February 28, 2009
If Kennedy were to see the direction President Obama is taking the country, I'm sure he would not be disappointed - he would be horrified. Pay attention to the principles Kennedy espouses and contrast it with Obama, or Pelosi or Reid. Kennedy himself would be attending a Tea Party if he were alive today.
I feel tonight somewhat like I felt when I addressed in 1960 the Houston Ministers Conference on the separation of church and state. But I am glad to have a chance to talk to you tonight about the advantages of the free enterprise system.
Less than a month ago, this nation reminded the world that it possessed both the will and the weapons to meet any threat to the security of free men. The gains we have made will not be given up and the course that we have pursued will not be abandoned. But in the long run, that security will not be determined by military or diplomatic moves alone. It will be affected by the decisions of finance ministers, as well as by the decisions of Secretaries of State and Secretaries of Defense; by the deployment of fiscal and monetary weapons, as well as by military weapons; and, above all, by the strength of this nation's economy, as well as by the strength of our defenses.
America's rise to world leadership in the century since the Civil War has reflected more than anything else our unprecedented economic growth. Interrupted during the decade of the 30s, the vigorous expansion of our economy was resumed in 1940 and continued for more than 15 years thereafter. It demonstrated for all to see the power of freedom and the efficiency of free institutions. The economic health of this nation has been, and is now, fundamentally sound.
There are a number of ways by which the federal government can meet its responsibilities to aid economic growth. We can and must improve American education and technical training. We can and must expand civilian research and technology. One of the great bottlenecks for this country's economic growth in this decade will be the shortages of doctorates in mathematics, engineering, and physics — a serious shortage with a great demand and an undersupply of highly trained manpower. We can and must step up the development of our natural resources.
But the most direct and significant kind of federal action aiding economic growth is to make possible an increase in private consumption and investment demand — to cut the fetters which hold back private spending. In the past, this could be done in part by the increased use of credit and monetary tools, but our balance of payments situation today places limits on our use of those tools for expansion. It could also be done by increasing federal expenditures more rapidly than necessary, but such a course would soon demoralize both the government and our economy. If government is to retain the confidence of the people, it must not spend more than can be justified on grounds of national need or spent with maximum efficiency. And I shall say more on this in a moment.
The final and best means of strengthening demand among consumers and business is to reduce the burden on private income and the deterrents to private initiative which are imposed by our present tax system — and this administration pledged itself last summer to an across-the-board, top-to-bottom cut in personal and corporate income taxes to be enacted and become effective in 1963.
I'm not talking about a "quickie" or a temporary tax cut, which would be more appropriate if a recession were imminent. Nor am I talking about giving the economy a mere shot in the arm, to ease some temporary complaint. I am talking about the accumulated evidence of the last five years that our present tax system, developed as it was, in good part, during World War II to restrain growth, exerts too heavy a drag on growth in peace time; that it siphons out of the private economy too large a share of personal and business purchasing power; that it reduces the financial incentives for personal effort, investment, and risk-taking. In short, to increase demand and lift the economy, the federal government's most useful role is not to rush into a program of excessive increases in public expenditures, but to expand the incentives and opportunities for private expenditures.
Under these circumstances, any new tax legislation — and you can understand that under the comity which exists in the United States Constitution whereby the Ways and Means Committee in the House of Representatives have the responsibility of initiating this legislation, that the details of any proposal should wait on the meeting of the Congress in January. But you can understand that, under these circumstances, in general, that any new tax legislation enacted next year should meet the following three tests:
First, it should reduce the net taxes by a sufficiently early date and a sufficiently large amount to do the job required. Early action could give us extra leverage, added results, and important insurance against recession. Too large a tax cut, of course, could result in inflation and insufficient future revenues — but the greater danger is a tax cut too little, or too late, to be effective.
Second, the new tax bill must increase private consumption, as well as investment. Consumers are still spending between 92 and 94 percent on their after-tax income, as they have every year since 1950. But that after-tax income could and should be greater, providing stronger markets for the products of American industry. When consumers purchase more goods, plants use more of their capacity, men are hired instead of laid-off, investment increases, and profits are high.
Corporate tax rates must also be cut to increase incentives and the availability of investment capital. The government has already taken major steps this year to reduce business tax liability and to stimulate the modernization, replacement, and expansion of our productive plant and equipment. We have done this through the 1962 investment tax credit and through the liberalization of depreciation allowances — two essential parts of our first step in tax revision — which amounted to a ten percent reduction in corporate income taxes worth 2.5 billion dollars. Now we need to increase consumer demand to make these measures fully effective — demand which will make more use of existing capacity and thus increase both profits and the incentive to invest. In fact, profits after taxes would be at least 15 percent higher today if we were operating at full employment.
For all these reasons, next year's tax bill should reduce personal as well as corporate income taxes: for those in the lower brackets, who are certain to spend their additional take-home pay, and for those in the middle and upper brackets, who can thereby be encouraged to undertake additional efforts and enabled to invest more capital.
Third, the new tax bill should improve both the equity and the simplicity of our present tax system. This means the enactment of long-needed tax reforms, a broadening of the tax base, and the elimination or modification of many special tax privileges. These steps are not only needed to recover lost revenue and thus make possible a larger cut in present rates, they are also tied directly to our goal of greater growth. For the present patchwork of special provisions and preferences lightens the tax loads of some only at the cost of placing a heavier burden on others. It distorts economic judgments and channels undue amounts of energy into efforts to avoid tax liability. It makes certain types of less productive activity more profitable than other more valuable undertakings. All this inhibits our growth and efficiency, as well as considerably complicating the work of both the taxpayer and the Internal Revenue Service.
These various exclusions and concessions have been justified [in the past] as a means of overcoming oppressively high rates in the upper brackets, and a sharp reduction in those rates — accompanied by base-broadening, loophole-closing measures — would properly make the new rates not only lower, but also more widely applicable. Surely this is more equitable on both counts.
Those are the three tests which the right kind of bill must meet — and I am confident that the enactment of the right bill next year will in due course increase our gross national product by several times the amount of taxes actually cut. Profit margins will be improved, and both the incentive to invest and the supply of internal funds for investment will be increased. There will be new interest in taking risks, in increasing productivity, in creating new jobs and new products for long-term economic growth.
It will not, I'm confident, revive an inflationary spiral or adversely affect our balance of payments. If the economy today were operating close to capacity levels with little unemployment, or if a sudden change in our military requirements should cause a scramble for men and resources, then I would oppose tax reductions as irresponsible and inflationary — and I would not hesitate to recommend a tax increase, if that were necessary. But our resources and manpower are not being fully utilized, the general level of prices has been remarkably stable, and increased competition — both at home and abroad — along with increased productivity, will help keep both prices and wages within appropriate limits.
We shall, therefore, neither postpone our tax cut plans nor cut into essential national security programs. This administration is determined to protect America's security and survival, and we are also determined to step up its economic growth. And I think we must do both.
Our true choice is not between tax reduction, on the one hand, and the avoidance of large federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget — just as it will never produce enough jobs or enough profits. Surely the lesson of the last decade is that budget deficits are not caused by wild-eyed spenders but by slow economic growth and periodic recessions, and any new recession would break all deficit records.
In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now. The experience of a number of European countries and Japan have borne this out. This country's own experience with tax reduction in 1954 has borne this out. And the reason is that only full employment can balance the budget, and tax reduction can pave the way to that employment. The purpose of cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.
I repeat: our practical choice is not between a tax-cut deficit and a budgetary surplus. It is between two kinds of deficits: a chronic deficit of inertia, as the unwanted result of inadequate revenues and a restricted economy, or a temporary deficit of transition, resulting from a tax cut designed to boost the economy, increase tax revenues, and achieve, I believe — and I believe this can be done — a budget surplus. The first type of deficit is a sign of waste and weakness; the second reflects an investment in the future.
Nevertheless, as Chairman Mills of the House Ways and Means Committee pointed out this week, the size of the deficit is to be regarded with concern, and tax reduction must be accompanied, in his words, by "increased control of the rises in expenditures." This is precisely the course we intend to follow in 1963.
In addition, I have directed all heads of government departments and agencies to hold federal employment under the levels authorized by congressional appropriations, to absorb through greater efficiency a substantial part of this year's federal pay increase, to achieve an increase in productivity which will enable the same amount of work to be done by less people, and to refrain from spending any unnecessary funds that were appropriated by the Congress.
This nation can afford to reduce taxes, we can afford a temporary deficit — but we cannot afford to do nothing. For on the strength of our free economy rests the hope of all free nations. We shall not fail that hope — for free men and free nations must prosper and they must prevail. Thank you.
New York City (upcoming)
Grassroots conservative groundswell starting up, or are we talking about a common sense revolution?
“I am a recovering McCain surrogate.” Michael C. Burgess.
“America’s challenges are different from year to year, but our defining principles remain the same. Conservatives don’t enter each new political era trying to figure out what we believe.” Mitt Romney.
"Margaret Thatcher used to say it well. She said, 'First you win the argument, then you win the vote.'" Mike Pence.
"If we get our act together, he is a one-termer." Josh Bolton.
[Where's the Red October?]
NOVO-OGARYOVA, Russia, Feb 27 (Reuters) - Russian Prime Minister Vladimir Putin warned opposition critics on Friday not to use the economic crisis as an excuse to challenge his government and told them to abide by the law.
Unrest across Russia over economic upheaval has been muted, with the biggest protests so far taking place in the Far East port of Vladivostok where hundreds were arrested in January demonstrations over car tax.
Speaking at a meeting with leaders of Russia's dominant political party, United Russia, ahead of regional elections this weekend, Putin said that criticism of the Russian government during a crisis was allowed, but only within the laws.
[It was love at first sight.]
CARACAS, Feb. 26 (Xinhua) -- The Venezuelan government on Thursday rejected a U.S. report that denounced its human rights record.
The government in defense of the sovereignty of the Venezuelan people, strongly and firmly rejects the publishing by the U.S. Department of State of a report that pretends to evaluate the general condition of Venezuela's human rights," a statement said.
The U.S. report on human rights in Latin American countries was published on
Regarding Venezuela, the report pointed out "the widespread corruption, the harassment of the press and opposition, the polarization of the judicial system, and the violence against women and traffickers."
The Venezuelan statement said the country does not accept such practices of the U.S., adding that the U.S. has "the darkest record in disregarding and violating human dignity in contemporary history, yet still takes power without mandate and legitimacy to become judges of other countries."
The report was "fake and interfering," it said.
[Still doesn't understand why Simon Cowell doesn't like him.]
Relations between the two Koreas are also tense following South President Lee Myung-bak's decision to link the provision of bilateral aid to progress on denuclearisation. Pyongyang has recently scrapped several peace agreements with
The mooted launch also follows speculation about the health of North Korean leader Kim Jong-il, who is believed to have suffered a stroke in mid-2008. On a trip to Asia last week, the new US Secretary of State Hillary Clinton warned North Korea against any rash moves, saying a test-launch would be "unhelpful".
[Nice parade of an Iranian missile destroying a U.S. flag. Nothing says national pride like despising America]
Iranian President Mahmoud Ahmadinejad said on Friday that his country sees no limit for its expansion of cooperation with Iraq, the official IRNA news agency reported.
Ahmadinejad made the remarks in his meeting with Iraqi President Jalal Talabani, who arrived in Tehran late Thursday for a three-day visit to the neighboring Islamic republic.
"Expansion of cooperation among regional states in different sectors, economic domain in particular, is of prime importance regarding ongoing global conditions," Ahmadinejad was quoted as saying.
"Quadrilateral cooperation among Iran, Iraq, Turkey and Syria is of extreme significance and is a basic pillar of sustainable security and promotion of fraternity," he added.
The Dow Jones Industrial Average dropped 119.15 points, or 1.7%, to end at 7062.93. The blue-chip benchmark ended down 937.93 points, or 11.72% on the month -- the worst percentage drop for February since 1933, when it fell 15.62%.
The Dow industrials have fallen six months in a row and are now more than 50% off their record highs hit in October of 2007.
Is the President oblivious or is he deliberately trying to destroy the free market? At this point naively oblivious is sadly, the preferable option.
February 27, 2009
Clearly Marx was the worse scourge for the world. But for America, the answer is a bit different. Marxism, communism was never a serious contender for American hearts and minds. But socialism, statism and government meddling are all clearly deemed acceptable. And by many, they are believed to be the right thing to do - including President Obama.
Keynes was more dangerous to American prosperity. Yes Mr. President - that argument should be over. The problem is your belief system was on the losing side of the evidence.
Here's the flaw with Keynesian thinking; government priming the pump by putting more money into the economy can only do so by taking money out of the economy (taxing). It's robbing Peter to pay Paul.
This prime-the-pump approach could only work if the government already had a stored surplus of cash - a rainy day fund - stored and ready to unleash into the economy. Such is not the case here. It's SO not the case here.
The government has another way to do this pump cash - borrowing. It can borrow money from banks - in this case though, crowding out the very people/businesses the banks should be lending to in the current liquidity crisis. There's only so much cash that can be lent.
So couldn't the government borrow from foreign banks? Yes, up to a point. Given the soaring debt levels in America, the end of that gravy train is fast approaching. Besides, many foreign banks have their own countries' woes to solve. Not to mention the fact foreign borrowing puts America even further into external debtor nation status - an unsustainable choice in the long run.
The last option is to just print more money and then the government can spend all it wants. That has it's own set of disasters waiting to befall the country. History has examples to warn us:
Perhaps it's already started.
Is it time to start panicking? Maybe. If any country can take a vicious economic hit and come out the other end it's the United States of America. But the worry is that maybe enough people won't see the need to come out the other end until it's too late.
And with the series of actions taken by the Congress, Senate and the Obama administration marching in lock-step towards socialism, trickle down misery is exactly what the believers will get.
Right now they are in that nether world of liberal joy/anguish that typifies their moral compass. They are elated still by the Obama win. They are excited about the changes he plans to enact and in fact has already moved on in some cases. On the more sinister side, they are pleased that the so-called rich are suffering and that their share of the tax burden will be rising to what they see as reasonable, confiscatory levels. That makes them happy.
On the other hand, liberals are as worried about the current economic condition as much as conservatives. While they do have Obama to "rescue" them, and they won't have to think for themselves about the future too much, that does speak to the future. Many are out of work now, or threatened by layoffs and employer bankruptcies. And then of course there's all that other work to be done and fret over - closing Gitmo, stopping torture, ramping up abortions, indoctrinating children, punishing Israel and rewarding Hamas - a liberal's work is just never done.
That bizarre state of anguish and hope - that's pretty much the best it can ever get for a liberal. Let's face it, despite the efforts of The One, a socialist utopia is an unattainable pipe dream. I'm not sure what type of pipe - ask your Messiah what pipes the cool kids use for their hits.
Given this is the best it can get for liberals, there will always be new rights to wrong, successes to reverse etc., then there's really nowhere to go but down. And this is where the trickle down misery comes in.
Liberals aren't happy apparently, unless someone else is as miserable or more miserable than they are. Obama's plan will certainly give liberals a short term fix in that regard. Business owner are going to suffer. The rich are going to be penalized for their success.
But a receding tide lowers all boats. That misery - fewer jobs, less credit, more restrictive employer environments and far more competition amongst employees for jobs - will trickle down to the liberal rank and file. And with that, the spread the wealth ideals of socialism have been turned into a spread the misery scenario. That's socialism. Share the wealth share the pain. For some, that's the way to go. The one thing that eludes me on what effect that will have is this: will that make liberals/socialists happy (to be miserable) or just miserable?
We can't be sure, but what we can be sure about is that whatever happens, Chris Matthews will be feeling the misery in a very different way than the rest of the country.
February 26, 2009
[Yes, we are all THAT cool].
Over the past several decades we've lost many of our best and brightest doctors to the United States, where they've been allowed to operate (perhaps literally) under the auspices of the free market system. They were allowed to earn money commensurate with their skills and investment in their education. Now is Canada's opportunity to reverse that brain drain trend and get those best and brightest doctors back. Doesn't matter if they're ex-Canadian or born American, we can use them all.
So, you are most welcome to come to Canada. We've got great beer, great donuts, hockey, and the world's largest supply of Canadian flags. We also get HBO and MTV. Oh, and our taxes are going down (slowly, but hey, at least it's not going up $1 trillion). And our banks are safe - huge profits last year. What else? Oh yeah - The government of Alberta hands out money to people as a result of cash surpluses .
- Elvis is here.
- We eat steak and pizza and burgers with lobster at every meal.
- There's an abundance of super-models. In fact 1 in 3 women in Canada is a certified super-model.
- Workplace nudity is subtly encouraged.
- Everything is FREE.
I'm not kidding. I took my fiancee's daughter to emergency for a deep leg cut a couple of weeks ago, around 6:00 at night. They told us the wait would be until about 5:30 in the morning. Ouch. We couldn't go anywhere else - the clinics were all closed. It's really not good.
But the problem can’t be solved just by taxing the rich. That top 1 percent pays only about one-quarter of federal taxes. Once the recession ends, taxes on the not-so-rich will need to rise, too.Admitting in one short paragraph that the taxes on the middle class will have to rise and that the top 1% of income earners pay 25% of all taxes, the editor of the Times must have been asleep.
There's a couple of problems with the New York Times when compared to reality. Firstly there's this issue; as recently as October 31st, 2008 (just before the election), the New York Times had this to say;
Independent analyses of the presidential candidates’ tax proposals show that those who make less than $250,000 a year would not see their taxes raised under Senator Barack Obama’s plans. Further, Mr. Obama would generally cut taxes more than Senator John McCain would for households with incomes less than $100,000 a year.
Uh okay - you were lying then or covering for Obama now, NYT - take your pick. The reality is that your statements from 4 months ago are diametrically opposed to your statements today.
But the deception goes further. The article today (as shown in the graph below) points out that tax revenue as a percentage of GDP dropped as a result of the Bush Tax cuts of 2001 and 2003.
But that is in direct contrast to the graph Nonsensible Shoes posted on February 23rd that shows the Bush tax cuts of 2003 led to the highest revenue ever recorded in 2005.
Are both of these graphs potentially true? Well, yes actually. Looking at tax revenue as a percentage of GDP is a bit of a red herring. If you lower taxes of course it's percentage of the domestic economy will fall. More economic activity is happening outside of the tax base, so as a percentage it will necessarily be smaller. It has to be. But look what happened to the tax revenue. It rose, and quite significantly too.
So while liberals would have you look at the impact on tax as a percentage of the economy, what they are doing is distracting you from the fact that reducing taxes decreased the government revenue. Extra money held by consumers and business created additional economic activity, clearly with a higher multiplier effect and grew the economy which made the tax percentage fall even further, even while the tax revenue for the government still managed to rise quite dramatically.
The graph below shows what the real issue is;
Revenue dipped in the early part of the decade with the recession and then the 9/11 attacks compounding the problem. But the tax cuts, particularly the 2003 tax cuts started to kick in over time and by 2005 the tax revenue was steamrolling past historical highs. But look at the spending line. In the last 14 years spending has doubled and the graph shows no sign of curtailing the spending. It's just a steady rise.
Looking back at the Times chart, the interest payments and the Medicare/Medicaid/Social Security burden are what's going to hurt. Getting the debt down is important, but most important is figuring out smarter ways to finance Medicare/Medicaid/Social Security has got to be priority #1 for the government. And by the way, in 2004 that's what President Bush wanted to spend his political capital on. Seems like not only was he right in warning about the impending mortgage crisis, he was also sounding another warning that wasn't being heeded under his watch.
Perhaps it's deliberate misdirection in support of Obama's tax plan, or perhaps it's too much to expect of the NY Times to understand basic economics (tax revenue growth is possible with tax reductions). In either case, don't let the Times, the Democrats or the President fool you into another crisis mentality with respect to government deficits and the national debt. Yes the deficit must be addressed, but the issues are on the spending side, not the revenue side. Don't let anyone tell you otherwise.
February 25, 2009
The rephrasing of the Benjamin Franklin quote (They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety), puts the question in the lap of liberals - we are trading freedom not for security from terrorists but security from poverty and the tyranny of an intellectual elite, domestically.
Is that the real meaning that Benjamin Franklin had for his phrase? Given the environment of a fledgling government and the issues the revolution had been created from, I'm sure his attention was on domestic government tyranny. And if that's the case, has the phrase been unfairly co-opted by the left in their Bush Derangement Syndrome driven fight against the Homeland Security measures?
Ironically, when he assumed power, Bob Rae was responsible for ruining Ontario’s economy in the early 90s.
February 24, 2009
According to the Associated Press he's not entirely without some questionable activity in his past.
Locke was briefly linked to the scandal over foreign contributions to President Bill Clinton's 1996 campaign. In July 1998, he gave a deposition to the House Committee on Government Reform and Oversight about his relationships with questioned Clinton donors. But the committee subsequently said the deposition produced no evidence that Locke knowingly accepted illegal campaign donations.
Locke denied any wrongdoing, and he subsequently returned some checks tied to people implicated in the fundraising scandal, including $750 from John Huang. The former Commerce Department official was the Democratic Party's chief fund raiser for the Asian-American population in the 1996 elections, and he became one of the central figures in the national Democratic Party fundraising scandal.
Also, in December 1997, Locke's political committee was fined a maximum $2,500 by state regulators after it admitted breaking campaign finance laws during two out-of-state fundraisers in 1996.
And in March 1998, state investigators cleared Locke of wrongdoing following complaints that he unlawfully took $10,000 in campaign contributions from members of a Buddhist church.
While it's likely not enough to disrupt his nomination, it begs the question, can't the Democrats find anybody who is actually free of issues to run the Commerce Department?
The measure includes thousands of earmarks, the pet projects favored by lawmakers but often criticized by the public in opinion polls. There was no official total of the bill's earmarks, which accounted for at least $3.8 billion.
The legislation, which includes an increase of roughly 8 percent over spending in the last fiscal year, is expected to clear the House later in the week.
Democrats defended the spending increases, saying they were needed to make up for cuts enacted in recent years or proposed a year ago by then-President George W. Bush in health, education, energy and other programs.
Is GM getting any better at quality? Apparently so if you ask GM. They do appear to have made great strides but only time will tell.
And are they getting greener? Wait, who cares? Not me - I care about their economic viability. I will not get sidetracked by discussions about polar ice caps melting. What should be asked, is what is the industry outlook for 2009?
Not great. Hence the plans to trim down, and the possible talk about bankruptcy protection options.
February 23, 2009
Police in Baltimore today made what is believed to be the first arrest in a civil disobedience program aimed at supporting homeowners who refuse to vacate their foreclosed homes.
An activist with ACORN — the Association of Community Organization for Reform Now — faces criminal charges after breaking into a home in southeast Baltimore on Thursday to protest the foreclosure crisis sweeping the country.
"This is our house now," ACORN member Louis Beverly reportedly said after cutting a lock with bolt cutters at the home.
Beverly will be charged with fourth-degree burglary, according to Anthony Guglielmi, a spokesman for the Baltimore Police.
Joe Cox, a community organizer for ACORN in Baltimore, said Monday's arrest was not a surprise.
"We definitely expected some kind of a response," Cox said. "We understand people have to do their jobs and we hope that they understand that we're doing this to highlight the issue."
Cox said he expects homesteading — refusing to vacate a foreclosed property — will become common as blame for the foreclosure crisis increasingly shifts from homeowners to financial corporations.
"This program is saying, 'We are not going,'" Cox said last week. "People say we're breaking the law, but we don't see how putting a person back in an abandoned property is harming anyone."
ACORN launched its "Home Savers" campaign in New York earlier this month and plans to expand the program to at least 22 other cities and three counties nationwide in the coming weeks.
Participants like Beverly say they will refuse to move out of foreclosed homes or reclaim properties altogether until a comprehensive federal housing plan takes affect.
Great work Governors, you deserve credit for your stand!
Also refusing; Haley Barbour and Sarah Palin.
Well, then there's this;
One can only sigh at that.
February 22, 2009
It's not languishing, it's not pining for the glory days of the Republican party or the glory days of America. It's just a great picture of a great man, in a great time. While we can't dwell on Reagan, there's no harm in celebrating him and what he did for conservatism.
[UPDATE: The link may not load - you can view the video here: http://www.gallup.com/video/104476/Chinas-Economy-Rises-Americans-Eyes.aspx]
But Gallup in 2009 sees a changing sentiment, no doubt due in large part to the Great Leader's vision and hope and change leadership.
What's changed in the last year besides the Executive Image? The economics of the world have changed for the worse, but the US has been reduced to a recession while China has been reduced to 9% growth in GDP. All that's changed is perception. The problem of Chinese hegemony is still there. The American public is doing it's best head-in-the-sand on the issue of the rise of China. The reality is that in it's drift towards more government involvement in the economy (yes, that is socialism, even if arguably only by proxy), has hastened America's Europeanization in the sense that those once pre-eminent powers are now struggling to maintain their B class status. Why America would want to follow in those footsteps is beyond me.
China is a threat, socialism is a threat. Both need to be taken seriously. Luckily if the government were to unfetter capitalism and reduce socialism, it would take care of both problems. Capitalism and freedom forged America into the great superpower it became. There's no reason those two ideals can't be unleashed and allow the United States to maintain it's leadership role in the world. The current administration is seeking to keep those factors under wraps and temper American entrepreneurial spirit, thereby watering down it's greatness. Why? Because they believe in different ideals. They believe in a managed system. They believe in interventionism, and social engineering. By proxy it must be true that they are comfortable with European levels of unemployment, welfare, taxation and regulation.
The real question is twofold whether Americans are comfortable with that approach and secondly whether they are aware of the creeping death that awaits them by heading down the path of a command economy. Ironically China, while still communist, owes it's rising fortunes to the adaptation of a limited free market economy. Two powers, opposite directions, and divergent futures if they continue down the paths they are choosing.
February 21, 2009
NEW YORK (Reuters) - Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of near-term resolution to the crisis.
Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.
He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system.
"We witnessed the collapse of the financial system," Soros said at a Columbia University dinner. "It was placed on life support, and it's still on life support. There's
no sign that we are anywhere near a bottom."
His comments echoed those made earlier at the same conference by Paul Volcker, a former Federal Reserve chairman who is now a top adviser to President Barack Obama.Volcker said industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.
"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world," Volcker said.
George Soros has made his mark as an enormously successful speculator, wise enough to largely withdraw when still way ahead of the game. The bulk of his enormous winnings is now devoted to encouraging transitional and emerging nations to become 'open societies,' open not only in the sense of freedom of commerce but—more important—tolerant of new ideas and different modes of thinking and behavior.
I don't care if this guy is a trillionaire - he simply can't be trusted to suggest what really is in the best interests of America. He built himself up in the capitalist system he seems intent on blowing up. Maybe I'm being too cynical and he really is a capitalist at heart - maybe he's just trying to sell more of those doomsday books he keeps writing. In any case, according to the Forbes list he's ranked 101st richest man in the world, and if being rich equals being smart (which it doesn't), there are at least 100 people out there smarter than Soros. And if they're all socialists too, then this is Bizarro World.
Below is the entire post. I can enumerate the problems with it in detail or I can simply point to one phrase that encapsulates the sheer idiocy involved.
Congress would authorize the US Treasury to print thousand-dollar bills, and give every US resident six of them.
followed later by this gem;
There is a way out, but it requires the greatness of economic enlightenment. Establish sound money with free-market banking: stop the expansion of money by the Federal Reserve, and instead let banks issue private currency redeemable into Federal-Reserve-note money.
Clearly he does not need to wait for the legalizing of marijuana he refers to below. However, I encourage you to read this and assess it for yourself. It's enlightening in the sense that as conservatives we need to understand the direction Obama's support stems from.
How Obama could be the Greatest President Ever
Fred E. Foldvary, Senior Editor, January 19, 2009
A crisis is an opportunity for revolutionary change. Obama could become the greatest president ever, and fulfill the hopes he inspired, by making radical changes. He could put the economy on track to prosperity, reorient American foreign policy towards harmony, and refresh the American spirit of liberty.
The government could end the recession within three months with “money to the people.” Congress would authorize the US Treasury to print thousand-dollar bills, and give every US resident six of them. That would be debt-free and would end the negative-feedback loop of higher unemployment creating ever less demand for goods, which then makes companies shut down and lay off workers. The recession creates economic lockjaw: banks fear to lend because companies are shutting down and workers are losing their jobs. Cash is the ultimate credit and the antidote to credit freeze. “Money to the people” is almost a free lunch, because the recession is causing deflation and fear of further price declines. Monetary expansion is bad medicine except in an economic depression with deflation, when it is a good tonic if given directly to the
people, not to the risk-fearing banks.
For long-run prosperity, Obama should promote radical changes in taxation. Don’t tax the rich just because they have wealth. Instead, tax subsidies so that they are no longer subsidies. Polluters are subsidized if they do not pay the social cost of their emissions, so tax pollution. Landowners are subsidized from the increase in their rent and land value due to public works
and civic services. Tax land value to eliminate this subsidy. A land value tax will make the economy more productive, as the land-value subsidy promotes inefficient uses of land and the excessive speculation that results in the boom-bust sequence we are suffering from now.
In foreign policy, Obama is confronted by the unsolved conflict over Palestine and the wars in Afghanistan and Iraq. Besides bringing home the US troops, Obama could promote a lasting democracy in Iraq by promoting an equal sharing of the oil profits, decentralized governance and voting, and protection for persecuted minorities. In Afghanistan, pay the farmers to grow alternatives to opium, and decentralize democracy to bring political power to the people.
Restore trade with Cuba. Stop promoting the war on drugs that is tearing Latin America apart with violence. Apologize for having overthrown the government of Iran in 1953. For the Arab-Israeli conflict, recognize an independent Palestinian state in which the Israeli settlers of the West Bank pay rent for the lands they hold. Most important, declare that American foreign
policy will henceforth avoid interfering in the domestic affairs of other countries. Declare also that Americans are willing to talk to and negotiate with all adversaries.
Strengthen American freedom by promoting a constitutional liberty amendment: “Congress shall make no law restricting any peaceful and honest adult human action, not involving force or fraud, any state interest to the contrary notwithstanding.” A first step would to be to legalize medical marijuana.
Obama has said he would confront the growing under-funded liabilities such as for Medicare and Social Security. A greater government takeover of medical services would compound the problem. The reason folks cannot afford medical care is because the money to pay for it has been take from them in the first place. Obama should separate the poverty problem from the medical problem. Make medical payments tax deductible, to unlock insurance from employment. Reform the legal system to having the loser in medical civil lawsuits pay all the legal costs. Then allow workers to opt out of Medicare and provide their own medical care.
Obama could be truly great by getting welfare-state liberals to understand that state socialism cannot improve on the choice and productivity provided by a free market. Allow workers to switch from Social Security to individual accounts funded at first by US Treasury bonds. That would replace the current Ponzi scheme with accounts that finance retirement from the worker’s own wages.
The global economy will recover from the Crash of 2008, but the massive bailouts and greater debt will cause problems far into the future. Where will the money come from for the coming trillion-dollar deficits? If it comes from money creation, the result will be inflation much worse than during the 1970s, and a global flight from the US dollar.
There is a way out, but it requires the greatness of economic enlightenment. Establish sound money with free-market banking: stop the expansion of money by the Federal Reserve, and instead let banks issue private currency redeemable into Federal-Reserve-note money.
The US can reduce its trade deficit and borrowing from abroad with a radical tax shift that reduces the cost of exports, stops economic waste, and induces high economic growth. That is the tax shift described above. Stop taxing labor, goods, production, and investment. Instead, just remove all the subsidies, such as to pollution, to farmers, and to land holding.
Taxing land value and pollution, plus user fees, could provide sufficient revenue while eliminating the need to compensate people for denying them economic opportunity. That implies that there would be no more transfer payments: no more governmental payments for medical care and retirement. That cuts the budget in half while raising wages and reducing the cost of living.
These are the radical steps that could make Obama the greatest US president ever. If not, small change will be ineffective, hope will be lost, and America will continue on the path towards self-destruction. Can Americans make the revolutionary changes needed to avoid disaster? Obama has inspired many us with the answer. Yes we can! However pessimistic we feel, we can yet remain hopeful. That is the real audacity of hope.
The amazing thing is that this guy gets a couple of points right - for example the Medicare issue he at least understands the government has co-opted health care from the individual. So even this hippy is salvageable. No one it seems, is beyond hope except for the Obamassiah types. And when I say beyond hope, I'm not talking about Obama hope, I'm talking about the hope that they will understand the true way to keep America great.