Archive for the ‘Business’ Category

Warning: Euro May Trigger Global Collapse

Tuesday, November 29th, 2011

What Democracy Really Looks Like

Over the last week, I’ve been watching events unfolding with growing concern, and while I truly hate the idea that I might inadvertently offer myself up as just one more “Chicken Little,” I must in all candor tell you that because the sky is not falling now, do not assume it will not fall tomorrow.  We’ve listened to the media talking heads, the pundits, the analysts, the economists, and even the politicians, and virtually all of them have made rosy predictions and hopeful prognostications for the immediate future, and your federal government feeds this view with its own phony numbers, endlessly amendable and adjustable statistics, and a common lie that consists of telling you: “It’s all going to be just fine.”  As I’ve reported to you within the last few weeks, more downgrades were coming, and banks moved Euro liabilities under cover of FDIC, but now the downgrades are here.  There will be more.  When the Euro falls, it may very well take the United States with it.  The time to prepare has very nearly expired, and there will be no turning back.

Ladies and gentlemen, I am now going to tell you the truth, and I will place no bunting of red, white and blue around it, because you deserve to know it all lest you be left penniless and homeless and starving in the streets, unable to defend yourself from the cold, never mind the brigands that will likely swarm our cities:  If the Euro collapses, the blow-back may not merely damage our economy, but thoroughly destroy it, and there is absolutely nothing we can do but deepen and worsen the results by more delaying tactics.  Businesses are scrambling to come up with options if the Euro collapses, but the truth is that many of them are now in a position from which they will not recover.   The choices you make now may mean the literal life or death of you, but it’s important that you know how we arrived here so that if ever there is a chance to arise anew, you will already know the answer.  Even now, the statists of Europe are seeking ways to loot you. One world government will come riding in on the back of this nightmarish trojan horse.

It is a truism that few wish to acknowledge that one cannot consume more than one produces without eventually becoming subject to the sort of collapse we now face.  It goes for nations as well as people,  and just as people can hide the growing disparity between their financial underpinnings and their lifestyles for a time, nations can do so, and for even longer and to a greater degree because they can pilfer the value of the few still producing among their citizens.  The problem is that just like individuals, even nations and unions of nations run afoul of nature’s basic truism requiring one to produce at least as much as one consumes.  Herein lies the sickening truth of the impending Euro collapse, and the collapse of all those who have tied themselves to the Euro, including the United States.  For far too long, far too many of us have lived without producing while others camouflaged their bankruptcy, willingly or [more often] unwillingly carrying their burdens.  No nation can survive that.  No people can sustain that.

The single currency of the European Union was advertised to make them more competitive as a trading bloc with the United States and Asia.  In truth, that’s not the whole story.  The Euro was also devised as the means by which to buy a little more time before the welfare states of Europe failed.  No rational person ever thought otherwise, and every politician from Rome to Madrid to London to Paris and Berlin has known this for two generations or more.  Your politicians right here in the good ol’ US of A have known it too, and yet when they had a chance to do something to change it, they instead accelerated it.  You might ask: “Why?”

The answer has ever been the same, and it is the endless pursuit of power at the cost of any and every principle.  This ambition has blinded mankind almost from the very start of the first civilizations.  In our modern society, if you think politicians are the greatest bribe-takers, I urge you to think again: Modern politicians are the greatest source of offers in bribery but the greatest recipients are we the people.  You wonder who is guilty?  He who offers a bribe is powerless in the face of rejection, but he who accepts that bribe is guilty for all his days.  In small increments, and in bits and pieces, the people of Europe were convinced to surrender their liberty in exchange for small bribes.  Over time, the bribes became so large that to maintain them demanded more and more from the producers, until the relative few producers began to join the gravy train.  While they bribed your silence and your complicity with the get from your neighbors’ pockets, be assured that they have been busily lining their own.

The Euro was concocted to hide this.  All those nations whose fiscal problems are now manifest have always been unstable, and it’s because successive generations of politicians in those nations have been carrying out this sort of bribery of its citizenry from time immemorial.  The French revolution was a Marxist affair, though not known by that name in those days, and nations such as Greece, Italy, and Spain haven’t been fiscally responsible for centuries.  The disease is not heritable, but it often visits subsequent generations, because it is born of a bad idea that is passed from one to the next.  That idea is statism.  Statism is the ruin of mankind, and always has been, because its fundamental claim is that man exists to serve the state before himself.  Whether statism took the form of Monarchy, Theocracy, Democracy, or some brand of Totalitarianism, it has ever been the bane of human existence, and yet no idea has more staying power among people than this one.  It plays upon one of mankind’s greatest weaknesses:  The temptation of covetousness and envy, born ever of sloth.  It is enabled  by the deadliest sins against nature, or nature’s God.  It offers the false promise of a life without discomfort, effort, or pain, but in the end, it returns only misery.

A little more than a century ago, this idea began to catch on even in  America.  It has slowly grown as a cancer, and it has spread its tendrils through every community, on every level, and in all things.  We’ve been hiding it, too.  This disease has its own fuel, and the Federal Reserve provides it, and not surprisingly, has been providing it for most of the time in question: Easy money.  Low interest rates and plentiful credit has made this possible.  Consider the individual who runs up a pocket-full of credit cards, and struggles to make the monthly minimum payments.  That’s our nation.  Just as a weak-minded, or necessity-driven person can quickly run into debt to a dangerous level, so too can a country, and just as the easy availability of credit can act as an inducement for an individual, so does it work as a great temptation to nations.  Nations fall when they permit politicians to bribe them with credit.  Look around you: How many votes have been bought by a budget that is nearly two-thirds entitlement programs?

As has been reported this week, our own Federal Reserve loaned out over $7 Trillion at impossibly low interest rates.  That’s half the GDP of the United States, in loans.  Yet you may rightly ask:  Where does the Fed get the money?  Answer: It loans it into existence, i.e., it prints it.  Only the promise of the debtor to pay gives it any value, but if that debtor defaults, well, the value of the dollar is diminished accordingly, but even if the debtor makes payments, there is always risk attached, and that risk is shown in inflation.  This is why the Credit rating of the US Government has been such a big deal:  It is the single largest debtor, and substantially so. As our government looks less and less likely to be able to repay its debts, while it continues to borrow money at an increasing pace, what do you suppose will happen to the value of your money?  Why did Thanksgiving dinner cost an average of 13% more this year than last?  Next year’s will cost 20% more, or worse.

This is the real truth of this situation, and unless and until you are ready to confront it, and to reject the myriad bribes from politicians, you are going to see things grow much worse.  Perhaps most frightening, they may have successfully engineered not only the collapse of the Euro, but also the Dollar, and every other major currency on the planet, but what they will offer as a “fix” is a global currency that will make of us all slaves to the same masters.  They will offer you more bribes, or at least threaten to take away the ones you currently enjoy, all so you will go along.

Ladies and gentlemen, make no mistake about it:  With the current crisis ready to explode in Europe, and with the state of our own economy, under the willfully absent leadership of Barack Obama, we are waiting on the edge of collapse.  This may be a most un-Merry Christmas, and it only promises to worsen.  If we somehow survive as a nation, it will be surprising, but it will only have been possible if we reject calls for a global currency even at the expense of the bribes we are now so accustomed to taking that we believe them to be our entitlements.  From now until then, you can spend your time in contemplation: Do you prefer life as a slave?  Many of your neighbors will say “yes” without flinching.  Somehow, somewhere, we must find the strength to say “No.”   Prepare, my friends, and by the strength of your preparations may the republic endure.

Possible Euro Collapse Sparks Civil Unrest Fears

Sunday, November 27th, 2011

Prepare For the Worst

Those who have been paying attention have known the Euro is in deep trouble, and much of it stems from the way in which is was created.  Too many member states were admitted which had currency that was overvalued for the merger, and they’ve done nothing to curb ridiculous fiscal policies in those countries.  This includes nations such as Greece, Italy, Portugal, Spain, but also to a lesser degree, France.  Now, it’s time to pay the piper, and predictably, nobody wants to do so.  Governments in Europe are now forced to consider what will happen if the Euro falls and the member states wind up reverting to their prior forms of currency.  Some estimates suggest that GDP would decline in Europe among member states by as much as half, or more, and that widespread unemployment on a scale that would dwarf any previous depressions in scale and depth.  In short, they’re now planning for a calamity, complete with riots and revolutions, and the reason is simple: It’s now a very real possibility. From a story in the UK Telegraph:

The Financial Services Authority this week issued a public warning to British banks to bolster their contingency plans for the break-up of the single currency.

Some economists believe that at worst, the outright collapse of the euro could reduce GDP in its member-states by up to half and trigger mass unemployment.

Analysts at UBS, an investment bank earlier this year warned that the most extreme consequences of a break-up include risks to basic property rights and the threat of civil disorder.

“When the unemployment consequences are factored in, it is virtually impossible to consider a break-up scenario without some serious social consequences,” UBS said.

Of course, many Americans are not moved by these tidings, somehow believing that we are insulated from a European crisis, but nothing could be further from the truth.  If such drastic circumstances arise in Europe, the effects will be global, and so will be the civil unrest that accompanies it.  This is the  kind of calamity from which there is virtually no escape, anywhere on Earth.  In such an environment, not only would our own exports to Europe would collapse, but also we would find our own currency in free-fall because we have so thoroughly tied it to the Euro.  The defaults alone would wreck our own currency, and leave the United States in a similar situation.

Reuters is now carrying a story about the French and German effort to establish some fiscal controls to stave off a calamity, but the truth is that this will likely be too little, too late. Some authorities realize that this will be a stalling tactic at best, and are using the time it may buy to prepare for what is increasingly being seen as an inevitable collapse. From the Telegraph:

A senior minister has now revealed the extent of the Government’s concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time.

“It’s in our interests that they keep playing for time because that gives us more time to prepare,” the minister told the Daily Telegraph.

Recent Foreign and Commonwealth Office instructions to embassies and consulates request contingency planning for extreme scenarios including rioting and social unrest.

As is now obvious, this is all a play for time.  They’re buying time, but they’re not going to save things, and the Europeans seem to know it.  The question thus becomes:  What is our own government doing to prepare?  What are they telling you to do in preparation?  Nothing.  Your own federal government is behaving irresponsibly in the face of this looming crisis.

For three years or more, the hand-writing has been on the wall, and our own government has obfuscated and lied about the direction of things, but has done little to prepare the American people for the possibilities now in the offing.  Let me suggest to you that the recent sporadic reports of spikes in the purchase of survival supplies is an indicator that the American people have begun to figure it out without governmental warnings.  No rational person can examine what’s been happening on the global economic and financial front and not have some sense of the very real dangers now accumulating.  It remains a prudent course of action for Americans to prepare for any sort of emergency, but with the real possibility of complete Euro-zone collapse now seemingly imminent, prudence would dictate an uptick in preparedness planning.  Our own currency has been tied too closely to the Euro currency to avoid the consequences of its collapse.

Obamanomics Delivers Worst Turkey Since 1932

Saturday, November 26th, 2011

One Turkey Gets Reprieve; Rest Get Axe

Nobody is really surprised by this development, but CNBC dutifully reports that this Thanksgiving week was the worst for the markets since 1932.  On the heals of miserable economic performance, and with all that has happened in Europe, it’s not likely to improve any time soon.  The Euro is on the verge of collapse, as US-based investors continue to balk at European banking institutions, and as they slide over the precipice, things aren’t looking any better here at home.  As I’ve explained before, our own banking system has thoroughly tied itself to the European mess that a significant collapse there will tend to spread its tentacles to this country in rapid fashion.  Perhaps in the worst sign of the day, now comes an early report that Black Friday spending by consumers was altogether flat.

No prolonged, significant recovery can commence until energy prices are brought under control, and as is now obvious, the only way to combat this in any sustainable fashion is to unleash domestic energy production.  Alas, the Obama administration is strangling our energy production, using EPA regulations to shut down coal-fired electric plants with no replacement of lost capacity.  Barack Obama is doing for the nation what his party first inflicted on California.  Rolling black-outs will likely become the norm next summer.  An economy like ours can never attain its most efficient stride under such a regime. Wealth and job creation require production, and production of anything at all requires energy.

Let us be honest enough to admit that we cannot recover while our President and his administration maintain their current course.  Since they are not likely to change course, we are stuck with this miserable economy.  It is for this reason that I believe that Barack Obama will go down to massive defeat in 2012.  Whomever replaces him, it will need to be an actual conservative, who will push for energy production, and who will act to lessen the regulatory burdens on the people of the United States.  Americans have been adaptive and creative people, but no people can be flexible enough to live on nothing, with no resources, and no energy.  This may be the most important lesson of the Obama administration:  You can’t make something out of nothing.  People who are accustomed to making lemonade have found that under this president, unless you happen to be one of those connected cronies, there aren’t even lemons.

The other thing we are going to be forced to address is the welfare state.  The welfare state in all its myriad forms has become a vast and overpowering drag on the economy of the United States.  Non-defense spending has exploded under Obama, and while many look to the defense budget when it comes time to swing the cutting axe, the truth is that the welfare state consumes fully two-thirds of our budget.  It is this spending that accounts for most of the growth in the federal deficit these last three years, and the time is rapidly approaching when we will be forced to choose: Welfare spending or economic growth.  Some will wonder what one has to do with the other, but it’s simply understood in this way:  Welfare-state spending is squeezing out private production and economic activity.  For far too many Americans, the welfare state has become a viable permanent alternative to work.

Barack Obama will be remembered for many things, and very few of them will be good.  When this President leaves office in January 2013, there can be some hope of a turnaround.  Until then, the American people are going to be made to suffer.  On the world stage too, Barack Obama has been a miserable failure, and with all the promises about making America more respected in the world, all this President has done is to multiply the contempt with which we are viewed.  If we are to have growth, and if we are to have hopeful economic times, we must replace this President and his band of cronies.  Like Sarah Palin, I believe “November [2012] can’t come soon enough.”

Tea Party Opposes Occupy Black Friday with BUYcott

Thursday, November 24th, 2011

Now They Have Opposition

In an interesting development sure to finally put the lie to the notion that the Tea Party and the Occupy Wall Street crowds are similar, one Tea Party group has decided enough is enough with all the “Occupy” nonsense, and is planning to support stores by encouraging the public to shop like crazy on Friday in opposition to the “Occupy Black Friday” boycott aimed at publicly traded retail outlets.  The Occu-pests don’t want you to buy from corporate America, but the truth is that they’re actually trying to stall economic recovery in order to foment revolution.  It’s a maniacal plan, but it tells you a good deal about the motives of the two groups.  The Occupiers want to use the economy for political purposes, and they wish to make it worse rather than better.  Meanwhile, the Tea Party, largely a conservative-minded, guided by a generally pro-capitalist philosophy, is trying to help the economy recover.

One of these groups is concerned with the economic hardships the American people are enduring under Obama, while the other intends to make things worse in order to inflame the situation and further empower Obama.  If it wasn’t clear to you before, it certainly should be after this debacle.  According to the cynical politics of Washington DC, the Tea Party should be trying to make the economy worse in order to hurt Obama at the polls next year,  but that’s not what drives the Tea Party.  Instead, they are sincere Americans who want to create a rising tide that will lift all boats.  The Tea Party is not a destructive organization, but is instead made up of Americans who believe in creating wealth because they understand that to create jobs, you must create wealth, and you must aggregate capital.  The Tea Party wants the country to rise, and to do that, people must engage in commerce.  The group Liberate Philadelphia/Liberate America put out a statement on their BUYcott. From their statement:

“At a time when our economy is most fragile and ratings agencies are talking about another downgrade of the U.S. credit rating, it’s completely irresponsible for Occupy Wall Street to attempt to bring the U.S. economy to a halt on the busiest shopping day of the year,” says Liberate organizer, John Sullivan, spokesman for the Cherry Hill Area Tea Party.

Meanwhile, the Occupiers now intend to punish the economy.  They are focusing on Malls and also on Corporations, claiming to make a distinction between small businesses and publicly traded firms, but the problem with this argument is two-fold:  First, many of the shops and stores in any mall are small businesses. Second, corporations provide jobs to millions of Americans.  What sort of lame-brain pretends otherwise?  Black Friday often causes those retailers to spend more money on employees, hiring seasonal workers, and paying additional overtime to current employees, almost all of which is converted into spending in the economy.  Particularly at this time of year, anything that boosts employment and wages in the private sector can only be considered a positive thing, unless you’re a ne’er-do-well Occu-Pest or leftist, and these anti-capitalists (despite their disingenuous claims to the contrary) are intentionally setting out to wreck the biggest shopping day of the year.

There’s no doubt that we have a serious problem in the economy, and on Wall Street, but most of that problem originates from Government’s tinkering in the free market, and from grotesque cronyism.  If the Occupiers want to make a real difference, they’d Boycott Obama.  They’d help the Tea Party Occupy the White House.  Unfortunately, they’re not that kind of movement, and their intentions are clearly anti-free market, anti-capitalist, and anti-liberty.  I agree with the Tea Party organizers who wish to have a BUYcott tomorrow:  Let us elevate ourselves without the government.  If the government and their shills in the media intend to flat-line this economy, and they’ve cooked up the Occu-pests to help, I say we oppose them.   I’m not ordinarily the sort to go Black Friday shopping, but tomorrow I will, because I believe in the free market, and I’m going to damned-well engage in it irrespective of, and in spite of the Occupiers, Obama, and all their miserable cronies.

US Cranes Company Policy: No Hiring Until Obama Gone

Wednesday, November 23rd, 2011

No Work Means No Jobs - Thank Obama

You might think this is a joke, and it sounds outrageous, but imagine how poor Bill Looman feels:  It’s his company and his policy.  Looman began posting signs on his trucks and properties roughly six months ago, but now it’s gone viral.  Looman explained that it’s not that he’s actively choosing to refuse to hire but that he says it’s not possible to hire under the economic condition the Obama administration’s policies.  In short, this isn’t the course he would have chosen, but it’s simply not economically feasible to hire.  I’m certain thousands of other businesses share his sentiment, and the employment numbers reflect this reality.

The same philosophy that brought us the disaster of Obamanomics has put forth the notion that businesses ought to hire as a matter of some form of charity.  What such wizards don’t quite grasp is that this is what has gotten us into the trouble in the first place.  The housing market collapse was largely due to giving people loans and mortgages for which there was little chance they would repay based on credit history, as an act of charity.

This sort of policy-making is an attempt to short-circuit the free market, but it never works.  Those who argue Looman should hire even though it would be an economic detriment to his company simply haven’t grasped the fact that if companies implement that policy, it will destroy more companies, and once they’re destroyed, their current employees will be joining the proposed new employees in the unemployment line.  Hiring people for the sake of hiring them won’t fix the economy, either, because growth is fueled in part by increases in productivity which doesn’t improve with idle workers hired for the sake of “giving somebody a job.”

Companies aren’t charities.  They exist to make money, and create wealth, and when they are able to do so, jobs are created not as the cause of the company’s prosperity, but as an effect of its growth.  This is the fact Looman’s signs are intended to convey: You can’t hire workers when you have no work for them to do.  That seems obvious to those of us who confront reality daily, but those in the Obama administration who continue to push radical, job-killing policies simply don’t understand economics or free  markets, or worse don’t hold prosperity of the American economy as the goal for which they’re working.

Bill Looman, US Cranes LLC

11Alive, an NBC affiliate, sent a reporter to Waco, GA, to speak to employer Bill Looman.  Looman, a Marine Corps veteran explained “Can’t afford it,” Tuesday evening. “I’ve got people that I want to hire now, but I just can’t afford it. And I don’t foresee that I’ll be able to afford it unless some things change in D.C.”

He went on to say: “I just spent 10 years in the Marine Corps protecting the rights of people… the First Amendment, and the Second Amendment and the [rest of the] Bill of Rights,” he said. “Lord knows they’re calling me at 2 in the morning, all night long, and voicing their opinion. And I respect their right to do that. I’m getting a reaction, a lot of it’s negative, now. But a lot of people are waking up.”

Looman is now being harassed by some who are unhappy with his signs, but he seems undeterred.  See a video at 11Alive Here.

Ten Reforms to Save America: Reform Number Four

Saturday, November 19th, 2011

Is This How It Works?

Whatever we may do about the limiting of congressional terms, or the length of service of Congressional staff, one of the main reasons to tackle that problem is the revolving door between Congress and the lobbying interests in Washington DC.  Whether representing trade groups, corporations, unions, or other groups, the problem is that the lobbyists often know the lay of the land, both physical and political, better than many members of Congress.  Too often, members and staff leave those offices to become lobbyists, and with equal frequency, we find lobbyists becoming Congressional staff.  This cozy relationship will be ended only by doing something drastic:  We must enact a lifetime ban on lobbyists from serving in government, and government  officials or staff from going to work in the lobbying racket.

Once again, I can hear the squealing of all the pigs at the DC troughs: “You can’t do this to us!”  Yes, we the people can.  When most Americans think of politicians leaving office for the private sector, they think of them returning to work in some profession or field that takes them back home, away from Washington DC.  All too often, when politicians depart government service, where they land is in some lobbying firm.  This frequently applies to staff too.  For most Americans, this isn’t considered to be “private sector employment,” but instead merely “public sector looting.”  It’s part of what makes Washington DC stink of corruption, and most Americans suspect it is the reason we have so many complex and convoluted laws.  Naturally, the American people are right about that, but in most cases, they have only the a glimpse of how thorough the corruption is.

The other problem is that the American people have been conditioned to view lobbyists as the source of the problem.  They’re not.  Lobbyists are a symptom just like the runny nose, achy muscles and spiking fever that tells you you’ve been infected with influenza.  The virus is already there, and while you can treat the symptoms, and it will at least make you feel better, your body still must combat the illness or you’ll never recover.  Everybody harbors and image in their mind’s eye of some lobbyist, a briefcase full of cash, and some elected or appointed official waiting greedily to be in receipt of the loot.  The problem is, this isn’t what actually happens in most cases.  Outright bribery of that sort would be caught fairly easily, and the people involved would be dealt with under existing law.  It’s not to say this never happens, because it does, but that’s a fairly stupid politician or lobbyist who gets caught in that fashion.

Instead, there are other ways to enrich themselves, and most involve a kind of extortion racket, or kick-backs, or insider information to be used for personal profit.  Imagine you’re a business, and imagine  the business you’re in is one regulated in some fashion by the federal government(but which industry isn’t?)  Imagine that some politician introduces a bill that you know will effectively destroy your company, or make it easier for a competitor to displace you in the market?  Your inevitable response would be to play self-defense, and you would do that by lobbying Congress.  You might contribute to campaigns and parties, but in all cases, you’d try to make happy everybody who holds your business in the palms of their hands.  This kind of extortion racket is common, and what you discover is that the number of legal contributions “enticed” by this method is scandalous.

Naturally, this works the other way too, as a matter of offense.  Do you need a “competitive edge” in the market?  No problem for Congress.  They just pass a bill that either directly or indirectly fouls the business of your competitors, and “Bingo!” To ensure a Presidential signature, you make sure the provision is attached to the most popular legislation, or at least something certain to get the approval of those who run the show.

Imagine yours is a large concern.  One way to pay off folks for their good deeds on your behalf is to provide them information that will enable them to make a killing in the markets.  A bit of info here, and a little investment there, and before you know it: Instant Congressional millionaire.  Of course, the member just happened to “get lucky” in the market.  Consider how frequently members of Congress get in on the Initial Public Offering of stock in a company commencing public trading.  It’s obscene.  It’s not easy to get in on an IPO for most people, and insider information is frequently a good head-start.  Some have suggested that Congress ought to be forbidden from investing in things related to that on which they’re currently legislating, but the problem with this approach is that the Congress now legislates on every matter under the sun.

Apart from the ban on lobbying, there is something more we can add to this reform, and that is to require members of Congress and their staff to convert their investments into cash savings.  That way, as the value of the dollar goes, so goes the value of their savings.  Under such a regime, the Congress would have every reason to safeguard the value of the dollar by prudent fiscal policies, and you could bet they’d be eye-balling the Federal Reserve a good deal more closely.  Many suggest the use of blind trusts, but the problem is that most things called “blind trusts” aren’t really blind at all, as Governor Sarah Palin recently pointed out in an op-ed in the Wall Street Journal.

Of course, all of these suggested reforms still only address part of the issue.  The biggest part of the problem is that Congress is involved too deeply in business at all levels, and in all respects.  This has become the biggest problem we face: As long as Congress can stick its nose into any business for any reason at all, to impose their notion of “regulating interstate commerce” as they see fit, under whatever outrageous definition they concoct, and with courts willing to interpret the Constitution that way, we’re in serious trouble.  It means they will always have some way to dig their claws into not only business, but also into our lives and our pockets.  We need a wall of separation between business and state at least as thorough as the one that’s been erected between church and state.  If we wish to save America, we’ll need to tackle this too.

 

 

Barnhardt Capital Management Closes Down With Stunning Announcement

Friday, November 18th, 2011

Ann Barnhardt

Ann Barnhardt has run her grain and livestock brokerage for years, but now, she’s “Going Galt.”  This reminds me very much of the character “Midas Mulligan” from Ayn Rand’s Atlas Shrugged, and it’s no coincidence that she has chosen this moment to shut down her company.  After years of watching the Obama administration and its cronies looting the capital markets, Barnhardt has made the moral decision to shut down operation since in the current environment, she can no longer safeguard her clients’ capital against the predatory tendencies of this administration, and its henchmen in the markets.  As I have told you before, this is being done intentionally: Our country is being destroyed by design.

Apparently, Ms. Barnhardt is the first courageous broker to say this flatly, and to make plain that she no longer has confidence in the rule of law since the federal government now makes it up as it goes along.  In such an environment, nobody can do business, because every transaction is subject to the whimsical prerogatives of government bureaucrats, and nothing is certain.  If contracts have no meaning, because they will not be enforced, and if government can reach back in time to retroactively steal funds, there is no safe market anywhere any longer.

Rather than tell you what Ms. Barnhardt said, I’m going to provide her notice completely:

BCM Has Ceased Operations (source)
Posted by Ann Barnhardt – November 17, AD 2011 10:27 AM MST

Dear Clients, Industry Colleagues and Friends of Barnhardt Capital Management,

It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. After six years of operating as an independent introducing brokerage, and eight years of employment as a broker before that, I found myself, this morning, for the first time since I was 20 years old, watching the futures and options markets open not as a participant, but as a mere spectator.

The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy.

The futures markets are very highly-leveraged and thus require an exceptionally firm base upon which to function. That base was the sacrosanct segregation of customer funds from clearing firm capital, with additional emergency financial backing provided by the exchanges themselves. Up until a few weeks ago, that base existed, and had worked flawlessly. Firms came and went, with some imploding in spectacular fashion. Whenever a firm failure happened, the customer funds were intact and the exchanges would step in to backstop everything and keep customers 100% liquid – even as their clearing firm collapsed and was quickly replaced by another firm within the system.

Everything changed just a few short weeks ago. A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.

I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg. There is massive industry-wide exposure to European sovereign junk debt. While other firms may not be as heavily leveraged as Corzine had MFG leveraged, and it is now thought that MFG’s leverage may have been in excess of 100:1, they are still suicidally leveraged and will likely stand massive, unmeetable collateral calls in the coming days and weeks as Europe inevitably collapses. I now suspect that the reason the Chicago Mercantile Exchange did not immediately step in to backstop the MFG implosion was because they knew and know that if they backstopped MFG, they would then be expected to backstop all of the other firms in the system when the failures began to cascade – and there simply isn’t that much money in the entire system. In short, the problem is a SYSTEMIC problem, not merely isolated to one firm.

Perhaps the most ominous dynamic that I have yet heard of in regards to this mess is that of the risk of potential CLAWBACK actions. For those who do not know, “clawback” is the process by which a bankruptcy trustee is legally permitted to re-seize assets that left a bankrupt entity in the time period immediately preceding the entity’s collapse. So, using the MF Global customers as an example, any funds that were withdrawn from MFG accounts in the run-up to the collapse, either because of suspicions the customer may have had about MFG from, say, watching the company’s bond yields rise sharply, or from purely organic day-to-day withdrawls, the bankruptcy trustee COULD initiate action to “clawback” those funds. As a hedge broker, this makes my blood run cold. Generally, as the markets move in favor of a hedge position and equity builds in a client’s account, that excess equity is sent back to the customer who then uses that equity to offset cash market transactions OR to pay down a revolving line of credit. Even the possibility that a customer could be penalized and additionally raped AGAIN via a clawback action after already having their customer funds stolen is simply villainous. While there has been no open indication of clawback actions being initiated by the MF Global trustee, I have been told that it is a possibility.

And so, to the very unpleasant crux of the matter. The futures and options markets are no longer viable. It is my recommendation that ALL customers withdraw from all of the markets as soon as possible so that they have the best chance of protecting themselves and their equity. The system is no longer functioning with integrity and is suicidally risk-laden. The rule of law is non-existent, instead replaced with godless, criminal political cronyism.

Remember, derivatives contracts are NOT NECESSARY in the commodities markets. The cash commodity itself is the underlying reality and is not dependent on the futures or options markets. Many people seem to have gotten that backwards over the past decades. From Abel the animal husbandman up until the year 1964, there were no cattle futures contracts at all, and no options contracts until 1984, and yet the cash cattle markets got along just fine.

Finally, I will not, under any circumstance, consider reforming and re-opening Barnhardt Capital Management, or any other iteration of a brokerage business, until Barack Obama has been removed from office AND the government of the United States has been sufficiently reformed and repopulated so as to engender my total and complete confidence in the government, its adherence to and enforcement of the rule of law, and in its competent and just regulatory oversight of any commodities markets that may reform. So long as the government remains criminal, it would serve no purpose whatsoever to attempt to rebuild the futures industry or my firm, because in a lawless environment, the same thievery and fraud would simply happen again, and the criminals would go unpunished, sheltered by the criminal oligarchy.

To my clients, who literally TO THE MAN agreed with my assessment of the situation, and were relieved to be exiting the markets, and many whom I now suspect stayed in the markets as long as they did only out of personal loyalty to me, I can only say thank you for the honor and pleasure of serving you over these last years, with some of my clients having been with me for over twelve years. I will continue to blog at Barnhardt.biz, which will be subtly re-skinned soon, and will continue my cattle marketing consultation business. I will still be here in the office, answering my phones, with the same phone numbers. Alas, my retirement came a few years earlier than I had anticipated, but there was no possible way to continue given the inevitability of the collapse of the global financial markets, the overthrow of our government, and the resulting collapse in the rule of law.

As for me, I can only echo the words of David:

“This is the Lord’s doing; and it is wonderful in our eyes.”

With Best Regards-
Ann Barnhardt

Ladies and gentlemen, make no mistake about it: This is a sign of the end of our way of life as we have known it.  When diligent people assess the state of the country, the government, and the law, arriving at the conclusion that there is no basis for confidence in any of these, and making the moral choice to cease doing business, you are looking at the end of a civilization.  We have known for more than a century that the statists would use our own financial markets, our banks, and our commodity markets against us as the trigger for total collapse, but now that day has arrived.  Ms. Barnhardt’s courage in stating the truth should be commended, but her most important points must be understood in the context of a woman who has stopped.  She has refused to participate in a market dominated by looting, graft, corruption, and lawlessness, where government does nothing to uphold law, and instead merely makes law on any basis it decides, by dictates.

I am proud of Ms. Barnhardt, and for those who think she has quit, I would say to you that she hasn’t quit.  She’s made the moral choice that one cannot deal in a market without laws and without fixed, predictable rules that will hold up in all conditions.  Put another way, imagine sitting in at a game of Blackjack, where the dealer makes up the rules, or changes them, without any rhyme or reason except to take more of your money.  How long would you remain at such a table?  What Ms. Barnhardt has done here is to tell the dealer to shove it.  I don’t blame her.  She’s my new hero, and I can only hope men and women of courage throughout the market will now join her.

Obama and His Crony Connections Run Wild

Sunday, November 13th, 2011

All The President's Friends

We’re all familiar with the story of Solyndra, and a number of the other firms connected to the Obama administration and the “Green Jobs” programs that have been little more than a slush fund for Obama’s donors. Now enter Siga Technologies, with controlling stock held by Ronald O. Perelmaan, longtime Democrat Party donor and Obama supporter. The Los Angeles Times is now reporting that Siga was given a no-bid contract worth nearly one-half billion dollars by the Obama administration, and that the circumstances of how that happened seem to be less than above-board.  While vaguely reminiscent of the Perry-Gardasil scandal, this is much larger and has even more far-reaching potential consequences.   The real scandal lies in the method by which the contract was secured.   The administration replaced its own lead negotiator in order to push this contract through.   From the LA Times article:

When Siga complained that contracting specialists at the Department of Health and Human Services were resisting the company’s financial demands, senior officials replaced the government’s lead negotiator for the deal, interviews and documents show.

When Siga was in danger of losing its grip on the contract a year ago, the officials blocked other firms from competing.

This is a clear sign of serious corruption, and along with other cases involving Barack Obama, it puts the lie to the meme that this administration pushed that it would be “the most open and ethical administration in history.”  Perhaps most stunning about this case, the drug in question hasn’t even been tested, meaning the tax-payers could be footing the bill for something that is completely worthless:

Siga’s drug, an antiviral pill called ST-246, would be used to treat people who were diagnosed with smallpox too late for the vaccine to help. Yet the new drug cannot be tested for effectiveness in people because of ethical constraints — and no one knows whether animal testing could prove it would work in humans.

What we have here is another Solyndra-like instance of tax-payer funds going to purposes of questionable or even seriously flawed merit, conveniently to companies closely tied to this administration.  When Sarah Palin raised the alarm about crony-capitalism, few outside the cesspool of Washington DC had any idea just how bad and how commonplace these sorts of tax-payer rip-offs had become.  Apparently, it’s much worse than all but the most wary observers might have guessed.

Meanwhile, ABC News is reporting that the administration knew they would face blow-back over Solyndra and other Energy Department loan guarantees and contracts.  CBS News’ 60 Minutes is supposed to be devoting its show on Sunday evening to the entire question of Crony Capitalism.  Given CBS’ tendency to be in the tank for Democrats, I expect them to downplay the matter, or at least spin it in some way favorable to Democrats and President Obama.

It’s what they do.

National Defense Faces Severe Cuts

Monday, November 7th, 2011

A Scalpel or a Sword?

As you will may remember from the Debt Ceiling debacle in early August, the deal then worked out has some automatic triggers.  If the Super Committee created by the legislation fails to produce sufficient spending cuts, those triggers will kick in and cuts will be forced upon Congress.  The biggest target of these cuts is the defense budget, and as the New York Times is reporting,  it’s Leon Panetta who is now considering what those cuts will be.  This is one of the most despicable parts of our current budget morass, and it’s astonishing that nobody much seems to notice:  One of the few legitimate functions of government is the national defense, and yet among all the things to be cut, defense will be hit the most deeply.  I have no problem with an examination of the necessities of our defense spending, but I’m also aware that while government spends money on all sorts of things for which it has no actual constitutional authority, defense is clearly one of the budget categories for which the federal government exists.  In part, this is the result of the can-kicking in which Boehner and House Republicans joined by making their deal with the devil in August, but it’s also the built-in result of generations of governmental growth in other areas of expenditure.

Defense spending now stands at approximately $700 billion.   That’s an astonishing number that is as large as the entire federal budget just thirty years ago.  Part of that number owes to our engagements in Afghanistan and Iraq, with the actual baseline spending for defense being $530 billion.  That’s still an incredible amount of money, but it is only $130 billion(yes, “only”) more than the defense budget at the height of the Reagan administration, but in inflation-adjusted dollars, it’s actually less.  Defense constitutes the largest single line-item in the discretionary portion of the budget, but the entitlements, in the non-discretionary budget, have begun to dwarf the spending on defense.  Social Security is a larger program, and Medicare and Medicaid together exceed the total defense spending.  It should seem odd to Americans that programs for which there is no clear constitutional authorization are considered “non-discretionary,” while programs that are most definitely among the legitimate roles of our federal government are considered “discretionary.”

What this means is that we don’t have a choice on a year-to-year basis about those items in the non-discretionary budget.  We are going to spend to support them, because previous legislation has mandated it.  Discretionary budget items are those that are adjusted on an annual basis, and not necessarily tied to previous legislation.  You can look at it this way for simplicity’s sake:  Non-discretionary spending is comprised of entitlement programs.  Discretionary spending is comprised of everything else.  In our federal budget, non-discretionary spending is roughly twice the size of discretionary spending.

I am certain defense can be trimmed without hampering the nation’s immediate defenses, but I am less certain that over the long run, we can maintain a force capable of deterring and repelling enemies around the globe.  Even in the midst of a deep recession, we are having difficulties with recruiting and retention of military personnel.  This is because just like any other large organization, most of the defense budget is actually spent on salaries and benefits for our Soldiers, Sailors, Airmen, and Marines. In precisely the same way that the CEO of a large corporation will make cuts to employees first, mainly because it’s the biggest single operational cost, the Defense Department suffers from the same basic problem: Service-members cost a great deal, and a good deal more than their already pathetic pay and benefits represent.  Training costs are phenomenal, and the costs of supporting units in the field are huge.

Many will suggest, naively, that we simply “buy a few less $400 toilet seats.”  While that makes for a good laugh line, the reality is that the defense budget has finally managed to clean up most of those sorts of egregious expenditures over the last decade or so, largely because the Defense Department has had no choice.  Still, there are matters that should be examined, like the billions of dollars simply missing, and other problems with big-ticket line items.  Nevertheless, in our dangerous world, there is an ever-escalating competition between us and our would-be and real enemies, where high technology will be contribute directly to reducing the number of flag-draped caskets that arrive at Andrews AFB during each future engagement.  This sobering recognition is among the reasons that any such spending cuts in the military budget must be accomplished as some might say, “not with a machete, but with a scalpel.”  We must be certain that whatever cuts we make do not leave us naked to attacks, and that when we do engage in warfare,  our troops are given every advantage we can provide to win with minimal losses.

One of the areas in which Secretary Panetta is looking for cuts to defense is in the area of medical and other benefits, in addition to gross payroll.   That’s a mistake.  We already have difficulties attracting people to serve in the military, and this too can have a dramatic affect on morale, and readiness.  In truth, to make the level of cuts they’re intending, nearly $200 billion annually, we’re going to be forced to withdraw from virtually all overseas engagements and forward locations.  This poses another danger, inasmuch as we may be slower to respond to crises around the globe, and we may be less able to react when things go awry in one theater of operations or another.  We can ill-afford to be caught short again, because the direction of global terrorism is marching toward weapons of mass destruction.  The 9/11 attacks of 2001 were just a sample of the sort of mayhem the terrorists around the globe are going to be able to create, and this says nothing of our strategic adversaries such as Russia, China, and several others.

This impending doom for the DoD makes plain the problem with our current budgetary priorities.  We are spending far too heavily on entitlement programs of every description, and it will no begin to affect our nation’s defenses.  There are those who argue that the military should be cut, but they don’t think in terms of scalpels or even machetes, but guillotines.  This short-sighted approach is surely destined to create a situation in which we will face increased vulnerabilities on some fronts, and escalating troubles with recruitment and retention.  Our fighting forces deserve the best equipment and training we can afford, but now the question is:  What can we afford?  The answer to this question is likely to be unsatisfactory, because too many politicians derive too much support by virtue of entitlement spending, and while the argument could be made that there is a certain element of the same thing with the defense budget where it comes down to large bases and projects, it’s also true that they aren’t so concerned about the costs in morale and readiness for ordinary soldiers.  What the American people must begin to recognize is that we’ve blown our budget not so much by virtue of military spending, but because we’ve over-extended our social spending to such a degree that it is now squeezing out defense.  There’s something terribly wrong in our thinking when we look at military spending as “discretionary” but Medicaid as “non-discretionary.”  What is our government here to do, after all?  Now we’ve been reduced to the near inevitability that a big-government liberal, Leon Panetta, is going to be hacking away at our nation’s defenses.  We should all be worried at this prospect.

Lies, Damned Lies, and Unemployment Rates

Saturday, November 5th, 2011

Had Enough Yet?

The Obama Administration’s Bureau of Labors Statistics published the October unemployment numbers on Friday, and to the somewhat uninformed, the numbers might seem improved, if not wonderful.  Unemployment fell to 9.0%, down a tenth of one point from the previous month, and 80,000 jobs were created.  Good news, right?  Not so fast.  When our economy is limping along, we create at least 250,000 jobs per month, but when the economy is really running well, we should expect to see job creation numbers in the range of one-half million per month.  More, examining the unemployment numbers closely, you realize that something is wrong:  They’re adjusting the size of our overall workforce downward, so that mathematically, it must look better in each successive statistical period.  The BLS did a gross adjustment at the end of last year, and they’ve been tweaking it all along.  What they’re doing essentially eliminates the long-term unemployed from the workforce, assuming they have retired or otherwise no longer seek employment.  If you’ve been unemployed for any significant period of time, they’re simply not going to count you any longer.

What you need to understand is that in order to make it appear as though the overall employment picture is improving, this administration is pushing the BLS to make things look less dire than they are in fact.  One way to combat the dis-information is to refer people to John Williams’ excellent Shadow Government Statistics (shadowstats.com) website.  To receive all of his reports, there is a substantial fee, but what he provides for free is educational and important for people who generally follow the headlines, but seldom delve into the details.

Courtesy of ShadowStats.com

The chart at left is from his site, through the month of October, 2011.  There are three lines on the chart, and it is important to understand what they represent.  Once you understand what they mean, it’s astonishing to realize just how dishonest our government has become in reporting statistical data on matters of inflation and unemployment.  The red line (U3) represents the official statistic provided by the Bureau of Labor Statistics.  The gray line represents a broader measure(U6) that includes short-term discouraged workers, and underemployed workers who have taken lower-paying, usually part-time work to have any job at all.

The blue line (SGS Alternate) is the most realistic number on the chart, because it reflects the real situation, and doesn’t attempt to write down the size of the total workforce as is done by the BLS.  In 1994, the Bureau of Labor Statistics officially defined long-term discouraged workers out of existence, and with the labor force tinkering the BLS has been doing, all of this presents a rosier picture than exists in fact.  Real unemployment now stands at over 22%.  Ladies and gentlemen, that rivals the unemployment seen in the worst days of the Great Depression.  We are at an unprecedented level of unemployment among men, African-Americans and teenagers/students.  This is a disaster, and it is largely the result of a president who seems intent upon making it worse, in my view to radicalize more of our population, making revolutionary sentiment more prevalent.  This is all adding to a highly destabilized country, and as the chart makes plain, it’s only growing worse.

When the shills for the Obama administration tell you that we’re in a recovery, and the economy is on the mend, you already suspect it is dishonest, because you don’t see any improvements.  Now you know why you feel that way, and it’s not merely a “gut feeling” or “intuition.”  It’s simple fact:  As this government lies to you about the state of the economy, they intend to run for re-election and use this crisis of their own manufacture to prod the uninformed folks along in their direction.  What do you think is the real meaning of the Occupy protests?  Why do you think the Soros/Obama crowd is funding and supporting these protests?  They need an army of radicals to carry out their Marxist designs, and this is part of their long-tended strategy to accomplish that goal.  “Lies, damned lies, and statistics” is the old lament, and now you know why the last of these can be so dangerous.

The Real Economic Forecast

Sunday, October 30th, 2011

Where is this Going?

It’s possible that I could be wrong, but something about what’s happening in the economy leads me to suspect that despite the rosy prognostications of Government bureaucrats, and the even rosier hopes of some market analysts, I don’t think the improved GDP growth numbers for the third quarter are going to mean much for the long-term health of the economy.  For one thing, the government has had to revise every quarter downward as they adjust their numbers to better fit reality.  These first numbers are raw at best, and propaganda at worst, and may bear little or no resemblance to what is actually going on.  For another thing, I’ve noticed a trend, and I suspect you’re going to notice it too.  Fuel prices fell with the ugly end of summer, and they’ve recently begun to tick up anew.  I suspect this will tell us the direction of the economy in two months or so, if history is a guide.

As I have discussed at length before, our economic prospects are linked to many things, but few are more important to growth than the price of energy.  Through the first half of October, gasoline prices fell at the pump because the economy was doing poorly and producing few new businesses.  By mid October, the price decline suddenly reversed and we watched the cost per gallon begin to tick upward again. As I have explained ad nauseum, once the prices tick back past the $3.50/gallon boundary on gasoline, or the $4.00 threshold on diesel, you can expect the temporary increase in growth we saw in the end of the 3rd quarter begin to be choked off.

There is always a lag to these things, but what should have offered you the tip on the economy’s underlying condition was when fuel prices began to decline well before Labor Day weekend.  That’s a sign of a struggling economy, all else being equal, and it should have been noted with trepidation.  I knew the numbers for August were going to be abysmal long before they eventuated.  The price of fuel continued to slip, but some time in the last part of the third quarter, we saw a turnaround in growth.  The reason is simple:  With the prices of fuel in decline, economic activity increased, consumers had more to spend on other things, and we saw a brief uplift.  I suspect that as this little bubble grows, the prices of fuels will follow.  As they reach higher, they will begin to suck all of the oxygen out of the economic room, once again.  When that happens, well, you know the rest.

At the same time all of this was going on, Texas was seeing record heat and a continuing drought(that persists for most of the state even now.)  In that period, Texas began to experience rolling brown-outs, and threats of them, as our once enviable electrical grid could no longer support the demand.  We’ve had to shut down a number of coal-fired power plants in Texas due to EPA regulations, and with no new plants to replace them, and more plant closures almost certain in the coming year, the prospects are going to worsen.  Barack Obama’s obsession with the elimination of coal-fired plants is going to be the death of Texas, but hey, Texans didn’t elect him anyway, so why should he care?  This political aspect aside, Rick Perry has been somewhat successful in getting some companies to relocate here, but they’ll find it difficult to function when they can’t turn the lights on.

At the end of it all, it was her superior understanding of this particular facet of the economy that had made me most hopeful Sarah Palin would run for president in 2012.  Most politicians are blissfully ignorant of how thoroughly dependent growth is on energy.   They will soon discover it if Obama has his way.

Now comes some very realistic analysis to which you should pay close attention.  Despite all the assurances of impending improvement, and the ostensibly good news of last week’s Euro-deal, you should still prepare for all of that to collapse.  As Liam Halligan reports in the Telegraph,  this deal, this latest round of bail-outs offers not much hope of failure. As he rightly points out, with all of these government bail-outs, the natural signaling in the free-market is short-circuited, which means people take actions based on conditions that are largely ore even entirely artificial.  It’s much like Treasury forcing all banks to take TARP money during the crisis of 2008, because they realized that by giving assistance funds to some banks, but not to others, they would be signaling which banks were in trouble.  Rather than permit depositors to draw their own conclusions, and make rational choices, what they did was to intentionally obscure which banks were healthy and which were not.  This sort of tinkering is part of what got us here from the outset.

Halligan’s basic warning boils down to a suggestion that the prideful Euro-set will not accept, but is nevertheless the best advice he could give them:  Let Greece default, openly, and boot them from the Euro.  Dump Portugal too, says Halligan, because as he points out, it is “absurd” to think of Portugal as having the same monetary stature as Germany.  This is what you get when politicians interfere in the markets: Unbridled chaos and fakery, and this is what we are now experiencing.  When the Euro-deal fails, as it almost certainly must, Wall Street and markets around the globe will lose all the value they’ve gained in recent weeks, and then some.  Mr. Halligan concludes as follows:

“The eurocrats, of course, lack the guts to trim back monetary union to a more manageable size. Too much face would be lost. So “euroquake” fears, once viewed as outlandish, are gaining pace. Despite Thursday’s deal, and all the reassurances of a “durable solution”, the Italian government on Friday paid 6.06pc for 10-year money, up from just 5.86pc a month ago and a euro-era high. Such borrowing costs are disastrous, given that Rome must roll-over €300bn of its €1,900bn debt in 2012 alone. A default by Italy, the eurozone’s third-biggest economy, and the eighth-largest on earth, would make Lehman look like a picnic.”

“The eurozone must be consolidated. World leaders should similarly force European banks to disclose their losses, we all take the hit and then we move on. Instead, we are served-up, in ever more complex variants, the same “extend and pretend” non-solutions. It gives me no pleasure to write this, but I give this deal two weeks.”

Indeed, what Halligan predicts looks bleak, but as he reminds, it needn’t be the case.  Just like in our own domestic policies, this is being done by people who are largely ignorant of the workings of markets and the conditions that drive them.  The problem is, they always do what politicians have done since the first elections on record: They kick the can down the road hoping for one more postponement.  There w ill come a day that such tactics will offer no further hedge, and I suspect it will be sooner rather than later.

Rick Perry Says Something Refreshingly Honest

Thursday, October 27th, 2011

Damn Right!

The left will doubtless make all the hay they can from this, but the truth is that for once, I think Rick Perry is to be credited for speaking the truth in a bold way. He said “I don’t care” if his tax plan helps the rich.  Kudos to Rick Perry.  Here’s the thing, and it’s a point I’d try to make to every whining ne’er-do-well now Occuping Wall Street.  Now, he could really impress me and say something more important, like “You’re damned right it does, and it should. Who do you think creates jobs? Occu-pests?”  This endless assault on wealth is more than it seems, and less intellectually-bound than it pretends.  It’s a form of  cannibalism, and it’s aimed at destroying more than the wealth it pursues:  It’s about destroying reason.  It’s about disguising something, too.  Behind all of the complaints about the “greed” of the rich is the sickly confession of those who haven’t had the diligence, the discipline, or the desire to make it on their own.  I’m going to say it without reservation:  If you’re not rich, but you really want to be, in this country you have nobody to blame but yourself and your friends in government.  For a change, Rick Perry got it right.

Wealth is produced not by claims of need, or demands at gunpoint, but by the efforts of honest, diligent people.  When I say “honest,” it is in the sense that they understand you cannot consume more than you produce without eventually destroying yourself and yielding your life.  Nothing in the world is free – not even hope.  Manna may have fallen from the heavens in Moses’ day, but in the world around us, there is nothing that will feed you if you are unwilling to expend effort for it, except a government program, but the truth of that, as every working person knows, is that somebody is paying, even if that somebody isn’t you.  Most range-of-the-moment thinkers will see that as an opportunity to get by, but those of us who produce our daily bread look on it somewhat differently.  We see a vast moral vacuum where a human conscience should be, when an able-bodied person permits him or herself to become a perpetual ward of the state.

What Rick Perry admitted is something we should all know:  It’s none of our business how much money others earn.  In my view, a fair tax system would take the federal budget, divide it by the population, and send out the bills with guardians responsible for  dependents’ shares.   That’s a tax reform I could get behind.  Of course, that would eat a hole in some families’ budgets.  I think everybody should have some “skin in the game.”  Do the math: The federal budget is some 3.5 trillion and the population is roughly 320 million.  That’s roughly $11k for every man, woman, and child. Guess what?  In my household, that would be a tax cut.  Of course, there’s just me and my wife.  Still, why shouldn’t you pay your way? Besides, it’s my bet that if you saw an equal share of the burden, you’d be in no hurry to see it increased.

Okay, so you wish to exempt social security recipients from paying? Fine. There are roughly 50 million of them.  So let’s adjust our numbers:  $3.5 trillion divided by (320-50)=270 million payers, giving you an average tax bill of nearly $13K.  Anybody else you wish to exempt?  Food stamp recipients? Fine. There are 45 million of those, so let’s adjust our numbers again: $3.5 trillion divided by an adjusted population of  (270-45)=225 million taxpayers.  Now the tax bill per man, woman and child is $15,555.55.  Get the point?  Nothing is free.  Nothing.  You want to get it from “the rich”?  Let’s seize the total assets of a billionaire. Let’s say he’s worth a billion, even.  Of course, you’ll only be able to get this from him one time, because after that, he’s broke, but let’s do the math.  Let’s just take that billion off the top.  That reduces our total bill from $3.5 Trillion to  $3.499 Trillion. Fine. Now, we’ll need to adjust the numbers accordingly: $3.499Trillion divided among 225 million people. Okay, so how did this complete seizure of a billion dollars help the other 225 million taxpayers?  It reduced our bill from $15,555.55 to $15,551.11.  Feel better?  We just took all the assets of a guy who employed people, turned him into a pauper, and saved a whopping $4.44 on each of our tax bills.  Of course, we should have subtracted him out of the taxpayers, because now he’s on foodstamps.

The point, if you’ve managed to miss it in all of this, is that seizing wealth from the so-called “rich” really makes no difference. You can do it exactly once.  You simultaneously create more poverty, more unemployment, and more dependency, while reducing the taxpayer base.  Do you see why redistributionist policies cannot work?

People whine about the rich, but if the rich had more of their money to spend and invest, guess what?  There would be many more jobs.  I think we should eliminate corporate taxes, too.  I think we should get government out of the way of the formation of capital.  I think we should get rid of regulatory bureaucracies that are choking off prosperity in this country.  The truth is that our problems, while severe, are not insurmountable.  We can still fix things, but we need to get control of our government.  While the Occupy Wall Street crowd continues its protest, the people really at the root of the misery that confronts us are preparing to cash in, again.  They’re using the OWS protests as cover.

Reality is hell for those who “suck at math.”  Rick Perry’s right in this instance: I don’t care if the tax burden on the rich is reduced. The top 1% already pay 40% of all the income taxes collected.  That’s sinful, and the sin is accrued by those who live from the fat of  this inequality.

Greenspan Gets One Right; Blows Up on Taxes

Wednesday, October 26th, 2011

Once Upon a Time...

Maybe the problem is that when Greenspan is actually in charge of something, he loses his competence. I don’t know. Back in the 1960s, he got it. Back when I was in diapers, this man exercised a fertile mind.  Then, he was an unabashed advocate of capitalism and liberty.  Somewhere on his way to becoming the chairman of the Federal Reserve, he lost his way.  Now that he’s been out of there a while, it seems like he’s slowly coming back to his senses.  He offered an in-depth analysis of the Euro Crisis, and I find it to be fairly close to the mark in most respects, but it also seems to be a scathing reproach to some of his own policies while he was the Chairman of the Federal Reserve system.  In the end, however, he takes another step towards the failed policies in the US that Barack Obama is pursuing.  Greenspan seems to have adopted statism, and while still occasionally correct, as often as not, he’s been tragically wrong.

His primary critique of the Euro goes back to it fundamental, underlying flaw:  The cultures of Mediterranean Europe are vastly different from those of Central and Northern Europe.  It’s much as I mentioned earlier when I described the debate I overheard among Germans in the late 1980s about the proposed European Union and a single unified currency:  Germans viewed the southern Europeans with suspicion due to a long, long history of fiscal chicanery.   Two decades have proven the point and Greenspan is now recognizing the fatal flaw those guesthouse discussions of two decades ago made plain to me at the time:  Two distinct cultures and traditions cannot share a single currency, because one culture will tend to treat the currency and their fiscal responsibilities under the union with a higher level of diligence and respect than the other. Is there really any doubt but that this lies at the heart of the European crisis?

Of course, Greenspan is not the sort of fellow who will readily admit a mistake, and what he fails to mention in this critique of Europe is the extraordinarily loose monetary policy he himself administered over at the Federal Reserve.  Frankly, between he and the hucksters of easy mortgage qualification, they together created a bubble of another sort that was likewise doomed to failure.  You cannot build or center an economy on continuing growth in a housing market that is sabotaged by bad lending practices encouraged by your monetary policy, and your fiscal and regulatory policies besides.  To see Greenspan make the one criticism without understanding his own role in the second is an irony of the most enlightening form.

In the end, however, Greenspan discusses the looming debt crisis in the US, and he seems now to be a budget hawk, but as ever, he is neutral to hostile on pro-growth fiscal policy.  He believes in manipulating monetary policy to effect economic ends, so he sees no effective problem with massive tax hikes.  This indifference, as much as anything else he said,  demonstrates the coldly calculating view of individuals as a means to statist ends, and it is here that I suspect that Greenspan really hasn’t reformed much since departing the seat of Fed Chairman.  At the end of the day, he still views your money and your life as instruments of the state, and his policy prescriptions fail to note a similar duality in cultures in our country, every bit as distinct and intractable as the differences between Northern and Southern Europe.

In our nation, the distinction isn’t formed along State borders, but at the split between urban and suburban/rural America. This also largely defines the political polarization he laments in Washington DC.  It really is that obvious.  Of course, I don’t expect Mr. Greenspan to notice this any more than he noticed the irony manifest in his criticism of the Eurozone.  I also don’t expect him ever to make a full recovery to the days when he understood the moral root of money, when he wrote many intelligent articles in his youth.  That was a long time ago, and it seems he has forgotten what he once knew.  It’s one of the few areas in which I  firmly agree with Ron Paul, although so many of his policy stances makes him unpalatable as a Presidential candidate.  Still, I’d like to remind you of what Alan Greenspan once wrote, before he began to accept the premises of the statists. First published in Ayn Rand’s “Objectivist” newsletter in 1966, and subsequently reprinted in her book, Capitalism: The Unknown Ideal, in 1967:

Gold and Economic Freedom

by Alan Greenspan

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense — perhaps more clearly and subtly than many consistent defenders of laissez-faire — that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society.

Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.e., as a means of saving.

The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or be forced to live on self-sufficient farms and forgo the inestimable advantages of specialization. If men had no means to store value, i.e., to save, neither long-range planning nor exchange would be possible.

What medium of exchange will be acceptable to all participants in an economy is not determined arbitrarily. First, the medium of exchange should be durable. In a primitive society of meager wealth, wheat might be sufficiently durable to serve as a medium, since all exchanges would occur only during and immediately after the harvest, leaving no value-surplus to store. But where store-of-value considerations are important, as they are in richer, more civilized societies, the medium of exchange must be a durable commodity, usually a metal. A metal is generally chosen because it is homogeneous and divisible: every unit is the same as every other and it can be blended or formed in any quantity. Precious jewels, for example, are neither homogeneous nor divisible. More important, the commodity chosen as a medium must be a luxury. Human desires for luxuries are unlimited and, therefore, luxury goods are always in demand and will always be acceptable. Wheat is a luxury in underfed civilizations, but not in a prosperous society. Cigarettes ordinarily would not serve as money, but they did in post-World War II Europe where they were considered a luxury. The term “luxury good” implies scarcity and high unit value. Having a high unit value, such a good is easily portable; for instance, an ounce of gold is worth a half-ton of pig iron.

In the early stages of a developing money economy, several media of exchange might be used, since a wide variety of commodities would fulfill the foregoing conditions. However, one of the commodities will gradually displace all others, by being more widely acceptable. Preferences on what to hold as a store of value will shift to the most widely acceptable commodity, which, in turn, will make it still more acceptable. The shift is progressive until that commodity becomes the sole medium of exchange. The use of a single medium is highly advantageous for the same reasons that a money economy is superior to a barter economy: it makes exchanges possible on an incalculably wider scale.

Whether the single medium is gold, silver, seashells, cattle, or tobacco is optional, depending on the context and development of a given economy. In fact, all have been employed, at various times, as media of exchange. Even in the present century, two major commodities, gold and silver, have been used as international media of exchange, with gold becoming the predominant one. Gold, having both artistic and functional uses and being relatively scarce, has significant advantages over all other media of exchange. Since the beginning of World War I, it has been virtually the sole international standard of exchange. If all goods and services were to be paid for in gold, large payments would be difficult to execute and this would tend to limit the extent of a society’s divisions of labor and specialization. Thus a logical extension of the creation of a medium of exchange is the development of a banking system and credit instruments (bank notes and deposits) which act as a substitute for, but are convertible into, gold.

A free banking system based on gold is able to extend credit and thus to create bank notes (currency) and deposits, according to the production requirements of the economy. Individual owners of gold are induced, by payments of interest, to deposit their gold in a bank (against which they can draw checks). But since it is rarely the case that all depositors want to withdraw all their gold at the same time, the banker need keep only a fraction of his total deposits in gold as reserves. This enables the banker to loan out more than the amount of his gold deposits (which means that he holds claims to gold rather than gold as security of his deposits). But the amount of loans which he can afford to make is not arbitrary: he has to gauge it in relation to his reserves and to the status of his investments.

When banks loan money to finance productive and profitable endeavors, the loans are paid off rapidly and bank credit continues to be generally available. But when the business ventures financed by bank credit are less profitable and slow to pay off, bankers soon find that their loans outstanding are excessive relative to their gold reserves, and they begin to curtail new lending, usually by charging higher interest rates. This tends to restrict the financing of new ventures and requires the existing borrowers to improve their profitability before they can obtain credit for further expansion. Thus, under the gold standard, a free banking system stands as the protector of an economy’s stability and balanced growth. When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one — so long as there are no restraints on trade or on the movement of capital. Credit, interest rates, and prices tend to follow similar patterns in all countries. For example, if banks in one country extend credit too liberally, interest rates in that country will tend to fall, inducing depositors to shift their gold to higher-interest paying banks in other countries. This will immediately cause a shortage of bank reserves in the “easy money” country, inducing tighter credit standards and a return to competitively higher interest rates again.

A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.

But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline — argued economic interventionists — why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely — it was claimed — there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government. Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks (“paper reserves”) could serve as legal tender to pay depositors.

When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve’s attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain’s gold loss and avoid the political embarrassment of having to raise interest rates. The “Fed” succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930’s.

With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain’s abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed “a mixed gold standard”; yet it is gold that took the blame.) But the opposition to the gold standard in any form — from a growing number of welfare-state advocates — was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.

Under a gold standard, the amount of credit that an economy can support is determined by the economy’s tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government’s promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which — through a complex series of steps — the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy’s books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.

Yes, once upon a time, Greenspan was a sensible man who found the statists detestable. Somewhere, he lost his way, and I wish he would remember his earlier positions that had been far more logical.

Greece Seeing Runs on Banks – Escalating

Tuesday, October 25th, 2011

Making a Withdrawal - Of Everything

We’re seeing the beginning of the end for Greece.  The runs on banks area escalating even now.  People are beginning to panic as they realize their life savings are at risk, and they’re withdrawing the money so they can stuff their mattresses.  The problem is, hyper-inflation, which may be just around the corner, will turn their mattresses full of paper into worthless kindling.  There’s no point in pretending otherwise, as the Greeks have looted their own government and monetary system to the extent that it’s probably unrecoverable.  Greece is going down. Back in the 1980’s, as I listened to the first debates about the formation of the EU, I listened to opponents.

They worried that they were getting suckered into a bottomless pit of debt with the Mediterranean countries, that were well-known for their fiscal and monetary unreliability.   I feel badly for Europe, but guess what?  Our Federal Reserve and the International Monetary Fund have managed to link us to the same fate. Here are some tidbits from Bild via ForexCrunch:

“I come here to immediately pick up my pension € 300. Who knows what else happened today. My money is safe only when it is at home” said Pensioners Evagelos Dimitros age 73.

The head of an Athens bank branch told BILD: “More and more Greeks who still have some money come to get it from the bank. In my office there are a total of 5,000 customers, 2,500 of which either have their money transferred abroad or hoard it at home. If this continues, there will soon be no more money.”

This is a warning and an alarm bell ringing for all of Europe.  This is the beginning of the collapse of the European single currency, whether they realize it or not.  The British should jump ship from the EU Titanic if they wish to save themselves.  The Germans may be left holding the bag, and Italy is on the verge of following suit immediately.

Ladies and gentlemen, through a string of bad decisions, and suicidal policies that have promoted the growth of socialism, we have a true calamity coming.  Even now, as the  European heads of state meet to discuss what to do next, it seems they will fail to avert this crisis. Of course they will.  There’s no way around it.  Neither big government, nor even big, big, big government can fix this in any way but one: Slash spending.  Until the member governments are willing to do that, there’s no hope.

European Union Headed For Collapse?

Monday, October 24th, 2011

Beginning of the End?

In the UK’s Parliament, David Cameron is trying to stave off a revolt of the conservative party, as at least 60 members are aboard with the idea of putting up a referendum on leaving the EU.  As a way to head them off, Cameron is hoping to exact some EU treaty re-writes that will return some autonomy to the UK in the matters of social laws and employment.  At the moment, he doesn’t seem to be making any headway, and a revolt against his proposal seems likely.  At the same time, French President Nicolas Sarkozy has told Cameron that he’s sick of the UK telling the rest of the EU what to do, since the British “hate the Euro.”  If you haven’t figured out what’s at the root of all of this, let me help to explain:  The EU is on the brink of complete and utter destruction, and the Eurozone is likely to fails, since neither Greece(immediately) nor Italy(just over the horizon) seem likely to stave off default on their sovereign debt.  Yesterday, I related to you the story of Angela Merkel of Germany chastising Italy over its debt-to-GDP ratio, as she’s looking over the immediate horizon and can see the trouble brewing in Italy, but now France has joined in the pressuring of Italy.  The EU is in deep trouble just now and it looks like the beginning of the end.

Some see this as empowering the US, but any such bubble will be short-lived, as while power in Europe is likely to become decentralized in the short run, in the US, a collapse of our markets and our banking system may not be too far away as I reported Saturday and Sunday.  Our current state of economic and financial affairs leverages strongly against any lasting leadership role, because we’re in debt very nearly on par with Italy, and if we fold, the rest of the world will follow.  The problem at the moment for the US is that we’ve stuck our necks out on behalf of the Europeans via the Federal Reserve and the International Monetary Fund to an extent that we are now firmly tied to their fate.  If they fall, so will we, but the question remains: How far, and how fast?

If we had wise political leadership, they would demand that we stop sticking our neck out on behalf of the Eurozone.  Yes, if they fail, it will hurt us too, but the more we increase our stake, the greater our eventual losses, and the greater the damage will be here at home.  If the EU winds up dissolving at some future date, it will be a potential boon to American economic might, but in the short run, it will have dire effects on our capital markets.  The point to be understood is that I can’t imagine a way that Europe fetches this one from the fire, as the UK’s reluctance signals.  If the British do not wish to stick their necks out, I can’t imagine a reason on Earth that we should be so-inclined.

Domestically, we have weak leadership in the only House in government that would be able to stop any of our further involvement. John Boehner’s not going to stick his neck out in opposing what’s being done with the European derivatives from the Bank of America and JP Morgan, just as he wouldn’t stick his neck out over the debt ceiling negotiations.  In the end, Boehner will capitulate to the Democrats just as he did in July, and much like David Cameron is having to do with members of Parliament in London, Boehner will be trying to herd his members in Washington DC who can see the elections of 2012 directly in front of them, and know they cannot support these kinds of deals any longer.

What all of this is likely to mean on Wall Street at the open on Monday is anybody’s guess, but one thing’s for certain: The volatility we’ve been seeing these last several months is likely to continue, and one of these days very soon may be the worst day on Wall Street in 80 years.  I’m not trying to instill fear or panic, but I want you to know what’s going on in the world around you.  With Europe on the brink, the Middle East ablaze, and our own nation in a severe downturn, it’s only natural to wonder when the bubble will burst.  Washington has been trying to conceal all of this from you for so long that I think they may have forgotten it’s fake.  You can’t support the markets with direct injections of cash as was done through TARP, the bail-outs, and QE2 without eventually arriving at the day when it all goes belly-up.  Having been linked to Europe so thoroughly, we are more vulnerable than ever. Our political leaders have neither the competence nor the will to extricate our nation from the grip of a global calamity.  In the case of at least one individual, I believe it’s being engineered.  Prepare, ladies and gentlemen, prepare.

Another Downgrade on the Horizon?

Sunday, October 23rd, 2011

Worse This Time?

Leave it to Bank of America/Merrill Lynch to publish their fears of another credit-rating downgrade for the US government.  On Saturday, I brought you the story of how this very company is shifting some of its European derivatives over to its depository arms so that they will be insured under FDIC.  It’s a stunning development that an analyst for this very institution to  tell us they expect another credit downgrade, tells us something about how they believe that will work out for the American tax-payer that will now be on the hook for trillions. They don’t think it’s going to turn out well, I can assure you, but you can expect all sorts of hand-wringing excuses when the meltdown occurs.

In his dire analysis, Ethan Harris writes:

“We expect a moderate slowdown in the beginning of next year, as two small policy shocks—another debt downgrade and fiscal tightening—hit the economy. The “not-so-super” Deficit Commission is very unlikely to come up with a credible deficit-reduction plan. The committee is more divided than the overall Congress. Since the fall-back plan is sharp cuts in discretionary spending, the whole point of the Committee is to put taxes and entitlements on the table. However, all the Republican members have signed the Norquist “no taxes” pledge and with taxes off the table it is hard to imagine the liberal Democrats on the Committee agreeing to significant entitlement cuts. The credit rating agencies have strongly suggested that further rating cuts are likely if Congress does not come up with a credible long-run plan. Hence, we expect at least one credit downgrade in late November or early December when the super Committee crashes.”

Of course, part of the problem is that everybody is waiting for the other shoe to drop.  Europe stands on the verge of a complete meltdown, and our Federal Reserve has gotten us so deeply tied to the success or failure of Europe at this point that if Europe goes down, we will likely fall down too.  Several outlets are reporting that a number of European banks are on the brink, and that this will trigger a sell-off and panic unlike anything we’ve seen in a long time.

At the same time Germany’s Angela Merkel is chastising Italy over its debt of 120% of GDP, I wonder if she’d do us a favor and look at the US, which isn’t far off from that ratio itself, and tell Obama a thing or two while she’s at it.  Merkel is among those who are urging further austerity measures, and she’s right. The trouble is that leftists never tire of pitching their best Keynesian plans at these sorts of problems, pretending that if only they can borrow and print a little more liquidity, the problem will solve itself.  Naturally, that’s nonsense, and while everybody knows it, the spenders will never, ever admit it.

Ladies and gentlemen, we stand on the precipice and wonder why this is happening, but anybody who has ever learned the hard lessons of running on credit must begin to see the simple truth of the matter:  You cannot consume more than you produce on an indefinite basis.  This entire fiasco is the result of runaway governments spending our future into oblivion.  While we’re at it, we must also rein in the Federal Reserve as the policies now in force are merely multiplying the trouble.  One year ago, as they began to plan out QE2(Quantitative Easing, Round 2,) Sarah Palin warned the world.  She was mocked by Krugman, the purveyor of Alien Attacks and other nonsense dressed up as economics, while she was being berated for her stance by a host of others, but in the end, who has been right?  We mustn’t permit ourselves to suffer under this comfortable illusion any longer: There is no alternative but to dramatically slash government spending.  We must do it now, or there may be no tomorrow.

“All Restaurants Are Taco Bell”

Saturday, October 22nd, 2011
What Kind of Monopoly?

Drudge is linking the story about Google considering joining in on a bid for Yahoo.  Some are already beginning to raise a flag about monopoly, as the two Internet giants certainly occupy some of the same market space.  Of course, they might be interested in acquiring it just to slice it up and sell it off, or it could be that like so many things, Google has gotten so large that it wants multiple big-name brands to capture more of the market.  Either way, it’s not necessarily a monopolistic move, but many will already see it as such.  Part of the thing that makes a monopoly is government authority.  You may remember the silly, poorly-made movie starring Sylvester Stallone titled “Demolition Man,” in which the recently defrosted hero discovers that “all restaurants are Taco Bell.”  This was something enforced on the culture by government.  That is a coercive monopoly, which is the only sort that should cause you concern.

One of the problems is that people don’t understand the concept of monopoly, because what the popular culture tells them is that all monopolies are bad. Far be it from me to defend Google here, or in any instance, but I think it’s important that we understand what truly constitutes a coercive monopoly, as well as understanding how the concept has been oversimplified into the more generic and misleading term “monopoly.”

A monopoly is said to exist when a specific person or enterprise is the only supplier of a particular commodity.  For instance, if you patent a new device, and have sole rights to produce or license the production of the device, you have a monopoly.  If you own the last ham sandwich on Earth, with no expectation of there ever being more, you have a monopoly.  Look down at your keyboard. If you own it,  you have a monopoly on its use.  In this very obvious sense, a monopoly isn’t necessarily bad at all.  Copyrights are another form of monopoly, as are trademarks.  We could not long function as a society if there was no concept of property and no attendant “monopoly rights” of ownership.  As you can see, the concept is an important a vital part of a capitalist society.

Now let us turn to the much more specific and problematic concept of coercive monopolies.   This form of monopoly is a good deal different, and it’s the sort of which we should generally disapprove. Like patents, trademarks, and copyrights, coercive monopolies are granted and enforced by government, however, with these, there is nothing to prohibit another person from providing a substitute product or service.  When government creates a legal coercive monopoly, it freezes out substitutions, and it reduces the provider of the goods or services to one entity.  Consider the municipality that provides a public water utility, but prohibits the drilling of water wells.  Consider the public garbage collection service, while the city that provides it prohibits the use of alternative collection services, or requires that you pay the fees irrespective of your usage of the service.

Think of the public school system that collects your money, in most places based on the value of your property, whether you have children or not, and without rebate if you send your children to a private school at your own expense.  Notice that in this case, they are able to extort the money from you on the basis of seizing your property.  These are the sorts of monopolies with which governments empower themselves, but they also empower others as well.

Consider Major League Baseball, that gets a specific exemption from the anti-trust statutes under the law.  You can’t simply go set up your own baseball league.  This institution is protected by exemption from anti-trust laws, in specific legislation by Congress, under the assumption that it’s somehow too fundamental to American culture to permit competition.  Let me suggest that the idiotic legislators who passed this exemption failed to recognize something much more fundamental to American society: Competition.  The irony of protecting a competitive sport from external competition is mind-boggling.  If you’re a pro quality baseball player, you can either accept their rules or give up your career. This has been done in the main to restrict players from being able to negotiate.  If there was another league paying better, or willing to allow the player to decide the cities with which he would negotiate, the value of baseball players would escalate.  Some people think they’re paid too much already, but the fact is that they should earn whatever they can negotiate that the market will bear.

Of course, there are other sorts of monopolies that government rigs all the time.  Back in the 1990s, Bill Clinton put a huge swath of territory in Utah off-limits to coal mining, allegedly on the basis that it was to protect the environment.  It was also one of the only known sources of clean-burning coal in the world, the other being offshore.  Guess who had been buttering Mr. Clinton’s bread?  Yes, this sort of game is played all the time in Washington, where effective monopolies are created by legislation, and it’s part of the entire universe of crony capitalism that so many have been lamenting recently.

The government has enacted anti-trust laws advertised as being used to break up monopolies, or to prevent their formation, but all too frequently, this is just an excuse for intervention in the markets used to extort money from companies.  The most egregious cases of this are when government imagines a monopoly into existence so that they can squeeze money out of them.  Consider the case of Microsoft, that in the early 1990s became the dominant player in desktop operating systems.  At the time, Microsoft didn’t have a massive lobbying operation, and Bill Gates ran his company, but once he started to really beat his competitors badly, his competitors cried foul and turned to government for relief.  The problem is that Microsoft wasn’t really doing anything illegal, despite all the posturing by its competitors, and such laws as could be stretched to cover its actions were miserable ideas born of crony capitalism.

Several companies, all competitors, went to politicians and lobbied them to take steps against Microsoft.  It was a bi-partisan lynching, and after the affair, I believe it signaled the beginning of Microsoft’s market-share decline.  Bill Gates learned from the experience, as did his successor, and you can believe that Microsoft now employs plenty of lobbyists to plead its case before government. Did consumers benefit?  No.  So who did?  It didn’t save Netscape, which had been one of the complainers, and the truth is that Microsoft’s market share had been the product of great marketing, a very good product, and good, old-fashioned competition.  In the main, it had been what is termed a “natural monopoly.”   People simply preferred their products.  In the end, the only beneficiaries of this fiasco had been government and its officials, its regulators, and of course, all the lobbyists who now rake in cash.

When somebody complains to you about the monopoly some company allegedly enjoys, you’d be right to consider just what it is that the term means in the context proposed.  Not all monopolies are bad, and some are even vital parts of our economic system, but the ones with which we ought to be most concerned are those created in the cloakrooms in Congress, in the old executive Office building, and in the White House.  It never fails to be the case that it is this sort that subjects us all to the greatest perils.

Weakening America: The Federal Reserve’s Latest Risky Scheme

Saturday, October 22nd, 2011

Taxpayers on the Hook - Again

It simply doesn’t seem possible, and yet here it is, right in front of us: Our own Federal Reserve under the direction of Ben Bernanke is pushing for a policy that will leave American tax-payers on the hook for tens of trillions of dollars in liabilities.  European derivatives for Bank of America in its Merrill investment banking unit  are being shifted to the depository arm and this is insured under FDIC, your Federal Deposit Insurance Corporation.  That’s right, this is going to be a gigantic crisis when Europe finally implodes, and with Greece now needing a 60% write-down on its bonds, you must know that calamity is right around the corner.   What’s worse is that it is now revealed that this will be hidden from you in part due to Dodd-Frank, the “financial reform” law that Congress passed in 2010.

Ladies and gentlemen, our country is being systematically destroyed.  These obligations are the financial form of a dirty bomb planted in the US Treasury, and it will destroy us.  This is insanity.  It also turns out JP Morgan is doing much the same thing.  We’re talking about trillions of dollars in redistribution of tax-payer wealth to private global banking interests.  This is setting the stage for the mother of all bail-outs.  I can’t believe that this is being done, or that anybody thinks this is a prudent plan.  It’s as though the American tax-payer is being robbed at gunpoint without knowing it.

This is the one thing about which Ron Paul is consistently correct:  The power of the Federal Reserve system must be curtailed if not eliminated entirely.  We simply can’t afford any more of this.  It has the potential for destroying us.  Our political leaders must stand against this, but in too many cases, they’re part of the problem because they’ve enabled much of this.

We need a return to a sound monetary system, and those who think it should be tied to the other currencies of the globe are out of their minds.  Of course, they want that for the same reason this is being done:  To offer themselves protection. Ladies and gentlemen, we’re looking at a possible, or even probably catastrophe here, and other than just a rare few media outlets, nobody is telling you about it. You should begin to wonder why they’re not.

The Durbin-Obama Debit Card Fee

Tuesday, October 4th, 2011

They "Care" About You

It’s time we come recognize the people who are making a difference in our lives.    In this case, it’s a negative difference, and while the banks are going to get blamed, the idea here is to give credit (or place blame) where it is due.  Dick Durbin, D-Ill., helped to create the circumstance by which new Debit fees will be necessitated by banks to pay a new tax assessed against them under the Dodd-Frank Financial reform act.  You should feel much better knowing that as consumers, you’re being “protected” by the machinations of big government.  Of course, that the demagoguery they used to sell all of this, but now the sad truth is out:  You’re going to pay more for the pleasure of access to your own money.  Don’t complain.  Thank Dodd, Durbin, Frank, and Obama.

Durbin’s Amendment to the bill was the cause.  You’ve heard about Bank of America tacking on a $5/month fee to account-holders for debit card use?  They won’t be alone, but it’s not because of pure profit-seeking whimsy.  It’s the result of Dick Durbin, Christ Dodd, Barney Frank, and anybody who voted for the Financial Reform Act.  Barack Obama signed it into law.  Now, you need to understand that all of this is simply because they care about you, and wish to punish the “greedy bankers,” which is a notion that appeals to the absurd goons now protesting on Wall Street.

Be happy!  This is your government at work.  This is the change you hoped for, isn’t it?  No?  Ladies and gentlemen, this is an example of the whole problem with big government employed by demagogues who are simply making an appeal to dolts on the basis of class envy.  This is the sick heart of the ideology of statism.  People will blame Bank of America, but the truth is that this was done to you by the Democrats pictured above, along with a larger number not pictured in Congress who inflicted this upon you.  Durbin actually had the nerve to urge people to dump the Bank of America.

Whenever we see politicians behave in this way, we should grab our wallets.  There’s seldom a time when the costs they inflict on business won’t ultimately fall to us to pay.  That’s a lesson all of the protesters on Wall Street and elsewhere ought to understand.

The Other Side of Class Warfare: Taking Society Down

Thursday, September 22nd, 2011

Society's Lowest Common Denominator

One of the most divisive and intractable problems we face in the U.S. is the growing poverty in our society.  More people are connected to the governmental umbilical cord than ever in history, and there are complaints emanating from all the usual sources that the wealthy segment of our society doesn’t pay enough for the privilege of their wealth.  I look at this from a completely different perspective, based in reality, and not in some grand socialistic dream about the good in humanity.  I know that humans are fallible and imperfect, and easily fall into a destitution of spirit even more readily than they do into a poverty of material things.  Encouraged to do so, many people are more than willing to live from the efforts of others and to subsist without reference to their own sloth.

I realize that what I am going to tell you will cause many to hurl derision in my direction, but it’s time that we tell the truth about who the real free-riders in our society have been.  Our country cannot thrive so long as the free-riders of whom we ask exactly nothing can collect by virtue of their unwillingness to contribute anything.  Our “welfare” system is becoming the largest segment of a rapidly growing government that rests not on a poverty of material things it provides, but on the grotesque destitution of spirit of those among those who these programs were intended to assist.

First, I’d like to address the question of entitlement programs, and differentiate among them on the following basis: Social Security, a program I think has thoroughly impossible problems, has been promised on the basis of individual contributions over a lifetime of work.  While it is clear that some substantial reform is necessary, and many  have been misled about the nature of the program, it is not the program I wish to discuss.  Instead, I’d prefer to focus on the massive programs for which there is no connection between benefits paid and the manner in which they are funded.  This includes the myriad programs that fall into the category widely regarded as “welfare,” and includes everything from public housing to Medicaid, among the more well-known, but includes also Pell Grants and Home Energy Assistance, and extends now even to Internet Service and Cellular Phones.

Over the last number of days, I’ve been verbally hammered via email and on the phone by those who have become disheartened at the things they now witness in their daily lives.  It’s not merely that these programs exist, or that they now provide every imaginable need, but that the recipients no longer appreciate them as a gift of a generous society.  Instead, they now view these benefits as a primary means of existence, and a right to which they are entitled to exercise.  Imagine subsisting in the belief that society owes you a living, based on no more exhaustive claim but for your existence.  It is to say “I’m here, so pay for me.”  If this seems stunning to some Americans who are less familiar with this sub-culture of economic dependency and moral depravity, it shouldn’t.  We have allowed our politicians to create a system in which they are rewarded with votes by providing material goods to people who produce nothing, owe nothing, and more, are being conditioned to believe that they possess an endless right to the wealth of those who produce the wealth of the nation.

Ladies and gentlemen, there can be no doubt that by permitting government to become the great dispenser of benefits, we have built a monster that has taken on a life and a force from which we may not escape.  We have such stellar intellectuals as Elizabeth Warren, a candidate for Senate in Massachusetts, and a former Obama White House flunky, who tells us a few things that ought to disqualify her from any office anywhere on the planet:

“I hear all this, you know, ‘Well, this is class warfare, this is whatever.’  No. There is nobody in this country who got rich on his own — nobody.”

Do you understand her claim?  She is saying that society enables people to become rich.  This is a lie.  If society enables people to become rich, why aren’t we all rich?  Why? What’s the difference between one person’s wealth and another person’s poverty?  She doesn’t explain that, but she does continue to make absurd statements that reveal her poverty of understanding  of both economics and human nature:

“You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police-forces and fire-forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory — and hire someone to protect against this — because of the work the rest of us did.”

This bizarre and reckless politician is telling you that the roads came first.  She is plainly asserting that roadways came before commerce.  They did not.  Commerce was the reason the roads were built, and the people who were engaged in that commerce are the ones who built the roads.  If there was nothing to protect, we would not need police.  This asinine would-be Senator actually believes that “the rest of us paid for” all of these things.  She is lying.  Find for me the total number of dollars paid for any roadway by those who do nothing but take from this system?

“Now look, you built a factory and it turned into something terrific, or a great idea. God bless — keep a big hunk of it. But part of the underlying social contract is, you take a hunk of that and pay forward for the next kid who comes along.”

This is pure sophistry.  There is no instance in which her narrative is true.  We cannot  afford any more of this notion.  The people who have paid for those products are most frequently the people who had a hand in producing them.  This is a serious problem.  She is an advocate for free-riders who actually insists on bolstering the notion that free-riders are the great virtue in our system who somehow provide the ability of the rich to become richer, while nevertheless providing exactly and precisely nothing.

This must stop.  We must begin to strip such power from politicians. We must challenge this nonsense at ever turn.  We must begin to say “No” and mean it, not merely to these politicians, but also to the people who have become dependent upon them.  It simply ludicrous to suggest that the infrastructure depends on the payments of people who don’t pay, while people who do pay are compelled at gunpoint to build and provide  it.

We have a real problem, and this insufferable leftist demonstrates it quite well: The poverty we face is in intellect, philosophy, and spirit, and we can no longer afford the luxury of all of these programs.  We must end the welfare state before it ends us.  With each day it continues, it increases its own numbers as more people give up the will to earn their existence as they find themselves increasingly surrounded by those who will not.

Barack Obama’s Desperately Phony Deficit Reduction Plan

Monday, September 19th, 2011

More Presidential Hot Air for His Base

On Monday, Barack Obama introduced an alleged deficit reduction jobs plan that offers three dollars in tax increases for every dollar off spending cuts it promises.  This is another extension of his outrageous spending policy.  There’s nothing new included in this plan, as he proposes a new “Buffett Tax” on wealthier people including small businesses.   This is a failure, and it’s not very likely to get through the House of Representatives, unless John Boehner is determined to be known as the Surrender-Monkey Speaker, but the question must be asked:  Since everybody knows this is a failed policy, why is he insisting on a leftist approach to an issue of such national import?   The answer may be as simpler:  He’s offering this as a way to stave off a primary challenge, as Ralph Nader and others begin to consider challenging him.

Weak as he is, this may be the most serious threat as Obama has fallen to all-time low approval among liberals.  That’s a shocking development, and his internal polls have been telling him this for weeks.  This is the reason for his pathetic Debt plan, and it speaks volumes about how subservient he is is rapidly becoming to the extreme left in his party for the sake of his own re-election.  We know Barack Obama can’t believe raising taxes in the midst of a re-emerging recession because he’s told us before that “the last thing you want to do is raise taxes in the middle of a recession.”  Or does he?  This is an example of how he’s unable to move toward the center, and he’s a prisoner of the radical left in his party’s base.  He dare not go along with reasonable spending cuts, tax cuts, or even tax freezes, because his base will politically crucify him.  The number of people on the extreme left end of his party now seriously discussing a primary challenge is the most thorough difficulty he faces.  If he loses his base, having lost the moderate or conservative Democrats, and most Independents, he’s well on his way to cratering.  He must serve his radical leftist friends, or concede his re-election altogether.

In trying to shore up his base, we are beginning to see the most pathetic sorts of posturing in the liberal press.  Now, they’re trying to paint him as the “first Jewish President” over at NewYorkMagazine.  This is because there has been some evidence that Obama is losing support among American Jews, and now, they’re taking  this approach to help him with this part of the base of the Democrat party.  Let’s be honest about it: He’s in significant political trouble, and no amount of window-dressing is going to turn that around.

Today’s Deficit and Debt Reduction Plan was merely another attempt to shore up his base.  It is in no way a serious proposal unless Boehner decides to treat it as one.  It will be your task to make sure that doesn’t  happen.  Barack Obama is trying to prevent a primary challenge, knowing that it will cause him more grief than any  Republican could dream of doing.  Of course, Joseph Farah over at WND has another idea, but I think it’s seriously flawed.  Still, Obama knows he’s in trouble which is why he will now rush to every microphone he can find to propose plans that demonstrate his hard-left commitment to his base.  That’s all this plan really is, and to treat it as anything else is to miss the important meaning it actually contains: Barack Obama is terrified of his own base, and for all the wrong reasons.

UPDATED: Deeper into the Morass of Obama Demagoguery

Sarah Palin Posts New Note on Obama Crony-Capitalism

Wednesday, September 14th, 2011

Sarah Palin on Facebook

In a scathing criticism of the scandalous usage of taxpayer dollars in what has all the appearances of a slimy pay-to-play shell-game, Sarah Palin takes on the Obama administration and the potential wrong-doing in the Solyndra Scandal.  Not satisfied with just calling out Solyndra, Governor Palin also talks extensively about GE’s relation to the Obama administration.

As this site has reported previously, the giant sham of Solyndra is now exploding onto the pages of major media in a scandal that is threatening to overturn the entire apple-cart of DC crony capitalism as expressed in the current administration, and hopefully beyond.

As usual, when confronting this sort of apparent corruption in government, Governor Palin is on the front lines on behalf of the American people.  Among other things, she offers:

“President Obama has his sights set on raising $1 billion for his reelection campaign. Raising that money won’t be easy. But if you can hand out other people’s money to friends, it must get a whole lot easier. This crony capitalism and government waste is at the heart of our economic problems. It will destroy us if we don’t root it out. It’s not just a Democrat problem or a Republican problem. It’s a problem of our permanent political class.”

Amen! Our country cannot withstand much more of this, irrespective the party responsible.  Kudos to Sarah Palin for once again telling it like it is.

Barack Obama’s “Hail Mary” Pass

Thursday, September 8th, 2011

Head-Fake Right, Ball Goes Left

It’s a close game, and with time ticking off the clock, the home team is on defense.  The other team has possession of the ball, and they run it out of bounds to stop the clock.  They have one more chance to run a play, but with 80 yards of the field between them and the end-zone, the quarterback steps into the huddle with instructions from the coach for one last “Hail Mary” play.  Unfortunately, the ball is mishandled on the snap, and the while the quarterback picks it right back up, he’s already killed the initiative.  His receivers are trying to get open with every head-fake known to man, but the defense is on it, and the ball is in the air, and just shy of the 20 yard-line, the ball is picked-off by a quick corner-back.

Off to the races, and down the sideline he goes, unopposed for a stand-up touchdown.  He could have ducked out of bounds at any time and ended the game, but he wanted to deliver a message:  “I’ve seen this play before, and it will never work again.” The losing quarterback looks on in horror, knowing he’s lost the game, but the corner-back isn’t finished, and in an act of celebratory sportsmanship, Mark America spikes the ball.  Mr. Obama, you’re a terrible quarterback and only the ineptitude of our own offense has kept you in this game this long.

Does he really believe we will fall for this, or is this simply aimed at the unthinking folks who get their news in three-second sound-bites from MSNBC?  President Obama presented a number of fine-sounding capitalistic ideals, intermixed with the pure statism, but the truth is that he squandered all his initiative when he mentioned the manner in which it would be paid.  Take all the fine head-fakes out of this speech, and what you are left with is really just more of the same. The new stimulus, which they won’t call stimulus, is to be paid for by adding to the deficit-deficit Congress is already likely unable to address later this year.  As I said, it was a head-fake to fiscal responsibility, but that of which it really consists is more smoke and mirrors, and more can-kicking that doesn’t advance the ball down the field, and will ultimately only add to our disaster.

There were a number of relative novelties in the speech, also part of the head-fake, referencing the pledge of allegiance as he did without dropping “under God.”  What wasn’t novel was his continued reliance on the hand-outs to the education establishment and the unions.  This is the most thinly disguised program of alleged economic stimulus on record.  One might ask why he keeps going back to the same play-book, and the answer is simple: He’s got nothing else.  Ideologically, he’s simply incapable of rejecting more statism, although this time he wrapped it all up in red, white and blue bunting.

There can be no escape from reality, and yet what Barack Obama offered today was a farce.  He threw in a few temporary measures such as tax credits for business, and more short-run tax cuts for individual tax-payers, but he insists on raising taxes on the wealthy.  He insists on paying for this with imaginary cuts added to other imaginary cuts, but there’s no honest proposal here.  What Mr. Obama has accomplished would be everything he set out to do, if it weren’t for that one corner-back who intercepted his big lie.  Now truth be told, if you watched his speech, you noticed the same things, but many of your friends and family won’t have been watching since this President is a ratings disaster almost equal to the economic one that he represents.

This speech was pure political theater, which is why Boehner should have refused it when first proposed, or he should have offered the President the 2am pacific time slot for this load of continually stinking refuse.  Sadly, the Republican leadership hasn’t been good at office, and is much happier when on defense since others like you and me will carry their water.

It’s a farce to suggest that we can stimulate the economy with temporary tax cuts and more spending programs all paid for by increased taxes on the rich and more magical, imaginary cuts we all know we will never, ever see.  This was propaganda for the sound-bite news gatherers, in order to help ratchet up his own base.  If Speaker Boehner had any kind of fortitude, he’d stand up and tell the President:  Not good enough.  DOA.  We will see how the Republicans react to this nonsense, but I have fears about their willingness to stand once the “killing babies, killing seniors, and killing jobs” rant begins.

They’ve been timid and terrified at every turn.  The only good news to come out of this is that it was likely seen in not many more households than watches MSNBC.  We’ve had enough of this propaganda, and at this late hour, we need to send in a back-up. We need to fire the coach.  I can see November 2012 from my house.  Can you?

Sarah Palin Knows How to Destroy Crony Capitalism

Tuesday, September 6th, 2011

Sarah Palin Takes on the Crooks!

One of the problems our nation faces at this moment of economic crisis is that all too frequently, the best answer to a problem is ignored, the best person for a job doesn’t get it, and the best path forward isn’t followed.  This leads to a faulty conclusion among far too many Americans about the virtues of capitalism:   They don’t see any.  Lost in the shuffle of bureaucratic paperwork, and wrapped in a pile of red tape, and hidden from sight by nifty euphemisms, the American people are not suffering from too much capitalism, but as Governor Palin understands, too little of it unobstructed, and unadulterated by crony capitalism.   Many people are confused about the difference, even unaware that the increasingly dominant system really isn’t capitalism at all.  Few Americans have known real capitalism, because for generations, politicians have been stealing their economic and political rights.  It’s time we clear up the meaning of all of this, and consider what is capitalism, as distinct from the shoddy representations of it we’re provided by the entrenched permanent political class inside the DC beltway.  Sarah Palin understands why crony capitalism must die, but now in order to save this country, so must you.

Capitalism is an economic system that relies upon individual choices and freedom, not merely in the economic sphere, but in all facets of life.  To succeed, Capitalism requires that individual men and women are free to make choices on what to produce, when to produce it, how to produce it, and whether to produce it at all.  It also requires the free choice of those who will purchase, whether goods or services, without the intervention of people and institutions who seek to rig the market to their advantage.  The moment you begin rigging the market to support somebody’s idea of a preferred outcome, you begin to destroy Capitalism.  Like any economic system, Capitalism relies on certain rules too.  There must be a presumption of rights to one’s property and one’s wealth, and there must be stability in the rules.  Fraud and theft must be punished, disputes must be resolved against an objective standard of law, and the security of the nation must be preserved in such a way to avoid intruding unnecessarily into the market or the freedoms of citizens.  What must be happen in all cases is that those with the power to legislate, regulate, or interpret those rules may never be permitted to use those rules to exact their own subjectively defined preferential results.

In the same way that actual, objective justice is displaced by subjective notions of justice, like social justice, racial justice, economic justice, and more recently, environmental justice, so too is real Capitalism displaced by the predations of its shoddy imitator: Crony capitalism.  When you hear a social activist claim to pursue “social justice,” what they’re hoping to do without you having noticed is to substitute a fake, and completely contrary idea for what is actual justice.  In our legend and lore, Lady Justice stands blind-folded, scales in one hand, and a sword at the ready in the other.  She judges the matter based on an objective rule of law.  What “social justice” or other modified forms offer is to set aside the objective form of justice in the name of the subjectively derived ends in question.  One notion of social justice is that all people ought to have sufficient food to eat, but it requires that some people have food(or the money to buy it) stripped from them  to feed others.  Justice would weigh the matter and answer that the property rights of one individual do not exist at the discretion of others, but the notion of “Social justice” demands a scrapping of the objective standard.  In much the same way, all of the other perversions of justice seek precisely the same end:  To strip some people of their rights and liberties in order to give preferential treatment and wealth to others.  These notions displace and destroy actual justice.

For these same reasons, crony capitalism destroys the real thing.  In a real capitalist system, the market and consumers would evaluate a product or company and decide whether to purchase it based on considerations that are entirely a matter of personal choice.  If you have a large family, for instance, you might wish to purchase a larger vehicle, such as a min-van or an SUV.  The only deterrents to this choice the market would impose is that these get poorer gas mileage and cost more to purchase and maintain.  If your family necessity dictated it, however, you would purchase the vehicle you need and consider it as a cost of the family you’ve chosen to raise.  If government steps in to make that choice more difficult, or to make it altogether impossible by regulating large vehicles out of existence, what you are seeing is one application of social engineering, and in most cases, also a healthy dose of crony capitalism.

Somewhere, behind the scenes, somebody’s palms have been greased in one or more ways, from one or more sources, all aimed at deriving a particular outcome in the marketplace: Fewer mini-vans and SUVs.  Environmental groups will seek such ends, but so too will manufacturers of smaller and lighter vehicles.  In both cases, there will be some politician(s) somewhere deriving a benefit from the legislation, in one or more forms.  One is in the direct cashing in through investments and the manipulation of the markets, and another is through contributions to election campaigns.  For nearly every piece of legislation or regulation to come out of Washington, there is very likely to be one or more such stories on the back side that make clear that Capitalism is being discarded in favor of some particular corporation, group, or individual.  This process dominates the legislative process, and it happens at all levels of government, but in no other place is it so rigorously practiced and thoroughly entrenched as in the federal establishment in Washington DC.

Many people will wonder what kind of difference this issue really makes in their lives.  The truth that is concealed beneath the surface is an ugly mess of corrupt politicians, entrenched interests, and insider trading and deal making that defies summation, not because it’s hard to demonstrate, but because the whole fabric of Washington politics is awash in it.  It’s become the infinite web of lies and deceit that stands guard over an establishment preying upon the people it alleges to serve.

Consider the health-care debate.  How many pharmaceutical companies had a hand in crafting the legislation?  In 1993, when Hillary Clinton was working the health-care issue, she was stopped in part by the fact that the pharmaceutical industry opposed her plans which ignored their property rights and the actual needs of the market.  This time around, with the passage of the Affordable Care Act, commonly known as Obamacare, the industry was bought off by granting to them large giveaways and concessions.  The politicians purchased silence this time.  In exchange for their silence, the legislation was crafted to aid them and better insure their future, or so they were led to believe. Also in exchange will be the political contributions yet to come.

You might think this is awful, but what institution has the ability to shut up large corporations, by some form of extortion or bribery?  With legislative and regulatory powers that have exceeded all previous bounds, no business can survive an all-out assault by the US Federal Government.  There isn’t a soul alive who can out-gun the US Government if Congress and/or the President decide to make you their target.  It’s also true that nobody can make you richer, faster.  All you need to do is set up a company to pursue some goal like green energy, and they will throw federal dollars your way in the form of both direct and indirect subsidies.  A company can modify an existing product line to comply with the news standards, but all too frequently, without a political contribution, it will make no difference to the regulators.  Direct subsidies will come in the form of grants and various tax loopholes, and indirect subsidies will come in the form of tax incentives to those who will buy the target product or service.  That’s a pretty lucrative process if you can get in, and the politicians in Washington dispense your money in exchange for some cash in the contributions basket.

If you think that’s not bad enough, ask yourself what interest government would have in creating standards for who can work in the computer networking field.  Yes, even here, it’s a kickback to somebody.  Any time you see a government at any level requiring permits, certifications, or licenses to work in a particular field, you would do well to ignore their stated motives and instead follow the money.  If you want to control a thing, all you need to do is control the people who build, own, operate, and maintain it.  In this case, it’s aimed at the people with the skill-set, and it will undoubtedly lead to a greater unionization of the field that will in turn lead to higher wages in the short run, but lower productivity in the longer run.  So, who is paying whom? Once again, you will find that unions are behind this, having become a sort of corporate interest of their own, using the power of government to freeze out competitors, all on the basis that they will deliver loot and votes to politicians.

Those of you who think Republicans are or have been immune to all of this need to examine the question more closely.  One can find Republicans and Democrats using these same practices.  Democrats pretend to be the friend of the working man, denying any such connections, and Republicans use the notion that they’re business-friendly.  I’m business-friendly: I continue to reward companies that provide me the best products and services, in part by way of repeat business or word of mouth advertising on their behalf.  What some who claim to be conservative capitalists have done is to actually climb into bed with corporations for kickbacks and contributions.  That’s not “business-friendly,” but instead mere crony capitalism.

When Sarah Palin criticizes crony capitalism, it’s because she has a long and well-established track record of opposing it while serving in offices from the Mayor of Wasilla all the way to the office of Governor.  If you haven’t seen the movie, The Undefeated, it’s now out on Pay-Per-View and you can learn about her struggle against Alaska’s version of the same dirty practices.  Sarah Palin understands that there’s no way to make deals with the devil without becoming his tool, whether you’re the corporation turning to Washington’s interest, or a politician serving a corporate interest.  This is because crony capitalism seeks to avoid the normal rewards and punishments of the free market, and in the end, destroys real capitalism. What Sarah Palin offers is the opportunity to wipe this mess away, to clean up Washington, and to turn tables on the corruption within.  One of her bold proposals this Saturday offers a glimpse of the ideas for which she will fight.

We’ve all been taught about the American inventors, innovators and entrepreneurs who started with a better idea, and built empires of industry, providing jobs and wealth to the whole economy as a result.   What few of us realize is that all of this can be negated by the corruption of crony capitalism.  We’ve all seen the mom-and-pop stores die off, not for inefficiencies in all cases, but frequently because corporate giants have been legislated or regulated market power they hadn’t gained by right of their performance in the free market.  Government shouldn’t be so business-friendly that it takes the side of one business or industry over another, but all too frequently, this is what happens when politicians sell their souls to the highest bidders in exchange for maintaining their power.  Republican Independent, or Democrat, we all deserve better.  Sarah Palin understands this, and it’s why she’s fighting to clean up this mess.  She knows there can be no lasting virtue in capitalism unless we remove its corrupt imitator.  You can bet all the crony capitalists inside the beltway understand that she knows it, too.