At some point, no matter what your opinion, you have to ask yourself three questions. #1 What exactly did Bush do to screw up the economy that we need to reverse? I mean, we blame Bush for the economy, so there must be something he was doing that he alone (or with the Republicans) was doing; some of which I covered this in my recent article, It Wasn't All Bush You can still “blame Bush,” but a more important question is(#2) , What are we going to do about it? And the #3 question is, after 20 months of Obama’s economic recovery plan, with no evidence that the economy has recovered at all, is it reasonable to ask, is Obama’s plan a failure? Should we be looking to do something else? Certainly, if you interject $500 billion into the economy and loan $800 billion to the banks, it is going to have a temporary and positive effect on the economy; and it did. But the economy is slipping back into what some are falsely calling a double dip economy. But this double dip recession appears to be the same recession less the temporary affects of the stimulus; as Ron Paul said, “You can’t have a double dip recession if the first recession never came to an end.”
Presidents like to posture that they are following some economic strategy; Reagan had “supply side”economics and Obama has Keynesian theory. But what usually happens, due to perceived political necessity like Reagan or a re-distributive ideology as with Obama, these strategies become political road kill. When Reagan compromised with the Democrats and allowed high deficits along with his tax cuts, he simply redistributed taxes as debt (and his key economic adviser David Stockman resigned). This is not to condemn what occurred, it just wasn’t supply side economics. The same with President Obama, the key to his economic reform is a Keynesian stimulus to prime the economic pump. But the President’s stimulus was not injected into areas of the economy that would result in any jobs. Rather the stimulus was written by the ultra-left Apollo Alliance to fund those areas of the economy that met with their political agenda. Even Paul Krugman had to agree, “..for all the talk of a failed stimulus, if you look at government spending as a whole you see hardly any stimulus at all.” While FDR also ran up the debt and may have extended the Great Depression, at least he had something to show for it. Where are all the work projects? Where are the dams and bridges and highways? Where are all those “shovel ready “jobs?
The Whitehouse said they saved 3 million jobs, but there are still 8 million jobs lost! Because a Keynesian stimulus is not designed specifically to create jobs, the stimulus simply disappeared in the $34 trillion of private dept. What Keynesian theory has never dealt with before are such large amounts of private debt. People are willing to maintain a rather high debt levels if they are employed, but these safety-net programs like unemployment insurance, are recognized by the unemployed as temporary. So rather than breaking us loose from the "liquidity trap," people are paying off debt and increasing their savings, hoping for the best but preparing for the worst; contrary to Nancy Pelosi saying that unemployment insurance will stimulate the economy and create jobs. This is the fatal flaw that eventually shows itself with Keynesian theory; the inability to factor in unanticipated human behavior. But even with this, the President never gave the stimulus a chance; it was more important for the Apollo Alliance to fund its progressive agenda, than to create jobs or improve the economy, which makes this the coming attraction for Cap and Trade.
Wednesday, September 1, 2010
Sunday, August 29, 2010
The Mosque and Gitmo
The first reaction anyone has to the idea of building a mosque at ground zero is, "What? You must be kidding. Why would Muslims want to draw so much negative attention to themselves?" It's a good question. Why? Even if one looks past Imam Rauf’s remarks that the US was complicit with the 911 attacks, or want to give him the benefit of the doubt that the ground zero mosque is the Islamic equivalent of an extended hand of friendship, there are overwhelming reasons why the ground zero mosque should not be built. If one believes that Guantanamo Bay is being used to recruit Islamic terrorism, what do you think the result would be if the largest mosque in America was built on ground zero of the worst terrorists’ attack on US soil. Dr Zuhdi Jasser MD the founder of the American Islamic Forum for Democracy says “Make no mistake, this Islamic center is not a spiritual statement but a global one in the name of Islam…It will be used by Islamic leadership around the world to say, ‘despite the violence that al-Qaeda perpetrated on the American population, political Islam will always be victorious and from it’s ashes has risen the largest religious Muslim structure in the United States.’”
Islam is a very compartmentalized religion, local Imams or religious leaders like a pastor, determines the form of Islam he will present to his followers. It is not unusual to ask Muslims about aspects of Islam which they will have no concept of, as their Imam does not delve into that part of Islam; they will always direct you to find a cleric that imparts and interprets that area of the Koran. But just because political jihad and sharia law are not generally taught to American Muslims, that does not mean there is not pressure to do so. Much of this pressure comes from the likes of the Muslim Brotherhood The Muslim Brotherhood and the Ground Zero Mosque, of which Amam Rauf is a member, who are considered moderate, not because they do not believe in political Islam, but because they do not purport the use of violence for proselytizing political Islam . Jasser warns us against ignoring “Islamist" or "Ilamism,” his words for political Islam that is bent on world domination, “As the (Obama) administration continues to move backwards, (outlawing) the use of specific religious Islamic terms like jihad, Islamism, and salafism, the Islamists continued to make unopposed headway in the contest of ideas. We are losing the war of ideas.”
The glaring difference of course between Gitmo and the planned ground zero mosque, is Gitmo is a Marine base and the mosque will be built on private property that would normally be protected by the Constitution’s freedom of religion. I say normally because the First Amendment right is not absolute; one would not be allowed to practice the Aztec religious rite of human sacrifice, nor was Utah allowed to become a state until the Mormons stopped their religious practice of polygamy. Any religion in the United States must still not violate the rule of law. The very existence of sharia in Islam and its use by the Muslim Brotherhood as a method of proselytizing political Islam, combined with the Amam Rauf repeated remarks regarding the need for sharia Law in the United States, show the purpose for the mosque, at least in part, is to challenge our Constitution and the rule of law. Jasser believes that Aman Rauf also continues to fan the flame of what he calls the “narrative”, or the false paradigm spread by Islamic Extremists that America is at war with and wants to extinguish Islam. The belief in this narrative is so strong, that many Muslims are taught and believe that the United States is using its full military might to destroy Islam and only Allah stops it from happening. “Until anti-Islamist Muslims wage the intellectual battle against Islamism with the Muslim consciousness, we will make no headway against the narrative.” When a religion comes with its own form of political tyranny, and the leaders and followers refuse to separate themselves from that tyranny, then it is no longer protected by our Constitution. America is not at war with Islam, but we will resist political Islam or any other tyranny no matter what it looks like or purports itself to be.
Islam is a very compartmentalized religion, local Imams or religious leaders like a pastor, determines the form of Islam he will present to his followers. It is not unusual to ask Muslims about aspects of Islam which they will have no concept of, as their Imam does not delve into that part of Islam; they will always direct you to find a cleric that imparts and interprets that area of the Koran. But just because political jihad and sharia law are not generally taught to American Muslims, that does not mean there is not pressure to do so. Much of this pressure comes from the likes of the Muslim Brotherhood The Muslim Brotherhood and the Ground Zero Mosque, of which Amam Rauf is a member, who are considered moderate, not because they do not believe in political Islam, but because they do not purport the use of violence for proselytizing political Islam . Jasser warns us against ignoring “Islamist" or "Ilamism,” his words for political Islam that is bent on world domination, “As the (Obama) administration continues to move backwards, (outlawing) the use of specific religious Islamic terms like jihad, Islamism, and salafism, the Islamists continued to make unopposed headway in the contest of ideas. We are losing the war of ideas.”
The glaring difference of course between Gitmo and the planned ground zero mosque, is Gitmo is a Marine base and the mosque will be built on private property that would normally be protected by the Constitution’s freedom of religion. I say normally because the First Amendment right is not absolute; one would not be allowed to practice the Aztec religious rite of human sacrifice, nor was Utah allowed to become a state until the Mormons stopped their religious practice of polygamy. Any religion in the United States must still not violate the rule of law. The very existence of sharia in Islam and its use by the Muslim Brotherhood as a method of proselytizing political Islam, combined with the Amam Rauf repeated remarks regarding the need for sharia Law in the United States, show the purpose for the mosque, at least in part, is to challenge our Constitution and the rule of law. Jasser believes that Aman Rauf also continues to fan the flame of what he calls the “narrative”, or the false paradigm spread by Islamic Extremists that America is at war with and wants to extinguish Islam. The belief in this narrative is so strong, that many Muslims are taught and believe that the United States is using its full military might to destroy Islam and only Allah stops it from happening. “Until anti-Islamist Muslims wage the intellectual battle against Islamism with the Muslim consciousness, we will make no headway against the narrative.” When a religion comes with its own form of political tyranny, and the leaders and followers refuse to separate themselves from that tyranny, then it is no longer protected by our Constitution. America is not at war with Islam, but we will resist political Islam or any other tyranny no matter what it looks like or purports itself to be.
It Wasn't All Bush
Obama is the first President in memory that has refused to take ownership of the economy he inherited. Because of this, our current President has presided over a US economy were the American people continue to be unsure who is responsible and what is being done. Once they took power, FDR did not blame Hoover, nor did Reagan blame Carter; both took ownership and responsibility for economy from their inauguration forward. This inspires confidence and allows the President to define the present economy and his strategy for creating growth. Obama has done neither, except to blame the previous administration. We therefore are left up in the air wondering what it is exactly that we are supposed to "Blame Bush" for and what strategy Obama is using, besides increasing public dept and expanding entitlements. So lets take a moment to review exactly what we are "Blaming Bush" for and what Obama could be doing if he were to finally take ownership of the economy.
Most have heard something about the repeal of Glass-Steagall, a post Great Depression law that was passed in hopes of preventing another depression, and in many ways what also lead to our current problems. The repeal started as a Republican bill during the Clinton Administration in 1999. The proponents of the bill were Sen. Phil Gram(R-TX) and Rep. Jim Leach(R-IO), but by the time it emerged from it's conference committee it was very bi-partisan bill and Clinton signed it into law.
What really started the ball rolling on the mortgage bubble was Clinton's ex-Director of Management and Budget Franklin Raines. Raines took control of Fannie Mae in 1999 and instituted the American Dream Commitment program which started the pilot program of increasing sub-prime loans to get previously un-qualified and more minorities home loans. By 2004 Raines was raking in the dough but the numbers were not adding up. After Raines resigned in Dec 2004, it was determined he mis-stated over $6 billion in profits adding about $90 million to his bonuses. His penalty was to return about $7 million, but the sub-prime program started by Raines exploded after he left and the rest is history. Raines is now involved in an carbon trading Investment Company waiting for cap and trade to be voted in. Neither the Republicans or Democrats did much to stop the coming melt-down, but it was Democrats such as Barney Frank and Chris Dodd that were the most vocal defenders.
Our crisis however was one of credit. The basis of the credit crunch can be traced in my opinion to Ronald Reagan. The result of Carter Stagflation (a recession with high interest rates; not believed possible till then) caused lower debt and higher savings in the private sector. As interest rates fell and the economy boomed, but the effect was misapplied supply side economics. Now this was not President Reagan's intention. Reagan cut taxes across the board, but also raised the employer tax (ie Social Security) so the Social Security fund would be solvent in the future. When there was a significant budget deficit, Reagan made a deal with the Democrts that he would raise some taxes and they would reduce spending; Reagan did his part, but the Demicrats did not. The effect on the national psyche, was actually Keynesian in nature, that with cheap money (low interest rates) the private sector could borrow their way to prosperity. This reduction in savings and excessive private debt help fuel the economy through the Bush 41 , Clinton and Bush 43 years. Much has been said of the Clinton budget surpluses, which right or wrong are mainly attributed to a lack of major military conflict during his presidency and a markedly reduced GDP, probably a result of increased taxes. The end result was an economy based on credit.
A simplistic definition of Keynesian theory: Keynes explanations of slumps ran something like this: in a normal economy, there is a high level of employment, and everyone is spending their earnings as usual. This means there is a circular flow of money in the economy, as my spending becomes part of your earnings, and your spending becomes part of my earnings. But suppose something happens to shake consumer confidence in the economy. Worried consumers may then try to weather the coming economic hardship by saving their money. But because my spending is part of your earnings, my decision to hoard money makes things worse for you. And you, responding to your own difficult times, will start hoarding money too, making things even worse for me. So there's a vicious circle at work here: people hoard money in difficult times, but times become more difficult when people hoard money. The cure for this, Keynes said, was for the central bank to expand the money supply. By putting more bills in people's hands, consumer confidence would return, people would spend, and the circular flow of money would be reestablished. (www.huppi.com). You will notice not once was there a mention of reducing unemployment, that's because Keynesian economics does not key into unemployment, only increasing the money flow. But no time in the history of economics has a private economy been so indebted. The Keynesians have no plan to stop people from paying off debt, rather than re-circulating money.
Another inherent flaw in Keynesian theory is the belief in cheap money; that it doesn't matter if you can't repay a loan as long as you can afford the interest payments. Sound familiar? When Keynesians say "expanding the money supply", they mean low interest loans and subsidizing private industry usually with large construction projects. The problem is there is no mechanism in Keynesian theory to ever actually pay back the loans and when the construction jobs ends, so does the temporary employment. As long as the Federal reserve keeps interest rates low, there will also be no incentive to save money. This reliance on borrowing cheap money has led to our current situation where business must borrow to stay in business. It is like you needing to borrow rent money, knowing you will have the money next month. You pay the rent with the borrowed money but when the next month's rent comes due, you must use what ever money has come in to pay off last months loan and then take out another loan for this month; you can never get ahead and if the bank stops loaning you're dead in the water. Government on the other hand, just keeps taking out interest only loans.
However bad the sub-prime meltdown was, and it was bad, was made ten times worse by side bets (or Credit Default Swaps) made by the investment banks like Leman Bros, AIG and of course Goldman Sachs. For every sub-prime mortgage that was loaned out, there were about 40-50 of these made up side bets made. After the meltdown, US Banks had assets, originally valued at about $1 trillion, who's value could not be determined (i.e. toxic), which basically meant they couldn't lend any money and businesses almost came to a stand still. The government first decided to just buy (or insure these toxic assets, because unlike the banks, the Fed can just hold onto them until their value can be established later. This was done during the Saving and Loan crisis of the 1980's and the Federal Government actually made money when the S&L assets were eventually sold. Unfortunately the players in all this, Henry (Hank) Paulson, Ben Bernanke, Timothy Geithner, all alumni from Goldman Sachs, knew the real danger to the banks was from the outstanding Credit Default Swaps, whose outstanding debt to the banks could be as high as $40 trillion. Therefore the expanded Troubled Asset Relief Program (TARP) money, ($1.2 Billion) ended up being distributed via AIG to US (including Goldman Sachs) and European banks to cover some of these outstanding derivatives. So instead of loosing up money to make more loans, the banks just made good with themselves.
The recession we are seeing now is the result of business holding back until they can once again run their business month to month without having to borrow money. This process is pretty much complete, but before they start hiring again, and borrowing to expand, they want to know what the new government programs and taxes are going to cost them. The only offering the Obama economists are offering is to make it easier to borrow money, this is the Keynesians concept of expanding the money supply. But until business knows what is coming down the pike, they are going to wait. Add to this Obama wanting to raise taxes by letting the Bush tax cuts expire and we are so stuck.
As a final caveat, one should look at Bush's spending compared to Obama. It is difficult to understand exactly how much $700 billion or $800 billion really is. The CBO recently released a study, that shows that Obamas stimulus @ $862 billion, cost more than 8 years of the Iraqi war under Bush. Further, although Bush created a new high in deficit spending adding $2.5 billion of debt in eight years. In 2009 Bush submitted a budget with a $487 billion deficit, but Obama added another $700 billion resulting in a $1.2 trillion deficit (the left wing media usually charges Bush with the entire amount). TARP was a two part process. Bush distributed $267 billion in 2008 and the Obama Administration distributed some $151 billion in 2009. Then, because banks and Wall Street firms repaid a net $110 billion in TARP funds in 2010, Obama claimed credit for cutting spending by that much.The combination of TARP lending in one year and much of that money being paid back in the next makes Obama's spending record for 2010 look $261 billion thriftier than it really was. This also means of the $700 billion TARP loans guarantees that were added to the 2009 Bush deficit, only $418 billion were ever disbursed of which $405 billion was repaid, but because the repaid Bush TARP money was claimed by Obama as cost saving, rather than returned to the Treasury, it continued to be counted as Bush deficit spending. Add the 2010 deficit of an estimated $1.3-1.4 trillion and Obama will have raised the national debt by over $2.5 trillion, matching Bush's 8 year debt in only 2 years. Obama and the left say these deficits are necessary to reverse to damage done by Bush, but if that is so, why don't they actually change the policies as well?
While Bush claimed to believe in supply side economics (lower taxes and cut spending), with the exception of his tax cuts, he was really a Keynesian with his spending and $152 million stimulus. While Bush was the President of note as the sub-prime bubble became critical, the seeds sewn for this recession and were planted at least as far back as the Clinton Administration. Bush even did try to regulate Fannie Mae and the other mortgage GSEs in 2003 New Agency To Oversee Freddie Mac and Fannie May, which failed. But now we see the new Financial Reform Law, still does nothing to reform the regulations of Fannie and Freddie. As usual the politicians that created the problem tell us they are the only ones that can fix it. There is also the reminder discussed by Thomas Sowell, "No President of the United States can create either a budget deficit or a budget surplus. All spending bills originate in the House of Representatives and all taxes are voted into law by Congress. Democrats controlled both houses of Congress before Barack Obama became president. The deficit he inherited was created by the Congressional Democrats, including Senator Barack Obama, who did absolutely nothing to oppose the runaway spending. He was one of the biggest of the big spenders. The last time the federal government had a budget surplus, Bill Clinton was president, so it was called 'the Clinton surplus.' But Republicans controlled the House of Representatives, where all spending bills originate, for the first time in 40 years. It was also the first budget surplus in more than a quarter of a century."
The direction I believe we need to go is what Germany is doing; read this Op-Ed piece by David Brooks and see if you don't agree The Parent Model . If any of what I have tried to explain in the article runs true, then hopefully you will realize that it's doesn't matter if you blame Bush43 as the President of record when the economy collapsed, as long as we change they way we are doing business and that is not happening.
Most have heard something about the repeal of Glass-Steagall, a post Great Depression law that was passed in hopes of preventing another depression, and in many ways what also lead to our current problems. The repeal started as a Republican bill during the Clinton Administration in 1999. The proponents of the bill were Sen. Phil Gram(R-TX) and Rep. Jim Leach(R-IO), but by the time it emerged from it's conference committee it was very bi-partisan bill and Clinton signed it into law.
What really started the ball rolling on the mortgage bubble was Clinton's ex-Director of Management and Budget Franklin Raines. Raines took control of Fannie Mae in 1999 and instituted the American Dream Commitment program which started the pilot program of increasing sub-prime loans to get previously un-qualified and more minorities home loans. By 2004 Raines was raking in the dough but the numbers were not adding up. After Raines resigned in Dec 2004, it was determined he mis-stated over $6 billion in profits adding about $90 million to his bonuses. His penalty was to return about $7 million, but the sub-prime program started by Raines exploded after he left and the rest is history. Raines is now involved in an carbon trading Investment Company waiting for cap and trade to be voted in. Neither the Republicans or Democrats did much to stop the coming melt-down, but it was Democrats such as Barney Frank and Chris Dodd that were the most vocal defenders.
Our crisis however was one of credit. The basis of the credit crunch can be traced in my opinion to Ronald Reagan. The result of Carter Stagflation (a recession with high interest rates; not believed possible till then) caused lower debt and higher savings in the private sector. As interest rates fell and the economy boomed, but the effect was misapplied supply side economics. Now this was not President Reagan's intention. Reagan cut taxes across the board, but also raised the employer tax (ie Social Security) so the Social Security fund would be solvent in the future. When there was a significant budget deficit, Reagan made a deal with the Democrts that he would raise some taxes and they would reduce spending; Reagan did his part, but the Demicrats did not. The effect on the national psyche, was actually Keynesian in nature, that with cheap money (low interest rates) the private sector could borrow their way to prosperity. This reduction in savings and excessive private debt help fuel the economy through the Bush 41 , Clinton and Bush 43 years. Much has been said of the Clinton budget surpluses, which right or wrong are mainly attributed to a lack of major military conflict during his presidency and a markedly reduced GDP, probably a result of increased taxes. The end result was an economy based on credit.
A simplistic definition of Keynesian theory: Keynes explanations of slumps ran something like this: in a normal economy, there is a high level of employment, and everyone is spending their earnings as usual. This means there is a circular flow of money in the economy, as my spending becomes part of your earnings, and your spending becomes part of my earnings. But suppose something happens to shake consumer confidence in the economy. Worried consumers may then try to weather the coming economic hardship by saving their money. But because my spending is part of your earnings, my decision to hoard money makes things worse for you. And you, responding to your own difficult times, will start hoarding money too, making things even worse for me. So there's a vicious circle at work here: people hoard money in difficult times, but times become more difficult when people hoard money. The cure for this, Keynes said, was for the central bank to expand the money supply. By putting more bills in people's hands, consumer confidence would return, people would spend, and the circular flow of money would be reestablished. (www.huppi.com). You will notice not once was there a mention of reducing unemployment, that's because Keynesian economics does not key into unemployment, only increasing the money flow. But no time in the history of economics has a private economy been so indebted. The Keynesians have no plan to stop people from paying off debt, rather than re-circulating money.
Another inherent flaw in Keynesian theory is the belief in cheap money; that it doesn't matter if you can't repay a loan as long as you can afford the interest payments. Sound familiar? When Keynesians say "expanding the money supply", they mean low interest loans and subsidizing private industry usually with large construction projects. The problem is there is no mechanism in Keynesian theory to ever actually pay back the loans and when the construction jobs ends, so does the temporary employment. As long as the Federal reserve keeps interest rates low, there will also be no incentive to save money. This reliance on borrowing cheap money has led to our current situation where business must borrow to stay in business. It is like you needing to borrow rent money, knowing you will have the money next month. You pay the rent with the borrowed money but when the next month's rent comes due, you must use what ever money has come in to pay off last months loan and then take out another loan for this month; you can never get ahead and if the bank stops loaning you're dead in the water. Government on the other hand, just keeps taking out interest only loans.
However bad the sub-prime meltdown was, and it was bad, was made ten times worse by side bets (or Credit Default Swaps) made by the investment banks like Leman Bros, AIG and of course Goldman Sachs. For every sub-prime mortgage that was loaned out, there were about 40-50 of these made up side bets made. After the meltdown, US Banks had assets, originally valued at about $1 trillion, who's value could not be determined (i.e. toxic), which basically meant they couldn't lend any money and businesses almost came to a stand still. The government first decided to just buy (or insure these toxic assets, because unlike the banks, the Fed can just hold onto them until their value can be established later. This was done during the Saving and Loan crisis of the 1980's and the Federal Government actually made money when the S&L assets were eventually sold. Unfortunately the players in all this, Henry (Hank) Paulson, Ben Bernanke, Timothy Geithner, all alumni from Goldman Sachs, knew the real danger to the banks was from the outstanding Credit Default Swaps, whose outstanding debt to the banks could be as high as $40 trillion. Therefore the expanded Troubled Asset Relief Program (TARP) money, ($1.2 Billion) ended up being distributed via AIG to US (including Goldman Sachs) and European banks to cover some of these outstanding derivatives. So instead of loosing up money to make more loans, the banks just made good with themselves.
The recession we are seeing now is the result of business holding back until they can once again run their business month to month without having to borrow money. This process is pretty much complete, but before they start hiring again, and borrowing to expand, they want to know what the new government programs and taxes are going to cost them. The only offering the Obama economists are offering is to make it easier to borrow money, this is the Keynesians concept of expanding the money supply. But until business knows what is coming down the pike, they are going to wait. Add to this Obama wanting to raise taxes by letting the Bush tax cuts expire and we are so stuck.
As a final caveat, one should look at Bush's spending compared to Obama. It is difficult to understand exactly how much $700 billion or $800 billion really is. The CBO recently released a study, that shows that Obamas stimulus @ $862 billion, cost more than 8 years of the Iraqi war under Bush. Further, although Bush created a new high in deficit spending adding $2.5 billion of debt in eight years. In 2009 Bush submitted a budget with a $487 billion deficit, but Obama added another $700 billion resulting in a $1.2 trillion deficit (the left wing media usually charges Bush with the entire amount). TARP was a two part process. Bush distributed $267 billion in 2008 and the Obama Administration distributed some $151 billion in 2009. Then, because banks and Wall Street firms repaid a net $110 billion in TARP funds in 2010, Obama claimed credit for cutting spending by that much.The combination of TARP lending in one year and much of that money being paid back in the next makes Obama's spending record for 2010 look $261 billion thriftier than it really was. This also means of the $700 billion TARP loans guarantees that were added to the 2009 Bush deficit, only $418 billion were ever disbursed of which $405 billion was repaid, but because the repaid Bush TARP money was claimed by Obama as cost saving, rather than returned to the Treasury, it continued to be counted as Bush deficit spending. Add the 2010 deficit of an estimated $1.3-1.4 trillion and Obama will have raised the national debt by over $2.5 trillion, matching Bush's 8 year debt in only 2 years. Obama and the left say these deficits are necessary to reverse to damage done by Bush, but if that is so, why don't they actually change the policies as well?
While Bush claimed to believe in supply side economics (lower taxes and cut spending), with the exception of his tax cuts, he was really a Keynesian with his spending and $152 million stimulus. While Bush was the President of note as the sub-prime bubble became critical, the seeds sewn for this recession and were planted at least as far back as the Clinton Administration. Bush even did try to regulate Fannie Mae and the other mortgage GSEs in 2003 New Agency To Oversee Freddie Mac and Fannie May, which failed. But now we see the new Financial Reform Law, still does nothing to reform the regulations of Fannie and Freddie. As usual the politicians that created the problem tell us they are the only ones that can fix it. There is also the reminder discussed by Thomas Sowell, "No President of the United States can create either a budget deficit or a budget surplus. All spending bills originate in the House of Representatives and all taxes are voted into law by Congress. Democrats controlled both houses of Congress before Barack Obama became president. The deficit he inherited was created by the Congressional Democrats, including Senator Barack Obama, who did absolutely nothing to oppose the runaway spending. He was one of the biggest of the big spenders. The last time the federal government had a budget surplus, Bill Clinton was president, so it was called 'the Clinton surplus.' But Republicans controlled the House of Representatives, where all spending bills originate, for the first time in 40 years. It was also the first budget surplus in more than a quarter of a century."
The direction I believe we need to go is what Germany is doing; read this Op-Ed piece by David Brooks and see if you don't agree The Parent Model . If any of what I have tried to explain in the article runs true, then hopefully you will realize that it's doesn't matter if you blame Bush43 as the President of record when the economy collapsed, as long as we change they way we are doing business and that is not happening.
Saturday, August 28, 2010
Germany Proves the Keynesians and Obama Wrong
Keynesian has been one of the predominant economic theories since the end of WWII. The United States is about 10 years behind Europe primarily because of the post WWII economic boom that occurred in the US, countering the Keynesian doom-sayers who predicted high unemployment and slow growth after the war. This delay has allowed economists in the US to look at Europe as kind of a crystal ball into the future. In March/April of this year there was a meeting of the G20 in England. There Obama was rebuffed for his Keynesian ways and was told Europe had had enough of high unemployment and low GDP, and rather than spend themselves into prosperity, they were going to tighten there belts and cut spending toward a path of austerity.
Paul Krugman, one of the loudest voices for Keynesian economics was beside himself. In a now infamous OP-Ed named “That ‘30s Feeling”, Krugman lambasted the Germans. “What’s the economic logic behind the government’s moves? The answer, as far as I can tell, is that there isn’t any. Press German officials to explain why they need to impose austerity on a depressed economy, and you get rationales that don’t add up. Point this out, and they come up with different rationales, which also don’t add up.” The reason Krugman was so adamant against austerity is one of Keynesian’s primary pillars is stimulus or perish; but he saw all this cheap money available to the Germans, “The key point is that while the advocates of austerity pose as hardheaded realists, doing what has to be done, they can’t and won’t justify their stance with actual numbers — because the numbers do not, in fact, support their position. Nor can they claim that markets are demanding austerity. On the contrary, the German government remains able to borrow at rock-bottom interest rates.” Krugman went on to forecast,“There will, of course, be a price for this posturing. Only part of that price will fall on Germany: German austerity will worsen the crisis in the euro area, making it that much harder for Spain and other troubled economies to recover.”
David Brooks wrote in his Op-ed piece “The Parent Model”, the German financial minister countered the Keynesians with, “Governments should not be addicted to borrowing as a quick fix to stimulate demand”. (No wonder Krugman hit the ceiling!). The Germans instead were looking reduce debt, balance budgets and increase confidence. Well it’s been 5 months and what has happened? The US is still mired in a recession with 9% employment and a flat GDP. Germany on the other hand has seen 9% growth in one quarter and unemployment has fallen. Brooks went on to say, “The results do underline one essential truth: Stimulus size is not the key factor in determining how quickly a country emerges from recession. The US tried big, but is emerging slowly, The Germans tried small and are emerging quite nicely." Obviously this is only one quarter and as Brooks mentioned, 9% is not a sustainable level of growth, but I'm sure Obama would rather have seen similar results prior to the upcoming November elections.
Since the Keynesians and Paul Krugman have been tone deaf to current economic trends, economists have been looking in other directions. One Global Investment company that has been gaining a lot of respect is PIMCO and their New Normal. "The result is a prolonged pause, or in some cases, a violent reversal in certain concepts that markets had taken for granted. We referred to it as the demise of the “great age” of private leverage, asset- and credit-based entitlements, self-regulation, policy moderation, and shrinking direct government involvement. Not surprisingly given the extent of the gains that were privatized and the losses that are now being socialized, the demise is occurring in the context of popular anger, confusion and what one of our speakers called “a morality play” in parliaments around the world." PIMCO describes this economic world view as a result of what they termed the Keynesian "end point;" from Bloomberg , “Time, devaluations, and debt restructurings might be the only way out for many nations,” Crescenzi wrote in an e-mailed note titled “Keynesian Endpoint” that referenced the Great Depression era economist John Maynard Keynes. Debt-fueled spending programs aimed at combating the global financial crisis of 2008 are among policy tools now “being seen as a magic elixir that has morphed into poison.”
To be fair to John Maynard Keynes, there is little doubt that we would consider it laughable that Paul Krugman is a self described neo-Keynesian. Keynes was a pragmatist and was continually reconstructing his theories and determining exactly how much control the government need take to steer the economy. He did not believe in any absolutes and was not the political harlequin Paul Krugman has become. Perhaps Krugman should listen to Keynes when he said, "When the facts change, I change my mind. What do you do, sir?"
Paul Krugman, one of the loudest voices for Keynesian economics was beside himself. In a now infamous OP-Ed named “That ‘30s Feeling”, Krugman lambasted the Germans. “What’s the economic logic behind the government’s moves? The answer, as far as I can tell, is that there isn’t any. Press German officials to explain why they need to impose austerity on a depressed economy, and you get rationales that don’t add up. Point this out, and they come up with different rationales, which also don’t add up.” The reason Krugman was so adamant against austerity is one of Keynesian’s primary pillars is stimulus or perish; but he saw all this cheap money available to the Germans, “The key point is that while the advocates of austerity pose as hardheaded realists, doing what has to be done, they can’t and won’t justify their stance with actual numbers — because the numbers do not, in fact, support their position. Nor can they claim that markets are demanding austerity. On the contrary, the German government remains able to borrow at rock-bottom interest rates.” Krugman went on to forecast,“There will, of course, be a price for this posturing. Only part of that price will fall on Germany: German austerity will worsen the crisis in the euro area, making it that much harder for Spain and other troubled economies to recover.”
David Brooks wrote in his Op-ed piece “The Parent Model”, the German financial minister countered the Keynesians with, “Governments should not be addicted to borrowing as a quick fix to stimulate demand”. (No wonder Krugman hit the ceiling!). The Germans instead were looking reduce debt, balance budgets and increase confidence. Well it’s been 5 months and what has happened? The US is still mired in a recession with 9% employment and a flat GDP. Germany on the other hand has seen 9% growth in one quarter and unemployment has fallen. Brooks went on to say, “The results do underline one essential truth: Stimulus size is not the key factor in determining how quickly a country emerges from recession. The US tried big, but is emerging slowly, The Germans tried small and are emerging quite nicely." Obviously this is only one quarter and as Brooks mentioned, 9% is not a sustainable level of growth, but I'm sure Obama would rather have seen similar results prior to the upcoming November elections.
Since the Keynesians and Paul Krugman have been tone deaf to current economic trends, economists have been looking in other directions. One Global Investment company that has been gaining a lot of respect is PIMCO and their New Normal. "The result is a prolonged pause, or in some cases, a violent reversal in certain concepts that markets had taken for granted. We referred to it as the demise of the “great age” of private leverage, asset- and credit-based entitlements, self-regulation, policy moderation, and shrinking direct government involvement. Not surprisingly given the extent of the gains that were privatized and the losses that are now being socialized, the demise is occurring in the context of popular anger, confusion and what one of our speakers called “a morality play” in parliaments around the world." PIMCO describes this economic world view as a result of what they termed the Keynesian "end point;" from Bloomberg , “Time, devaluations, and debt restructurings might be the only way out for many nations,” Crescenzi wrote in an e-mailed note titled “Keynesian Endpoint” that referenced the Great Depression era economist John Maynard Keynes. Debt-fueled spending programs aimed at combating the global financial crisis of 2008 are among policy tools now “being seen as a magic elixir that has morphed into poison.”
To be fair to John Maynard Keynes, there is little doubt that we would consider it laughable that Paul Krugman is a self described neo-Keynesian. Keynes was a pragmatist and was continually reconstructing his theories and determining exactly how much control the government need take to steer the economy. He did not believe in any absolutes and was not the political harlequin Paul Krugman has become. Perhaps Krugman should listen to Keynes when he said, "When the facts change, I change my mind. What do you do, sir?"
Friday, August 27, 2010
The Ground Zero Mosque and Civics 101
Recently I had an ongoing conversation on a forum for the Santa Cruz Sentinel about the ground zero mosque. I have decided to repeat some of it because it has become obvious the much of the American citizenry don't understand their Constitution and Bill of Rights. The first blog demonstrated the most common mistake, once you get past that the issue is not whether the builders have the right to build the mosque, this lack of understanding takes front stage.
"Like most emotional subjects, mosque controversy is producing more heat than light. When the anger and fear are stripped away, this is a simple question: Do the owners of this property have the right to build a community center that will contain a Muslim mosque? The answer clearly is yes. The arguments raised by the opponents are irrational and fear-based. Our Constitution specifically protects this freedom and prohibits its infringement. I am saddened by the entire controversy. It is not a proud day for our country."
&
"You can't say you believe in the 1st Amendment, then turn around and say, "But they should build somewhere else."
The red herring being thrown out by the progressive left about the ground zero mosque is this is all about the First Amendment and religious freedom; this could not be further from the truth. The reason is the Bill of Rights protects the citizenry from government, but does not restrain the citizenry. If we all agree that government has no say so about building the mosque, then whatever the citizens say or demonstrate about has no attachment to the Constitution's protection against government intrusion. The citizenry is therefore protected by the First Amendment to protest the mosque; you can't claim one right to the exclusion of another. The fact that citizens want to uphold the mosque's Constitutional right to be built and can still say the disagree where it is being built should be applauded as it demonstrates the Constitutions protection of free speech. Thomas Jefferson said, as long as you don't pick my pocket or kick me in the leg, I don't care what else you do.
The Constitution also protects the minority from being trampled over by the majority. You aren't allowed to lynch Muslims simply because some sick majority has gotten their fever up and thinks they have a right ... simply because they are the majority. And I use the term "majority" lightly. Just because a group makes the most noise, it doesn't mean they are the majority.
Your are right as far as you go. The Constitution does protects the minority from the tyranny of the majority, but only if the trampling (or tyranny) is done through or by GOVERNMENT. If a majority of the citizenry attempts tyranny over a minority or individual (which does not rise to the level of criminal action), then the minority's redress is in Civil Court, where there are civil penalties, not criminal penalties. Lynching is primarily a violation of the criminal codes of kidnapping and murder, not a federal constitutional violation. There have been exceptions, but mostly when the federal governments believes the state GOVERNMENT violated the victim's rights. There are also are also so called “hate crimes” which are generally described as a person violating the “civil (or Constitutional rights) of another. However, these civil rights violations are actually enhancements to state statute law violation and not federal Constitutional rights, and do not come into play unless a criminal violation has first occurred. Further, most hate crimes enhancements are a violation state constitutional rights, not federal constitutional rights. In the mind of many, it is the State overreaching, wanting a perpetrator to be punished not just for his crime, not for his intentions, but the thought process behind his intentions; in essence it' s a thought crime. It's a shame that our citizenry is not taught basic civics in school. The only penalty a citizen can pay for tyranny (short of a criminal violation) is that which can be calculated monetarily. That's why there are so many damn lawyers..
"Like most emotional subjects, mosque controversy is producing more heat than light. When the anger and fear are stripped away, this is a simple question: Do the owners of this property have the right to build a community center that will contain a Muslim mosque? The answer clearly is yes. The arguments raised by the opponents are irrational and fear-based. Our Constitution specifically protects this freedom and prohibits its infringement. I am saddened by the entire controversy. It is not a proud day for our country."
&
"You can't say you believe in the 1st Amendment, then turn around and say, "But they should build somewhere else."
The red herring being thrown out by the progressive left about the ground zero mosque is this is all about the First Amendment and religious freedom; this could not be further from the truth. The reason is the Bill of Rights protects the citizenry from government, but does not restrain the citizenry. If we all agree that government has no say so about building the mosque, then whatever the citizens say or demonstrate about has no attachment to the Constitution's protection against government intrusion. The citizenry is therefore protected by the First Amendment to protest the mosque; you can't claim one right to the exclusion of another. The fact that citizens want to uphold the mosque's Constitutional right to be built and can still say the disagree where it is being built should be applauded as it demonstrates the Constitutions protection of free speech. Thomas Jefferson said, as long as you don't pick my pocket or kick me in the leg, I don't care what else you do.
The Constitution also protects the minority from being trampled over by the majority. You aren't allowed to lynch Muslims simply because some sick majority has gotten their fever up and thinks they have a right ... simply because they are the majority. And I use the term "majority" lightly. Just because a group makes the most noise, it doesn't mean they are the majority.
Your are right as far as you go. The Constitution does protects the minority from the tyranny of the majority, but only if the trampling (or tyranny) is done through or by GOVERNMENT. If a majority of the citizenry attempts tyranny over a minority or individual (which does not rise to the level of criminal action), then the minority's redress is in Civil Court, where there are civil penalties, not criminal penalties. Lynching is primarily a violation of the criminal codes of kidnapping and murder, not a federal constitutional violation. There have been exceptions, but mostly when the federal governments believes the state GOVERNMENT violated the victim's rights. There are also are also so called “hate crimes” which are generally described as a person violating the “civil (or Constitutional rights) of another. However, these civil rights violations are actually enhancements to state statute law violation and not federal Constitutional rights, and do not come into play unless a criminal violation has first occurred. Further, most hate crimes enhancements are a violation state constitutional rights, not federal constitutional rights. In the mind of many, it is the State overreaching, wanting a perpetrator to be punished not just for his crime, not for his intentions, but the thought process behind his intentions; in essence it' s a thought crime. It's a shame that our citizenry is not taught basic civics in school. The only penalty a citizen can pay for tyranny (short of a criminal violation) is that which can be calculated monetarily. That's why there are so many damn lawyers..
Tuesday, August 24, 2010
There is Something Fishy About the Ground Zero Mosque
There is something wrong going on in New York. What I mean the Ground Zero mosque just doesn’t past the smell test. Imagine you are a member of the Muslim Brother hood and your agenda for the United States “is a “Civilization-Jihadist Process” with all the word means. The Ikhwan (aka the Muslim Brotherhood) must understand that their work in America is a kind of grand Jihad in eliminating and destroying the Western civilization from within and “sabotaging” its miserable house by their [own] hands and the hands of the believers so that it is eliminated and God’s religion is made victorious over all other religions. Without this level of understanding, we are not up to this challenge and have not prepared ourselves for Jihad yet. It is a Muslim’s destiny to perform Jihad and work wherever he is and wherever he lands until the final hour comes, and there is no escape from that destiny except for those who chose to slack. But, would the slackers and the Mujahedeen be equal.” The Muslim Brotherhood and the Ground Zero Mosque.
This was written in 1991; 10 years later came 911, but thanks to President Bush, there was little retaliation against the Muslims in the US. In the 10 years since 911, the US has been at war with Muslims extremists in Afghanistan and whileAmericans have seen the continued atrocities of these Muslim extremists that are aligned with those that brought down the twin towers and murdered 3000 civilians in New York, we continue to welcome American Muslims into our culture. The majority of Americans holds our freedoms sacred, and will always give those the benefit of the doubt when it comes to their religious beliefs, even when a segment of that religion are cowardly terrorists that annihilated our brothers and sisters. If it is the intent of the Muslim Brotherhood, and I firmly believe that it to “eliminate and destroy” the Western civilization from within and “sabotaging” its miserable house by their [own] hands and the hands of the believers so that it is eliminated and God’s religion is made victorious over all other religions, would you then plant the flag of victory for the terrorist at the site of the 911 attack?
In no other country would we be even having this discussion. There is no other country in the world that is so forgiving as the American people. This is a country where most the racism that exists is that baited by the progressives (if one take a moment to review history you will see that like all those who judge others, the progressives mostly judge what they see in others for what they most hate in themselves). The most often cited reason for distrust of Muslims has nothing to do with religious rights at all, at least in the traditional sense. It is well known that Islam carries with it it’s own criminal justice system called Sharia (or Shariah). The primary tactic used for proselytizing Sharia Law, aka Dawa (or Dawah), is interjecting Sharia law into a nation, trying create a two tier justice system. Imam Fiesal Abdual Raouf, the front man for the Ground Zero mosque, has attempted to make some headway in the United states by saying the Constitution is Sharia compliant, however Americans had stood fast in opposition to any to attempt to honor any aspect of Sharia law as Americans still hold the Constitution and Rule of Law sacred.
So what is going on here? Why would the Muslim Brotherhood seemingly shot themselves in the foot and create so much anti-Muslim sentiment? This is not Islamphobia as the progressive media is so willing to judge, as the American people have had every right to mistrust Muslims, but have generally offered our hand in friendship instead. This is something else. If I had to venture a guess, I would think we are looking at the moral equivalent of two opposing Christian armies meeting in no-man’s land during a Christmas cease fire. The generals could not allow the soldiers humanizing each other so they were fired upon to separate them. What I believe is the Muslim Brotherhood is losing control. Like any religion that comes to America, they are soon “corrupted” by the ways of liberty and freedom. They actually start believing the Imam Fiesal Abdual Raoul rhetoric that the Constitution is Sharia compliant; so it is starting to be viewed as a replacement? American Muslims see a country where other religions are truly accepted and encouraged (I have always been wary of the acceptance by Islam of other religions, when history shows them tearing down the churches and synagogues of conquered cities to build mosques in their place; I’m guessing they were accepting in a more historical sense). Imam Fiesal Abdual Raoul wanted to ease Sharia law into the United States, but what he is seeing is American Muslims that have no need for such an antiqued justice system and without Sharia law, Islam as it is known would not exist. An excellent on point article is A Patriotic Muslim's Warning On Ground Zero Mosque.
Without Sharia law, Islam simply becomes another respected religion in America. The Muslim Brotherhood through Imam Fiesal Adual Raoul had to throw up a wall between the American people and the America Muslims, and create the impression Muslims are being discriminated against so they will continue to seek out Sharia law. What we are seeing is not Islamphopia, the fear is coming from the other side. The American Muslims are simply becoming Americans, not part of the plan for an Islamic world revolution contained in the constraints of Sharia law.
This was written in 1991; 10 years later came 911, but thanks to President Bush, there was little retaliation against the Muslims in the US. In the 10 years since 911, the US has been at war with Muslims extremists in Afghanistan and whileAmericans have seen the continued atrocities of these Muslim extremists that are aligned with those that brought down the twin towers and murdered 3000 civilians in New York, we continue to welcome American Muslims into our culture. The majority of Americans holds our freedoms sacred, and will always give those the benefit of the doubt when it comes to their religious beliefs, even when a segment of that religion are cowardly terrorists that annihilated our brothers and sisters. If it is the intent of the Muslim Brotherhood, and I firmly believe that it to “eliminate and destroy” the Western civilization from within and “sabotaging” its miserable house by their [own] hands and the hands of the believers so that it is eliminated and God’s religion is made victorious over all other religions, would you then plant the flag of victory for the terrorist at the site of the 911 attack?
In no other country would we be even having this discussion. There is no other country in the world that is so forgiving as the American people. This is a country where most the racism that exists is that baited by the progressives (if one take a moment to review history you will see that like all those who judge others, the progressives mostly judge what they see in others for what they most hate in themselves). The most often cited reason for distrust of Muslims has nothing to do with religious rights at all, at least in the traditional sense. It is well known that Islam carries with it it’s own criminal justice system called Sharia (or Shariah). The primary tactic used for proselytizing Sharia Law, aka Dawa (or Dawah), is interjecting Sharia law into a nation, trying create a two tier justice system. Imam Fiesal Abdual Raouf, the front man for the Ground Zero mosque, has attempted to make some headway in the United states by saying the Constitution is Sharia compliant, however Americans had stood fast in opposition to any to attempt to honor any aspect of Sharia law as Americans still hold the Constitution and Rule of Law sacred.
So what is going on here? Why would the Muslim Brotherhood seemingly shot themselves in the foot and create so much anti-Muslim sentiment? This is not Islamphobia as the progressive media is so willing to judge, as the American people have had every right to mistrust Muslims, but have generally offered our hand in friendship instead. This is something else. If I had to venture a guess, I would think we are looking at the moral equivalent of two opposing Christian armies meeting in no-man’s land during a Christmas cease fire. The generals could not allow the soldiers humanizing each other so they were fired upon to separate them. What I believe is the Muslim Brotherhood is losing control. Like any religion that comes to America, they are soon “corrupted” by the ways of liberty and freedom. They actually start believing the Imam Fiesal Abdual Raoul rhetoric that the Constitution is Sharia compliant; so it is starting to be viewed as a replacement? American Muslims see a country where other religions are truly accepted and encouraged (I have always been wary of the acceptance by Islam of other religions, when history shows them tearing down the churches and synagogues of conquered cities to build mosques in their place; I’m guessing they were accepting in a more historical sense). Imam Fiesal Abdual Raoul wanted to ease Sharia law into the United States, but what he is seeing is American Muslims that have no need for such an antiqued justice system and without Sharia law, Islam as it is known would not exist. An excellent on point article is A Patriotic Muslim's Warning On Ground Zero Mosque.
Without Sharia law, Islam simply becomes another respected religion in America. The Muslim Brotherhood through Imam Fiesal Adual Raoul had to throw up a wall between the American people and the America Muslims, and create the impression Muslims are being discriminated against so they will continue to seek out Sharia law. What we are seeing is not Islamphopia, the fear is coming from the other side. The American Muslims are simply becoming Americans, not part of the plan for an Islamic world revolution contained in the constraints of Sharia law.
Monday, August 23, 2010
The Muslim Brotherhood and the Ground Zero Mosque
The world organization that has dedicated itself to world wide Sharia law is the Muslim Brotherhood; a religious and political organization that had it's start in Egypt in 1928. The primary goal is "the upbringing of an Islamic generation" through the restructuring of society and religious education. The Muslim Brotherhood has been active in the United states since 1960 with it's stated purpose as Dawa (proselytizing Sharia Law; see Where is the Outcry from Mainstream Muslims). The Muslim Brotherhood is considered moderate for it's belief in non-violent jihad as the method for converting the world to Islam; they have close ties to Hamas, are vehemently anti-Zionist and are the organizers of the recent flotilla demonstrations trying to run the blockade of Gaza. However in May of 1991, a inflammable memorandum called the “Understanding the role of the Muslim Brother in North America,” was distributed by Mohamed Akram, Dr. Mohamed Akram Adlouni (or Adluni) to high ranking members in the United States. At the time of writing, Adlouni was one of the key players within the Muslim Brotherhood in the U.S. He was a member of the Shura Council and five departments within the apparatus including, the Planning department; the Special Committee and the Secretary of the Palestine Committee The Muslim Brotherhood in the United States,. Article 4 of his memorandum states, “The process of settlement is a “Civilization-Jihadist Process” with all the word means. The Ikhwan (aka the Muslim Brotherhood) must understand that their work in America is a kind of grand Jihad in eliminating and destroying the Western civilization from within and “sabotaging” its miserable house by their [own] hands and the hands of the believers so that it is eliminated and God’s religion is made victorious over all other religions. Without this level of understanding, we are not up to this challenge and have not prepared ourselves for Jihad yet. It is a Muslim’s destiny to perform Jihad and work wherever he is and wherever he lands until the final hour comes, and there is no escape from that destiny except for those who chose to slack. But, would the slackers and the Mujahedeen be equal.” The Muslim Brotherhood is the largest collective of Muslim organizations in the world. Imam Fiesal Abdual Raouf, the front man for the NY ground zero mosque, is a high ranking member of this organization from Malaysia, currently operating in the United States. His father, Mohammed Abdul Rauf, is a close contemporary of the Muslin Brotherhood founder Hassan al-Banna.
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