This needs to be shared with everyone, well thought out and presented....
Full Spectrum Dominance: 8 Examples Of How The Government Is Attempting To Take Total Control Of Our Food, Our Health, Our Money And Even Our Dignity
Monday, November 22, 2010
Power-Mad Bureaucrats and the Men Who Encourage Them
It's amazing, in order not to offend a suspected terrorist, the American people must be punished for trying to live the good life that they've worked so hard to attain. Are we reaching a breaking point with political correctness?
Power-Mad Bureaucrats and the Men Who Encourage Them
Power-Mad Bureaucrats and the Men Who Encourage Them
Limousine Liberals
Last week, Warren Buffett wrote his typical folksy "thank you big government" letter in an attempt to play the "capitalist loves big government" role that he has come to embrace and prop up his buddy Obama. On CNBC I challenged his quote that people who work for him pay more in taxes than he does by suggesting that if Mr Buffett is so concerned about paying enough in taxes, that he should promote a tax on wealth instead of income since he only pays himself $100,000 per year in salary. Unfortunately, my comments never made the broadcast (hmmm.....wonder why?).
Porter Stansberry, who has been linked on this blog several times before has started quoting the phrase "Limousine Liberal" to identify scum bags like Buffett, Soro's, John Kerry, Herb Kohl, Jay Rockefeller and others who have no issue with taxing your income while they sit on billions of their own wealth. Here is an update from an earlier post regarding Obama'a former "car czar"...
Porter Stansberry: "You're the joke"
Saturday, November 20, 2010
Back in May, I made Reuters and Barron's headlines when I booed financier turned Obama "car czar" Steve Rattner during Ira Sohn's annual investment conference in New York.
Listening to him tell one lie after another about the bankruptcy of General Motors was bad enough. (And believe me… I know a little bit about GM's balance sheet, having been the first analyst anywhere to predict the carmaker's bankruptcy as early as 2005.) But having to listen to this scumbag lecture me about the evils of "income inequality" was more than I could bear.
This man was personally implicated in bribing New York state pension officials. He made close to $500 million via his private-equity fund (Quadrangle), while his investors underperformed municipal bonds. This guy lives in a $15 million home on Martha's Vineyard and in the same Fifth Avenue apartment building as George Soros.
This is a guy who flies his own plane… whose wife is the leading fundraiser for the Democratic Party. This is Arthur Sulzberger Jr. and Michael Bloomberg's best friend. And Barry Diller's. This guy spent his entire life in the rarified world of Ivy League colleges, investment banks, and New York City's most elite social circles.
And yet… even with all these advantages, he ended up accused of bribing New York State pension officials to get them to invest with his private-equity firm. (By the way… I have to hand it to Obama on appointing Rattner as the "car czar." Obama knew about the corruption charges, and appointed Rattner to restructure General Motors anyway. After all, who better to steal from bondholders than a crook?) And now, Rattner was going to lecture us, the great unwashed, about "income inequality." It was simply unbearable…
After spending about 20 minutes congratulating himself on the bailout of GM (which cost taxpayers roughly $80 billion and bondholders roughly $27 billion), Rattner put up a chart he seemed to believe indicated rich people in America were making far too much money. I let out a loud "Boooo…."
Really, it was more of a moan of agony. I just couldn't take anymore. How could such a person ever have been allowed to reach such levels of power and influence? How could an idea as obviously repelling as government-directed income redistribution ever be discussed at an investment conference filled with thousands of capitalists?
Rattner's response to my loud "boo" was remarkable. In his most condescending, the-government-knows-best tone, he said, "I hope you're joking." As if to even question the role of government in redistributing the wealth of our society made me some kind of a mental invalid or moral outrage. I replied, in a much, much louder and more hostile tone, "YOU'RE THE JOKE."
When I write about not recognizing my fellow Americans… and feeling like I live in a country called Amerika, I'm talking about the Rattnerization of our country. This guy is the very embodiment of the term "limousine liberal." He wants to raise your taxes because his income is now all sheltered. And he thinks he knows how to use your money far better than you do. In his mind, he's doing you a big favor when he raises your taxes.
As the whole global warming thing falls apart (hard to believe it's lasted this long), guys like Rattner need a new slogan. They need a new calling – a new, better, and simpler reason to motivate voters. Their cry will be "income inequality." The free market has failed, they say, because some people are getting very, very rich.
And Rattner knows the 50% or so of the people who no longer pay federal income taxes will believe income inequality is a problem (instead of the result of a wonderful technological revolution). And they will support every possible measure to correct "the problem." This will keep people like Rattner in power for a long, long time.
Look for Al Gore's next movie to be about income inequality. You think I'm kidding. But I'm not. Rattner even has a hockey stick chart, just like Gore did, showing that income inequity is soaring… and threatening to destroy us all.
Well, our buddy Rattner is back in the headlines this week… And it's not because of General Motors' initial public offering. New York Attorney General Andrew Cuomo filed two lawsuits this week accusing Rattner of bribing folks to invest in his private-equity firm, Quadrangle.
Cuomo wants at least $26 million from Rattner and a lifetime ban from the securities industry. Separately, the SEC announced Rattner agreed to pay $6.2 million to settle similar charges. Rattner issued the following statement:
While settling with the SEC begins the process of putting this matter behind me, I will not be bullied simply because the Attorney General's office prefers political considerations instead of a reasoned assessment of the facts.
This episode is the first time during 35 years in business that anyone has questioned my ethics or integrity – and I certainly did not violate the Martin Act. That's why I intend to clear my name by defending myself vigorously against this politically motivated lawsuit.
The suit alleges Rattner secured investments for Quadrangle by arranging for a firm to distribute a movie produced by David Loglisci, the New York retirement fund's chief investment officer, and his brothers. Rattner also allegedly contributed $50,000 to the reelection campaign for former New York Comptroller Alan Hevesi.
So far, Hevesi pleaded guilty to a corruption charge and agreed to cooperate in Cuomo's investigation. In total, seven people – including Hevesi and Loglisci – have pleaded guilty. Rattner hasn't, though he exercised his Fifth Amendment right not to answer questions under oath 68 times.
Regards,
Porter Stansberry
Porter Stansberry, who has been linked on this blog several times before has started quoting the phrase "Limousine Liberal" to identify scum bags like Buffett, Soro's, John Kerry, Herb Kohl, Jay Rockefeller and others who have no issue with taxing your income while they sit on billions of their own wealth. Here is an update from an earlier post regarding Obama'a former "car czar"...
Porter Stansberry: "You're the joke"
Saturday, November 20, 2010
Back in May, I made Reuters and Barron's headlines when I booed financier turned Obama "car czar" Steve Rattner during Ira Sohn's annual investment conference in New York.
Listening to him tell one lie after another about the bankruptcy of General Motors was bad enough. (And believe me… I know a little bit about GM's balance sheet, having been the first analyst anywhere to predict the carmaker's bankruptcy as early as 2005.) But having to listen to this scumbag lecture me about the evils of "income inequality" was more than I could bear.
This man was personally implicated in bribing New York state pension officials. He made close to $500 million via his private-equity fund (Quadrangle), while his investors underperformed municipal bonds. This guy lives in a $15 million home on Martha's Vineyard and in the same Fifth Avenue apartment building as George Soros.
This is a guy who flies his own plane… whose wife is the leading fundraiser for the Democratic Party. This is Arthur Sulzberger Jr. and Michael Bloomberg's best friend. And Barry Diller's. This guy spent his entire life in the rarified world of Ivy League colleges, investment banks, and New York City's most elite social circles.
And yet… even with all these advantages, he ended up accused of bribing New York State pension officials to get them to invest with his private-equity firm. (By the way… I have to hand it to Obama on appointing Rattner as the "car czar." Obama knew about the corruption charges, and appointed Rattner to restructure General Motors anyway. After all, who better to steal from bondholders than a crook?) And now, Rattner was going to lecture us, the great unwashed, about "income inequality." It was simply unbearable…
After spending about 20 minutes congratulating himself on the bailout of GM (which cost taxpayers roughly $80 billion and bondholders roughly $27 billion), Rattner put up a chart he seemed to believe indicated rich people in America were making far too much money. I let out a loud "Boooo…."
Really, it was more of a moan of agony. I just couldn't take anymore. How could such a person ever have been allowed to reach such levels of power and influence? How could an idea as obviously repelling as government-directed income redistribution ever be discussed at an investment conference filled with thousands of capitalists?
Rattner's response to my loud "boo" was remarkable. In his most condescending, the-government-knows-best tone, he said, "I hope you're joking." As if to even question the role of government in redistributing the wealth of our society made me some kind of a mental invalid or moral outrage. I replied, in a much, much louder and more hostile tone, "YOU'RE THE JOKE."
When I write about not recognizing my fellow Americans… and feeling like I live in a country called Amerika, I'm talking about the Rattnerization of our country. This guy is the very embodiment of the term "limousine liberal." He wants to raise your taxes because his income is now all sheltered. And he thinks he knows how to use your money far better than you do. In his mind, he's doing you a big favor when he raises your taxes.
As the whole global warming thing falls apart (hard to believe it's lasted this long), guys like Rattner need a new slogan. They need a new calling – a new, better, and simpler reason to motivate voters. Their cry will be "income inequality." The free market has failed, they say, because some people are getting very, very rich.
And Rattner knows the 50% or so of the people who no longer pay federal income taxes will believe income inequality is a problem (instead of the result of a wonderful technological revolution). And they will support every possible measure to correct "the problem." This will keep people like Rattner in power for a long, long time.
Look for Al Gore's next movie to be about income inequality. You think I'm kidding. But I'm not. Rattner even has a hockey stick chart, just like Gore did, showing that income inequity is soaring… and threatening to destroy us all.
Well, our buddy Rattner is back in the headlines this week… And it's not because of General Motors' initial public offering. New York Attorney General Andrew Cuomo filed two lawsuits this week accusing Rattner of bribing folks to invest in his private-equity firm, Quadrangle.
Cuomo wants at least $26 million from Rattner and a lifetime ban from the securities industry. Separately, the SEC announced Rattner agreed to pay $6.2 million to settle similar charges. Rattner issued the following statement:
While settling with the SEC begins the process of putting this matter behind me, I will not be bullied simply because the Attorney General's office prefers political considerations instead of a reasoned assessment of the facts.
This episode is the first time during 35 years in business that anyone has questioned my ethics or integrity – and I certainly did not violate the Martin Act. That's why I intend to clear my name by defending myself vigorously against this politically motivated lawsuit.
The suit alleges Rattner secured investments for Quadrangle by arranging for a firm to distribute a movie produced by David Loglisci, the New York retirement fund's chief investment officer, and his brothers. Rattner also allegedly contributed $50,000 to the reelection campaign for former New York Comptroller Alan Hevesi.
So far, Hevesi pleaded guilty to a corruption charge and agreed to cooperate in Cuomo's investigation. In total, seven people – including Hevesi and Loglisci – have pleaded guilty. Rattner hasn't, though he exercised his Fifth Amendment right not to answer questions under oath 68 times.
Regards,
Porter Stansberry
Sunday, November 21, 2010
O Deflation, Where is Thy Sting? - Thoughts From The Frontline - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
The government is creating runaway inflation in food and energy while shoring up the Wall Street Investment Banks for the next mortgage crisis......
O Deflation, Where is Thy Sting? - Thoughts From The Frontline - InvestorsInsight.com Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
O Deflation, Where is Thy Sting? - Thoughts From The Frontline - InvestorsInsight.com Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Report: Would-be plane bombers post attack details - Yahoo! News
Has anyone ever considered that these people are not going to go away or that anything short of "fighting fire with fire" is a worthless endeavor? Babies are patted down by the TSA while terrorists go about their business with little or no resistance.........
Report: Would-be plane bombers post attack details - Yahoo! News
Report: Would-be plane bombers post attack details - Yahoo! News
Wednesday, November 17, 2010
Michigan Engineering | Making Oil at Warp Speed
This type of research and not Cap and Trade or Batteries made of scarce raw materials or Corn is the answer to our future energy needs. Real science can create what junk science seeks to impair...
Michigan Engineering Making Oil at Warp Speed
Michigan Engineering Making Oil at Warp Speed
Friday, November 12, 2010
Setbacks aside, Obama claims stronger global hand - Yahoo! News
The man is delusional....prior to being elected and shortly thereafter we went around the world telling our enemies and allies alike that he was going to reduce our influence in the world. Well Mr. President, you succeeded and now the new economic leaders are treating you like the rest of the 3rd world dictators.....
Setbacks aside, Obama claims stronger global hand - Yahoo! News
Setbacks aside, Obama claims stronger global hand - Yahoo! News
End of Liberty Video
This is produced by a group calling itself the National Inflation Association. The video is long and a bit chilling...do not watch it alone or in the dark!
Independent Voters Pushed GOP Wave Further Right « Wisconsin GOP Blog
Note to Republicans...Ignore AP, ABC, CBS and NBC. You were sent to Washington to unwind this massive parasite that is sucking the life out of the American people.
We don't want Big Government compromise
We don't want Euro-socialist institutions and handout programs
We don't want any new stimulus unless it is in the form of tax cuts
We don't want more debt
We don't want to be beholden to foreign oil nor government - subsidized "clean energy" projects that are not economically sustainable
There is no such thing as CO2-based global warming only liberal hot air
Tha American people have made it pretty clear...
Independent Voters Pushed GOP Wave Further Right « Wisconsin GOP Blog
We don't want Big Government compromise
We don't want Euro-socialist institutions and handout programs
We don't want any new stimulus unless it is in the form of tax cuts
We don't want more debt
We don't want to be beholden to foreign oil nor government - subsidized "clean energy" projects that are not economically sustainable
There is no such thing as CO2-based global warming only liberal hot air
Tha American people have made it pretty clear...
Independent Voters Pushed GOP Wave Further Right « Wisconsin GOP Blog
Thursday, November 11, 2010
The Perfect Cover for the Republicans
Unwittingly, President Obama handed the Republicans a huge Christmas present when he created his own Deficit Reduction Commission. Although I sure he assumed he'd see a proposal full of Big Government solutions such as cap and trade, a Value Added Tax and Payroll tax increases for Social Security and Medicare, what he got was a well thought out and realistic plan to address the real problems with the deficit.
Think about this, with mortgage interest rates at ridiculously low levels, who wouldn't give up the interest rate deduction in exchange for a top income tax rate of 23%? Where do I sign up?
Hopefully the new Republican leadership will pound the tables over this for the next 2 years and continuously cite "Obama's own Commission" as they roll out positive changes in fiscal policy.
Can you hear us John Boehner?
Commission leaders say cutting deficit will hurt - Yahoo! News
Think about this, with mortgage interest rates at ridiculously low levels, who wouldn't give up the interest rate deduction in exchange for a top income tax rate of 23%? Where do I sign up?
Hopefully the new Republican leadership will pound the tables over this for the next 2 years and continuously cite "Obama's own Commission" as they roll out positive changes in fiscal policy.
Can you hear us John Boehner?
Commission leaders say cutting deficit will hurt - Yahoo! News
Wednesday, November 10, 2010
CURE | Race and the 2010 elections
I cannot believe that Star Parker did not win the congressional seat, she is so much more eloquent and her story is so much more compelling that Sarah Palin.
CURE Race and the 2010 elections
CURE Race and the 2010 elections
OMG! Obama Reveals He Doesn't Know What the Fed's Job Is, Supports Bernanke Anyway | Jr Deputy Accountant
Should politicians be required to pass a civic's exam before taking office?
OMG! Obama Reveals He Doesn't Know What the Fed's Job Is, Supports Bernanke Anyway Jr Deputy Accountant
OMG! Obama Reveals He Doesn't Know What the Fed's Job Is, Supports Bernanke Anyway Jr Deputy Accountant
Tuesday, November 09, 2010
Why Soaking the Rich Doesn't Work
I'm still waiting for the day when 1 Republican challenges the notion of taxing the wealthy through an income tax versus a wealth tax. Many on the left would just sit there dumbfounded if we proposed taking away 50% of a persons net worth above say....$10 million since I don't know anyone who can't live on $10 million...
Why Soaking the Rich Doesn't Work
Why Soaking the Rich Doesn't Work
Friday, November 05, 2010
Thursday, November 04, 2010
Quote of the Day
"Society is full of busybody do-gooders and navel-gazing morons who are happily eating up a larger and larger share of the nation’s once- productive capital. And, as this group grows and grows, they eventually shift from a disheartened minority down on their luck to taking full control of Congress. That’s when the taxpayer checkbooks really come out. Initiatives that begin as “state services” invariably end up making us servants to the state. And, in the end, voters only have themselves to blame."
- Joel Bowman, Whiskey and Gunpowder
- Joel Bowman, Whiskey and Gunpowder
Did Barack Obama Save America?
From an email I received this AM, author unkonwn...
"One 82-year-old lady loves Obama and she may have a very good point.� She says that Obama is amazing, and is rebuilding the American dream! She gives us an entirely new slant on the "amazing" job Obama is doing,� and she says that she will thank God for the President.� Keep reading for her additional comments and an explanation. When discussing Obama, she says:
1. Obama destroyed the Clinton Political Machine, driving a stake through the heart of Hillary's presidential aspirations - something no Republican was ever able to do.
2. Obama killed off the Kennedy Dynasty - no more Kennedys trolling Washington looking for booze and women wanting rides home.
3. Obama is destroying the Democratic Party before our eyes! Dennis Moore had never lost a race. Evan Bayh had never lost a race. Byron Dorgan had never lost a race. Harry Reid - soon to be GONE!(well..almost...) These are just a handful of the Democrats whose political careers Obama has destroyed. By the end of 2010, dozens more will be gone. Just think, in December of 2008 the Democrats were on the rise. In the last two election cycles, they had picked up 14 Senate seats and 52 House seats. The press was touting the death of the Conservative Movement and the Republican Party. However, in just one year, Obama put a stop to all of this and will probably give the House - if not the Senate - back to the Republicans.
4. Obama has completely exposed liberals and progressives for what they are. Sadly, every generation seems to need to re-learn the lesson on why they should never actually put liberals in charge. Obama is bringing home the lesson very well:
Liberals tax, borrow and spend.
Liberals won't bring themselves to protect America .
Liberals want to take over the economy.
Liberals think they know what is best for everyone.
Liberals are not happy until they are running YOUR life.
5. Obama has brought more Americans back to conservatism than anyone since Reagan. In one year, he has rejuvenated the Conservative Movement and brought out to the streets millions of freedom loving Americans. Name one other time when you saw your friends and neighbors this interested in taking back America !
6. Obama, with his "amazing leadership," has sparked the greatest period of sales of firearms and ammunition this country has seen. Law abiding citizens have rallied and have provided a "stimulus" to the sporting goods field while other industries have failed, faded, or moved off-shore.
7. In all honesty, one year ago I was more afraid than I have been in my life. Not afraid of the economy, but afraid of the direction our country was going. I thought,Americans have forgotten what this country is all about.My neighbors and friends, even strangers, have proved to me that my lack of confidence in the greatness and wisdom of the American people has been flat wrong.
8. When the American people wake up, no smooth talking teleprompter reader can fool them!� Barack Obama has served to wake up these great Americans!
Again, I want to say: "Thank you, Barack Obama!" After all, this is exactly the kind of hope and change we desperately needed!!"
"One 82-year-old lady loves Obama and she may have a very good point.� She says that Obama is amazing, and is rebuilding the American dream! She gives us an entirely new slant on the "amazing" job Obama is doing,� and she says that she will thank God for the President.� Keep reading for her additional comments and an explanation. When discussing Obama, she says:
1. Obama destroyed the Clinton Political Machine, driving a stake through the heart of Hillary's presidential aspirations - something no Republican was ever able to do.
2. Obama killed off the Kennedy Dynasty - no more Kennedys trolling Washington looking for booze and women wanting rides home.
3. Obama is destroying the Democratic Party before our eyes! Dennis Moore had never lost a race. Evan Bayh had never lost a race. Byron Dorgan had never lost a race. Harry Reid - soon to be GONE!(well..almost...) These are just a handful of the Democrats whose political careers Obama has destroyed. By the end of 2010, dozens more will be gone. Just think, in December of 2008 the Democrats were on the rise. In the last two election cycles, they had picked up 14 Senate seats and 52 House seats. The press was touting the death of the Conservative Movement and the Republican Party. However, in just one year, Obama put a stop to all of this and will probably give the House - if not the Senate - back to the Republicans.
4. Obama has completely exposed liberals and progressives for what they are. Sadly, every generation seems to need to re-learn the lesson on why they should never actually put liberals in charge. Obama is bringing home the lesson very well:
Liberals tax, borrow and spend.
Liberals won't bring themselves to protect America .
Liberals want to take over the economy.
Liberals think they know what is best for everyone.
Liberals are not happy until they are running YOUR life.
5. Obama has brought more Americans back to conservatism than anyone since Reagan. In one year, he has rejuvenated the Conservative Movement and brought out to the streets millions of freedom loving Americans. Name one other time when you saw your friends and neighbors this interested in taking back America !
6. Obama, with his "amazing leadership," has sparked the greatest period of sales of firearms and ammunition this country has seen. Law abiding citizens have rallied and have provided a "stimulus" to the sporting goods field while other industries have failed, faded, or moved off-shore.
7. In all honesty, one year ago I was more afraid than I have been in my life. Not afraid of the economy, but afraid of the direction our country was going. I thought,Americans have forgotten what this country is all about.My neighbors and friends, even strangers, have proved to me that my lack of confidence in the greatness and wisdom of the American people has been flat wrong.
8. When the American people wake up, no smooth talking teleprompter reader can fool them!� Barack Obama has served to wake up these great Americans!
Again, I want to say: "Thank you, Barack Obama!" After all, this is exactly the kind of hope and change we desperately needed!!"
Tuesday, November 02, 2010
Keynesian Confusion - John Mauldin's Outside the Box - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
A great piece about why things aren't "working as planned"...
Keynesian Confusion - John Mauldin's Outside the Box - InvestorsInsight.com Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Keynesian Confusion - John Mauldin's Outside the Box - InvestorsInsight.com Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
A Market-Based HealthCare Solution
From Heritage, I believe that if every working American was signed up for a Health Savings Account (HSA) starting with their first job (in other words, they would have to opt out if they didn't want it or were covered by their spouse's job), the debate over providing Health Care to our citizens would end in 10 years.......
The Entitlement Crisis | The Heritage Foundation
Common sense staring points for fixing our financial woes..
The Entitlement Crisis The Heritage Foundation
The Entitlement Crisis The Heritage Foundation
Monday, November 01, 2010
Friday, October 29, 2010
Thursday, October 28, 2010
Another Low for the US Government
From the 5 Minute Forecast Blog....
"...the group Transparency International just released its annual ranking of nations based on how corrupt their governments are. For the first time, the United States has fallen out of the list of 20 least-corrupt nations, coming in at No. 22.
New Zealand, Denmark and Singapore rank as the cleanest. Iraq, Burma, Afghanistan and Somalia come in at the bottom.
Coincidence? Except for Burma, each of the four most-corrupt governments in the world owes its very existence to U.S. intervention: Your tax dollars at work.
"...the group Transparency International just released its annual ranking of nations based on how corrupt their governments are. For the first time, the United States has fallen out of the list of 20 least-corrupt nations, coming in at No. 22.
New Zealand, Denmark and Singapore rank as the cleanest. Iraq, Burma, Afghanistan and Somalia come in at the bottom.
Coincidence? Except for Burma, each of the four most-corrupt governments in the world owes its very existence to U.S. intervention: Your tax dollars at work.
Wednesday, October 27, 2010
How This Economy Recovery Stacks Up - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Not only does this article point out the moronic approach that this administration and it's congressional lapdogs have taken, it also shows what a great period of growth and prosperity was ignited during the Reagan revolution. Numbers do lie but the apple to apple relative comparisons between the 1980's recovery and this one are stunning!
Hopefully some GOP candidates will take note of this....
How This Economy Recovery Stacks Up - Forecasts & Trends - InvestorsInsight.com Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Hopefully some GOP candidates will take note of this....
How This Economy Recovery Stacks Up - Forecasts & Trends - InvestorsInsight.com Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Inflation in the Real World
If you sometimes feel like a lamb being led to the slaughter, this chart won't make you feel any better...
Chart of the Week: Inflation in the Real World - Casey Research
Chart of the Week: Inflation in the Real World - Casey Research
Tuesday, October 26, 2010
How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America--and Spawned a Global Crisis
An excerpt from the book "The Monster" by Michael W Hudson
How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America--and Spawned a Global Crisis - John Mauldin's Outside the Box - InvestorsInsight.com Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America--and Spawned a Global Crisis - John Mauldin's Outside the Box - InvestorsInsight.com Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Monday, October 25, 2010
Saturday, October 23, 2010
What is the Proper Role of Government in our Economy?
Last weekend I had an exchange on LinkedIn with a connection over what our government should be doing. His argument was that the government should be focused on creating jobs, my point was that they:
This piece by Joel Bowman showed up today in my inbox which add's fuel to the discussion....
Joel Bowman, from Punta del Este, Uruguay...
In his 1958 interview with Ayn Rand, a young Mike Wallace asked the following question:
"Suppose, under your system of self-sufficiency, one single corporation were to get a stranglehold on a vital product or a raw material, uranium for instance, which might be vital for the national defense, and then would refuse to sell it to the government, then what?"
To which the original objectivist responded:
"Under a free system, no one could acquire a monopoly on anything. If you look at economics and economic history, you will discover that all monopolies have been established with government help, with the help of franchises, subsidies or any kind of government privileges. In free competition, no one could corner the market on a needed product. History will support me."
The above exchange is pertinent today for multiple reasons.
First and foremost, it calls each and every one of us to ask some very important questions of the society in which we live today...and about where it is heading tomorrow and beyond. What is the proper role of government in economics? Should, as Rand argued, there be separation of economy and state, just as there is of church and state? Should the government be able to use force and compulsion against the will of free men and women, to supersede or suspend the rights of the very individuals it affects to represent? And in what special case, if any, would this be permissible?
- Couldn't
- Shouldn't try, and;
- Should be focused on eliminating the barriers they have constructed that are now hindering economic growth
This piece by Joel Bowman showed up today in my inbox which add's fuel to the discussion....
Joel Bowman, from Punta del Este, Uruguay...
In his 1958 interview with Ayn Rand, a young Mike Wallace asked the following question:
"Under a free system, no one could acquire a monopoly on anything. If you look at economics and economic history, you will discover that all monopolies have been established with government help, with the help of franchises, subsidies or any kind of government privileges. In free competition, no one could corner the market on a needed product. History will support me."
First and foremost, it calls each and every one of us to ask some very important questions of the society in which we live today...and about where it is heading tomorrow and beyond. What is the proper role of government in economics? Should, as Rand argued, there be separation of economy and state, just as there is of church and state? Should the government be able to use force and compulsion against the will of free men and women, to supersede or suspend the rights of the very individuals it affects to represent? And in what special case, if any, would this be permissible?
Wednesday, October 20, 2010
O Canada! - John Mauldin's Outside the Box - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
This article shows proof that a liberal who truly cares about their country can find a balance and get things moving in the right direction. This is even more damning evidence that the people in power either don't have our best interests in mind or that they are totally inept......
O Canada! - John Mauldin's Outside the Box - InvestorsInsight.com Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
O Canada! - John Mauldin's Outside the Box - InvestorsInsight.com Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Failing to Learn From History
From Stansberry & Associates, The S&A Digest:
At the beginning of the American War of Independence, the Continental Congress decided to print money, the Continental. The value was supposed to be based on the Spanish dollar, the famous "pieces of eight," which equaled eight silver Spanish reales.
The Continental Congress intended on printing 2 million Continentals. It soon realized it didn't have enough to pay its debts (sound familiar?). So by 1779, the congress had printed more than 242 million Continentals. The British waged a counterfeiting campaign, compounding the problem. By the time the Continental Congress stopped printing them in 1781, it took $168 worth of Continentals to buy a $1 silver coin. Hence the old saying, "Not worth a Continental."
The Spirit of the Continental lives on in today's U.S. dollar... The Federal Reserve came about in 1913, largely as a political response to the Panic of 1907. Among the Fed's stated goals today are "conducting monetary policy... in pursuit of maximum employment, stable prices, and moderate long-term interest rates," and "maintaining the stability of the financial system."
I'll let you judge how stable the financial system is and how the Fed's doing at maintaining "maximum employment, stable prices, and moderate long-term interest rates." But the monetary policy? The Fed has done quite a number on your money: What cost $1 in 1913 now costs more than $21. What cost $1 in 2009 would have cost about $0.05 in 1913. Hence, the Federal Reserve has reduced the value of the U.S. dollar by approximately 95% during its 97-year tenure.
And the Fed's not done yet! Not by a long shot. In fact, Tim Geithner told the whole world yesterday the devaluation of the U.S. dollar is an absolute certainty now. He didn't put it in so many words. They never do. But according to Reuters, he said, "It is very important for people to understand that the United States of America, and no country around the world, can devalue its way to prosperity, to [be] competitive. It is not a viable, feasible strategy and we will not engage in it."
Geither sounds a lot like a child denying the inevitable. I learned a lot about this sort of thing growing up: "We will not devalue the currency" lives in my mind next to, "I'm not getting in that bathtub," "I'm not eating those vegetables," and perhaps most memorable of all for me, "I'm not going to bed now, because I'm not tired." Every time I uttered that last one, I was sawing logs within minutes.
Maybe after its rapid rise, the gold price is in for some type of correction. I don't know, and I don't care. The U.S. Treasury Secretary has virtually guaranteed gold will increase in value in the coming years, how can you afford not to own it? The government is manipulating the gold price; and it's determined to shove it straight up.
At the beginning of the American War of Independence, the Continental Congress decided to print money, the Continental. The value was supposed to be based on the Spanish dollar, the famous "pieces of eight," which equaled eight silver Spanish reales.
The Continental Congress intended on printing 2 million Continentals. It soon realized it didn't have enough to pay its debts (sound familiar?). So by 1779, the congress had printed more than 242 million Continentals. The British waged a counterfeiting campaign, compounding the problem. By the time the Continental Congress stopped printing them in 1781, it took $168 worth of Continentals to buy a $1 silver coin. Hence the old saying, "Not worth a Continental."
The Spirit of the Continental lives on in today's U.S. dollar... The Federal Reserve came about in 1913, largely as a political response to the Panic of 1907. Among the Fed's stated goals today are "conducting monetary policy... in pursuit of maximum employment, stable prices, and moderate long-term interest rates," and "maintaining the stability of the financial system."
I'll let you judge how stable the financial system is and how the Fed's doing at maintaining "maximum employment, stable prices, and moderate long-term interest rates." But the monetary policy? The Fed has done quite a number on your money: What cost $1 in 1913 now costs more than $21. What cost $1 in 2009 would have cost about $0.05 in 1913. Hence, the Federal Reserve has reduced the value of the U.S. dollar by approximately 95% during its 97-year tenure.
And the Fed's not done yet! Not by a long shot. In fact, Tim Geithner told the whole world yesterday the devaluation of the U.S. dollar is an absolute certainty now. He didn't put it in so many words. They never do. But according to Reuters, he said, "It is very important for people to understand that the United States of America, and no country around the world, can devalue its way to prosperity, to [be] competitive. It is not a viable, feasible strategy and we will not engage in it."
Geither sounds a lot like a child denying the inevitable. I learned a lot about this sort of thing growing up: "We will not devalue the currency" lives in my mind next to, "I'm not getting in that bathtub," "I'm not eating those vegetables," and perhaps most memorable of all for me, "I'm not going to bed now, because I'm not tired." Every time I uttered that last one, I was sawing logs within minutes.
Maybe after its rapid rise, the gold price is in for some type of correction. I don't know, and I don't care. The U.S. Treasury Secretary has virtually guaranteed gold will increase in value in the coming years, how can you afford not to own it? The government is manipulating the gold price; and it's determined to shove it straight up.
Tuesday, October 19, 2010
Monday, October 18, 2010
Sunday, October 17, 2010
Friday, October 15, 2010
Glenn Beck Calls for ‘Largest Day of Fundraising’ for Chamber of Commerce | The Blaze
Support the people who support private enterprise...
Glenn Beck Calls for ‘Largest Day of Fundraising’ for Chamber of Commerce The Blaze
Glenn Beck Calls for ‘Largest Day of Fundraising’ for Chamber of Commerce The Blaze
China and the Future of Rare Earth Elements - John Mauldin's Outside the Box - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Take note as the current "leadership" in Washington Huff's and Puff's about the Chinese currencies. The Big Bad Wolf eventually got his ass burned......
China and the Future of Rare Earth Elements - John Mauldin's Outside the Box - InvestorsInsight.com Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
China and the Future of Rare Earth Elements - John Mauldin's Outside the Box - InvestorsInsight.com Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
What You Don't Know about "Mortgagegate" Could Crush the U.S. Banking System
This needs to be taken very seriously, the Obama networks won't start reporting it until it's too late.
What You Don't Know about "Mortgagegate" Could Crush the U.S. Banking System
What You Don't Know about "Mortgagegate" Could Crush the U.S. Banking System
Thursday, October 14, 2010
Audit of UN Climate Change Panel cites lack of Scientific Evidence
In the past, the American press would have been all over this scandal. It just shows how the left has infiltrated so many of our institutions and corrpupted our society for their own twisted cause.........
Sadly, most of these people are nothing more than useful idiots.....
GetLiberty.org Home
Sadly, most of these people are nothing more than useful idiots.....
GetLiberty.org Home
The View From the Big Money Guys
There is no doubt in my mind that the current activity by the Federal Reserve is unsustainable and will end badly, that is why it is important to learn how to trade a bear market...
From Porter Stansberry
"My friend at the Value Investing Congress was impressed by hedge-fund manager Kyle Bass' speech. So much so, he's giving him $5 million to manage. Bass, with Hayman Advisors, gained notoriety after making a fortune shorting subprime mortgages. Now, he's short the entire world (the host of the conference agreed with my view that Porter could have given the same speech).
Kyle started his talk by mentioning the recently awarded Nobel Prize for economics. The folks who won the prize found increasing unemployment benefits raises unemployment. Despite this revelation, the government is still preparing to spend $1 trillion on increasing unemployment benefits.
The rest of Kyle's speech was divided into three topics – the U.S, Europe, and Japan. In short, we're all in trouble. Everyone knows the problems in the U.S... We've got too much debt. We're losing an ever-increasing amount of money each year, and we're preparing to print more money. Europe is worse. I'll get to Japan in a minute...
The world is trying to paper this problem over, but it's too late. Eventually, we'll see serial defaults across the globe. Kyle argues the central banks know it's inevitable. They're just trying to get the global economy to a point where it can handle this crisis.
On to the Federal Reserve... Kyle says the Fed is "a mental crutch for depositors." The Fed's opacity is by design. The International Monetary Fund is the same way. By charter, a European has to run the IMF, but it's in Washington, D.C. Kyle said he recently visited congressman Barney Frank and asked him why the U.S. was giving the IMF $100 billion. Frank's response: "You and I both know it's not real money. It's just a journal entry." In other words, this money will never be drawn. It's just a backstop. Kyle said the IMF granted Greece 3,000% of the money it's allowed to draw from the fund... Again, it doesn't expect this money to be repaid.
Now onto Japan... Japan has 2.5 quadrillion yen in debt. Its debt service will surpass total government revenue soon. Currently, retirement obligations and debt service costs Japan 44 trillion yen annually. The government only brings in 41 trillion yen. Japan has more people exiting the workforce every year than entering. The country can no longer fund itself internally. If Japan has to access the credit markets, its costs will increase. Kyle says it's not "if," but "when," Japan defaults. Japan's last move is to force banks to buy its debt. That will likely happen, prolonging the default. But that is Japan's last move.
Kyle is playing the Japanese default through interest-rate call options. It's like a credit default swap... He's paying a small amount of money every year to bet against Japan. When Japan starts failing, he'll make 50 to 100 times his money. Unfortunately, individual investors can't make this trade (unless your net worth is more than $100 million... then it may be possible). "
From Porter Stansberry
"My friend at the Value Investing Congress was impressed by hedge-fund manager Kyle Bass' speech. So much so, he's giving him $5 million to manage. Bass, with Hayman Advisors, gained notoriety after making a fortune shorting subprime mortgages. Now, he's short the entire world (the host of the conference agreed with my view that Porter could have given the same speech).
Kyle started his talk by mentioning the recently awarded Nobel Prize for economics. The folks who won the prize found increasing unemployment benefits raises unemployment. Despite this revelation, the government is still preparing to spend $1 trillion on increasing unemployment benefits.
The rest of Kyle's speech was divided into three topics – the U.S, Europe, and Japan. In short, we're all in trouble. Everyone knows the problems in the U.S... We've got too much debt. We're losing an ever-increasing amount of money each year, and we're preparing to print more money. Europe is worse. I'll get to Japan in a minute...
The world is trying to paper this problem over, but it's too late. Eventually, we'll see serial defaults across the globe. Kyle argues the central banks know it's inevitable. They're just trying to get the global economy to a point where it can handle this crisis.
On to the Federal Reserve... Kyle says the Fed is "a mental crutch for depositors." The Fed's opacity is by design. The International Monetary Fund is the same way. By charter, a European has to run the IMF, but it's in Washington, D.C. Kyle said he recently visited congressman Barney Frank and asked him why the U.S. was giving the IMF $100 billion. Frank's response: "You and I both know it's not real money. It's just a journal entry." In other words, this money will never be drawn. It's just a backstop. Kyle said the IMF granted Greece 3,000% of the money it's allowed to draw from the fund... Again, it doesn't expect this money to be repaid.
Now onto Japan... Japan has 2.5 quadrillion yen in debt. Its debt service will surpass total government revenue soon. Currently, retirement obligations and debt service costs Japan 44 trillion yen annually. The government only brings in 41 trillion yen. Japan has more people exiting the workforce every year than entering. The country can no longer fund itself internally. If Japan has to access the credit markets, its costs will increase. Kyle says it's not "if," but "when," Japan defaults. Japan's last move is to force banks to buy its debt. That will likely happen, prolonging the default. But that is Japan's last move.
Kyle is playing the Japanese default through interest-rate call options. It's like a credit default swap... He's paying a small amount of money every year to bet against Japan. When Japan starts failing, he'll make 50 to 100 times his money. Unfortunately, individual investors can't make this trade (unless your net worth is more than $100 million... then it may be possible). "
Wednesday, October 13, 2010
The American Housing Market Is Headed for Total Destruction
This is a must read for anyone concerned about their future savings......
The American Housing Market Is Headed for Total Destruction
The American Housing Market Is Headed for Total Destruction
Monday, October 11, 2010
Economic Depressions: Their Cause and Cure by Murray N. Rothbard
Remember that Recession is a recent economic term, likely created to ensure that we don't suffer another "depression" again.
Economic Depressions: Their Cause and Cure by Murray N. Rothbard
Economic Depressions: Their Cause and Cure by Murray N. Rothbard
The Federal Reserve is Deaf, Dumb and Blind
It is easy to be a liberal when you are wealthy or live within the sheltered confines of tenured academia where you are never accountable for your own stupid ideas.
The danger comes when they are given the power to apply their ideas on the population.....
Taipan Daily - Opportunities Behind the Headlines
The danger comes when they are given the power to apply their ideas on the population.....
Taipan Daily - Opportunities Behind the Headlines
IMF Warns Western Economies Mired in 'Near Depression'
Once again Obama believes that he knows how to spend our money better than we do.
IMF Warns Western Economies Mired in 'Near Depression'
IMF Warns Western Economies Mired in 'Near Depression'
Do You Recognize This Marxist Country?
One note worth pointing out, "Dear Leader" does not actually advocate spreading Wealth around, that would mean that he and the other millionaires in Congress would have a bite taken out of their own net worth. They simply want to keep the rest of us out of the club by confiscation of income which they can then spread around to the poor unfortunate souls that keep voting for them.....
Do You Recognize This Marxist Country?
Do You Recognize This Marxist Country?
Turning Back Obamacare
A great discussion on the weakness of the bill and various strategies that could be employed to over-turn this abomination without the President's cooperation.
Just as he has had his czars try to end-around the Constitution, an informed congress could turn the tables on him and deconstruct the bill as he watches helplessly.....
Turning Back Obamacare
Just as he has had his czars try to end-around the Constitution, an informed congress could turn the tables on him and deconstruct the bill as he watches helplessly.....
Turning Back Obamacare
Europe is Headed for an Austerity Brick Wall
We are not being informed about what is really going on in the "more progressive" countries in the west. Socialized economies are collapsing under their own weight and it will get far worse before it gets better. The masses have been trained to expect "free handouts" from the government and were never educated about where those handouts came from. Someday we will see a scene out of Soilent Green when people finally figure out what they have been fed by the progressive movement.
Taipan Daily - Opportunities Behind the Headlines
Taipan Daily - Opportunities Behind the Headlines
What's Really in the Social Security Trust Fund?
Part 3 of a series analyzing the Social Security mess.
What's Really in the Social Security Trust Fund?
What's Really in the Social Security Trust Fund?
The End of Social Security as We Know It
Social Security is well on its way to becoming just another welfare program. The idea, though loosely framed as a government sponsored annuity was never a good idea to begin with and; of course, all that money under the control of the politicians, it was doomed to eventually become what it is today no matter what we did.
The End of Social Security as We Know It
The End of Social Security as We Know It
Thursday, October 07, 2010
Obama and Wall Street an Unholy Alliance says charlie gasparino: Tech Ticker, Yahoo! Finance
Charlie Gasparino is a great investigative reporter and his last book was spot on.
obama and wall street an unholy alliance says charlie gasparino: Tech Ticker, Yahoo! Finance
obama and wall street an unholy alliance says charlie gasparino: Tech Ticker, Yahoo! Finance
Obama Use of Foe's Tax Records Reviewed
Remember when Bush was in the news every day for a year regarding "illegal" wire taps of US citizens.....?
Where is the press now?
Obama Use of Foe's Tax Records Reviewed
Where is the press now?
Obama Use of Foe's Tax Records Reviewed
Asiatic Adventurism, Part I
The idea that unfair currency rates, not over-regulation, over taxation over meddling by a government that has become the lap-dog of big labor and the radical environmental movement is simply folly. This is nothing but a stunt that will do more damage to this already weak economy.....
Asiatic Adventurism, Part I
Asiatic Adventurism, Part I
O‘Reilly Slams ABC About Cleric’s ‘Flag of Islam’ Over the White House Vow | The Blaze
If the goal of Islam is "one world guided by Sharia", then at what point do they lose protection under the 1st amendment? I don't think Hitler would have been welcomed here as he was off invading Europe......
O‘Reilly Slams ABC About Cleric’s ‘Flag of Islam’ Over the White House Vow The Blaze
O‘Reilly Slams ABC About Cleric’s ‘Flag of Islam’ Over the White House Vow The Blaze
Wednesday, October 06, 2010
ObamaCare Kicks In - Taxes Sure to Rise - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
As predicted in my wake up America series before the elections of 2008. These people have put us on a path of economic destruction starting with 3rd-world -quality healthcare.
ObamaCare Kicks In - Taxes Sure to Rise - Forecasts & Trends - InvestorsInsight.com Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
ObamaCare Kicks In - Taxes Sure to Rise - Forecasts & Trends - InvestorsInsight.com Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Monday, October 04, 2010
Sunday, October 03, 2010
Government Workers: The New Upper Crust?
This of course is the best reason for limited government. Yhe more power and influence a government can wield, the more corrupt it will become by virtue of the people running it.
Government Workers: The New Upper Crust?
Government Workers: The New Upper Crust?
Friday, October 01, 2010
Pakistan and the U.S. Exit From Afghanistan - John Mauldin's Outside the Box - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Tuesday, September 28, 2010
CURE | Who are the realists and who are the ideologues?
Please support Star Parker on her mission to free her people from the life of Government tryanny....
CURE Who are the realists and who are the ideologues?
CURE Who are the realists and who are the ideologues?
Opt Out of Social Security
Given the deplorable fiscal condition of the Social Security Trust Fund, some forward-looking Americans are asking, “Why can’t I just opt out?” Even middle-aged members of the Baby Boom generation are wondering if there will be any Social Security left for them when the time comes…and if they wouldn’t be better off abandoning the government’s mandatory retirement plan.
Opt Out of Social Security
Opt Out of Social Security
A Historical Perspective of the Social Security Nightmare
There is a socialist part to this....security?
A Historical Perspective of the Social Security Nightmare
A Historical Perspective of the Social Security Nightmare
Sunday, September 26, 2010
Observations on the 2010 Republican primaries | Conservative Outpost
In 2004, the Radical Left started cleaning house in their primaries and drove many "concervative" Democrats out of office and in many cases out of the party. Well, the Tea Party movement is starting to do the same, we have driven many Big Government, Republicans out of office and replaced the with constitution-centric candidates. The establishment doesn't like this, but we must remember that they are the minority. All we need out of 2010 is to stop Obama/Pelosi/Reid from making things worse and keep up the heat on Obama and his unelected czars.
Capturing a majority of Governorships is in my opinion even more critical. Imagine 2/3 of the states passing an Arizona-like immigration law, or 2/3 of the states passing election laws that require a Presidential candidate to submit his long-form birth certificate in order to be allowed on the ballot. The Constitution was designed to prevent what we see happening now, we simply must use the power invested in the states to take back our country from the party of big government!
The real makeover begins in 2012
Observations on the 2010 Republican primaries | Conservative Outpost
Capturing a majority of Governorships is in my opinion even more critical. Imagine 2/3 of the states passing an Arizona-like immigration law, or 2/3 of the states passing election laws that require a Presidential candidate to submit his long-form birth certificate in order to be allowed on the ballot. The Constitution was designed to prevent what we see happening now, we simply must use the power invested in the states to take back our country from the party of big government!
The real makeover begins in 2012
Observations on the 2010 Republican primaries | Conservative Outpost
Friday, September 24, 2010
Wednesday, September 22, 2010
Sunday, September 19, 2010
Big Govt's War on Middle Class
A little lesson in history. Everyday, OBAMA! appoints another czar to circumvent the congress and impose his will on the people, is a scenario like this that far away. Many who grew up in the 70's will remember Price Control attempts that failed miserably to curb inflation.
Big Govt's War on Middle Class
Big Govt's War on Middle Class
Small Biz in America - CNBC.com
Great discussion by Bernie Marcus on how out of touch the leadershipin Washington is when it comes to small business and job creation. Very timely now that OBAMA! is touting his latest financial package aimed at "helping" small business....
Small Biz in America - CNBC.com
Small Biz in America - CNBC.com
Wednesday, September 15, 2010
Obama’s Plans to Help(?) Small Business - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
A thoughtful analysis on the nonsense of the Obama push to "help" small business. None of his proposals, none, can offset the damage of Obamacare and Frank-Dodd on the small business community.
Obama’s Plans to Help(?) Small Business - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Obama’s Plans to Help(?) Small Business - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Tuesday, September 14, 2010
Major Retailers Hurt By Collapse of Consumer Debt-Spending
Here is a sign to watch for as we continue to trudge forward.....
Major Retailers Hurt By Collapse of Consumer Debt-Spending
Major Retailers Hurt By Collapse of Consumer Debt-Spending
Monday, September 13, 2010
The Iraq War: “Mission accomplished”… for the Iranians
From the 5 Minute Forecast...
So… The “combat mission” is over in Iraq, the president declared last night. Just so there’s no confusion, that’s a separate thing from the “major combat operations” his predecessor declared were over in May 2003. Mission accomplished — again!
We’ve had “defining moments” like this before. Like the Paris Peace Accords that ended U.S. involvement in the Vietnam War in early 1973. Remember how that turned out a little over two years later?
We’re not saying this is how U.S. involvement in Iraq is going to end. The embassy in Baghdad is much bigger and better fortified. Still, the Iraq adventure has set in motion a series of events that could eventually end with oil north of $200 a barrel.
– Let’s review how we got to this point: Dick Cheney and friends figured on a quick war that would put an Iraqi exile buddy of theirs named Ahmed Chalabi in power. Chalabi was a successful banker educated at MIT and Chicago. If he couldn’t transform Iraq into a Jeffersonian democracy, at least he’d keep it in Washington’s corner.
Of course, ordinary Iraqis had their own ideas about who ought to run their country after Saddam Hussein. Since Shia Arabs make up about 60% of the population, we’ve since had a succession of Shia leaders. They have trouble getting along with each other, but the point here is that most of them are on friendly terms with Iran. Many lived in exile in Iran during the Saddam era.
And it turns out old Chalabi was funneling U.S. secrets to Iran himself. Thus, the supreme irony: A war started by U.S. leaders thoroughly hostile to Iran has empowered Iraqi leaders who are generally friendly with Iran.
Mission accomplished, for Iran.
For Washington, it’s a real pickle. Just yesterday in The Wall Street Journal, columnist Gerald Seib wrote that Obama’s policy in Iraq, Afghanistan and Israel-Palestine all aim to “clear the decks in order to concentrate more intensely on the paramount challenge posed by Iran and its Islamic extremist friends.”
– That’s what makes the news from Bahrain so interesting. Bahrain is an island state in the Persian Gulf, just 150 miles from Iran. It’s home to the U.S. 5th Fleet and Naval Forces Central Command.
It’s also home to a seething cauldron of Sunni-versus-Shia conflict — the ultimate dividing line in Islam, going back to the seventh century. The rulers are Sunni. The majority of the population is Shia. You can see how this might be a problem.
In recent weeks, the government’s been rounding up Shia opposition leaders. That could rile up the Shia majority. (The U.S. Embassy is advising Americans there to avoid parts of the capital city at certain times of the day.)
And it plays right into the hands of Shia Iran, which claimed Bahrain as its own territory as recently as 1970. “Politicians in Tehran still sometimes refer to the island as Iran's 14th province,” according to analyst Simon Henderson from the Washington Institute for Near East Policy. (Remember how Saddam Hussein called Kuwait Iraq’s “19th province?” Just sayin’.)
The pot gets stirred up even more next month when Bahrain holds elections. Think about it: A ruling Sunni minority propped up in power by Washington, versus a Shia majority sympathetic to Iran.
– Bahrain could actually be a fourth flash point in the “new war” Byron King sees shaping up between Shia and Sunni across the Middle East — spurred on by an Iran seeking to restore its Persian imperial luster.
“No Empire forgets its past glory,” Byron explains. “The Iranians resent losing theirs… But now they see a chance to get it back. The nuclear bomb? Tehran's crackpot leaders don't want it just to scare Israel. They want it so they can throw a dark shadow over their Sunni Arab neighbors, too.”
This is the setup for a “new war” in a region that sits atop 66% of the world’s key energy reserves. That would send oil as high as $220 and gasoline toward $8. Byron sees this coming in as little as 12-18 months.
So… The “combat mission” is over in Iraq, the president declared last night. Just so there’s no confusion, that’s a separate thing from the “major combat operations” his predecessor declared were over in May 2003. Mission accomplished — again!
We’ve had “defining moments” like this before. Like the Paris Peace Accords that ended U.S. involvement in the Vietnam War in early 1973. Remember how that turned out a little over two years later?
We’re not saying this is how U.S. involvement in Iraq is going to end. The embassy in Baghdad is much bigger and better fortified. Still, the Iraq adventure has set in motion a series of events that could eventually end with oil north of $200 a barrel.
– Let’s review how we got to this point: Dick Cheney and friends figured on a quick war that would put an Iraqi exile buddy of theirs named Ahmed Chalabi in power. Chalabi was a successful banker educated at MIT and Chicago. If he couldn’t transform Iraq into a Jeffersonian democracy, at least he’d keep it in Washington’s corner.
Of course, ordinary Iraqis had their own ideas about who ought to run their country after Saddam Hussein. Since Shia Arabs make up about 60% of the population, we’ve since had a succession of Shia leaders. They have trouble getting along with each other, but the point here is that most of them are on friendly terms with Iran. Many lived in exile in Iran during the Saddam era.
And it turns out old Chalabi was funneling U.S. secrets to Iran himself. Thus, the supreme irony: A war started by U.S. leaders thoroughly hostile to Iran has empowered Iraqi leaders who are generally friendly with Iran.
Mission accomplished, for Iran.
For Washington, it’s a real pickle. Just yesterday in The Wall Street Journal, columnist Gerald Seib wrote that Obama’s policy in Iraq, Afghanistan and Israel-Palestine all aim to “clear the decks in order to concentrate more intensely on the paramount challenge posed by Iran and its Islamic extremist friends.”
– That’s what makes the news from Bahrain so interesting. Bahrain is an island state in the Persian Gulf, just 150 miles from Iran. It’s home to the U.S. 5th Fleet and Naval Forces Central Command.
It’s also home to a seething cauldron of Sunni-versus-Shia conflict — the ultimate dividing line in Islam, going back to the seventh century. The rulers are Sunni. The majority of the population is Shia. You can see how this might be a problem.
In recent weeks, the government’s been rounding up Shia opposition leaders. That could rile up the Shia majority. (The U.S. Embassy is advising Americans there to avoid parts of the capital city at certain times of the day.)
And it plays right into the hands of Shia Iran, which claimed Bahrain as its own territory as recently as 1970. “Politicians in Tehran still sometimes refer to the island as Iran's 14th province,” according to analyst Simon Henderson from the Washington Institute for Near East Policy. (Remember how Saddam Hussein called Kuwait Iraq’s “19th province?” Just sayin’.)
The pot gets stirred up even more next month when Bahrain holds elections. Think about it: A ruling Sunni minority propped up in power by Washington, versus a Shia majority sympathetic to Iran.
– Bahrain could actually be a fourth flash point in the “new war” Byron King sees shaping up between Shia and Sunni across the Middle East — spurred on by an Iran seeking to restore its Persian imperial luster.
“No Empire forgets its past glory,” Byron explains. “The Iranians resent losing theirs… But now they see a chance to get it back. The nuclear bomb? Tehran's crackpot leaders don't want it just to scare Israel. They want it so they can throw a dark shadow over their Sunni Arab neighbors, too.”
This is the setup for a “new war” in a region that sits atop 66% of the world’s key energy reserves. That would send oil as high as $220 and gasoline toward $8. Byron sees this coming in as little as 12-18 months.
The War on Small Business: Washington’s long train of abuses against entrepreneurs
From the 5 minute forecast...
Today, we revisit a recurring theme: the assault on enterprise. It was the subject of our symposium in Vancouver in July. In this episode, we look at a particularly vulnerable segment of the economy: small businesses.
To help set the stage, let's look at some important stats from the Small Business Administration (SBA). Small businesses:
Represent 99.7% of all employer[s]
Employ just over half of all private-sector employees
Pay 44% of total U.S. private payroll
Have generated 64% of net new jobs over the past 15 years
Create more than half of the nonfarm private gross domestic product (GDP)
Hire 40% of high-tech workers (such as scientists, engineers and computer programmers)
Are 52% home-based and 2% franchises
Made up 97.3% of all identified exporters and produced 30.2% of the known export value in FY 2007.
Small firms produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large-firm patents to be among the 1% most cited.
Further, if you look to the Kauffman Foundation, startup firms are the "sole engine" of job creation in the U.S. economy.
Kauffman crunched a data set from the Census Bureau covering the years 1977-2005. In all but seven years during that period, existing businesses cut an average 1 million jobs… while firms in existence for a year or less created 3 million.
“Policymakers tend to focus on changes in the national or state unemployment rate, or on layoffs by existing companies,” explains Kauffman VP of Research and Policy Robert Litan. “But the data from this report suggest that growth would be best boosted by supporting startup firms.”
Instead, these small firms are being strangled. Let us count the ways...
According to the National Business Group on Health, the typical large business will see its health insurance costs rise 9% next year.
But for small businesses, the numbers are rising faster. Small employers in California are looking at increases of 12-23%, on average, according to the Los Angeles Times -- one got notice of a 76% increase.
It’s an acceleration of a long-standing trend…
The government has skewed health insurance costs in favor of larger businesses for decades… and now the “health reform” law signed this year is tilting the scales that much further.
Then there’s this nugget tucked into that other legislative monstrosity known as “financial reform”: Starting in 2012, every business must issue a Form 1099 to every vendor from whom it buys more than $600 in goods or services every year.
So if you’re a small businessperson and you order $601 in office supplies from Staples over the course of a year (better keep a running total), you must issue a 1099 to Staples.
26 million sole proprietorships alone will be caught up in this net. SMC Business Councils, a business networking group, reckons its typical member currently files about 10 1099s a year. Under the new rules, SMC estimates the number could reach 200.
The idea behind this requirement is to increase compliance with existing tax law. The unintended consequence is it will bury small businesses in paperwork.
Very small firms with fewer than 20 employees already spend 45% more per employee than larger firms to comply with federal regulations, according to the SBA.
And yet... right on cue... a study released by the pithily named Transactional Records Access Clearinghouse at Syracuse University shows the IRS has increased its audit hours of small businesses (those with less than $10 million in assets) by 30% over the last five years.
At the same time, large corporations’ audit hours are down 33%.
The average amount of “underreporting” found for each audit hour of a small- or midsized business was $1,025. For a large corporation, it was $9,354.
Hmmmn... that's a good trend if you’re a lawyer at a Fortune 500 firm. It's bad if you're trying to book a tee time or grow a small business.
Today, we revisit a recurring theme: the assault on enterprise. It was the subject of our symposium in Vancouver in July. In this episode, we look at a particularly vulnerable segment of the economy: small businesses.
To help set the stage, let's look at some important stats from the Small Business Administration (SBA). Small businesses:
Represent 99.7% of all employer[s]
Employ just over half of all private-sector employees
Pay 44% of total U.S. private payroll
Have generated 64% of net new jobs over the past 15 years
Create more than half of the nonfarm private gross domestic product (GDP)
Hire 40% of high-tech workers (such as scientists, engineers and computer programmers)
Are 52% home-based and 2% franchises
Made up 97.3% of all identified exporters and produced 30.2% of the known export value in FY 2007.
Small firms produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large-firm patents to be among the 1% most cited.
Further, if you look to the Kauffman Foundation, startup firms are the "sole engine" of job creation in the U.S. economy.
Kauffman crunched a data set from the Census Bureau covering the years 1977-2005. In all but seven years during that period, existing businesses cut an average 1 million jobs… while firms in existence for a year or less created 3 million.
“Policymakers tend to focus on changes in the national or state unemployment rate, or on layoffs by existing companies,” explains Kauffman VP of Research and Policy Robert Litan. “But the data from this report suggest that growth would be best boosted by supporting startup firms.”
Instead, these small firms are being strangled. Let us count the ways...
According to the National Business Group on Health, the typical large business will see its health insurance costs rise 9% next year.
But for small businesses, the numbers are rising faster. Small employers in California are looking at increases of 12-23%, on average, according to the Los Angeles Times -- one got notice of a 76% increase.
It’s an acceleration of a long-standing trend…
The government has skewed health insurance costs in favor of larger businesses for decades… and now the “health reform” law signed this year is tilting the scales that much further.
Then there’s this nugget tucked into that other legislative monstrosity known as “financial reform”: Starting in 2012, every business must issue a Form 1099 to every vendor from whom it buys more than $600 in goods or services every year.
So if you’re a small businessperson and you order $601 in office supplies from Staples over the course of a year (better keep a running total), you must issue a 1099 to Staples.
26 million sole proprietorships alone will be caught up in this net. SMC Business Councils, a business networking group, reckons its typical member currently files about 10 1099s a year. Under the new rules, SMC estimates the number could reach 200.
The idea behind this requirement is to increase compliance with existing tax law. The unintended consequence is it will bury small businesses in paperwork.
Very small firms with fewer than 20 employees already spend 45% more per employee than larger firms to comply with federal regulations, according to the SBA.
And yet... right on cue... a study released by the pithily named Transactional Records Access Clearinghouse at Syracuse University shows the IRS has increased its audit hours of small businesses (those with less than $10 million in assets) by 30% over the last five years.
At the same time, large corporations’ audit hours are down 33%.
The average amount of “underreporting” found for each audit hour of a small- or midsized business was $1,025. For a large corporation, it was $9,354.
Hmmmn... that's a good trend if you’re a lawyer at a Fortune 500 firm. It's bad if you're trying to book a tee time or grow a small business.
Sign of the Times,
From the 5 minute forecast
Federal bailout spending now exceeds the inflation-adjusted cost of World War II, according to our friends at the Independent Institute.
Senior Fellow William Shugart says World War II cost $3.6 trillion, but the bailouts now top $4 trillion. That’s actual money out of the taxpayer’s pocket, as opposed to the $12.8 trillion “lent, spent or guaranteed” figure you run across from time to time, a chunk of which might eventually be repaid.
And that’s just the direct cost. “As a result of keeping zombie businesses alive,” Shugart writes, “bailouts misallocate scarce productive resources away from more economically efficient (and profitable) uses elsewhere in the economy, alternatives that actually would promote growth and reduce unemployment.”
Can’t have that now, can we?
Federal bailout spending now exceeds the inflation-adjusted cost of World War II, according to our friends at the Independent Institute.
Senior Fellow William Shugart says World War II cost $3.6 trillion, but the bailouts now top $4 trillion. That’s actual money out of the taxpayer’s pocket, as opposed to the $12.8 trillion “lent, spent or guaranteed” figure you run across from time to time, a chunk of which might eventually be repaid.
And that’s just the direct cost. “As a result of keeping zombie businesses alive,” Shugart writes, “bailouts misallocate scarce productive resources away from more economically efficient (and profitable) uses elsewhere in the economy, alternatives that actually would promote growth and reduce unemployment.”
Can’t have that now, can we?
What crashed Greece's banks...
From the S&A Digest...
"If the law was enforced," the tax collector said, "every doctor in Greece would be in jail."
Michael Lewis wrote a great article on the Greek collapse in Vanity Fair. He traveled to Greece and interviewed government employees, tax collectors, and monks (explained in the article). Lewis wanted to know what caused Greece to crash so spectacularly. Unlike most of the world, Greece's banks didn't use the credit expansion to load up on subprime U.S. securities and other garbage. The cause for Greece's collapse is much simpler... It's socialism and good, old-fashioned government corruption. Greek banks took all of the new money and lent it to the government. And the government did what it does best... stole and squandered. As Lewis puts it, "In Greece, the banks didn't sink the country. The country sank the banks." In the excerpt below, Lewis notes the excesses in Greece's public sector...
The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece's rail passengers into taxicabs: it's still true...
The Greek public-school system is the site of breathtaking inefficiency: one of the lowest-ranked systems in Europe, it nonetheless employs four times as many teachers per pupil as the highest-ranked, Finland's. Greeks who send their children to public schools simply assume that they will need to hire private tutors to make sure they actually learn something. There are three government-owned defense companies: together they have billions of euros in debts, and mounting losses.
The retirement age for Greek jobs classified as "arduous" is as early as 55 for men and 50 for women. As this is also the moment when the state begins to shovel out generous pensions, more than 600 Greek professions somehow managed to get themselves classified as arduous: hairdressers, radio announcers, waiters, musicians, and on and on and on. The Greek public health-care system spends far more on supplies than the European average—and it is not uncommon, several Greeks tell me, to see nurses and doctors leaving the job with their arms filled with paper towels and diapers and whatever else they can plunder from the supply closets.
The excesses in Greece's liberal government pay policies are only rivaled by the government's inability to record costs. When Greek minister of finance, George Papaconstantinou, took his post last October (his job was to solve the mess), he discovered billions of dollars of government programs that were never accounted for. The G reek government never had a third-party verify its statements... That's one reason the news from Greece continually worsened... The government continually discovered it owed more and more money.
Greece is also particularly inept at collecting taxes. No self-employed citizens pay taxes because the government doesn't make them. One of the characters quoted in the article told Lewis: "It's become a cultural trait. The Greek people never learned to pay their taxes. And they never did because no one is punished. No one has ever been punished. It's a cavalier offense – like a gentleman not opening a door for a lady." To top things off, 2009 was an election year in Greece. During election years, politicians "pull the tax collectors off the streets." You can read Lewis' full article here.
"If the law was enforced," the tax collector said, "every doctor in Greece would be in jail."
Michael Lewis wrote a great article on the Greek collapse in Vanity Fair. He traveled to Greece and interviewed government employees, tax collectors, and monks (explained in the article). Lewis wanted to know what caused Greece to crash so spectacularly. Unlike most of the world, Greece's banks didn't use the credit expansion to load up on subprime U.S. securities and other garbage. The cause for Greece's collapse is much simpler... It's socialism and good, old-fashioned government corruption. Greek banks took all of the new money and lent it to the government. And the government did what it does best... stole and squandered. As Lewis puts it, "In Greece, the banks didn't sink the country. The country sank the banks." In the excerpt below, Lewis notes the excesses in Greece's public sector...
The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece's rail passengers into taxicabs: it's still true...
The Greek public-school system is the site of breathtaking inefficiency: one of the lowest-ranked systems in Europe, it nonetheless employs four times as many teachers per pupil as the highest-ranked, Finland's. Greeks who send their children to public schools simply assume that they will need to hire private tutors to make sure they actually learn something. There are three government-owned defense companies: together they have billions of euros in debts, and mounting losses.
The retirement age for Greek jobs classified as "arduous" is as early as 55 for men and 50 for women. As this is also the moment when the state begins to shovel out generous pensions, more than 600 Greek professions somehow managed to get themselves classified as arduous: hairdressers, radio announcers, waiters, musicians, and on and on and on. The Greek public health-care system spends far more on supplies than the European average—and it is not uncommon, several Greeks tell me, to see nurses and doctors leaving the job with their arms filled with paper towels and diapers and whatever else they can plunder from the supply closets.
The excesses in Greece's liberal government pay policies are only rivaled by the government's inability to record costs. When Greek minister of finance, George Papaconstantinou, took his post last October (his job was to solve the mess), he discovered billions of dollars of government programs that were never accounted for. The G reek government never had a third-party verify its statements... That's one reason the news from Greece continually worsened... The government continually discovered it owed more and more money.
Greece is also particularly inept at collecting taxes. No self-employed citizens pay taxes because the government doesn't make them. One of the characters quoted in the article told Lewis: "It's become a cultural trait. The Greek people never learned to pay their taxes. And they never did because no one is punished. No one has ever been punished. It's a cavalier offense – like a gentleman not opening a door for a lady." To top things off, 2009 was an election year in Greece. During election years, politicians "pull the tax collectors off the streets." You can read Lewis' full article here.
The Daily Reckoning Presents You say Obama; I say Ozawa! You say boom; I say ka-boom!
The Nobel Prize committee has never withdrawn a prize. It might want to consider it. In Tuesday's New York Times, prizewinner in economics, Paul Krugman reveals either that he knows nothing about economics...or that there is nothing worth knowing in it. We're beginning to think it's the latter.
"From an economic point of view," he writes, "World War II was, above all, a burst of deficit-financed government spending, on a scale that would never have been approved otherwise. Deficit spending created an economic boom - and the boom laid the foundation for long-run prosperity...."
In the 1938 US elections, voters showed what they thought of the New Deal; Democrats lost 70 seats in the House. Then as now, the public had lost faith in public spending, says Krugman. Nearly two out of three of those polled said they were opposed to stimulus efforts. Roosevelt buckled under the pressure; he drew back from further spending to fight the slump.
Thank God for WWII! No one opposes military spending in time of war. Krugman made his position clear in 2008 in his New York Times blog.
"The fact is that war is, in general, expansionary for the economy, at least in the short run. World War II, remember, ended the Great Depression."
According to this line of thinking, the best form of stimulus spending is money spent on the military. It creates consumer demand without creating consumer supply. Consumer prices rise; people spend. The slump is soon over.
But if WWII helped the US economy, think what it must have done for Japan; proportionally, its stimulus efforts dwarfed those of the US...and began much earlier. Just this week, Ichiro Ozawa, running for prime minister of Japan, vowed to take "every measure" to lower the yen and promised a stimulus package more than twice as big as the current program. He was just following in the footsteps of Japan's leaders from the '30s. It was "economic security" they said they were after. And they thought they could get it by central planning and government spending. Military spending rose from 31% of the budget in the early '30s to nearly 50% five years later. By the early '40s it was around 70% and nearly 100% later on. Deficits and debt soared.
Did that create a boom? You bet it did. Japan was the first nation to get out of the global slump. It boomed...and boomed...and ka-boomed. When it came to warships, planes, and soldiers, Japan was soon among the richest nations in the world. Yes, Americans had more electric fans, automobiles, central heating, aspirin, ice cream, and the rest of the paraphernalia of civilized life at the time. In the mid-'30s, the US produced 40 times as many autos per person as did Japan. Even during the Great Depression, the US out-produced Japan by a factor of 7 and its workers earned 10-times as much money.
Economists can't even measure real prosperity, let alone fiddle it. So they put on the GDP and employment numbers the way a bald man puts on a cheap wig. It makes him look ridiculous and fraudulent, but it's the best he can do. Unemployment disappears in a war economy. Japan put a million men in uniform. Two million more were part-time reservists. Those who weren't in the army were put to work building tanks and planes. By 1941, Japan could produce 10,000 planes a year. If you were a swallow you wouldn't want to build your nest in Japan's factory chimneys; they belched smoke night and day.
And talk about fiscal stimulus! Krugman would have loved it - stimulus unfettered by real money or even a casual regard for real prosperity. Takahashi Korekiyo was known as the "Japanese Keynes." Gillian Tett notes in The Financial Times that he was assassinated in 1936 after he came to his senses and tried to bring state finances under control. He was done in by army officers who did not want the stimulus to stop. Not that we're being judgmental about it. As far as we know, the quality of central banking could probably be improved by an occasional assassination.
Takahashi wasn't the first. Before him Junnosuke Inoue had held out for the gold standard and balanced budgets. He was out of office by 1931 and out of luck in 1932, when he was murdered. The gold-backed yen was abolished the day he left office. Then, public spending, deficits, central planning, debt, and inflation ran wild. By 1939, the Japanese were spending $5 million a day on their war with China - a huge sum for the Japanese at the time.
Was the economy improved by all this spending? No, it was perverted...hammered into a grotesque imposter - a parody of a real economy. Most of the nation's resources were put to work building things almost no one wanted. Then, after the attack on Pearl Harbor, the stimulus efforts were redoubled. Rations were reduced further. Working hours were extended. What few consumer items were available were three times as expensive at the end of the war as they had been when it began. Men were conscripted into factories and the army. Women were expected not only to make the tanks, but to join the home-guard and prepare themselves to repulse the American invaders with sharpened bamboo sticks. What a marvelous economy - operating at full capacity and full employment until General MacArthur finally put it out of its misery.
Regards,
Bill Bonner,
for The Daily Reckoning
"From an economic point of view," he writes, "World War II was, above all, a burst of deficit-financed government spending, on a scale that would never have been approved otherwise. Deficit spending created an economic boom - and the boom laid the foundation for long-run prosperity...."
In the 1938 US elections, voters showed what they thought of the New Deal; Democrats lost 70 seats in the House. Then as now, the public had lost faith in public spending, says Krugman. Nearly two out of three of those polled said they were opposed to stimulus efforts. Roosevelt buckled under the pressure; he drew back from further spending to fight the slump.
Thank God for WWII! No one opposes military spending in time of war. Krugman made his position clear in 2008 in his New York Times blog.
"The fact is that war is, in general, expansionary for the economy, at least in the short run. World War II, remember, ended the Great Depression."
According to this line of thinking, the best form of stimulus spending is money spent on the military. It creates consumer demand without creating consumer supply. Consumer prices rise; people spend. The slump is soon over.
But if WWII helped the US economy, think what it must have done for Japan; proportionally, its stimulus efforts dwarfed those of the US...and began much earlier. Just this week, Ichiro Ozawa, running for prime minister of Japan, vowed to take "every measure" to lower the yen and promised a stimulus package more than twice as big as the current program. He was just following in the footsteps of Japan's leaders from the '30s. It was "economic security" they said they were after. And they thought they could get it by central planning and government spending. Military spending rose from 31% of the budget in the early '30s to nearly 50% five years later. By the early '40s it was around 70% and nearly 100% later on. Deficits and debt soared.
Did that create a boom? You bet it did. Japan was the first nation to get out of the global slump. It boomed...and boomed...and ka-boomed. When it came to warships, planes, and soldiers, Japan was soon among the richest nations in the world. Yes, Americans had more electric fans, automobiles, central heating, aspirin, ice cream, and the rest of the paraphernalia of civilized life at the time. In the mid-'30s, the US produced 40 times as many autos per person as did Japan. Even during the Great Depression, the US out-produced Japan by a factor of 7 and its workers earned 10-times as much money.
Economists can't even measure real prosperity, let alone fiddle it. So they put on the GDP and employment numbers the way a bald man puts on a cheap wig. It makes him look ridiculous and fraudulent, but it's the best he can do. Unemployment disappears in a war economy. Japan put a million men in uniform. Two million more were part-time reservists. Those who weren't in the army were put to work building tanks and planes. By 1941, Japan could produce 10,000 planes a year. If you were a swallow you wouldn't want to build your nest in Japan's factory chimneys; they belched smoke night and day.
And talk about fiscal stimulus! Krugman would have loved it - stimulus unfettered by real money or even a casual regard for real prosperity. Takahashi Korekiyo was known as the "Japanese Keynes." Gillian Tett notes in The Financial Times that he was assassinated in 1936 after he came to his senses and tried to bring state finances under control. He was done in by army officers who did not want the stimulus to stop. Not that we're being judgmental about it. As far as we know, the quality of central banking could probably be improved by an occasional assassination.
Takahashi wasn't the first. Before him Junnosuke Inoue had held out for the gold standard and balanced budgets. He was out of office by 1931 and out of luck in 1932, when he was murdered. The gold-backed yen was abolished the day he left office. Then, public spending, deficits, central planning, debt, and inflation ran wild. By 1939, the Japanese were spending $5 million a day on their war with China - a huge sum for the Japanese at the time.
Was the economy improved by all this spending? No, it was perverted...hammered into a grotesque imposter - a parody of a real economy. Most of the nation's resources were put to work building things almost no one wanted. Then, after the attack on Pearl Harbor, the stimulus efforts were redoubled. Rations were reduced further. Working hours were extended. What few consumer items were available were three times as expensive at the end of the war as they had been when it began. Men were conscripted into factories and the army. Women were expected not only to make the tanks, but to join the home-guard and prepare themselves to repulse the American invaders with sharpened bamboo sticks. What a marvelous economy - operating at full capacity and full employment until General MacArthur finally put it out of its misery.
Regards,
Bill Bonner,
for The Daily Reckoning
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