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?
Tuesday, September 28, 2010
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
Fidel Castro on the Futility of the Cuban Economic System
From the Daily Reckoning
Fidel Castro is back on the job. After a long illness, the man is back at work...running his island nation into the ground.
Fifty years ago, Cuba was the most prosperous, most fun-loving, most- likely-to-succeed nation in Latin America. But...uh oh...it had a dictator.
So, Fidel Castro and his band of sociopaths and incompetents took over. One of Fidel's first acts as the new dictator was to appoint Che Guevara to run the central bank. What a mistake that was. Che was no better banker than he was anything else...which is to say, he was terrible. Soon, the economy was a wreck. Fidel figured he should get rid of Che...so Che was packed off to begin a series of very stupid attempts to export revolution...first, with a criminal gang in Africa, which ended in disaster for everyone...and second, where at least Che could speak the language, in South America. That one ended in disaster for Che...which is to say, it was a plus for the rest of the world.
But El Presidente is no fool. And now he's come to see that his economic model doesn't work. Bloomberg reports:
Fidel Castro's comment to a visiting US journalist that Cuba's economic system doesn't work is the strongest signal yet that the communist island is looking to private enterprise and foreign investment to bolster growth.
"The Cuban model doesn't even work for us anymore," Castro told journalist Jeffrey Goldberg after being asked if he believed it was something still worth exporting, according to a post yesterday on The Atlantic magazine's website. Castro didn't elaborate on his comment, Goldberg said.
Since re-entering the public sphere in July following an illness that almost killed him, statements by the 84-year-old former president have focused on international affairs. His silence on domestic issues signals he is willing to allow his brother Raul to reduce state control of the economy, said Tomas Bilbao, executive director of the Washington-based Cuba Study Group, which promotes free-market overhaul of the Cuban economy.
"These are pragmatic admissions from an idealist," Bilbao said. "Ever since he came back he has stayed away from talking about domestic issues which in itself is the best thing he can do to support his brother's running of the country."
Raul Castro, 79, has initiated measures to open the economy since being handed power by his brother in 2006. The moves come as the economy suffers its worst slide since the former Soviet Union ended its support in the 1990s, Bilbao said.
In a speech to the National Assembly on Aug. 1, Raul said that the government will allow more citizens to work for themselves rather than for the state. He warned that some government workers will lose their jobs to reduce inefficiency.
Property Laws
That month, the government loosened controls that prohibited Cubans from selling their own fruit and vegetables. It also eased property laws, extending lease periods to 99 years from 50 years for foreign investors in an effort to build up a tourism infrastructure and draw more visitors to the Caribbean island of 11.4 million people.
Cubans can now run private taxi companies, own mobile phones and operate their own barbershops. The state still controls 90 percent of the economy, paying workers salaries of about $20 a month in addition to free rationed food staples and health care, and nearly free housing and transportation.
The island's economy is suffering after prices for exports such as sugar and seafood fell. Cuba, the world's seventh- biggest nickel exporter, has seen the price of that metal tumble 59 percent this year.
Raul said in July that one in five state workers may not be needed to keep the government running. The Cuban government employs 95 percent of the country's workforce.
Cuba now receives about 100,000 barrels of oil a day from Venezuela, which Cuba pays for by sending medical staff to work in the South American country's community clinics. Venezuela has suffered five consecutive quarters of economic contraction and Cuba is looking to diversify its trade partners, Bilbao said.
What surprises us is that anyone thought the Cuban model would ever work.
Regards,
Bill Bonner,
for The Daily Reckoning
Fidel Castro is back on the job. After a long illness, the man is back at work...running his island nation into the ground.
Fifty years ago, Cuba was the most prosperous, most fun-loving, most- likely-to-succeed nation in Latin America. But...uh oh...it had a dictator.
So, Fidel Castro and his band of sociopaths and incompetents took over. One of Fidel's first acts as the new dictator was to appoint Che Guevara to run the central bank. What a mistake that was. Che was no better banker than he was anything else...which is to say, he was terrible. Soon, the economy was a wreck. Fidel figured he should get rid of Che...so Che was packed off to begin a series of very stupid attempts to export revolution...first, with a criminal gang in Africa, which ended in disaster for everyone...and second, where at least Che could speak the language, in South America. That one ended in disaster for Che...which is to say, it was a plus for the rest of the world.
But El Presidente is no fool. And now he's come to see that his economic model doesn't work. Bloomberg reports:
Fidel Castro's comment to a visiting US journalist that Cuba's economic system doesn't work is the strongest signal yet that the communist island is looking to private enterprise and foreign investment to bolster growth.
"The Cuban model doesn't even work for us anymore," Castro told journalist Jeffrey Goldberg after being asked if he believed it was something still worth exporting, according to a post yesterday on The Atlantic magazine's website. Castro didn't elaborate on his comment, Goldberg said.
Since re-entering the public sphere in July following an illness that almost killed him, statements by the 84-year-old former president have focused on international affairs. His silence on domestic issues signals he is willing to allow his brother Raul to reduce state control of the economy, said Tomas Bilbao, executive director of the Washington-based Cuba Study Group, which promotes free-market overhaul of the Cuban economy.
"These are pragmatic admissions from an idealist," Bilbao said. "Ever since he came back he has stayed away from talking about domestic issues which in itself is the best thing he can do to support his brother's running of the country."
Raul Castro, 79, has initiated measures to open the economy since being handed power by his brother in 2006. The moves come as the economy suffers its worst slide since the former Soviet Union ended its support in the 1990s, Bilbao said.
In a speech to the National Assembly on Aug. 1, Raul said that the government will allow more citizens to work for themselves rather than for the state. He warned that some government workers will lose their jobs to reduce inefficiency.
Property Laws
That month, the government loosened controls that prohibited Cubans from selling their own fruit and vegetables. It also eased property laws, extending lease periods to 99 years from 50 years for foreign investors in an effort to build up a tourism infrastructure and draw more visitors to the Caribbean island of 11.4 million people.
Cubans can now run private taxi companies, own mobile phones and operate their own barbershops. The state still controls 90 percent of the economy, paying workers salaries of about $20 a month in addition to free rationed food staples and health care, and nearly free housing and transportation.
The island's economy is suffering after prices for exports such as sugar and seafood fell. Cuba, the world's seventh- biggest nickel exporter, has seen the price of that metal tumble 59 percent this year.
Raul said in July that one in five state workers may not be needed to keep the government running. The Cuban government employs 95 percent of the country's workforce.
Cuba now receives about 100,000 barrels of oil a day from Venezuela, which Cuba pays for by sending medical staff to work in the South American country's community clinics. Venezuela has suffered five consecutive quarters of economic contraction and Cuba is looking to diversify its trade partners, Bilbao said.
What surprises us is that anyone thought the Cuban model would ever work.
Regards,
Bill Bonner,
for The Daily Reckoning
Friday, September 10, 2010
Andy Xie: The Financial Industry Is A 'Gigantic Parasite' We Don't Need Anymore
Great piece around the concept of industrial obsolesence. Too often we assume that things must exist without asking why?
Andy Xie: The Financial Industry Is A 'Gigantic Parasite' We Don't Need Anymore
Andy Xie: The Financial Industry Is A 'Gigantic Parasite' We Don't Need Anymore
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