2012's State of the World

By Alan Caruba

"Only the Dead have seen the End of War" – Plato

For myself and a lot of other Americans, the killing of Osama bin Laden was the highpoint of 2011. A decade has passed since nearly 3,000 Americans were killed on September 11, 2001. He was found in an army town in Pakistan.

Meanwhile the war in Afghanistan grinds on for no explicable reason, but the war in Iraq was declared ended for U.S. troops on December 15. Within twenty-four hours of the last troops departure bombings occurred in Baghdad and the nation began to come apart. The single unifying force in Iraq had been—you guessed it—the U.S. military.

Evil men met their end in 2011, but surely not enough of them. Gone now are Libya’s Colonel Gadhafi, North Korea’s Kim Jung Il. Classic dictators, it is likely that Syria’s Bashar Assad will be overthrown in 2012. The year began when Tunisia’s Zine El Abidine Ben Ali fled the nation he had controlled for four decades. In February Egypt’s president, Hosni Mubarak was forced to resign.

The “Arab Spring” was declared. It was and is an illusion. In terms of its lack of democracy, the Middle East, the seat of Islam, remains a rebuke to the modern world.

In 1979, the Iranians overthrew the dictatorship of Mohammad Reza Pahlavi, the Shah, and replaced him with the even worse dictatorship of Grand Ayatollah Ruhollah Musavi Khomeini. His passing put Ayatollah Ali Khamenei in charge and bogus elections have made Mamoud Ahmadinejad president. The balance of power in the Middle East will shift dramatically if Iran achieves nuclear weapons.

As regions go, Africa just barely managed to retain a few democratic nations while others remain in the grip of dictators of varying degrees of evil. The northern tier, known as the Maghreb, had been the spark of revolutions from Tunisia to Libya to Egypt. One sign of hope was the succession of South Sudan in July. In Africa, too, the emnity of Muslims toward its growing Christian population continues to spark unrest. In Nigeria, Muslim terrorists bombed churches on Christmas Day. How great an outrage is that?

Not all killer events in 2011 were wars and revolutions. In March, a 9.1 magnitude earthquake and subsequent tsunami struck eastern Japan killing nearly 16,000 and leaving nearly 4,000 missing. Four nuclear power plants were shut down after technical failures created widespread zones of radiation.

The European Union which was created in the wake of two wars on that continent remains in turmoil after several member nations posed a threat of financial default due to the socialist mismanagement of their economies. Its fate remains unknown, but it well could deconstruct itself in favor of a return to individual sovereignties.

In October, Israel---reviled by most of the world for having the temerity to exist--- returned 1,077 Palestinian terrorists to Hamas in exchange—are you ready for this—for a single Israeli soldier, Gilad Shalit, who had been kidnapped and held prisoner since 2006. Though not a sovereign nation, Palestine was admitted as a member by UNESCO, an agency of the United Nations, on October 31. Ever since 1948 when the Israelis defeated an attack by five Arab nations the UN has maintained an agency, UNRWA, whose sole purpose is to service Palestinians.

A former Prime Minister of Israel, Golda Mier, said it best. “We shall have peace with the Arabs when they love their children more than they hate us.” She could have been speaking of America as well because we are high on the list of Arab hatreds.

As 2011 came to an end, Americans were pleased to see their troops come home from combat in Iraq and would feel the same about Afghanistan. The two wars fought in Iraq have been sobering experiences, reminders of the role of the U.S. as the world’s policeman. 

We fight now with a volunteer military and one whose equipment from aircraft to ships to combat vehicles is growing old or being retired at a rate that raises serious questions about our ability to defend the homeland or wage war abroad.

The enduring truth of any year of recorded history has been that tribes, religions, and nations go to war with one another. It is naïve to believe that another war is not just around the corner, most likely in the Middle East and mostly likely with Iran. Israel has been in a state of war, hot or cold, with all its “neighbors” in the Middle East since its founding in 1948. It is being inexorably forced to the decision to attack Iran’s nuclear facilities.

Leadership is a critical factor when war threatens. The nation is in great need of it, but there are few signs it exists in the White House and among the political class in Congress these days.

I began with a quote from Plato. I will end with one from Marcus Tullious Cicero:

“A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist.”

© Alan Caruba, 2011

Looking to the Dollar, Gold, and "Mutti" to Save the World

By Alan Caruba

The most formidable couple in the world during the 1980s was Ronald Reagan and British Prime Minister Margaret Thatcher. Thatcher, a conservative and a woman of iron will, must be looking across the Channel with some amusement to see how her German counterpart, Chancellor Angela Merkel, is literally the only person keeping the European economy from collapsing and, it must be said, taking England and America with it.

The cover article of this week’s Business Week noted that “Merkel is the daughter of a Lutheran pastor. She won a PhD for a thesis on quantum chemistry…though childless, she is known as Mutti, for Mother.” Born in the post-war years, “Merkel’s worldview reflects the German desire for stability. Chaos plagued the German-speaking people long before there was a German nation…Later the hyperinflation of the 1920s and Depression of the 1930s, both of which undermined the middle-class, gave rise to Nazism.”

Plainly said, Angela Merkel is showing the rest of the world why Keynesian economics doesn’t work; that governments with huge “entitlement” programs and a tendency to throw vast amounts of money at their problems invite disaster. If Europe does not plunge into chaos, it will be because she refused to bail it out with the deutschmark.

Meanwhile, the Federal Reserve is moving billions to Europe to ease its lending crisis.

If you read just one book this year, I recommend James Rickards’ “Currency Wars: The Making of the Next Global Crisis” ($26.95, Portfolio Penguin). An advisor to the Department of Defense, the U.S. Intelligence community, and major hedge funds on global finance, he brings more than thirty years’ experience to a book that explains what has gone so terribly wrong and why.

Rickards spells out how the U.S. economic system has been gamed over the years to ensure that “elites captured most of that growth in income and profits.” It is the reason we are just learning that many members of Congress have grown wealthy using insider information, an act that would land anyone else in jail.

“Over time and with increasing complexity, returns on investment in society begin to level off and turn negative…Bureaucracies that started out as efficient organizations turn into inefficient obstacles to improvement more concerned with their own perpetuation than with service to society.”

This is a definition of the U.S. Departments of Education, Labor, Housing and Urban Development, Health, and Energy, along with the quintessential monster, the Environmental Protection Agency. For good measure, include Fannie Mae and Freddie Mac, the two mortgage loan agencies.

In a chapter titled “Endgame—Paper, Gold or Chaos?” Rickards looks at the weakness of the U.S. dollar, pointing out that “As the dollar and sterling were trading places in the 1920s and 1930s, there was never a time when at least one was not anchored to gold.”

“Gold is not a commodity. Gold is not an investment. Gold is money par excellence. It is truly scarce—all the gold ever produced in history would fit in a cube of twenty meters (about sixty feet) on each side, approximately the size of a small suburban office building.”

“Today, under Bernanke’s guidance, the United States is trying to do what England did in 1931—devalue…What is happening instead is that all the major currencies are devaluing against gold at once. The result is global commodity inflation, so that beggar-thy-neighbor has been replaced with beggar-the-world.”

Rickards’ book is a warning against what we are witnessing. “Perhaps the most likely outcome of the currency wars and the debasement of the dollar is a chaotic, catastrophic collapse of investor confidence resulting in emergency measures by governments to maintain some semblance of a functioning system of money, trade and investment.”

The two currency wars of the last century led to two world wars. Rickards warns that “The path of the dollar is unsustainable and therefore the dollar will not be sustained.” A return to the gold standard “offers the best chance of stability.”

Rickards recommends that the big banks be required to become smaller and that derivatives be banned because “they serve banks and dealers through high fees and poorly understood terms.” Derivatives are contracts between two parties that define the value of underlying variables. The “bundling” of mortgages that were then sold as assets is an example and, as the financial crisis revealed, their value was dubious at best, criminal at worst.

“The dollar,” says Rickards, “for all its faults and weaknesses, is the pivot of the entire global system of currencies, stocks, bonds, derivatives and investments of all kinds. It is the store of economic value in a nation whose moral values are historically exceptional and therefore a light to the world. The debasement of the dollar cannot proceed without the debasement of those values and that exceptionalism.”

The coming national election will be a choice between a President who does not believe the United States of America is exceptional and whoever the Republican Party selects to help the nation return to its fundamental values.

© Alan Caruba, 2011

Paper Money, Real Debt, and Spendthrift Nations

By Alan Caruba

As the citizens of the United States and the seventeen member-nations of the European Union look on, a great drama regarding the future of the EU and its currency, the Euro, is occurring.

The essential problem is that both the U.S. dollar and the Euro are just so much paper, despite the promises and guarantees that they will be honored as real money. The trick has been to keep everyone believing there are sufficient real assets to back up those promises.

Since the U.S. dollar is a kind of universal currency to which other nations peg the value of their currencies the problem for everyone is that the U.S. is broke. Its debt exceeds its annual capacity to generate income, otherwise known as its Gross Domestic Product. Every hour of every day it must borrow billions to meet its obligations. Forty cents of every dollar the U.S. spends is borrowed.

There is a reason why television these days if filled with commercials offering to sell gold. Gold has always retained its value though it does fluctuate. The U.S. Treasury’s gold hoard has a value of more than $400 billion these days, but that value is the flip side of the Federal Reserve’s demolition of the dollar which has lost 95% of its value since1913, the same year the Fed was created.

Currently the Federal Reserve has been printing vast quantities of dollars—quantitative easing—that only serves to devalue it. The dollar is backed by the “full faith and credit” of the United States, but for the first time in our history our credit rating has been downgraded by agencies such as Standard & Poor’s and Moody’s.

Not that the rating agencies haven’t also been part of the problem. They are famous for telling everyone that the bundled mortgage assets of Freddie Mac and Fannie Mae were okay right up to the day the 2008 financial crisis occurred and Lehman Brothers collapsed

When the 2008 financial crisis hit, the American taxpayer was tapped to bail out a number of banks, a huge insurance company, and even General Motors. This was followed by “stimulus” spending, all of which drove U.S. debt levels to historic highs. The vast matrix of Federal Reserve central banks, government agencies charged with oversight of financial institutions, and the ratings agencies all contributed to the crisis.

The U.S. went off the gold standard in 1931, in effect exporting deflation around the world. Other nations followed suit. At the time, Americans were experiencing high debt burdens, unemployment, and money hoarding. If that also sounds like 2011, you’re right.

The crisis of 2008 was brought about by the “bundling” of mortgage assets. Fannie Mae and Freddie Mac, two Depression-era social justice inventions, currently own 50% of mortgages, many of which were the result of pressures on banks to make loans to people who clearly could not pay them back. What the banks considered “assets” were phantoms whose collateral could often not be traced.



Ben Bernanke, Fed Chair

 Little noted is the role of the Federal Reserve. A government investigation into the causes of the 2008 financial crisis concluded that “The prime example is the Federal Reserve’s pivotal failure to stem the flow of toxic mortgages which it could have done by setting prudent mortgage-lending standards. The Federal Reserve was the one entity empowered to do so and it did not…”

What the Fed had done, in fact, was to lower the interest rate it charged for lending to banks to very nearly zero.

In his book, “Currency Wars: The Making of the Next Global Crisis”, author James Rickards explains what is actually occurring.

“The United States now has a system in which the Treasury runs non-sustainable deficits and sells bonds to keep from going broke. The Fed prints money to buy those bonds and incurs losses by owning them. Then the Treasury takes IOUs back from the Fed to keep the Fed from going broke.”

We’ve been here before in two previous currency wars, the latter of which led to World War II. The problem then and now is the need for job creation, something that can only be achieved by private enterprise.

The United States government has not provided a good environment for its business and industrial community to invest and expand. It has, as just one example, very nearly the highest corporate tax in the world; beyond that, a vast matrix of regulations makes doing business in America expensive, difficult, and often uncompetitive.

How this will all play out depends in large part on whether Americans are prepared to reduce the size of a government that grew precipitously in the 1930s and the second half of the last century. We must begin to slowly and fairly phase out the “entitlement” programs.

The great question facing Europe is whether the EU disbands and its members return to individual national sovereignty in a response to a continent-wide economic disruption caused by unsustainable debt in its southern tier nations. The EU was a response to a history that generated two major wars in the last century, bankrupting the continent morally, socially, and economically. The road back has been in part due to U.S. aid and protection against the former Soviet threat.

While the possibility of abandoning the Euro was unthinkable bare months ago, it is now an option; a very difficult option because of the vast interconnectiveness of Europe’s and our own banks.

In America the only real hope we have is that in November 2012 we will elect men and women who will turn the ship of state around before the latest currency war sinks ours and the world’s economies.

© Alan Caruba, 2011

The Threat of a Global Financial Collapse

By Alan Caruba

At present, the amount of the annual Gross Domestic Product, $14 trillion—the value of all the goods and services that generate income—is exceeded by the nation’s debts.

America is presently $15 trillion in debt and it grows daily.

In a November 21 Wall Street Journal interview, Erskine Bowles of the presidential advisory commission on the nation’s debt, said “If you take 100% of the revenue that came into the country last year, every single dime of it was consumed by our mandatory spending and interest on the debt.”

“Mandatory spending in English is basically the entitlement programs, Medicare, Medicaid and Social Security. That means that every single dollar we spent last year on national defense, homeland security, education, infrastructure, high-value added research—every single dollar was borrowed, and half of it was borrowed from foreign country.”

“That’s a formula for failure in anybody’s book.”

In truth, we are looking at a coming global financial collapse with experts from Credit Suisse to the Deutche Bank, the CEO of General Motors to Warren Buffett, all in agreement that the question is not if, but when.

It will come at a time when there is little, if any, real leadership to be found either in the U.S. or Europe, the most spendthrift of nations facing this crisis.

Thomas Jefferson, one of the most brilliant of our Founding Fathers, said “I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.” He also said that “It is incumbent on every generation to pay its own debts as it goes.”

Another Founding Father, James Madison, warned Americans against the concentration of power saying, “I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpation.”

Over the years, more and more power has been concentrated in the federal government and it requires the dismantlement and elimination of several of its components. Americans need to say no to the Departments of Education, Energy, along with the Department of Housing and Urban Development. These are all functions previously addressed by the states.

You will not find any of these activities specified in the Constitution. Consider when they came into being:

Education was established in 1953, originally as the Department of Health, Education and Welfare. In 1979, it was subdivided into Education and Health and Human Services.

The Department of Housing and Urban Affairs was created in 1965.

The Department of Energy was created in 1977.

Thus, between 1953 and 1979, a period of 26 years, the federal government took control of key factors of the nation’s affairs, most if not all are dealt with far better at the state and local level.

To these must be added Freddie Mac and Fanny Mae, two government “entities” responsible for the housing mortgage crisis and currently asking Congress for billions more to cover their losses.

The Tenth Amendment of the Constitution specifically says that “The powers not delegated to the United States by the Constitution, nor prohibited by it by the states, are reserved to the states respectively, or to the people.”

Congress is filled with men and women for whom their position has become a sinecure as they are elected and reelected, some for decades But Congress has proved itself unwilling to govern the financial affairs of the nation. A recent vote in the House rejecting a proposed balanced budget amendment reflects this.

In 2012, the voters will have the opportunity to reverse this failure, electing men and women who will vote for term limits, a balanced budget amendment, and other necessary changes.

We have witnessed what happens when Americans lose sight of the vision of our Founding Fathers and the Constitution they bequeathed to posterity.

We are that posterity.

The present generations of Americans are obligated to save the nation or see it fail.

© Alan Caruba, 2011

Media Amnesia

By Alan Caruba

We are now in a countdown to November 6, 2012, Election Day, and the mainstream press will shift more intensely into coverage of the campaigns; first for the Republican nomination of the candidate to oppose Barack Obama, and then through the interminable ups and downs of the campaign for the presidency.

We got a taste of it with Politico.com, an arm of The Washington Post that permits its liberal bias to be reported with a more barehanded approach. It was Politico.com that broke the Herman Cain story of sexual harassment allegations in the 1990s and issued some seventy “stories” about it in the space of three or four days. The women who filed the complaints and who financially benefited from the National Restaurant Association’s settlements have wisely recused themselves from going public.

About the only thing we have actually learned is that Herman Cain, who had a ten-day heads-up on the story, handled it poorly. As someone who has earned his bread in public relations, watching him stumble around with several different versions of what he remembered and what he knew was painful. That said, the story is likely to go away because such allegations by unnamed women are (a) commonplace in the business world and (b) most decent people don’t like that kind of “gotcha” journalism.

As U.S. troops are finally withdrawn from Iraq, news coverage of that nation is going to disappear from the front pages unless the bombings occurring with increasingly regularity there continue. Don’t expect the media to connect the dots to ask or even identify who’s setting off those bombs or why.

Both the existential and actual threats to Israel are also likely to get short shrift despite the fact that mere days after Israel released more than a thousand Palestinian terrorists to gain the return of a single soldier, Ashkelon, Ashdod and Sderot in southern Israel were under missile attacks from Gaza. No longer being attributed to Hamas, a group calling itself Islamic Jihad is getting the credit for the forty rockets and mortars fired over a two-day period in late October.

As Dore Gold, an Israeli statesman noted, “The real explanations for the decision of Islamic Jihad to attack at this time, however, are not to be found in the Gaza Strip, but rather in Tehran.” Islamic Jihad, Gold pointed out, “is a very different organization than Hamas.” Yet another effort by the Israelis, the 2005 forced evacuation of the Gaza Strip’s Jewish population to placate the Palestinians, has not accomplished anything more than a launch site for endless rocketing.

The media will continue to monitor the events in Europe as its Eurozone monetary system continues to collapse, likely taking the European Union with it. It is one of those ideas by the continent’s elitists and intelligentsia that ignored hundreds of years of history behind the sovereign states there or the economic disparities between them. It is doubtful such coverage will provide anything more than the daily he-said, she-said accounts as the individual nations go their own way. The site of many U.S. exports and investments, it will further harm our tenuous economy as well.

The campaign here at home will be page one news, but may serve to mask the incipient scandals of the Obama administration such as Solyandra and other failing green energy companies that received huge loan guarantees. Nor will the administration’s efforts to keep the southern border open to the flow of illegal aliens get much attention as it continues to sue states like Alabama and Arizona for trying to deal with the consequences.

The Great Depression 2.0

The one story the media cannot suppress is unemployment. Last week the media trumpeted the announcement that the “official” rate of 9.1% decreased to 9%. These government-generated statistics are a farce. It is likely closer to 22% because those who have given up looking for work and other factors are conveniently ignored. Unemployment is as bad as it was during the Great Depression, but don’t expect the media to report that.

In the spirit of never letting a crisis go to waste, it is likely that the Obama administration will exploit the distraction offered by the election campaign to continue its destruction of the nation’s energy sector; the one sector responsible for actually adding new jobs since 2003. The Environmental Protection Agency is desperate to impose new regulations to further its agenda of killing jobs and exercising total control over every aspect of our lives. Don’t expect much coverage.

There are some early indications that the media have grown disenchanted with Obama. They put him in office with their crazed propagandistic coverage in 2008, but he has proven to be a very big disappointment. This portends that their coverage of his reelection campaign will be treated like kryptonite, the substance that weakened Superman.

It is not putting it too strongly to say that, with notable exceptions, the mainstream media has failed and even deceived Americans for too long now, from the bogus global warming hoax to the installation of Barack Obama in the Oval Office. They think they know what is best for us, but they often have only the slimmest grasp of what is actually occurring at home and around the world.

© Alan Caruba, 2011

Kiss the European Union Goodbye

By Alan Caruba

In Paris on October 15th, a group of finance ministers and central bankers known as the G20, representing major nations, gave the European Union until October 23red to find an answer to the financial crisises that are tearing apart the EU and its monetary structure.

Don’t hold your breath. If not now, at least in the foreseeable future, the EU will collapse for the oldest reason, national sovereignty and national self-interest.

If you visit Wikipedia and enter “European Wars”, it will kick out a list that’s several pages long in small print starting with the Trojan Wars, 1193-1184 BC. The Romans conquered everyone for a while. The Spanish tried to invade England. For a while Napoleon was invading everyone. There were the hundred year wars, thirty year wars, and wars for the hell of it. Suffice to say the Europeans have a long record of going to war with one another.

World War One impoverished its participants and led to World War Two. After the devastation of World War Two and with the threat of the Soviet Union to the East, European leaders concluded that the only option to avoid future wars or being overrun by the Russian bear was to form a kind of United States of Europe.

In a newly published book, “The End of the Euro”, subtitled “The uneasy future of the European Union”, Dr. Johan Van Overtveldt, the editor-in-chief of Trends, Belgium’s leading weekly on business and economics, takes us through the history of the European Union and the creation of a common currency, the euro.

For people like me who thank a merciful God that Internet banking makes it possible to actually know my checking account balance, Overtveldt’s book is both a blessing and a challenge because it deals with some very complex issues of finance. He also provides some very useful history with which to understand the past and predict the future.

My knowledge of history was sufficient to have huge doubts about the formation of the European Union and it looks like I am about to be borne out in my pessimism. “While efforts at European integration have without question contributed to peace on the continent,” Overtveldt points out, “at least three other factors are also at play.”

“First, broader international cooperation and consultation” have been the order of the day since the end of World War Two. “Second, the presence of American troops throughout Europe, and certainly in Germany, helped maintain the military status quo. Third, the sense during the Cold War of “a common, non-democratic enemy increased cooperation and cohesion among Western European nations.”

Then Overtveldt identifies the central weakness of the European Union. “History teaches us that, in particular, the lack of real political union is a major barrier to the durability of a monetary union and its single currency.”

The problem of the EU and the euro “is the loss of an independent monetary policy” because what works for Germany does not necessarily work for France, Spain, Italy, and the other EU members.

This has become abundantly evident as Greece totters on default of its debts and the contagion of a sovereign debt crisis threatens to spread. Simply said, the Germans are not inclined to want to “bail out” the Greeks because the Germans have a wide conservative streak when it comes to the conduct of their financial affairs while the Greeks were inclined to fudge the books and run up a huge debt.

In addition to Greece, Portugal and Ireland are likely to find that they have no choice except to leave the EU and Spain, Italy, and Belgium have their problems, too. For that matter, add France to the list.

The U.S. financial crisis no doubt sped up the process, but our government bailed out the banks for the simple reason there never was a choice not to. One or two big investment banks were allowed to fail, others were forcibly merged, but a nation without a functioning banking system is nothing but lines on a map.

In a recent column by Patrick J. Buchanan, titled “Is the New World Order unraveling?” he notes the rise of “economic nationalism” in Europe as well as warning against the foolish American trend of signing away our sovereign rights by joining globalist organizations from the United Nations to the World Trade Organization, along with a slew of treaties and agreements.

The export of whole U.S. industries has been one result “while emerging powers like China, India, and Brazil are demanding to be exempt from restrictions developed countries seek to impose.” The world is a nasty place in which to live. The Moon and other planets, however, are less habitable and do not have cable TV.

As Americans vainly look to their Congress to redress its own authorization of the spending excesses of present and past administrations, the rest of the world, protected by our military strength and moral values, has decided it no longer has to pay us the attention it did in former times.

So we shall surely witness the end of the euro and the European Union as that continent returns to its normal levels of national self-interest that one might argue are not a bad thing in a competitive world. So long, of course, as those nations do not decide to declare war on one another.

© Alan Caruba, 2011

The Financial Advice of Experts, Then and Now

By Alan Caruba

“I see nothing in the present situation that is either menacing or warrants pessimism…I have every confidence that there will be a revival of activity in the spring, and that during the coming year, the country will make steady progress.” That’s what William Mellon, the U.S. Secretary of the Treasury, had to say on December 31, 1929. The Great Depression would last until 1941 when the U.S. entered World War Two.

“Could we have a crash a la 1929? The flat answer is no.” So said Dr. Pierre A. Rinfret, a noted economist, writing in Time magazine on October 5, 1987 and, on October 19, 1987—instantly dubbed “Black Monday”—the Dow Jones average plunged 508 points.

Despite the pronouncements of Presidents and pundits, it was the December 30, 1929 edition of Variety, a newspaper for the entertainment industry, that got it right. The day after the crash its headline read, “Wall Street Lays an Egg.”

All through history, the opinions of “experts” have been subject to revision and derision. The Internet has simply multiplied our access to a multitude of opinions. It behooves us all to pick our experts very carefully. A good track record is always a good sign, along with a healthy measure of common sense.

As the economies of the U.S. and several European nations totter on default it is essential to draw on lessons from the past. The most obvious lesson is that the governments of the U.S. and the Europeans have been spending far more than they can tax or borrow.

All have spent decades since the 1980s wasting billions on “alternative” sources of energy in the name of global warming or climate change. All have stayed busy before and since the end of World War Two consolidating power in the U.S. federal government and more recently in the European Union.

Herbert Hoover on whose watch Wall Street crashed in 1929 generally gets the blame, but five years earlier in an address to the annual meeting of the U.S. Chamber of Commerce, Hoover said, “The test of our whole economic and social system is its capacity to cure its own abuses,” warning that, “If we are to be wholly dependent upon government to cure these abuses, we shall by this very method have created an enlarged and deadening abuse through the extension of bureaucracy and the clumsy and incapable handling of delicate economic forces.”

“The clumsy and incapable handling of delicate economic forces.” Spoken nearly 90 years ago!

What a perfect phrase to describe what the nation has been passing through as Congress during the last days of the Bush administration and the past two and a half years of the Obama administration has demonstrated.

The financial crisis of late 2008 was the result of government “entities”, Fannie Mae, created in 1938, and Freddie Mac, created in 1970, both intended to stimulate the housing market by securing the loans made by banks for the purpose of giving everyone, including those who could least afford it, the opportunity to own a house. By the time the crisis hit, they jointly owned more than 50% of all U.S. mortgages.

The failure of communism in the former Soviet Union (1922-1991) should be proof enough that government ownership of property and the means of production is one of the all-time bad ideas of the last century. A modified version exists in China with other versions existing from North Korea to Cuba. All depend on oppression and coercion.

The irony, of course, is that the Great Depression was extended by Hoover’s successor, Franklin D. Roosevelt, who believed that expanding the role of government was the best way to bring the Depression to an end. Instead, the Depression, experienced as well by European nations in the wake of World War One, gave rise to totalitarian governments and World War Two.

There is a reason that President Obama’s approval ratings, along with those of Congress, are at record lows. Most astonishing is the fact that, when Obama took office, the Democrats controlled both houses of the legislature, the Senate and the House. Even more astonishing, Obama pursued the same failed programs of FDR, most famously sponsoring a multi-billion dollar “stimulus” bill, along with taking over General Motors and Chrysler, ginning up a Cash-4-Clunkers program, and discovering belatedly that there were few “shovel ready” infrastructure projects.

By 2010, the voters returned political power in the House of Representatives to the Republican Party, largely on the basis on newly minted “Tea Party” candidates. Obama’s Congress had rejected his proposed budget and the nation has been operating with “continuing resolutions” to fund its activities and a massive battle over raising the debt ceiling for the same purpose. A farcical congressional “super committee” has been told to cut a trillion and a half dollars out of government spending.

The economic advisers that Obama brought into the White House have all departed with the exception of the Secretary of the Treasury, Timothy Geithner. The various government departments continue to spend millions authorized by the Congress every week or engage in dubious “loan guarantees” which give every indication of being a series of Solyndra scandals.

Despite the increasingly absurd assertions of the President, it’s not just corporations, large and small, making decisions about the current and near-term future of the economy. It is the vast body of Americans who are deciding what to purchase, whether to expand their business by hiring or not, whether to invest in stocks or gold, and thousands of individual decisions by which the real economy is shaped.

It is their decisions that determine how long the recession lasts, not the official pronouncements about when the last one “ended” or a new one begins. Economists of a conservative point of view know what must be done and should be listened to, but they are not advising this President, nor guiding the government’s decisions.

In the midst of this latest of many financial crisises at home and abroad, the campaign for the next presidential election has begun. Much depends on who John Q. Public elects to the office. Much depends on the long, hard slog to reduce the size and grasp of the federal government.

Will the wisdom of “the crowd” prevail over the present “experts” affecting the economy?

Stay tuned.

© Alan Caruba, 2011

A Week of Horrid Headlines

By Alan Caruba

Journalism is often called “History written in a hurry.” If so, last week’s headlines from the front page of The Wall Street Journal reflected a period of our current history that will likely have future historians wondering how we made it through these times without completely losing our minds.

If fear sells newspapers, drives television news ratings, gets bad laws passed, and is useful for selling all manner of other goods and services, than last week must have been very good for business.

The weekend edition, Saturday/Sunday, September 3-4, began with “Job Growth Grinds to a Halt.” The sub-headline was “Lack of Hiring in August Roils Financial Markets; Gloom Ratchets Up Pressure on Obama.” The President would have to wait until the following Thursday to roll out his “Jobs” bill and to tell a joint session of Congress, “Pass this bill now!”

Reluctant to admit its role in the housing mortgage crisis that broke in late 2008 during the political campaign and largely due to Fannie Mae and Freddie Mac—both of whom own 50% of U.S. mortgages—the next article on page one was “U.S. Sues Big Banks Over Home Mortgages.”

Monday was Labor Day so there was no WSJ edition, but on Tuesday, September 6, the lead headline was “Europe Signals Global Gloom” with a sub-headline, “World Markets Fall as Continent’s Debt Crisis Fuels Worries of Lengthy Slowdown.” It reminded me of the cliché that, when the U.S. sneezes, the rest of the world gets pneumonia.” Under the lead story was a headline, “Voter Discontent Deepens Ahead of Obama Jobs Plan.”

By Wednesday, September 7, the headline was “Euro Woes Stir Currency Fears” with a sub-headline, “Older Americans Held Hostage by Mortgages.”

On Thursday, September 8, the headline was “Fed Prepares to Act” with a sub-headline, “Officials Consider Unusual Steps to Avert an Economic Stall.” The nation has been stalled since 2008 when gobs of taxpayer money was used to bailout banks, an insurance company, and two major auto manufacturers. Meanwhile, an accompanying headline said, “U.S. Hits Builders with Pay Probe” about a Labor Department investigation “of the top companies in home building, hitting them with a broad demand for records that has led to complaints of regulatory overreach.” You think?

By Friday, following Obama’s speech, the lead headline was “Obama’s Bid to Spur Growth." The sub-headline was “President Asks Congress for $447 Billion in Cuts, Spending; Tepid GOP Response.” With a $14 trillion national debt, I’d be tepid, too.

The proposed bill would be paid for with tax increases that would kick in after the next election in 2012. They are the same increases a Democrat-controlled Congress refused to authorize!

The Saturday weekend edition, led off with “Banker’s Exit Rattles Markets” and a sub-headline, “In Europe, Top ECB Economist Resigns, Seen as Policy Protest; Dow Industrials Fall 303.68 points.”

Obama speaks. The Dow tanks. Coincidence? I think not.

The other lead article headline was “Treasury Weighs New Tax Scheme.” It began “Treasury floats the notion of eliminating some, but not all taxes on overseas profits of U.S. multinational companies…”

Thus, the week’s WSJ headlines were a microcosm of the fears defining the economies of the U.S. and European nations whose socialist programs and massive over-spending had landed all of them in hot water.

We expect and we want government to exercise prudence in the management of public funds, but successive administrations and congresses did not, electing always to expand government. Let's hope the Fed does not want to print more money. It will cause a collapse of confidence.

It’s September 2011. Welcome to the 1930s.

© Alan Caruba, 2011

Obama's Global Incompetence

By Alan Caruba

All Presidents have had to deal with events around the world that seemed to call for a military response, but it was President Eisenhower who laid down the doctrine to avoid what he called “brushfire wars”, outbreaks such as we have seen in Tunisia, Egypt, Syria, Yemen, and, in particular, Libya.

Eisenhower had directed the defeat of Germany in World War Two as the Supreme Allied Commander before being urged to run for president. He would serve two terms and was doubtless the right man at the right time in the nascent years of the Cold War.

President Obama seems to lack any kind of a doctrine or plan to deal with a Middle East where many are fed up with its dictators, combined with the realization of how far behind the rest of the world the region is.

It is an irony of history that, after Eisenhower squelched the British, French and Israeli plans to retake the Suez Canal following Nasser’s nationalization in 1956, in rather rapid succession, Nasser died, was replaced by Sadat who was assassinated, and a 28-year-old Mubarack then ruled Egypt until the Maghreb and Middle East exploded with turmoil this year.

Why did Obama feel compelled to say anything? Earlier he was reluctant to support the Iranians protesting the ayatollahs in Tehran, but he rushed to the Tele-Prompter to tell, not ask, Egyptian President Mubarak to step aside.

Curently, the Egyptian decision to open its borders with Gaza and Hamas bodes ill for Israel, but just about everything in the Middle East right now fits that description. And, of course, Obama took the opportunity to launch a verbal attack on our only real ally in the region with an overt mention of “1967 borders”.

The payback was a joint session of Congress in which Israel’s Prime Minister Netanyahu delivered a speech to which both Democrats and Republicans repeatedly gave standing ovations. It made Obama look lame, but just about everything does these days.

Will there be a surge of democracy in Egypt? No. The military will find a way to retain power, most likely coalescing behind a new president/dictator. After that, large numbers of the Muslim Brotherhood will be jailed and killed until they crawl back into their holes.

In Libya, Obama could have simply let the resistance succeed or fail. There was no compelling reason to demand Gadhafi step aside and the embrace of “humanitarian concerns” rings hollow given events in Syria. So far the only thing that Libya has demonstrated is that NATO is ill prepared to wage a war.

Reports have it that Obama and the Russians have decided Gadhafi must go, but Assad of Syria can stay despite the fact that he is currently killing that nation’s people by the score.

Obama has returned from a European tour in which he exhorted them to give the emerging Arab states billions in aid to facilitate democracy, but Obama does not seem to grasp the fact that the only state in the Middle East that is a real democracy is Israel. The rest are controlled by dominant tribal groups in one fashion or another. They always have been and they always will be.

It has apparently escaped Obama’s notice that neither the U.S., nor any of the European nations have any money to throw at a bunch of unhappy Arabs. The Saudis have lots of money, but they are too concerned about the threat that Iran poses and too smart to get involved in the shifting sands of Middle Eastern power struggles.

The U.S. has a little problem called “a debt ceiling” to resolve so it can continue to borrow money just to pay interest on the money it already has borrowed.

Unlike Eisenhower, Obama is the wrong man at the wrong time. He is poorly advised by a pack of anti-Semites and lacks any experience, military or otherwise, to make decisions about the Middle East. His knowledge of that region’s history appears to come from brief quotes off the back of a cereal box.

In over two years in office, Obama has become a massive embarrassment to America whenever he goes abroad, whether it is to prattle about global warming in Copenhagen or to insult the Queen of England.

The result is a serious deterioration of confidence that America can be relied upon to support allies. In Eastern Europe, Poland, Slovakia, the Czech Republic and Hungary are creating a regional framework for their mutual defense, fearing that neither NATO, nor the European Union, will be of much use to them if Russia gets frisky.

And you might recall that Obama denied Poland (and Europe) a missile shield, thus sending a signal to Russia that he actually trusted them. Nobody, but nobody, trusts the Russians. And it should be noted that Iran has missles that can hit Europe.

All of this invites trouble in a dangerous world because, more and more, nobody trusts America so long as Obama is in the Oval Office.

© Alan Caruba, 2011

Obama vs. Israel

By Alan Caruba

Is Obama a Muslim? Does Obama hate Israel? Will Israel be attacked again? Will Iran nuke Israel? Has Maghreb and Middle Eastern turmoil flummoxed the White House? Why did Obama bow to Saudi Arabia’s king? Questions, questions, questions?

Watching President Barack Hussein Obama try to pick winners and losers in the Middle East would be amusing if it were not so deadly serious. Not a word about Syria’s slaughter of its protestors. A demand that Libya’s Gadhafi step aside and a quick retreat behind NATO’s skirts. Throwing Egypt’s Mubarack under the bus when saying nothing would have sufficed. And then there was the infamous and inauspicious start to his presidency with the “World Apology Tour” that included a stop in Cairo.

A May 11th Reuters news article published in the Jerusalem Post was titled “Obama may preempt PM’s speech to U.S. Congress.” Benyamin Netanyahu, at the invitation of Speaker John Boehner, will address the Congress on May 24. If President Obama delivers a speech about “political change in the Middle East and North Africa” prior to the PM, it will be impossible to deny that it is a deliberate effort to rebut in advance anything Netanyahu says.

Israel just celebrated the 63rd anniversary of its founding. Successive American administrations have struggled and failed to secure any peace between it and its sworn enemies. The reason is simple and obvious. Only Egypt and Jordan negotiated peace treaties with Israel and then only after having been decisively defeated in war.

Neither the Palestinian Authority, nor Hamas wants peace, nor does Hezbollah, an Iranian proxy group based in Lebanon. Not all the handshakes, Oslo Accords, and other diplomatic dances will change this.

President Obama’s special envoy, George Mitchell, whose mission it was to fashion a peace between Israel and the Palestinians just rendered his resignation. He could have saved himself the bother by not even taking the job.

The Israelis have given up territory and made countless concessions to the Palestinians without any reciprocity. Now the Palestinians are counting on the United Nations to unilaterally declare them a sovereign state. When not killing Israelis, they kill each other.

The United Nations has a long, ugly record of hostility, passing endless resolutions condemning Israel while maintaining the Palestinians as the world’s oldest “refugee” group to the tune of millions via the UN Relief and Works Agency (UNRWA).

The European Union whose World War II member nations allowed their Jews to be frog-walked to Nazi concentration and death camps has also demonstrated its hostility.

America, to its credit, has always been Israel’s one true friend. During the campaign, Obama even visited the Wailing Wall to demonstrate his solidarity. Once elected, however, and to the astonishment of voters the new Obama administration was reluctant to even say that militant Islam was the enemy or to even use the word “terrorism.” It was renamed “overseas contingency operations”!

Call me a cynic but I believe that the decision to kill Osama bin Laden was not taken until the 2012 elections became a priority. Why? Because three terrorist attacks, including the Fort Hood murders, had previously been swept under the rug by the Obama administration. Moreover, the Obama Justice Department continues to threaten CIA agents with jail for the aggressive interrogation techniques that led to finding bin laden.

The Obama administration’s hostility to Israel and the rush to preempt the Israeli Prime Minister’s speech is a reflection the 180 degree reversal of all previous administration’s relations with Israel. The president’s national security advisor, John Brennan, has referred to Jerusalem as “Al Quds”, the Arabic name for the ancient and modern capital of Israel and the State Department continues to send funds to Hamas.

In a speech delivered in March 2010, Netanyahu said, “The Jewish people were building Jerusalem three thousand years ago and the Jewish people are building Jerusalem today. Jerusalem is not a settlement. It is our capitol.”

The Muslim “tilt” of the Osama administration would be obvious to a blind man. At one point the U.S. Navy was instructed to call the Persian Gulf the “Arabian Gulf.” Who can forget the President’s weak response to a proposal to build a mosque within a short distance from New York’s Ground Zero, the site of 9/11?

New voices out of Egypt are calling for the abrogation of its peace treaty with Israel. Hezbollah has been removing its cache of long-range rockets (courtesy of Iran) from Syria as that regime faces opposition. Hamas, designated a terrorist organization worldwide, has joined hands with the PLO, negating any possibility for peace with Israel.

It is bad enough when various nations openly declare their hostility to Israel, but it is very dangerous when the current regime in Washington demonstrates its hostility in subtle and not-so-subtle ways.

President Harry Truman recognized Israel when it declared its sovereignty on May 14, 1948. At the time he said, “I have faith in Israel and believe it has a glorious future, not just as a sovereign nation, but as the embodiment of the great ideals of our civilization.”

Israel and Americans who support it must wait for the November 2012 elections before the threat the Obama administration represents can be removed.

Israel’s enemies may not be willing to wait, seeing the present regime and time as the best and possibly the last opportunity to make good on their threat to “wipe it from the map.”

© Alan Caruba, 2011

A World in Disarray

By Alan Caruba

It almost makes one wistful for the Cold War when the world was neatly divided between the United States and its allies against what Ronald Reagan called “the evil empire”, the Soviet Union and its satellite nations.

Trying to bring about a League of Nations after World War One virtually killed President Woodrow Wilson who suffered a massive stroke, but liberals have always been entranced with the notion that an international organization would bring an end to war. Until, that is, World War Two.

As WWII was winding down, Franklin Delano Roosevelt set to creating the United Nations and, following his death, it came into being on June 26, 1945. The preamble to its charter says:

“We the people of the united nations determined

to save succeeding generations from the scourge of war, which twice in our lifetime has brought untold sorrow to mankind, and

to reaffirm faith in fundamental human rights, in the dignity and worth of the human person, in the equal rights of men and women and of nations large and small, and

to establish conditions under which justice and respect for the obligations arising from treaties and other sources of international law can be maintained, and

to promote social progress and better standards of life in larger freedom,”

Yada, yada, yada!

The United Nations has devolved into a cesspool of evil and irrelevance. I cannot think of a single war, large or small, nor any genocides, it has managed to stop. There were a couple of military conflicts in which it was an active participant, mostly in the form of telling the United States to “go get’m!” and “don’t forget to wear our blue helmets.”

If there has been a force for freedom in the world, it has been the might and power of the United States of America.

Until now.

Now our President says, “No U.S. troops will be in Libya.” This administration is desperately looking for some other nation to take the lead on Libya.

Let me be clear. I have not been a fan of spending our treasure and blood for the people of the Middle East. I am not a fan of war, but I know that war is the only way that most international conflicts get settled for good or ill.

The last President, George W. Bush, put together a coalition and invaded Iraq because, well, because he really did not like Saddam Hussein who, incidentally, had been invading his neighbors since the 1980s. His father had previously done the same to drive him out of Kuwait in the first Gulf War.

If there ever was a coalition regarding Libya, it was made of sugar candy because Germany and France had serious second thoughts after a week. No fly zones, it seems, cost a lot of money to maintain and most Western nations are broke, including our own.

The Arab League that called for a no-fly zone over Libya ran away even sooner. Arabs, who have shown an unparalleled talent for killing one another, lack the stomach for anything that involves mounting a real war to stop one of their own from killing the unfortunate citizens of his satrapy.

As it is, alphabetically from Bahrain to Syria to Yemen, despots throughout the Middle East are busy right now putting down their own internal insurrections. In the late 1990s Osama bin Laden gained a lot of attention by calling for the downfall of all the monarchies and despots throughout the region and the implementation of sharia law in anticipation of a global caliphate. The Saudis exiled him as they thought this was a really bad idea despite being the protectors of Islam’s two holy cities of Mecca and Medina.

At the same time we are witnessing a remnant of the Cold War, NATO, that does not seem to be functioning all that well, nor the European Union that was formed to be an enconomic bloc and clearly not one with any kind of a military component or sense of mission.

What the world needs is decisive leadership, but instead it has the Hamlet of the White House, Barack Hussein Obama, whose initial tour of the Middle East has, in retrospect, turned out to be one that caused its despots to conclude he was a wuss, a naif, a moron.

Who’s in charge of Operation Free Libya? No one knows!

The result is a world in disarray because the one nation every other nation thought it could count upon, for better or worse, is led by the Vacationer-in-Chief, a man who thinks that merely “saying the right thing” is the same as “doing the right thing.”

The situation in Libya will not likely turn out well, nor the growing opposition in Syria. No one knows what the outcome in Egypt will be, but everyone is pleased the crowds in downtown Cairo have gone home.

Meanwhile, Hamas is gearing up to cause trouble in Israel, waging its usual Made-in-Palestine terrorism based on the Yassir Arafat Guide to Always Saying No.

It is my profound hope the Israelis will strike back very hard, but it is also my profound belief that the UN Security Council will hastily meet to pass another resolution against Israel taking any measures of self defense.

This is how really big wars break out because no one at this point wants to fight the small ones.

© Alan Caruba, 2011

Video: Why the Euro is Worth Even Less than the US Dollar

The Good Old Days

By Alan Caruba

It started with a haircut in the morning. I sat in a barber chair I had sat in initially around the age of five. In those days, the 1940s, four Italian gentlemen cut hair and it cost 25 cents for a kid and $1.25 for an adult. Same shop, but my haircut cost $16.00 not counting the tip. Except for the owner, some lovely gals cut hair there these days.

When my parents moved to an upscale suburb of Newark, New Jersey in 1942, they paid $11,000 for a three-bedroom home with a stand-alone garage. I sold it for many multiples of that and it was essentially the same house with a few improvements. I sold because, in 2000, the town had reevaluated the property and literally doubled the taxes. Ten years later, a second reevaluation was deemed worthy of an article in The Wall Street Journal.

My parents put two sons through college on the earnings of my Father, a CPA with vivid memories of the Great Depression. He was a liberal, a Democrat, and advocate of the United Nations. Starting in the 1950s Mother taught gourmet cooking in the adult schools that sprang up after the war, earning enough to purchase the family cars and otherwise contribute to the budget. They remained married for over sixty years. He never learned to drive.

After the haircut, I topped out the gas, a little under a half-tank, and paid $21 for a mixture of gasoline and ethanol, the latter mandated by the government and heavily subsidized. The cost included state and federal taxes. I can recall when gasoline in the 60s and 70s was around 60 cents a gallon. I can also remember long lines at the pumps in both 1967 and 1973-74 when the Saudis, angered by the U.S. support for Israel, implemented oil embargoes.

A visit to the supermarket these days is a carnival of sticker-shock. The price of food has been rising thanks in part to the increase of the cost of energy to produce it and the diversion of corn to produce ethanol that reduces the mileage you get from the gas you purchase and likely harms your car’s engine. Corn is a major feedstock so the cost of a steak is rising too.

During WWII, the milk was delivered to my home by a horse-drawn wagon. Before refrigeration became widely available, we kept it in an ice box that required the delivery of large blocks of ice. There was radio, but no television. If you wanted air conditioning, you had to go to the local movie theatre. Price of admission, plus popcorn cost a kid about twenty-five cents. I saw my first television program in the 1950s. Within no time, everyone had a TV.

When I attended elementary, middle and high school there was zero talk about illegal drug use because there was none and I cannot recall any mention, let alone the teaching of heterosexual or homosexual sex of any kind. The school day began with a pledge of allegiance and a prayer. We did not have a politically correct curriculum or have to listen to fantasies about the planet heating up.

We did not recycle because everyone knew it was just the garbage.

It was the rare child who came from a family that had experienced divorce or who was being raised by a single parent. There was no segregation in the north, but my high school was almost completely white. That ratio has been reversed.

The Draft ensured that every able-bodied young man would serve a minimum of two years in the military learning the arts of warfare. We had all been born early enough to have passed through World War Two as very young children. This was followed by a conflict in Korea in the 1950s when we were teens. By the time the Vietnam War came along it was a new generation of conscripts fighting it. After that, the military became entirely staffed by volunteers.

The biggest scandal of the presidency of Dwight Eisenhower involved a vicuna coat his chief of staff had accepted as a gift. It would take Watergate to stain and end Nixon’s presidency, an ugly sexual dalliance to undermine Clinton’s, and a parade of congressional felons that constitutes a non-stop perp-walk these days.

Since I was a lad the government added a Department of Education, a Department of Energy, a Department of Homeland Security, the Environmental Protection Agency, and others I cannot recall. Regulation of everything has exploded. Borrowing and spending has exploded. If anybody had told me back then that the government was broke, I would have thought he was crazy, but the debt ceiling kept being raised until there is, in effect, no ceiling.

In my memory, American society began to shift from traditional values and patterns in the 1960s. The century-long failure of the South to rid itself of the aftermath of the Civil War, the Jim Crow laws, eventually found expression among blacks, but it also caused riots in U.S. cities.

In time, gays in New York would rebel against police harassment and a whole new movement would be sparked, culminating in the demand for same-sex marriage, along with an end to Don’t Ask, Don’t Tell in the military. The lives of women changed with the advent of “the Pill” and demands for more equality.

Sex, drugs and rock’n roll became the order of the day. We have gone from Frank Sinatra to Lady Ga-Ga. Later generations than mine share a more chaotic vision of society and a far more costly one in which to live.

It has taken the emergence of the Tea Party movement to capture and focus the independent voters who have seesawed back and forth between the comfort of Eisenhower's conservatism to the free-spending of Lyndon Johnson, the conservative values of Ronald Reagan to Barack Obama’s effort to force European-style socialism on America.

In my life, we have gone from the Great Depression to an era in which whole nations have discovered that a highly centralized government inherently cannot function without bankrupting its citizens whether they live in the U.S., the United Kingdom, Portugal, Greece or in the former Soviet Union.

As international organizations have flourished, from the United Nations to the European Union, the more unwieldy, corrupt, and grasping they have become.

We live now in the Age of Terrorism. No one in authority seems to want to acknowledge the source, the threat to civilization called Islam. Few Americans knew anything about Islam before 9/11. Now you can’t get on a plane without a full body scan and search.

If your grandpa or grandma say they miss the “good old days”, keep in mind that in many fundamental ways, they really were good.

© Alan Caruba, 2010

Conservative's Wishful Thinking

By Alan Caruba

One of the themes running through conservative forums and blogs these days is the question of just when Barack Obama will resign from the presidency.

Secondarily, the concern is that he would do this before or after the November midterm elections, thus leaving the nation in the hands of Joe Biden, a longtime Washington insider and goofball.

The thinking of grass-roots conservatives is that Obama is just so over-whelmed and under-equipped to deal with the daily events, foreign and domestic, that he will run home to Chicago to work on yet another autobiography.

This is not going to happen. Obama is the casebook study of a pathological narcissist and everything that happens is always about him and is always somebody else’s fault.

This is what makes the BP oil disaster so delicious at the same time it is so awful. Like a giant oil slick from which he cannot free himself, this event will indelibly stain his presidency. He was too slow to respond to it and, during his belated press conference, strove to both assert that he was in charge “from day one” and that it was up to BP to solve the problem.

Compounding his problem is his announcement a month before the rig blew up that he favored offshore drilling. In politics, timing is everything and Obama’s is astonishingly slow and tone deaf. His announcement managed to anger a big part of his base, the Greens who hate oil everywhere except at the pump when they fill up their tank. Where that gasoline comes from remains a mystery to many of them who think it is a biofuel product made from soy beans and corn.

If you look closely, you will see quite plainly that Obama’s hair is turning white. He’s been in the Oval Office for a year and a half and he is aging before our eyes. This should surprise no one because he has never really had to deal with the challenges that tend to toughen up ordinary people.

Any president’s job is a daily series of domestic and foreign crisis. The skill-set most needed is leadership, followed by management. Americans know it when they see it and, so far as Obama is concerned, they are not seeing it.

What they have seen is one big mess after another made even bigger by a president who thinks big government is the answer to every problem. Most people, except for the 30% hard core of extremist liberals, have long ago concluded that big government is the problem.

A Marxist, Obama’s instinctual response was to nationalize every sector of the economy he could. Along with fellow Marxists, Nancy Pelosi in the House and Harry Reid in the Senate, the long-sought goal of a Democrat-controlled Congress was too golden to pay any attention to the people who showed up at town hall meetings or who gathered in the hundreds of thousands outside the Capitol building.

This is why there will be a heedless rush to impose an increase in every kind of tax imaginable before they are turned out of office and political control returns to the Republican Party. The GOP lost power precisely because it too jacked up the cost of government. They have some good people in office who, after the midterm GOP victory, will take the painful steps to save the nation. Just like Bill Clinton, Obama will take the credit.

Consider this, however. President Bush ran $2.9 trillion in deficits in the wake of 9/11 and Hurricane Katrina. On top of that, he was fighting two difficult wars in the Middle East. In his first twenty months in office, President Obama’s spending exceeds Bush’s one hundred months in office. Obama is spending $5 for every $1 Bush spent.

The U.S. government under President Obama has spent or lent $12.8 trillion to date and the annual GDP of the nation is just about that amount or, in other words, equal to the value of everything the United States produced last year.

As noted in a recent book, “Killing Wealth”, “the private sector comprises five million companies and 115 million employees, while the public sector comprises 89,000 taxing authorities and twenty million public servants. Private sector employees earned an average $49,935 in 2008, while federal civilian employees earned 50 percent more---$79,197 for the same kind of work.” Some would argue that it really isn’t the same kind of work because making a profit is not part of the equation.

Others might point out that Obama has surrounded himself with people who are academics or full-time government employees who have never, like himself, had to run a business, meet a payroll, or satisfy investors. They are totally ideological. They are totally clueless.

Some weeks back, I asked if the United States of America was “too big to fail?” The answer is no. Greece is close to default and Spain and Italy are not far behind. The European Union is likely to dissolve as the only nation member that has any money or the prospect of making any is Germany. Bailing out the others is not a popular option for Germans and the French will not want to either.

Bailing out the United States will eventually become an equally bad idea for China, Japan, and other sovereign investors in our treasury notes unless Congress can or will staunch the insane borrowing and spending that has characterized the past decade.

Conservatives will get their wish about Obama when the 2012 elections roll around. Until then, he’s not going away.

(a) Alan Caruba, 2010

Sorting Out Global Grievances

By Alan Caruba

“Cry havoc and let slip the dogs of war!” – Shakespeare, Julius Caesar

Every couple of decades, the world needs to sort out its various grievances. The most common mode of doing this is war and it is a truism of war that those waging it, successfully or not, sooner or later want it over. Empires, great and small, are always exhausted and generally ended by wars, even if they are on the winning side.

The last century was distinguished by two World Wars. The first was largely limited to Europe. Mechanization increased the numbers killed and it ended so poorly for Germany that it felt compelled to go to war again a mere twenty years later. That ended poorly for them as well. Making matters worse, the Japanese had dreams of empire at the same time, thus making both conflicts truly global. Their dreams ended under a mushroom cloud on August 6, 1945.

This did not dissuade the North Koreans from invading South Korea a few years later. The United States led a so-called United Nations coalition of forces, but as usual we did the most fighting. We went that route again in Vietnam until Americans began to fill the streets of Washington, D.C. with protests and, eventually, we left.

Things quieted down for Americans after that. We had a sortie or two in Panama and Grenada, and suffered losses as part of a peacekeeping force in Beirut. The Russians decided to invade Afghanistan and that turned out as badly for them as Vietnam for us.

After 9/11 we were the next ones into Afghanistan and have still been unable to leave. After Iraqi dictator, Saddam Hussein, had finished unsuccessfully waging war with Iran and then invaded Kuwait, it was a fairly easy decision to put troops in Iraq to get rid of him. We are still there.

At the end of World War One, the League of Nations was created to avoid future wars and then ignored. After World War Two, the United Nations, a pet project of Franklin D. Roosevelt, was created. Its first, interim Secretary General was a Soviet spy who worked at the highest levels of the U.S. State Department. Not a good start.

The United Nations is now the solely owned property of a coalition of Middle Eastern, African, and various socialist nations in South America and elsewhere. It is not merely useless, it is evil incarnate. Everyone in its headquarters on the East River should be told to find someplace else in which to intrigue against the U.S. After that, the headquarters should be fumigated and turned into condos.

After the world wars there was a passion to create international organizations whose purpose was to resolve conflicts, create trade agreements, and, in the case of the International Monetary Fund, bail out nations too stupid or criminal to conduct their own affairs without adult supervision.

Along with the World Trade Organization and similar organizations, ostensibly, the object was to maintain global stability, but the reality has been the establishment of global governance; one in which the central banks play an important role. To achieve this, nations must be induced to relinquish their national sovereignty.

In Europe, to avoid any more wars between Germany and France (which dragged everyone else into the mess) the European Union was formed. It sports a common currency and open borders. It came complete with a huge bureaucracy to promulgate thousands of regulations and a whole new class of useless political jobs.

None of this international fervor seems to turn out well and the EU is watching its plans for a united Europe go up in smoke thanks to Greece and other members tottering on bankruptcy. So much for the theory that global or multinational organizations are any better at running their own affairs than individual states, particularly if they are socialist economies.

If you think about it, getting all of the now fifty American States to work together as we have since the Constitution was ratified in 1788 is nothing short of a miracle, although we did take time out in 1861-1865 to sort out the nasty business of slavery. As usual, war was the way the matter was settled.

We have now arrived at 2010 and, as we look around, the U.S. has its military in Afghanistan and Iraq, along with an estimated 700 to 800 bases and missions, large and small, around the world. It has personnel in some 156 nations and always by invitation unless, as is the case with Afghanistan and Iraq, we’re there due to provocation and national security.

The entire world’s security is threatened by the rise of militant Islam and that genie has to somehow get put back in the bottle. Killing the Islamists from among 1.3 billion Muslims seems to be the only way to do it.

The United Nations is useless. The European Union is facing a financial meltdown. Its socialist member nations such as Greece, Spain, Portugal, Ireland, Italy, and even England have managed to spend their citizen’s money until there is none left to spend. Just as the Soviet Union imploded in 1991, it too may fall apart. As far back as 1848, Frederic Bastiat defined socialism as “legalized plunder.”

The contagion of financial failure is likely to lead to worse problems and, unfortunately, the United States will not be exempt because it too is deeply in debt. The national debt under the present administration has been tripled. Collapse is a very real possibility. Nations in the Middle East and anywhere they are run by despots will see an opportunity to resort to military means to expand their power.

In the same way the world fell to making war in the 1930s, it is on the brink of a similar scenario unless the prospect so frightens the leaders of Western and Asian nations that they will be left with little else than to threaten all others to settle for solutions that do not involve missiles, armies, navies and air forces.

The much vaunted “globalization” has masked the reality that individual nations must act responsibly or pay the price. History does not forecast a good outcome.

© Alan Caruba, 2010

World Economy in Trouble

How the U.S. Can Become Greece

By Alan Caruba

I find it interesting that an entire nation like Greece can face bankruptcy.

Greece will be loaned billions that it is not likely to ever repay. Meanwhile, Spain, Portugal, Italy, and Ireland are financially shaky as well. England is not much better off and the United States is printing money in the basement of the Federal Reserve while also borrowing it from China, Japan, and everyone else.

Our current miseries can be traced in part to too much government intervention and too many regulations. My hero, Wayne Crews of the Competitive Enterprise Institute, keeps track of such things and, in April, pointed out that last year Congress passed 125 bills, but federal agencies issued 3,503 final rules. Congress tasks its agencies to fill in the blanks when it passes new laws, but this now constitutes “regulation without representation,” says Crews.

The prime internal directive of government agencies, i.e., all bureaucracies, is to expand in power and budgets.

“Last year, Americans paid $989 billion in income taxes. Add to that sales taxes, property taxes, excise taxes, and other taxes, and the total tax burden comes to nearly 27 percent of national income,” notes Crews.

“Last year alone, the deficit was $1.4 trillion. This year’s deficit is expected to grow to around $1.8 trillion,” wrote Crews. “The hidden tax of federal regulation cost businesses and consumers an additional $1.187 trillion last year—none of which shows up in the federal budget. Regulation eats up an additional 8.3 percent of GDP.”

Capitalism can give you fits, but socialism is the doorway to financial disaster. Even the People’s Republic of China gave Karl Marx the heave-ho and has embraced capitalism. After Mao died, his successor told everyone “to get rich is glorious.”

The global embrace of socialism, particularly following World War Two, may have had something to do with a desire to avoid further wars the likes of which left all the nations involved in terrible shape. Only the U.S., shielded from the devastation of Europe, Russia, and Japan, came out in a position to thrive.

One result, however, was the creation of the United Nations, no doubt the most corrupt international organization of the modern era. It needs to be replaced with something less predatory and less in control of demagogues. A coalition of democracies is needed.

The U.N. was followed by the European Union, an organization rapidly discovering that a huge, centralized bureaucracy and its currency is vulnerable to the kind of trouble being caused by Greece. There’s a lot to be said for individual nations being in control of their own affairs and forming mutually beneficial partnerships with other nations.

In the U.S. the generation after World War Two became the Baby Boomers, born between 1946 and 1964, who were possibly the most spoiled and infantilized group in our short history.

They yielded the “counter culture” of the 1960s and the folks who have since risen to power in Congress and other elements of our society. The result was the rise of many of the nation’s societal ills that include the drug culture, the rise of feminism, and the emergence of gay and lesbian demands that, along with abortion, have undermined the keystone of society, marriage and families.

Does it surprise anyone that the president has nominated a second woman, Elena Kagan to the Supreme Court; a person who, like himself, has no paper trail, but who reportedly has a preference for abortion, gay rights, unions, and an antipathy to corporate America?

The push for “social justice” has played a major role in our current financial problems. The prime examples are two government sponsored entities, Fannie Mae and Freddie Mac. Having been previously bailed out to the tune of billions, Freddie Mac has requested $10 billion more while Fannie Mae is asking for an additional $8.4 billion. The taxpayers were on the hook for $145 billion in losses when the government was forced to take control of both in 2008.

There is no legitimate reason for government to be in the mortgage business or for owning General Motors and other private enterprises. Amtrak, for example, has never made a profit under government ownership. This kind of insidious nationalization is the road to ruin.

Socialist detours into Social Security and Medicare (both programs now teeter on collapse) culminated in the election of the first Marxist president the nation has ever seen. The intention of the President and the Democrat Party in Congress is to push the nation fully into the socialist camp. That would bring about a predictable collapse.

The pushback has begun, however, in States like Virginia and New Jersey where bedrock Republican conservatism elected two governors and, even in Massachusetts where a new senator won election by opposing Obamacare.

The midterm elections in November, if power in Congress changes hands to similar minded Republicans, remains our only hope that Obamacare can be defunded and even repealed. After that, the sobering fact that government is spending and regulating far too much may occasion the changes necessary to return the nation to a philosophy of fiscal responsibility and restraint.

The Founding Fathers had a profound distrust of too much government and fashioned a Constitution that would divide power among the legislative and executive branches. It expected the Supreme Court to protect the original intention of the Constitution.

Now it is up to a new generation or two of Americans to save the greatest experiment in democracy from itself.

© Alan Caruba, 2010

Global Warming Makes the Case Against Global Government

By Alan Caruba

The utterly baseless case for “global warming” is melting a lot faster than the glaciers in India’s Himalayas which, by the way, are not melting.

It is time for the Nobel Committee to rescind the Peace Prize given to Al Gore and the United Nations Intergovernmental Panel on Climate Change (IPCC).

It is time for the Academy of Motion Picture Arts and Sciences committee to take back Al Gore’s Oscar for “An Inconvenient Truth”, an alleged documentary that became mandatory viewing for students in the U.S. and around the world. Purporting to “prove” that the Earth was rapidly warming due to the rise in “greenhouse gases”, it is a fraud.

In the event the news hasn’t reached you, in mid-August 2009, after repeated requests for the Climate Research Unit’s raw data from which it calculated global temperatures, the CRU at the University of East Anglia (UK), a key element of the UN’s IPCC, announced that it had discarded the data, thereby making it impossible to determine if their assertions of rising global temperatures were accurate and true. Or not.

In October 2009, in the annual meeting of the Geological Society of America, it was demonstrated that the IPCC’s tree ring data from Russia that showed a cooling after 1961 had been disguised in its report (AR4) that, of course, asserted the Earth was warming.

A month later, just prior to a huge, international Conference on Climate Change in Copenhagen, emails from the CRU were leaked, revealing the lengths to which the CRU staff had gone to discredit and suppress any independent studies that disputed the global warming thesis.

In brief, the entire "scientific" basis on which the IPCC “scientists” and global warming advocates like Al Gore made their claims was a fraud. It rendered AR4 “scientifically questionable” in the polite parlance of the worldwide scientific community.

In January, Joe D’Aleo and E. Michael Smith released a detailed report that indicted the U.S. National Climatic Data Center and the National Aeronautics and Space Administration’s Goddard Institute of Space Studies for having eliminated many meteorological stations from their data bases in recent years and, to no one’s surprise, the stations were mostly in colder climate areas. Without their data, the “warmists” could continue to claim the Earth was in a warming cycle.

None of this came as a surprise to the “deniers” and “skeptics”, many of them internationally renowned climatologists and meteorologists, who had attended the Heartland Institute’s two international conferences on climate change, participating in seminars and addressing attendees to provide the truth; the Earth has been in a cooling cycle since 1998, any prior warming was a normal and natural cycle following the Little Ice Age that ended around 1850, and the claims of the IPCC and other alleged science-based government agencies were utterly false.

The sheer magnitude of the deception, directed and orchestrated from within a United Nations entity, given support by United States and British agencies, and further supported by multi-national groups such as the European Union, made it difficult for the average person to believe anything other than the elements of the hoax that were constantly proclaimed and then reinforced by the media and Hollywood.

When the global warming dam burst, millions around the world would conclude what they had always suspected; there was no global warming and all the billions spent in the name of “reducing greenhouse gases” or “clean energy” was part of a massive fraud, a set-up to permit new forms of taxation and to enrich the participants.

That is the case against multinational organizations such as the United Nations and the European Union, to name just two. They are, too often, giant propaganda machines whose agenda is to eliminate fundamental concepts of individual liberty and freedom, replacing them with faceless bureaucrats with no obligation to be responsive to citizens anywhere.

A U.S. President, Barack Obama, who attended the UN Copenhagen Conference and would, in the course of his State of the Union speech, claim that there was “overwhelming evidence” of climate change a.k.a. global warming, is part of the cabal that would waste taxpayer’s billions on "green jobs", “clean energy”, and “biofuels” as opposed to actually encouraging the building of nuclear and coal-fired plants, exploring and extracting offshore oil and natural gas reserves, and maintaining the nation’s vital infrastructure.

A rogue government agency, the Environmental Protection Agency, is brazenly warning Congress that it will regulate carbon dioxide if it does not pass the patently false “Cap-and-Trade” legislation intended to limit so-called “greenhouse gases.” The EPA must be reined in and a complete housecleaning is necessary to repeal the many regulations and laws based on the global warming fraud.

The U.S. needs a new Congress filled with men and women who want to protect the nation against the frauds perpetrated by its own science-related agencies, to kill legislation that would impose a massive tax on energy use, and bring the global warming advocates within the government to the bar of justice.

The world needs to dissolve the United Nations in the same way it shunted aside the useless League of Nations. The present institution should be broken into units that perform legitimate services, but governance is not a legitimate purpose. No global taxes. No global army. No global propaganda machine.

Nations, worldwide, need to reclaim their sovereignty and then work together for the mutual goal of peace and other worthwhile causes.