the world exceeds the ability of the entire world to pay for it. And the thing about debt that can’t be repaid is that it doesn’t get repaid.

I’m not at all worried or frightened about this.  We’re going to pay the piper for 80 years of sheer idiocy in government and economics.  A better and wiser people will emerge from the collapse.

UPDATE:  Stockton, CA, goes bankrupt.

UPDATE II:  Eurozone unemployment hits 12%.  Glad that we haven’t gone down their route of fake money and massive debt…oh, wait…

Can You Guess Who?

Retired Spook15 Comments

I got this idea from a member of the BlogsforVictory Google Group.  I’ve redacted details that would give the answer away.

WITH THE FEDERAL DEBT spiraling out of control, many Americans sense an urgent need to find a political leader who is able to say “no” to spending. Yet they fear that finding such a leader is impossible. Conservatives long for another Ronald Reagan. But is Reagan the right model? He was of course a tax cutter, reducing the top marginal rate from 70 to 28 percent. But his tax cuts—which vindicated supply-side economics by vastly increasing federal revenue—were bought partly through a bargain with Democrats who were eager to spend that revenue. Reagan was no budget cutter—indeed, the federal budget rose by over a third during his administration.

An alternative model for conservatives is [redacted]. President from [redacted], [Redacted] sustained a budget surplus and left office with a smaller budget than the one he inherited. Over the same period, America experienced a proliferation of jobs, a dramatic increase in the standard of living, higher wages, and three to four percent annual economic growth. And the key to this was [redacted] penchant for saying “no.” If Reagan was the Great Communicator, [redacted] was the Great Refrainer.
Following [redacted], the federal debt stood ten times higher than before the [redacted], and it was widely understood that the debt burden would become unbearable if interest rates rose. At the same time, the top income tax rate was over 70 percent, veterans were having trouble finding work, prices had risen while wages lagged, and workers in Seattle, New York, and Boston were talking revolution and taking to the streets. The [redacted] administration had nationalized the railroads for a time at the end of the [redacted], and had encouraged stock exchanges to shut down for a time, and Progressives were now pushing for state or even federal control of water power and electricity. The business outlook was grim, and one of the biggest underlying problems was the lack of an orderly budgeting process: Congress brought proposals to the White House willy-nilly, and they were customarily approved.

The Republican Party’s response in the [redacted] election was to campaign for smaller government and for a return to what its presidential candidate, [redacted], dubbed “normalcy”—a curtailing of government interference in the economy to create a predictable environment in which business could confidently operate. [Redacted], a Massachusetts governor who had gained a national reputation by facing down a Boston police strike—“There is no right to strike against the public safety by anybody, anywhere, any time,” he had declared—was chosen to be [redacted] running mate. And following their victory, [redacted] inaugural address set a different tone from that of the outgoing [redacted] administration (and from that of the Obama administration today): “No altered system,” [redacted] said, “will work a miracle. Any wild experiment will only add to the confusion. Our best assurance lies in efficient administration of our proven system.”

One of [redacted] first steps was to shepherd through Congress the Budget and Accounting Act of [redacted], under which the executive branch gained authority over and took responsibility for the budget, even to the point of being able to impound money after it was budgeted. This legislation also gave the executive branch a special budget bureau—the forerunner to today’s Office of Management and Budget—over which [redacted] named a flamboyant Brigadier General, [redacted], as director. Together they proceeded to summon department staff and their bosses to semiannual meetings at Continental Hall, where [redacted] cajoled and shamed them into making spending cuts. In addition, [redacted] pushed through a tax cut, lowering the top rate to 58 percent; and in a move toward privatization, he proposed to sell off naval petroleum reserves in Wyoming to private companies.

Is there any doubt that history repeats itself?  Read the whole piece here, and pray that another [redacted] comes along soon.

Sequestration Stance

Cluster25 Comments

The anticipated cuts, or more accurately, the slow down in growth rates of federal government spending as a result of the Obama endorsed Sequestration HAS to happen, and if the GOP folds, they will hasten their own demise. Despite the doomsday rhetoric of President Gloom, a 2.4% cut in spending will hardly make planes fall out of the sky, and will be a needed lessen in fiscal restraint that the federal government, and Obama ironically imposed on themselves in 2011. It’s important to note that even after the $85 billion in cuts, the federal government will still be spending more in FY2013 than they did in FY2012, yet Obama and the Democrats will have us believe that the federal government is so lean, so efficient, that the only choice they have will be to lay off first responders and allow children to go hungry – which should also tell you a lot Obama’s priorities. First of all, he doesn’t acknowledge that most first responders are paid for by their local municipalities and not by the federal government, and rather than scale back the Dept. of Education, the Dept. of Energy, or the Dept. of Labor just to name a few of the incredibly bloated federal bureaucracies, he will choose to release prisoners, and let children go without Head Start Programs. Is it possible to have a more divisive, more bitter, more incompetent President, with more contempt for America? I don’t think so. Think about this – wages have been stagnant, if not in decline since 2008, gas prices have nearly doubled, taxes have gone up, GDP has been revised to .1% in Q4 2012 and not expected to be much better in Q1 2013, grocery prices are increasing as a result of fuel prices, unemployment is 8% and really 10%+ if you’re actually counting and business investment in new facilities and employment is on hold. So Obama expects all of us to make do with less, but despite almost doubling federal expenditures in the last 4 years, he wants us to believe that any slight reduction will result in chaos and force him to cut children off. As I said, the sequestration cuts MUST happen but with spineless leaders like McConnell and Boehner, I am not holding out much hope.

One last item to note, our resident liberals have been awfully quiet on threads related to spending, unemployment, and the overall economy, but bring up gay marriage and they are out in force. Just exactly how Obama wants them to be – distracted by issues of little consequence.

Dystopia–In His Own Words.

Leo Pusateri15 Comments

Just prior to the 2008 elections, Barack Obama boldly stated,

“We are 5 days away from fundamentally transforming the United States of America” (October 30, 2008)

Many among my conservative friends took that to be so much fluff; pretty much liberal boilerplate consistent with his whole “Hope and Change” campaign message.  Given, however, Obama’s background, cutting his teeth with the radical leftists/communists of his day (i.e., Frank Marshall Davis, Bernadine Dorn, Bill Ayers, Jeremiah Wright) I believe I was one of the relative few that took him at his word.  Unlike most of America, conservatives such as myself and others who actually took the time to vet Obama, knew that background and worldview mattered, and that Obama’s past gave more than a glimpse of how he intended to govern in the present.

When Obama uttered those words, “.. fundamentally transform America” I knew he meant it. It was Obama himself who stated (emphases added),

“As radical as I think people try to characterize the Warren Court, it wasn’t that radical.  It didn’t break free from the essential constraints that were placed by the founding fathers in the Constitution, at least, as it’s been interpreted and Warren Court interpreted in the same way, that generally the Constitution is a charter of negative liberties. Says what the States can’t do to you; says what the Federal Government can’t do to you, but doesn’t state what the Federal government or State Government must do on your behalf.”  (Barack Obama, June 18, 2001).

There is no question that Barack Obama was unhappy with his perception of unequal distribution of wealth that America so unfairly championed, and that he wanted to transform this nation into something more ‘equitable’ in his eyes.  The question was how, and to what extent.  Just how does one “fundamentally”  transform a nation whose very basis for existence is freedom, itself?  The only feasible answer is to transform that already-free nation, into a nation with fewer freedoms.  Given Dinesh D’Souza’s brilliant insights as to Obama’s worldview engendered by his past, one knew that Obama’s absolute contempt for what he saw as America’s unequal distribution of wealth would result in his promoting policies that would necessarily stifle economic growth.   Obama’s America would no longer be one of unbridled economic opportunity; rather, America would be a nation of egalitarian outcomes, regardless of effort; to coin a phrase, to each, according to his needs; from each, according to his means.  

As a means of bringing about this transformation, America could no longer be a free nation.  No where as free, at least, as it was at the time of he assumed his presidency.  Liberties would need to be forsaken to bring about his vision of utopia.  The free market system would need to be reined in, and done so in no small measure.   Obama would have four years, eight at most, to make this happen.  This transformation would need to be done quickly, and in a big way.

Enter Obamacare, America’s first stop on its train ride to Utopia. Against the wishes of 60-70 percent of Americans, and without the vetting of congressional legislators who rammed through the legislation, the United States Federal Government took control of a full one-seventh of the American economy, which had the net effect of driving up the cost of health care for all involved,  taking away freedom of choice, relegating freedom of conscience incompatible with the party line to irrelevancy, while at the same time having the no-doubt intended effect of casting a chilling pall on America’s ability to sustain economic growth and prosperity.  For those who wish to argue regarding this latter point, how better to right the wrongs of the perceived injustice of unequally-distributed wealth than to stifle the engine that creates such wealth?

As I’ve said, Obamacare is but stop one on America’s train ride to Obama’s Dystopia.  Obama’s seeming assault on everything traditional America has held dear for centuries appears to have taken on epidemic proportions.  Remember- Obama only has three and three-quarter years left.  Those who haven’t yet felt the pinch of his “transformations,” most likely have not yet realized that they, too, have been pinched.   Obama’s willing media accomplices can only cover for him for so long before a critical mass of Americans, admittedly as dull as many of them are, will start to put two-and-two together and finally determine that the hopey-changey unicorn jockey they voted for may actually have had something to do with the plight in which they suddenly find themselves.

Then what?

When the critical mass of Americans finally wake up one morning, to find that they have been played as chumps, they are liable to get a bit–shall we say, testy. When this inevitability finally does come home to roost, The TEA party protests that grew out of Rick Santelli’s historic February, 2009 rant will no doubt look like a series of school pep assemblies.   Such civil unrest would certainly be difficult to quell, and will no doubt be yet another bump in the tracks on the way to Obama’s Dystopian dream.

What to do, what do do? You can’t just sick the military after the troublemakers. Well, you could, I suppose, but then you risk pissing off your fellow travelers who have had a history of contempt for men and women in uniform.

What to do??

Since, at least philosophy- and policy-wise, one can take Obama at his word, one may get a clue as to Obama’s plans by again, studying his own non-TelePrompter inspired rhetoric:

“We cannot continue to rely on our military in order to achieve the national security objectives that we’ve set.  We’ve got to have a civilian national security force that’s just as powerful, just as strong, just as well funded.”   -Barack Obama, July, 2008.

Yeah- remember that phrase?  Neither did a lot of other people.  Like the rest of Obama’s sordid past and rhetoric that if brought to the light of day would have rendered his election impossible, The media (true to their sycophantic nature) pretty much glossed over that little tidbit.  A powerful Civilian security force. Remind you of anyone?

So when you see articles like this, or like this, or like this, and then think, aww–Leo–take off that tinfoil hat!  You’re just blowing smoke.  That would never really happen here.  There’s no way.

Just remember.  I didn’t put those words into Barack Obama’s mouth.

He did.

Allocation of Wealth

Retired Spook40 Comments

On his radio show this morning Glenn Beck played a clip of Iowa Senator Tom Harkin talking about wealth allocation.

“First of all, I want to disagree with those who say we have a spending problem. Everyone keeps saying we have a spending problem,” he said during a discussion on the Budget Control Act of 2011 (which includes the across-the-board spending cuts known as “sequestration”) .

“And when they talk about that, it’s like there’s an assumption that somehow we as a nation are broke,” he added.

Sen. Harkin, who sits on the Appropriations Committee, continued:

Well look at it this way, we’re the richest nation in the history of the world. We are now the richest nation in the world.

We have the highest per capita income of any major nation. That kind of begs the question, doesn’t it? If we’re so rich, why are we so broke? Is it a spending problem?

No, it’s because we have a misallocation of capital, a misallocation of wealth.

It sounded like a great topic for a thread, because, IMO, an understanding of how wealth is allocated represents one of the fundamental differences between Conservatives and Liberals.

So, just exactly how should wealth be allocated?  Should it be the responsibility of government to allocate wealth, as President Obama has maintained?  In a society where the government is the final arbiter of wealth allocation, who is better off, the average citizen or those in charge of allocating the wealth?  Is there, or has there ever been, a society where government allocation of wealth has resulted in a high level of freedom and prosperity?  Are there ANY SOCIALISTS SUCCESS STORIES? 

Since the advent of LBJ’s Great Society and the War on Poverty, trillions of dollars of wealth have been re-allocated, and yet the poverty rate is the same as it was 3 decades ago, and only a couple percentage points lower than it was a half century ago.  It reminds me of one of my favorite Winston Churchill quotes:

“The vice of capitalism is that there is an unequal share of the blessings; the virtue of socialism is that there is an equal share of the misery.”

The other day Watson mentioned that capitalism has been very good to him, and yet he supports a system and a president whose ultimate goal is to destroy capitalism.  That seems to me to be a major disconnect.  Perhaps Watson can explain the rationale behind his position.

 

What OWS Got Wrong…and What We Have to Get Right

Mark Noonan122 Comments

 

I don’t often say that a video is “must see”, but this one is.  It lays out what is wrong with our financial and government system.  Our task is to educate the American people about the fact that what has happened is that Big Government and Big Corporation have got together and screw everything up.  The OWS people were shouting about the banks…and demanding that government fix it!  Government carefully and diligently assisted the bankers in ruining the economy.

Free markets are the silver bullet to fix what ails us – politically and economically.  We must have a revolution so that we can ensure that anyone who wants to participate in either market can do so without let or hindrance from a corporate or government bureaucrat.  If we want to occupy something, then we should be occupying the Federal Reserve and the Department of the Treasury – that would set us on a path back to rationality.

Obamunism: Women, Minorities Hardest Hit

Mark Noonan25 Comments

From CNS News:

Government unemployment numbers for December showed that while the general unemployment rate remained flat at 7.8 percent, unemployment for women and African-Americans rose despite an economy that created 155,000 jobs.

Unemployment for women rose to 7.3 percent in December from 7.0 percent while the rate for African-Americans rose sharply to 14.0 percent from 13.2 percent in November…

Still astounds me that Obama managed to win – there is not a single metric you can bring in which shows genuine improvement since January 20th, 2009.

UPDATE:  And the Obama “my praise is a kiss of death” curse continues to work.

Moral Decay Plus Welfare Equals…

Mark Noonan14 Comments

This – from the Daily Mail:

While many families are worrying about how to afford Christmas this year, one jobless single mother has revealed she receives so much in benefits she has £2,000 to spend on designer gifts, clothes and partying.

Mother-of-two Leanna Broderick plans to buy 20 presents for each of her children, including Burberry and Ralph Lauren outfits, iPads and gold jewellery.

The 20-year-old, who has never worked, claims nearly £15,500 a year in state handouts…

Whatever you do, don’t you dare get mad at the girl.  She’s just doing what she’s been told to do.

She was told it was ok to have sex before marriage, then she was told it was ok to be on welfare…and then the welfare system pays her more than entry-level work and, presto, you’ve got a “welfare queen”.  If you get mad at her then you are just being absurd:  this is the system of incentives provided and she has reacted to them in a perfectly reasonable manner.

And, of course, this does happen here in the United States as well – there are millions here who have no incentive to work because welfare benefits, of various types, are either equal to or greater than what can be earned by entry-level work…and even if you have a circumstance where the welfare is slightly less than a 40 hour a week, minimum wage job, not having to go to work beats going to work if its only a matter of 10-15% total income difference.

Yes, of course it is a disgrace – it is better than a lot of welfare situations where mom is a drug addict or some such (at least she does seem to be treating the kids well), but its still a horrid destruction of a human being, and apt to be repeated in the next generation by her daughters who will likely live by their mother’s example…and may not be so lucky on the drug-addiction issue.  We have, in some areas, several generations of people who live like this – who don’t work, never have worked and don’t even know what working is like.  And as liberal policies go their natural course, more and more people are hooked on welfare of one sort of another and yet more and more people develope a disconnect between work and reward.

There is a way to cure this, but it would take some guts and some willingness to genuinely reform the economy.

The guts part of it is this:

Total welfare benefits – from whatever source – for a physically fit person under retirement age must never exceed 80% of the value of a full time, minimum wage job.  They can be up to 100% of a minimum wage job if the welfare recipient is married and both persons have resided at the same address for 365 consecutive days or longer.  No additional benefits may be provided for children born while receiving welfare benefits.  That will take guts because to propose it is to immediately get howls of “racist!” and “hater!” and other such nonsense thrown at you.

The reform the economy part goes like this:

If we are to restrict welfare benefits like that, then we’d better buckets of entry-level jobs for these people to start working at – and that means manufacturing, farming and mining jobs, so we’d better restructure our economy for production rather than consumption and that will require much smaller government, a hard currency and a high cost for personal debt.

Or, we can just keep going as we are until we reach that tipping point where too many hands are in the till and the whole thing collapses.  That is, at most, four or five years from now.  So we’d better choose wisely…

 

Expanding Middle Class?

Retired Spook15 Comments

There’s an interesting article in the on-line edition of the Washington Post this afternoon. Another in a long line of election post-mortems, but citing a figure that I’ve not seen or heard before:

Romney won voters earning between $50,000 and $100,0000 by 52 percent to 46 percent. That’s less than what Bush got in 2004 (he won that group by 12) but they were 28 percent of the electorate in 2012 and just 18 percent electorate in 2004.

I had to read that a couple time to make sure I was reading it right.  In an economy that virtually everyone admits is the worst recovery from a recession since WW2, the number of people who have moved into the upper middle class has increased by over 55%.  And half as many (percentage-wise) of these upwardly mobile Americans voted for Romney as voted for Bush in 2004.  That made zero sense to me until I thought back to my response to Canadian Observer in the previous thread.  Given that a single mother of 3 making minimum wage has as much disposable income as a married couple with 2 kids making $60,000 a year, that puts a lot more Americans (and Obama voters) in that $50,000 to $100,000 demographic.  There’s probably another explanation, right?

Avoiding the Fiscal Cliff

Retired Spook42 Comments

Well, the agenda media is tripping over itself speculating on how Congress and the President will avoid the fiscal cliff, and what the ramifications are if they do (or don’t).

An on-line AP article today makes some of the most ludicrous statements and assertions I’ve seen in a while, illustrating the fact that they haven’t got a clue as to what’s going to happen — or why.

President Barack Obama and leaders of the lame-duck Congress may be just weeks away from shaking hands on a deal to avert the dreaded “fiscal cliff.” So it’s natural to wonder: If they announce a bipartisan package promising to curb mushrooming federal deficits, will it be real?

Come on, now — this is Washington D.C. where perception is reality, and the MSM is all about creating perception.

Obama and top lawmakers could produce an agreement that takes a serious bite out of the government’s growing $16 trillion pile of debt and puts it on a true downward trajectory.

On what planet could (or would) they do that?  Certainly not this one.  Even during the Clinton administration when the budget was supposedly “balanced”, the debt never went down year on year.  If they taxed the top 2% at 100%, they couldn’t even erase the current deficit, much less “take a serious bite” out of the debt.

Or they might reach an accord heading off massive tax increases and spending cuts that begin to bite in January — that’s the fiscal cliff — while appearing to be getting tough on deficits through painful savings deferred until years from now, when their successors might revoke or dilute them.

Now that sounds more like what we’re accustomed to from our political class.

Historically, Congress and presidents have proven themselves capable of either.

Not recently.  Since 1961 the debt has done nothing but increase.  In all fairness, the biggest jumps came during the administrations of Ronald Reagan ($2 trillion) and George W. Bush ($5 trillion).  But Obama has already exceeded Bush’s total and is likely to exceed that combined $7 trillion well before the midpoint of his second term.

Passing a framework next month that sets deficit-cutting targets for each of the next 10 years would be seen as a sign of seriousness. But look for specifics. An agreement will have a greater chance of actually reducing deficits if it details how the savings would be divided between revenue increases and cuts in federal programs, averting future fights among lawmakers over that question.

Say what?  Can anyone read that and not laugh?

Better yet would be including a fast-track process for passing next year’s tax and spending bills if they meet the savings targets so they can whisk through Congress without the possibility of a Senate filibuster, in which 41 of the 100 senators could kill a measure they dislike.

Is that the same Senate that hasn’t passed a budget in 3-1/2 years?

Raising money from higher rates, closing loopholes or a combination of the two would create real revenue for the government.

As opposed to what? Fake revenue?

The problem is many tax deductions and credits , such as for home mortgages and the value of employer-provided health insurance, are so popular that enacting them into law over objections from the public and lobbyists would be extremely difficult.

D’ya think?

With the price tags of tax and spending laws typically measured over a decade, delaying the implementation date can distort the projected impact of a change on people and the government’s debt.

But it does give the perception that they’re doing something.

Even more questionable are assumptions that overhauling tax laws will boost economic activity and thus produce large new revenues for the government. Many Republicans and ideologically conservative economists contend that’s the case, but most economists say there is no sound way to estimate how much revenue can be generated from strengthening the economy by revamping the tax system. Many believe the amount is modest.

Well then, we are just fluked!

Savings that come from weeding out waste, fraud and abuse, which sounds good but are difficult to find, or rely on one-time sales of federal assets should be treated with suspicion.

Of course — there’s no waste, fraud or abuse in the federal budget.

Deep cuts that take effect in the future, say after Obama leaves office in 2017, might be better than imposing them now and hurting an already weak economy by reducing spending.

Now were talkin’