On Fairness and Unfairness

By Alan Caruba

“Expecting the world to be fair to you because you are a good person is like expecting the bull not to charge because you are a vegetarian.”

I don’t know who said this, but it is a great piece of wisdom that we should all embrace.

Every time I hear President Obama talk about what is fair or not, I am reminded of how unfair it is to have a President whose personal history remains subject to question and the failure to provide documentation that most Americans are required to show for matters as simple as renewing a driver's license.

I am not given to feeling sorry for myself because I long ago concluded that whatever good fortune comes my way is just that, luck. Hard work helps, but sometimes it too is not enough. We live in a casino called life.

Is it fair, for example, that I was born into the Great Depression over seventy years ago and now, when I should be enjoying retirement, I am living in something the economists call a recession, but is just as bad, if not worse, than it was when I was born.

Despite all the distractions to keep us from confronting massive unemployment, widespread foreclosures, a government rife with corruption, waste, and cronyism, a broken justice system, a President who won’t produce a passport and whose Social Security number is fake.

So what do we do? We all just soldier on trying to pay what we are told is our “fair share” of an unfair system of taxation. We do so when the government is so deep in debt it has to borrow 40 cents of every dollar it spends and has imposed a per capita debt of $140,000 on every American, including those born this day.

Kennedy who famously said, “Life is not fair”, would be assassinated in 1963 and next in line was Lyndon Baines Johnson who took the nation into war with Vietnam and 58,000 dead young Americans later he decided not to run for reelection. I still recall the protest marches. The sixties became synonymous with “hippies”, a burgeoning drug culture, and some of the best rock’n roll ever performed.

Then we got Richard Nixon and his Secretary of State, Henry Kissinger, who finally negotiated something called “peace with honor”, but the war was the first major defeat the nation had sustained. All of which made me wonder why no one in the White House or Pentagon pointed out to President Bush that neither Alexander the Great, the British Empire, nor the Soviets had gotten out of Afghanistan without being beaten to a pulp.

Apparently, a generation or two of voters were not paying attention in school if, indeed, American and world history was even being taught. In 2008 a slim majority elected Barack Hussein Obama, a thorough-going communist with total contempt for the Constitution, America, and its people. That’s not fair.

And how close did we come to electing an environmental charlatan called Al Gore? Or John Kerry whose choice for vice president, John Edwards, is currently in court charged with using campaign funds as a “gift” to his mistress and his illegitimate child, the result of an affair carried on while his wife was dying of cancer?

Does it seem like America has been passing through a long period being led by the sorriest bunch of politicians to whom such power has been granted; Lyndon B. Johnson, Richard M. Nixon of Watergate infamy, Jimmy Carter, the skirt-chasing Bill Clinton, and the sorry likes of the Senate’s Harry Reid and former Speaker of the House, Nancy Pelosi?

None of it is fair. It just is.

America desperately needs to elect a grownup. It needs a man who knows how to read a balance sheet and how to restore the economy.

The Tea Party came into being to protest Obamacare. It now elects men and women to Congress, altering the balance of power in the 2010 elections, and will likely decide the outcome of the November elections.

It is testimony to the way Americans are willing to wage a peaceful revolution for real change, not just some dumb motto meant to cheat and enslave suckers.

© Alan Caruba, 2012

How (and Why) Obama has Impeded Recovery

By Alan Caruba

During and after his 2008 campaign, Barack Obama was hailed as the second coming of Franklin D. Roosevelt. History records that Roosevelt presided over the Great Depression, begun in the previous administration of Herbert Hoover who got most of the blame. Roosevelt’s policies extended it well beyond the normal recovery from a recession.

In his book, “Dupes”, historian Paul Kengor, wrote “Roosevelt won in a landslide in November 1932. To liberals and traditional Democrats everywhere, he was more than just a new face at 1600 Pennsylvania Avenue. He was a kind of political savior at the most desperate time in their lives.”

Roosevelt was immediately assailed by the Communist Party USA as he launched his New Deal stew of programs intended to reverse the effects of the economic crisis. As Kengor notes, “No president had ever moved so far to the left, and so quickly, but it was not enough for the comrades.” They portrayed Roosevelt “as a warmonger bent on wreaking havoc on the poor USSR (Soviet Russia)” because they feared the U.S. might go to war against it.

As we now know, some of Roosevelt’s closest advisors were either Communists or extremely sympathetic to Communism. Harry Hopkins was one of them and was later exposed as a likely Soviet agent. The Venona transcripts of secret communications between U.S. Communists and their Soviet handlers revealed this.

Obama came into office following the 2008 financial crisis which, as we know, he blamed entirely on George W. Bush. Triggered by Fannie Mae and Freddie Mac, two government sponsored enterprises, the crisis reflected the many “subprime” mortgages they had pressured banks to make. Bush’s efforts to rein them had fallen on deaf ears.

Like Roosevelt, Obama initiated a number of policies and legislation, not the least of which was his “stimulus” package to turn around the economy, but which has left it with a higher level of unemployment today than in 2009-10. His other initiative, stimulating Green energy has cost taxpayers billions.

In “New Deal or Raw Deal?” historian Burton Folsom, Jr., wrote of Roosevelt’s National Industrial Recovery Act (NRA) documenting that it and other measures did nothing more than balloon the federal government while interfering with the normal action of capitalism to recover—as it had many times before—from financial crises.

Oklahoma Senator Thomas Gore, first elected in 1907, summed up Roosevelt’s efforts saying at the time, “No depression can be ended by gifts, gratuities, doles, and alms handed out by the Federal Treasury, and extorted from taxpayers that are bleeding from every pore.”

As Folsom put it, “Capitalism had failed in Roosevelt’s view of the world and that opened the door for new experiments in government ownership and government direction of the economy. Private enterprise would become public enterprise.”

Why anyone would think that Barack Obama, a “red diaper baby”, raised by leftists and mentored in his youth by a card-carrying Communist, Frank Marshall Davis, would act any differently than Roosevelt, repeating all his mistakes, is to be ignorant of history.

The Worst Recovery Ever

Writing in the April 3rd Wall Street Journal, Edward P. Lazear, 2006-2009 chairman of the President’s Council of Economic Advisors, wrote about “The Worst Economic Recovery in History.” Assessing Obama’s policies, Lazear said that “our current recovery pales in comparison with most other recoveries, including the one following the Great Depression.”

“The Great Depression started with major economic contractions in 1930, ’31, ’32 and ’33. In the three following years, the economy rebounded with growth rates of 11%, 9%, and 13% respectively…According to the National Bureau of Economic Research, the recovery began in the second half of 2009. Since that time, the economy has grown at 2.4%, below our long-term trend by either measure. At this point, the economy is 12% smaller than it would have been had we stayed on trend growth since 2007.”

“It would be difficult to argue,” wrote Lazear, “that government policies over the past three years have enhanced confidence in the U.S. business environment. Threats of higher taxes, the constantly increasing regulatory burden, the failure to pursue an aggressive trade policy that will open U.S. exports and the enormous increase in government spending all are growth impediments.”

Like Roosevelt, Obama has impeded a rebound in the growth of the economy and he has done it by applying all the wrong Socialist “solutions” that extended the Great Depression from 1929 to 1941.

For Obama, this has truly been a crisis that would not be allowed to go to waste. What he has done has been to impose Obamacare in the face of massive rejection, overseen the loss of two million jobs, and increased the national debt to levels that put the U.S. on a crash course to financial collapse.

It would be naïve to think he did not know what he was doing. If one wanted to bring the United States of America to its knees, he would pursue Obama’s policies of the past four years. His “open mike” gaff, speaking with Russia’s President, Dmitry Medvedev, confirms his intent to work closely with America’s longtime adversary if reelected.

© Alan Caruba, 2012

It's the Economy, Stupid!

By Alan Caruba

It is interesting to see how intently foreigners are watching the run-up to the 2012 national elections, particularly as regards whether President Obama could be reelected. Hardly a day goes by that I do not receive inquiries from places like South Africa, Israel, or England. Some offer comments on my Facebook page, but the concern is the same, can Obama be defeated?

To borrow a phrase from Bill Clinton’s 1992 race, “It’s the economy, stupid.” That will be the deciding factor as Democrats , Republicans, and independents go to the polls in November. The news for Obama is bad. Unfortunately, the news for millions of out-of-work Americans it is even worse.

On February 28, the National Federation of Independent Businesses and a coalition of business groups were in the D.C. Court of Appeals to argue their challenge to the Environmental Protection Agency’s rules regarding greenhouse gas emissions. The fact that there is no correlation between such gases—mainly carbon dioxide—and a non-existent global warming probably won’t even be discussed. A spokesperson for the NFIB said, “For the small business community, the constant churn of costly and carelessly promulgated regulations has become too great a burden to bear.” Guess who all those small business owners will be voting against in November?

The Congressional Budget Office (CBO) keeps doing something that is unexpected from most government agencies; it keeps telling the truth. In mid-February it issued a report which said that, after three years of Obamanomics, the nation has seen the longest period of high unemployment since the Great Depression in the 1930s. Trust a Democrat President to repeat all the errors of Franklin Delano Roosevelt who prolonged the Depression for ten years while he held office.

The “official” unemployment rate has hovered around or exceeded 8 percent and this is expected to continue through 2014. The CBO noted that the level of long-term unemployment—those looking for work for more than six months—is over 40 percent! That is the highest since 1948 when the data was first collected.

Hans Bader, Counsel for Special Projects with the Competitive Enterprise Institute, recently noted that “The official unemployment rate is going down, but that’s partly because many long-term unemployed people went into Social Security Disability, citing ailments such as depression. Now they have a monthly government check, they are never, ever going back to work, and they are no longer treated by the government as unemployed.” This is governmental slight-of-hand to lower the rate of unemployment while contributing to it.

Writing in OpenMarket.org in February, Bader noted that a good part of the unemployment problem in the nation is a severe shortage of skilled factory workers. “In recent years, government officials have depicted white-collar jobs for college graduates as the way to go,” said Bader who noted that, while seeking to increase spending on colleges, the administration has been “slashing spending on more useful vocational education that could lead to work in manufacturing.”

An indication of how poorly the government solution to the need for skilled manufacturing employees has been is the fact that the private sector has stepped up to solve the problem. The National Association of Manufacturers has endorsed a National Manufacturers Skills Certification System to fill the gap. In partnership with community colleges and trade schools, the program offers “a relatively inexpensive path to meeting the human capital demands of U.S. advanced manufacturers.”

It has not gone unnoticed that Obama’s stimulus billions did not produce any “shovel ready” jobs and wasted public funds on a range of “green” industries, many of whom, like Solyndra, have gone belly up. Overall, the “green” industries involving solar panels, wind turbines, and electric cars have proven to be sinkholes of money that generate few jobs compared to the rest of the nation’s manufacturing sector.

Finally, after three years of the most anti-energy administration since Jimmy Carter, the rising price of gas is going to have a devastating affect for Democrats and Obama on public perceptions on Election Day.

To those foreign correspondents asking whether Obama will be reelected, I keep saying that the present economy with its slow “recovery” and the high rate of unemployed, combined with the government’s crushing load of irrelevant and odious regulations, is as good an indicator as any regarding the outcome of the November general elections.

If foreigners are as much concerned with U.S. elections as Americans, all the debates, daily silliness of political news coverage, and largely irrelevant social issues suggest that November will represent, like the 2010 elections, a massive voter movement away from “hope and change” to a Republican candidate that offers an alternative economic policy to four more years of the disaster called Barack Hussein Obama.

© Alan Caruba, 2012

Working Into the Grave

By Alan Caruba

Believe it or not, there was a time when, if you turned 65 and retired, you could expect to live in reasonable comfort. Social Security covered a portion of your expenses; your savings account yielded a modest amount of interest, and, if you had made investments, stock dividends provided a safety cushion. Not so anymore.

“More Elderly Find They Cannot Afford Not to Work” was a January 21 headline of an article in The Wall Street Journal, noting at one point that an 87-year-old woman who had retired in 2003 was now earning $7.25 an hour, four hours a week, collecting tickets at a movie theatre in my former New Jersey hometown. I had lived there for 62 years.

Thanks to ever-rising property taxes, I sold my home before prices plunged in the wake of the 2008 financial crisis. I parked the money in an annuity.

I am fortunate that there is no age limit on the ability to write for a living. The writing trade has always been a tough one. The former market for magazine articles is a shrinking pool paying little for one’s labors. Self-published books, particularly fiction, have flooded the marketplace and mainstream publishers rely on older, established authors with a following. As often as not, bestselling non-fiction is written by people who anchor television news or have some other form of celebrity.

As the Wall Street Journal article noted, “In 1981, Social Security paid 52% of the average worker’s pre-retirement earnings, according to the Social Security Administration.” I turn 75 this year and my Social Security is little more than “grocery money.” Interest on my savings account is a joke.

For too many of my fellow senior citizens, not working is not a choice The Wall Street Journal notes that “The unemployment level among Americans 75 and older—measuring the number of people seeking work—is relatively low but twice what it was five years ago. The rate was 5.6% last year…compared with 2.5% in 2006.”

When I was born in 1937 it was in the depths of the Great Depression. I have lived long enough to be swept up along with everyone else in the Great Depression 2.0.

Naively, I and many others of my generation thought the years of economic growth that began in the 1950s would go on forever. We survived a number of investment “bubbles” and predictable, but short-lived recessions, but this one is different. It has been exacerbated by an ever-growing federal government, job-killing “environmental” regulations, and burdened by “entitlement” programs whose cost understandably keep increasing along with the nation’s growing population of older Americans.

“”Federal spending on Social Security and Medicare is rising,” said the Journal article. “both in total dollars and percentage of the budget. Social Security made up 20% of the federal budget in the 2010 fiscal year, up from 13% in 1962. Combined spending on Social Security and Medicare represents 9% of GDP and is projected to grow to 12% in 2035.”

The nation’s debt now equals its Gross Domestic Product. The U.S. is broke and so are Europe’s nations with the exception of Germany. That is simply not sustainable—something the Congressional “super committee” discovered when it punted on any solution to the nation’s fiscal woes.

Part of the problem is the nation’s aging population. No one anticipated that health care would improve to the point of extending people’s life expectancy from 65 in the 1930s to an average of 78 years today. As it is, both my parents lived into their 90s, I have an older brother in his 80s, and a nephew in his late 40s who just became a father again.

We can thank short-sighted “social justice” programs such as Fannie Mae’s and Freddie Mac’s appalling “sub-prime mortgage” programs and “bundled assets” that sank banks from sea to shining sea. The U.S. taxpayer has had to bail out these two “government sponsored entities” to the tune of billions and they keep coming back for more.

In the space of just three years, President Obama has increased the nation’s debt by five trillion in horribly misspent, wasted dollars. Since 2010 when control of the House was returned to Republicans, they have fought against pressures to raise taxes that would suck more money out of the economy and have put forth sensible plans to restructure Social Security and Medicare. Naturally, they have been accused of being heartless.

Any senior citizen who votes for Obama or a Democratic Party candidate is putting themself at further risk of having to work until they die or seeing their savings eaten by illness or other rising costs before that occurs.

Editor’s Note: The author’s editorial services site is here.

© Alan Caruba, 2012

Spending More has Never Worked!

By Alan Caruba

Ask any financial advisor what to do when you are drowning in debt and they will tell you to spend less and pay down your debt. This is just common sense. However, if you ask politicians what to do, they will advise that the nation spend more and borrow more.

Despite a huge national debt and deficit, the federal government just concluded its biggest spending year with its second biggest annual budget deficit. For fiscal 2011 which ended September 30, the government spent $3.6 trillion, an increase over the $3.52 trillion posted in 2009.

The budget “deficit” is the difference between the revenues that government took in and what it spent. The “debt” is the accumulation of yearly deficits. The U.S. has a debt of $15 trillion and this grows by billions daily due to the interest that must be paid on the amount of borrowing required to sustain its operations. Fully 40 cents of every dollar the government spends is now borrowed.

The Congressional Budget Office noted that the deficit is “greater than in any year since 1945” as World War Two wound down. As a Wall Street Journal editorial expressed it, “The Obama years have racked up the three largest deficits, both in absolute amounts and as a share of GDP, since Hitler still terrorized Europe.”

In the wake of the failed Super Committee, charged with cutting a mere $1.2 trillion over ten years, the editorial noted that “President Obama fiercely resisted even the token spending cuts for fiscal 2011 pressed by House Republicans earlier this year.” He continues to press for higher taxes on “the rich” despite the fact that the rich pay the lion’s share of income taxes already. By Obama’s definition, the rich is anyone earning more than $200,000 a year. By most definitions, that qualifies as middle class, not rich.

We are entering a period that is likely to be called something like the Great Depression Two or 2.0. History usually serves as a guide and, as Hans Bader, counsel of special projects for the Competitive Enterprise Institute has noted, “government spending (and budget deficits) rose dramatically in the Depression under both the Hoover and the Roosevelt administration…(both) increased, rather than cut, spending in the Great Depression.”

It is a dangerous thing to cling to myths about the Great Depression. Bader says “Big government liberalism is a religion, not a school of rational thought. A false understanding of the history of the Great Depression is the cornerstone of left-wing ideology…”

The Great Depression was a series of recessions. In the August 5 New York Times, Bader noted that “In 1937, the Supreme Court upheld anti-business legislation that had been struck down by lower courts, like the National Labor Relations Act, in decisions like National Labor Relations Board v. Jones & Laughlin Steel Corporation. That made unions more powerful, led to a wave of costly strikes and discouraged hiring. The increased wages demanded by unions resulted in employers laying off many workers.”

Does this sound familiar? Efforts by States to rid themselves of collective bargaining, primarily with civil service unions such as Service Employees International Union (SEIU), is a reflection of the way they have drained public coffers with wage, pension and health plans that exceed those of private enterprise. Andy Stern, the former SEIU president, just had a commentary published in The Wall Street Journal in which he urged the U.S. to adopt Chinese Communism!

In Wisconsin, Ohio, and elsewhere, unions representing government workers and others in the private sector have spent millions to defeat such efforts to end collective bargaining. New Jersey Governor Chris Christie gained national attention for his efforts to curb that state’s teacher’s union demands.

What President Obama calls a “do nothing Congress” is one in which his party controlled both houses of Congress until the 2010 elections. It will live in infamy for imposing Obamacare on a nation that has flatly rejected it.

The Supreme Court will hear the suit brought against it by 26 state attorney generals. If permitted to stand, it will destroy what is widely regarded as the world’s best health system along with the historic interpretation of the Constitution’s commerce clause.

As for spending programs, President Obama’s “stimulus” or his “green jobs” program have been a costly failure along with the administration’s waste of billions in loan guarantees to green industries. Worst of all the administration’s thwarting of the nation’s traditional energy industries, as recently seen in the delay of the Keystone XL pipeline, has cost thousands of existing and future jobs.

It is a “perfect storm” of historic and current errors in judgment concerning the nation’s economy. Americans can only hope that Europe’s financial community does not implode before the November 2012 elections, dragging the U.S. and the rest of the world into another Great Depression.

© Alan Caruba, 2012

Does History Repeat Itself?

By Alan Caruba

Does history repeat itself? Yes, but with different faces and names. We evolve technologically, but we remain emotionally the same people as those in ancient Rome and Egypt. We are not that different than them.

The relentless repetition of wars, the justice systems processing miscreants, the holidays we celebrate, it has a continuity to it that is echoed in diverse civilizations. The obsession for power and wealth seeps through the ages.

That is why the images of a giant dust storm slowly engulfing Phoenix, Arizona evoked images from the 1930s when such storms were common. They become a symbol of the Great Depression in which even farmland was devoid of sustenance.

On top of the financial conditions of the 1930s, there were conditions worldwide that would lead to the manmade devastation and loss of life that was World War Two. Imagine! Two major wars in just one century, the latter stretching across vast oceans and continents. It was a century filled as well with many lesser wars.

For me “the greatest generation” were the many young men I encountered as a child riding the train between my parent’s home in Newark, NJ and Long Branch where my grandparents lived. The trains were filled with newly-minted soldiers from Fort Dix.

I can recall “rationing” as my Mother and neighbors swapped coupons to purchase sugar and other items that were scarce. Halfway though the war, the family had moved to a suburb where milk was delivered in a horse-drawn wagon!

In the run-up to the war in Europe, Hitler had made no secret that Germany was rebuilding its military. Even our “ally” in WWII, the Soviet Union, had cut a secret deal with him to divide Poland. His intent, of course, was to control Europe. More accurately, it was to loot Europe because the Nazis were more like a huge Mafia operation than anything else.

Now we have Iran “testing” missiles that it says can hit Europe and planning others that can hit America. Instead of Deutschland Uber Alles, it is now Iran threatening not just Israel and the entire Middle East, but any potential military response from NATO and others. To no one’s surprise, Russia has been their ally.

Sadly, but presciently, the poor NATO performance in Libya and the draw-down of troops in Afghanistan will be correctly read by the Iranian Revolutionary Guards as indications that their plans are right on schedule as they move ever closer to becoming a nuclear power exercising hegemony over the Middle East.

There are other indicators of unrest such as the riots in Greece and those that took place earlier in London when austerity measures were instituted to stem the financial bleeding occurring in the wake of the global crisis in late 2008 during the U.S. political campaigns. In retrospect it has the look of an “October surprise” designed to affect an outcome and the outcome was the present Obama administration.

It was preceded by a sudden electronic run on banks that was surely deliberate. Within hours the Federal Reserve stepped in to stop the massive withdrawals, but it has curiously never revealed the names of those parties or banks involved in what was quite simply an attack on the U.S. economy.

Indeed, the fact that billions, if not trillions, can be transferred at the speed of an electron represents a whole new structure of global finance than those who put the system together could have anticipated.

We are, in effect, using a financial system that dates back to the 14th and 15th centuries to deal with the exigencies of the 2lst century. Even the invention of the Federal Reserve System in 1913, put together in secret by a handful of Wall Street Bankers, seems unable to respond to the present crisis. Both the present and prior chairmen admit they do not understand why.

Meanwhile, eerily echoing the Great Depression from 1929 to 1941 when World War Two began, the nation today is deep into the same levels of unemployment, housing foreclosures, and business stagnation. The growth of the gross domestic product is practically invisible, the debt defies the imagination, and there is a lot of misery while the nation’s leaders in Congress and in the White House are at loggerheads.

The reason for this short history lesson is that, indeed, lessons can be learned from history, but only if the nation is willing to act on them.

© Alan Caruba, 2011

It Feels Like a Depression to Me

By Alan Caruba

Between the time that George Washington took the first oath of office as president and when Barack Obama did—-1789 to 2009, the United States had borrowed nine trillion dollars. Since Obama took office, it has borrowed or imposed nearly three trillion more debt. Tell me he is not deliberately seeking to bankrupt the nation.

In an August 28 Wall Street Journal editorial it noted that “To no one’s surprise except Vice President Joe Biden’s, second quarter economic growth was revised down yesterday to 1.6% from the prior estimate of growth of 2.4% which was down from first quarter growth of 3.7%, which was down from the 2009 fourth quarter’s 5%. Economic recoveries are supposed to go in the other direction.”

I was born during the Great Depression of the 1930s and have lived long enough now to find myself in a new one. There are similarities between the two, but the first one led to the creation of a variety of government regulatory entities and programs that should have avoided or at least were expected put the brakes on the current one.

At the heart of the current Depression is the government’s intrusion into the nation’s housing market via Fannie Mae and Freddie Mac, government “entities” that functioned to purchase the mortgages provided by banks and lending companies that, by law, were required to make “sub-prime” bad loans. They have since been seized and billions remain at risk until such time as they are removed from distorting the housing market.

The mortgages were then bundled and resold to banking and investment firms. When the housing “bubble” failed, it threatened the financial structure of the nation. It was a classic asset bubble as people used their homes as piggy banks, taking second mortgages to pay for lifestyles that often did not include saving money for a rainy day. If this sounds like infantile behavior, it is.

Despite the multi-billion dollar bank bailouts initiated in 2008 at the end of the second Bush term and “stimulus” bailouts continued by the Obama administration, the recession has grown longer and there is talk of a “second recession.” This is like saying the family drunk or druggie has a “consumption problem.”

Despite zero interest rates for banks borrowing from the Federal Reserve justifiable fears have slowed lending. Consumers have held off spending. Home sales reached a 15-year low in June.

If the Obama administration and Congress allow the Bush tax cuts to expire, it will deepen the current crisis. In 1932 President Hoover persuaded Congress to raise taxes and we know this led to a decade of a severe economic Depression.

Poor monetary policy drove the Great Depression and is being repeated in this one. Government does not create jobs. Its highest priority is to protect the U.S. dollar so that investment and growth can be maintained.

E. Ralph Hostetter, publisher of American Farm Publications, recently noted that “The federal government has been in control of the U.S. dollar since 1913 when the Federal Reserve Banking System was established.”

“The 130 years prior to 1913, going back to 1783, was the longest period of currency stability in U.S. history. Since the dollar came under control of the Federal Reserve Bank in 1913, it has lost 90 percent of its original value. Eighty percent of that loss has occurred since President Richard Nixon took the United States off the gold standard in 1971.”

As Gerald P. O’Driscall Jr. recently wrote in a Wall Street Journal essay, “The solution lies in restoring balance sheets. For financial firms that means raising capital. For consumers and businesses alike, that means saving more of their reduced incomes.” He warned that “Low interest rates slow the process…by keeping asset prices artificially inflated.” The current Federal Reserve interest rate is zero.

The entire governmental and economic system depends on trust and the Obama administration has squandered that by constantly telling Americans that things were getting better when it was obvious to everyone they were not.

Claims that “shovel ready” projects would turn around the economy were false. Only 3.3% of the $814 billion stimulus was allocated to the Federal Highway Administration for highway and bridge projects. The bulk of the funds expended were directed at retaining civil service jobs of teachers and funds for police and firefighters. Union contracts, fat with pension and health benefits, have bankrupted many States.

In early August first-time claims for unemployment hit a nine-month high. Since the stimulus passed, 2.6 million Americans have lost their jobs and 1.2 million have given up trying to find a new one. Despite the 9.6% figure the government cites, the actual levels of unemployment are far closer to 20%.

During the Great Depression, unemployment was 25% and wages fell 42%.

The nation has reached a point where well-respected economists are now openly using the “Depression” word. David Rosenberg, writing in his daily briefing to investors, warned against interpreting the occasional blips of Gross Domestic Product and stock market gains as signs of recovery. Other economists from major investment and banking institutions are reducing their GDP predictions for 2010 to an anemic range of 1.5% to 2%.

The United States is not in “a summer of recovery” and is not likely to see any recovery if taxes increase. Massive “reform” of Medicare will drive up insurance and healthcare costs. Massive infusions of taxpayer money to keep states afloat to pay for Medicaid and other mandated costs are temporary at best.

Social Security, insolvent because successive Congresses have raped its so-called trust fund, will require a major overhaul to protect those who have paid into it and free new generations from its requirements.

Tax “holidays” are needed to allow businesses and consumers to keep their money instead of handing it over to a profligate federal government and to States that have failed to exercise fiscal sanity.

Get used to the word “Depression.” That’s what we’re in and the first step to get out of it will be to send people to Congress who will address these problems.

© Alan Caruba, 2010

The Lies About Green Jobs

By Alan Caruba

“I was impressed as never before by the utter lack of logic of the man, the scantiness of his precise knowledge of things that he was talking about, by the gross inaccuracies in his statements, by the almost pathological lack of sequences in his discussion, by the complete rectitude that he felt as to his own conduct, by the immense and growing egotism that came from his office, by his willingness to continue the excoriation of the press and business in order to get votes for himself, by his indifference to what effect the long-continued pursuit of these ends would have upon the civilization in which he was playing a part.”

No, this was not a judgment of President Barack Obama, though the description eerily fits him. It was the view of Raymond Moley, a Columbia University professor and member of President Franklin Delano Roosevelt’s “Brain Trust” who often wrote or helped write FDR’s major speeches. FDR’s policies extended the Great Depression for ten years.

Here are some facts worth considering every time Obama calls for an expansion or intercession of the federal government as an answer to the current financial crisis:

Social Security, a cornerstone of FDR’s administration, was established in 1935. After 74 years it is on the brink of insolvency because Congress gave itself access to its funds.

Fannie Mae was established in 1938 to facilitate home ownership. It has been around for 71 years. Congress has had to seize control of it and of Freddie Mac, established in 1970. Together, they presently own or guarantee about half of the United States’ $12 trillion mortgage market.

The War on Poverty started in 1964. One trillion dollars has been transferred to “the poor” and it has not worked.

The Department of Energy was established in 1977 to lessen dependence on the import of foreign oil. With 16,000 employees and an annual budget of $24 billion, the United States has imported more oil with every passing year while denying U.S. companies access to vast national reserves in ANWR and off our continental shelf. It is an abysmal failure.

All of these programs were put forth by liberals, now calling themselves “progressives”, initiated by Democrat administrations to advance what they call “social justice.” The Obama administration is hell-bent on “health care reform” that will put one sixth of the U.S. economy under the control of the federal government whose interventions in the free market have been the cause of the previous recessions.

In 2010, the Obama administration says it intends to relieve the job shortage by creating “green jobs” in the sectors of wind and solar power and biofuels. It has announced a program that will cost $2.3 billion, costing approximately $135,000 per job.

“Show me one other industry that requests and receives a nearly 30 percent taxpayer subsidy,” says Thomas J. Pyle, president of the market-based Institute for Energy Research. “If the President really wants to create an environment that will foster economic growth and job creation, he need not look any further than the domestic oil, gas and coal industries.”

In November 2009, a Washington Times editorial said, “’Green energy’ is proving to be no miracle solution to the nation’s monumental unemployment problems, and it is doing little to help the economy emerge from its deepest recession in decades, economists say.”

A large part of the administration’s $786 billion dollar stimulus bill was devoted to green or renewable energy projects, but the rate of unemployment continues to rise, the cost of gasoline and heating oil continues to rise in the face of the coldest winter on record in decades, and real jobs in energy industries are thwarted by Obama administration restrictions on the exploration and development of our national energy reserves.

Similar green jobs programs in Spain, Germany, and other nations that signed onto the UN Kyoto Protocols limiting carbon dioxide emissions have demonstrated that such jobs cost too much to create and eliminate other jobs in the process.

Following recent Climategate revelations, it is abundantly clear that so-called greenhouse gas emissions do not cause a non-existent “global warming” which was and is a massive science-based fraud.

Despite this, a Cap-and-Trade bill awaits a vote in the U.S. Senate that would impose a huge tax on energy use. At the same time, the EPA is claiming that carbon dioxide is a pollutant that must be regulated.

The lies simply do not stop.

So-called Green jobs depend on two of the most impractical and unreliable sources of electricity generation. Solar and wind farms require backup by coal-fired and nuclear power sources for the blatantly obvious reason that the sun does not shine full-time, nor do the winds blow full-time. These, plus biofuel producers, are parked on the doorstep of Congress to secure the subsidies they need just to be in business; subsidies that are derived from our taxes

Biofuels divert valuable crops like corn to create ethanol, driving up the cost for a gasoline additive that incongruously produces less mileage and increases the cost of the many food products that utilize corn.

America, the home to centuries-worth of massive amounts of coal, has a President who has openly declared war on the coal industry that currently provides half of all the electricity used by Americans. By contrast, solar and wind provide just over one percent!

When the President talks of “green jobs” he is lying to Americans who need real jobs. The stimulus bill was nothing more than a political “pork” bill and is providing no real surge in job creation. Indeed, the administration has claimed to have “saved” or produced jobs in non-existent Congressional districts.

Meanwhile, the members of the U.S. House and Senate have voted themselves $4,700 and $5,300 in new raises at the same time they have voted to deny a Social Security cost of living increase in 2010 and 2011.

The job of every voter in November 2010 is to remove from office every Senator and Representative that voted for and supported the Obama administration’s policies who will run for reelection.

Then, maybe, we can put America on an economic footing that will generate real jobs and put an end to the Green Lies about “green jobs”, environmentally inspired legislation, and the existing Green laws and regulations that are currently killing any hope of recovery.

Stop the Bailouts!

By Alan Caruba

I can recall the bailout that Chrysler received in 1979. Jimmy Carter was President and the question of whether the government should save the nation’s third largest automaker was subjected to a lot of debate. In the end, Congress authorized a $1.5 billion loan package. In 1983, Chrysler repaid the loan guaranteed by the U.S. taxpayers.

By contrast, the so-called Stimulus Bill authorized the spending of $787 billion!

The Chrysler bailout was considered an anomaly even though the government has been in the business of making loans to just about anybody and everybody from small business owners to college students for a very long time.

From the G.I. Bill after World War Two to the latest effort to rescue defaulting homeowners from themselves, loans are part of the fabric of how government is seen.
Given the success of government-run entities such as Amtrak or the Postal Service, the notion that the now government-owned GM can recover, let alone pay back those billions, is doubtful.

Based on a liberal interpretation of the Constitution, the Federal Housing Administration was founded in 1934 to insure mortgage loans made by private firms to qualifying homeowners. The U.S. was in the midst of the Great Depression and the FDR administration engaged in every kind of intervention into the economy in an effort to end it.

In hindsight, many historians and economists believe that, had the government done nothing, the Depression would have very likely ended on its own. The general consensus is that all those government programs prolonged the Depression for ten long years until World War Two intervened.

The government really got into the mortgage loan business big-time when it created Fannie Mae and Freddie Mac so that everyone who wanted to own a home could go to a bank or mortgage company that would, in turn, sell the loan to either of these two quasi- government entities. By the time the government was forced to seize their control, they would own or guarantee about half of the United States’ $12 trillion mortgage market.

Recall that in September 2003, Rep. Barney Frank (D-MA) defended the financial soundness of Fannie Mae and Freddie Mac. Backed by the full credit of the nation, mortgage loan rates kept getting lower and lower at the same time banks and mortgage loan firms were being pressured to make loans to minorities and others who, using normal banking standards, would not have received them.

Just how well did that work out? According to a December 31 article on Bloomberg.com, “Taxpayer losses from supporting Fannie Mae and Freddie Mac will top $400 billion, according to Peter Wallis on, a former general counsel at the Treasury who is now a fellow at the American Enterprise Institute.”

Do you think there might have been a connection? “The debt of Fannie Mae, Freddie Mac and the Federal Home Loan Banks grew an average of $184 billion annually from 1998 to 2008, helping fuel a bubble that drove home prices up by 107 percent between 2000 and 2006, according to the S&P/Case-Shiller home-price index.”

So, it was the government, not “greedy” bankers and mortgage loan companies that created the scenario that led to the present financial crisis.

If you think that was a bad idea, wait until H.R. 4173 kicks in. The financial reform legislation that passed the House of Representatives in early December and is awaiting a vote in the Senate is the handiwork of Financial Services Committee Chairman, Rep. Barney Frank (D-MA), the same person who told us how sound Fannie Mae and Freddie Mac were.

At 1,279 pages, it is unlikely that anyone in the House read the bill, but we are in a new age of governance where Congressmen and women no longer feel required to read a bill before voting on it.

Republican members of Congress are the exception because, as you may have noticed, not one of them voted for healthcare “reform.” Through bribery and other means, the bill still passed the Senate. A dozen or more states are already seeking exceptions and some governors are threatening to sue to block it.

Columnist David Reilly of Bloomberg.com reports that Rep. Frank’s bill authorizes the Federal Reserve to provide as much as $4 trillion in emergency funding the next time Wall Street crashes.

“This is more than twice what the Fed pumped into markets this time around.” The bill does require that there has to be “a 99 percent likelihood” that all funds and interest will be paid back. It also allows the government to back financial firm’s debts in the next crisis. It is a blank check for the next crisis and a very bad idea.

The Frank bill also prohibits “any incentive-based payment arrangement.” And we all know how well any business functions when you take away any incentives.

In October, the Cato Institute issued a Policy Analysis titled, “Would a Stricter Fed Policy and Financial Regulation Have Averted the Financial Crisis” by Jagadeesh Gokhale and Peter Van Doran.

“Imposing onerous financial regulations will only impede the reconstitution of financial institutions, delay the recovery, and dampen the pace of long-term economic growth.”

You think?

The Cato analysis noted that many of the nation’s prominent economists significantly misread the state of the economy.

“In hindsight,” the Cato authors concluded, “they were all wrong.”

In the first issue of 2010, Business Week’s Bradley Keoun pointed out that, “As the last big banks scrambled to return their bailout funds in mid-December, the President summoned top Wall Street chiefs to the White House, urging them to increase lending to companies and individuals.”

What the President knows or understands about finance could fit neatly into a bug’s ear. In his view, Wall Street is composed of “fat cat bankers.” Not a good attitude if you want them to begin making loans again.

While granting that the TARP funds proved effective in getting credit flowing again, Keoun also noted that “Even when they had the federal funds, banks hunkered down in the face of losses.” They have not been making loans at the previous pace, fueled in part by the housing bubble (see Fannie Mae and Freddie Mac). Indeed, “As capital rises, lending is falling,” noted Keoun.

Ominously, the Business Week reporter concluded that “The only provider of credit is the government.”

The government is not supposed to be in the banking business. What it is authorized to do is “lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States.” Towards this end, the government may “borrow money on the credit of the United States.”

That credit is based on the ability of Congress to manage the government in such a way to avoid plunging the nation into levels of debt that will devalue the U.S. dollar and threaten the loss of its rating as a reliable, trusted borrower. The U.S. government must borrow a billion dollars a day just to stay in business.

In May 2009, the President said “We have no money.”

After that he and the Congress returned to the effort of increasing the national debt with a “Stimulus” bill that was pure “pork”, and nutty programs like “Cash for Clunkers.” After that, we were told that jobs had been “saved” in Congressional districts that don’t even exist. The latest insanity is Obamacare that increases the insolvency of Medicare by adding thousands of recipients to its rolls.

The White House and Congress are treating the nation’s wealth as if it were Monopoly money. It’s not. It’s our money.

Events Will Decide Obama Presidency

By Alan Caruba

A former British Prime Minister, Harold Macmillan, was once asked what he feared most and his answer was, “Events.”

Leadership is tested by things that happen over which neither a Prime Minister, President, nor any other national leader has any control. Bush43, as are all Presidents, was warned daily of potential threats, but until 9/11 Bush was into a relatively standard first term feeling his way with Congress on a few legislative initiatives.

History will record that Bush43 was up to the moment. People forget that, not only had he attended and received degrees from both Yale and Harvard, but had served in the Texas Air National Guard and qualified as a fighter pilot. This is no small feat. Moreover, he had experience in the business sector before becoming Governor of Texas. So, when 9/11 occurred, he had a lot of experience, knowledge, and resources to draw upon, including a father who had been President!

Bush made a strategic decision to expand the initial success in Afghanistan against al Qaeda to include the removal of a threat to the entire Middle East when he invaded Iraq, along with the British and other allies. Saddam Hussein had previously conducted an eight year war against Iran and had later invaded Kuwait. In retrospect, it appears to have been a good idea to rid the region of this destabilizing entity.

What was not anticipated, however, was the even greater destabilizing factor of fundamentalist Islam as personified by al Qaeda and the Taliban. It currently threatens the government of Pakistan. Until the entire world takes the Islamic jihad seriously and takes steps to tamp it down, “events” in the Middle East and elsewhere are going to continue to challenge peace everywhere.

In August 2005, Hurricane Katrina wreaked so much destruction over such a wide swath of Gulf States that surely no President could have anticipated it and clearly the federal government encountered levels of incompetence in Louisiana that were unforgivable.

Occurring while the Iraq war gave little evidence of a successful outcome meant that these two events rendered blows to Bush’s presidency from which it would never fully recover. The coup de grace came late into the last weeks of his presidency when the sub-prime mortgage crisis was precipitated by a run on U.S. banks that has not been fully reported upon to this day.

At this point President Obama has not been tested except by the appearance of incompetence among those he has chosen for his cabinet and as his White House advisors. They are generally ideologues and often radical in their views. The most reputable among them and the most welcome is literally a holdover from the Bush administration, Robert Gates as the Secretary of Defense. Other than Gates, the Obama administration is a re-run of the Clinton administration with none other than the former First Lady as Secretary of State. How bizarre is that?

The President’s primary response to the banking/housing crisis, the problems facing elements of the U.S. auto industry, and even the outbreak of swine flu has been to literally throw billions of dollars at them.

No one, other than Republicans, appears to be asking where this money is going to come from without drastically raising taxes; the worst option in a recession or depression. That leaves borrowing and even China has voiced concerns about its continuing investment in U.S. treasury notes.

Beyond borrowing and spending money, there are the unknown, frequently unpredictable, and often grievous “events” that lie in wait for this President.

The fall of the Pakistani government to the Taliban could literally set off a third world war. Attacks on U.S. cities would create panic and demands for retaliation. A sudden surge of illegal immigration from Mexico if its government collapsed or was unable to cope with the flu outbreak has already initiated demands to close the 2,000 mile border. Some close observers already regard Mexico as a failed state.

The pressures on a Democrat administration that wants to reduce the investment in the nation’s military, that wants to create a more open border immigration and an amnesty policy, that has launched a charm offensive with enemies such as Iran, that wants to impose a nationalized healthcare system, all could and would be derailed by “events.”

History records that it was only World War II and the mobilization of America that finally got the nation out of a decade-long depression, despite and often because of every effort made by the Roosevelt administration.

President Obama will discover what his predecessors did. There is no way to prepare for events that change public opinion overnight. There are only the time tested responses. That requires pragmatism, not idealism.

This President is going to be tested and, if his past is any indication, when events occur the choices he will have to make will likely prove unpalatable.

Obama: Buyer's Remorse

By Alan Caruba

The Economist is a weekly magazine whose headquarters is London and which is widely respected for its global coverage of political, social and, of course, business news. It also has a relentlessly liberal outlook which is to be expected given Great Britain’s nanny state mentality.

Former Prime Minister, Margaret Thatcher, a conservative and a contemporary of Ronald Reagan, pointed out that the problem with socialism is that eventually you run out of other people’s money.

It took from January 17, 2009 to March 28, 2009 for The Economist to lose its virginity so far as Barack Obama was concerned. Like most of the media, the magazine greeted his succession to the office of President with a schoolgirl’s gushing enthusiasm.

“Renewing America” was the January cover story welcoming him to high office saying, “Mr. Obama carries with him the hopes of the planet.” Not just America. The planet!

How far left is The Economist? “In some ways,” it opined in January, “the times cry out for more active government: for stronger regulation of banks and near-banks, for much more short-term government spending to counteract the contraction elsewhere in the economy, and for the establishment of a basic health-care system for everyone.” This tends to overlook the obvious fact that this is a description of the conditions that led to the current financial meltdown.

The existing regulation of U.S. banks was not accompanied by anything faintly resembling actual scrutiny and oversight. It was the government that had created Fannie Mae and Freddie Mac to buy up and “securitize” all those bad loans banks and mortgage companies were required by law to make.

The short-term spending in the billions that has been made is widely regarded as a massive waste of taxpayer dollars. And Britain’s health-care system is an appalling deathtrap for anyone in need of immediate care. It is one in which bureaucrats literally decide who shall die if they have the misfortune of having a particular form of cancer.

In January, The Economist noted that Obama had “put together a team which has impressed almost everyone with its caliber and centrism.” Oh yeah?

By late March, The Economist was echoing Hillary Clinton’s comment during the campaign that the Oval Office is no place for on-the-job training. “It went to the heart of the nagging worry about the silver-tongued young senator from Illinois; that he lacked even the slightest executive experience, and that in his brief career he had never really stood up to powerful interests, whether in his home city of Chicago or in the wider world.”

One can only imagine how he shall be judged by the heads of state at the upcoming G-20 meeting in the UK. One suspects that, if there is any candor to be had, they will take him into some room far from public view and beat the living tar out of him. It is an understatement to say they are very unhappy with this young Marxist.

From its optimism in January to its pessimism of March, The Economist concluded that Obama “has a long way to travel if he is to serve his country—and the world—as he should.” The tone of the editorial was not a hopeful one.

Indeed, many in the media that could not wait for Obama to take office are now experiencing some severe buyer’s remorse. It is instructive to watch them inch their way out of the cheering section, but it is altogether too late.

Barack Hussein Obama is the President and only the return of Republican control of Congress will be able to put any brakes on his intention to bankrupt the nation and take the rest of the world with it.

The First Day of Spring

By Alan Caruba

The early morning snowfall that greeted the first day of spring on parts of the East Coast seems symbolic to me of the undeniable fact that the Earth is into its tenth year of a cooling cycle. As it continues to cool, perhaps for another twenty to thirty years, such snowfall will not be regarded as anything but old news.

These seasonal and climate cycles are, of course, entirely natural. The last mini ice age lasted from around 1500 to 1850. It changed history in a lot of ways by causing in part the French Revolution when crop failure caused the price of bread to soar. Here in the colonies, soldiers in the Continental Army spent a frozen winter at Valley Forge.

For me, the date has personal significance because March 21, also occasionally the first day of spring, marks my late parent’s anniversary. Robert and Rebecca Caruba married in 1928 just in time to witness the crash of Wall Street the following year and to begin raising a family, my older brother and I, throughout the whole of the Great Depression. It was made worse by the then-Congress and White House, and we are watching this spectacle repeat itself.

Though it may seem odd, the first day of spring for me also rings the bell for the opening of the termite season. As a public relations counselor, I have several decades of experience working with the New Jersey Pest Management Association and have gained a healthy respect for all manner of pest species. They don’t care about economic cycles, wars, or other human problems. They are the great masters of survival.

Annually termites do more damage to homes throughout the United States than the combined effects of storms, fires, and earthquakes. Rarely covered by homeowner’s insurance, it is estimated they cause $5 billion in damage every year. A lot of homeowners are going to discover they have been playing host to large colonies of termites that have been eating the guts out of their house for three to five years. Those winged termites that cluster around window sills are the tell-tale sign.

Poets, of course, have always celebrated spring for its symbolic value. Spring is about the Earth’s astonishing ability to renew itself after the hibernation of winter in the northern hemisphere. Trees sprout leaves again, flowers pop out of the ground, and all manner of life returns or begins as eggs hatch and the cycle of birth continues among the creatures who share the Earth with us.

The first day of spring is as good a time as any to help yourself to a large amount of humility about the human race. There have been billions of such first days as the Earth spins its merry way around the Sun. After numerous mass extinctions, life has always renewed itself with new species.

Those who keep telling you that humans are to blame for the climate or various natural calamities are idiots.

Humans have been around for about 10,000 years. Our “carbon footprint” has no impact on the climate, nor does that of the countless other creatures with whom we share the planet, including the termites that produce an amazing amount of CO2 as they chew through your home.

It’s time for the poets to pen a thousand new odes to spring.

It’s time for the flowers to blossom again.

It’s time to get your home inspected by your local pest management firm.

It’s time to pay your taxes so Obama can “redistribute” them.

It’s a good time to fall in love with life itself and someone other than yourself.

Buddy, Can You Spare a Dime?

By Alan Caruba

When television is filled with advertisements by firms offering to help you out of your debt by negotiating with the IRS or consolidating it to the satisfaction of your creditors, you have to wonder why President Obama and the Democrats intend to impose an estimated three trillion dollars in debt on the nation.

Much of that debt will have to be borrowed from other nations.

Would YOU loan any money to the United States of America today? Or tomorrow?

I wouldn’t and my guess is that, pretty soon, China and other nations will have second thoughts about buying U.S. Treasury notes

The February 11 Rasmussen polls revealed that 67% say they could do a better job on the economy than Congress; 75% oppose the nationalization of banks; 62% want more tax cuts and less spending; and 50% says the stimulus bill will make things worse. Does the public get it? Oh, yes!

Meanwhile, the President keeps talking down the economy, doing his best to use the current financial crisis to justify spending billions on “green” energy and “green” jobs, among countless other idiotic “pork” projects, though it must be said that money spent on infrastructure maintenance and new projects is a good investment.

At the heart of the economic crisis is a banking problem. It is a problem of credit liquidity—the willingness to loan money—that is the direct result of the government mucking around in the mortgage industry, having insisted that banks give mortgage loans to people who could not afford them.

The government was and is the problem. The answer, when the government already has a huge deficit, is not to go on a $799 billion spending spree or to stealthily introduce a program to nationalize the healthcare system.

The stimulus bill will not “create” jobs. Only private enterprise can do that, unless it is the intention of the government to create more government jobs and, in fact, much of the bill is devoted to expanding government.

I don’t even say this as someone with any economist credentials to flash around, but I do know that more borrowing or, worse, the printing of money “to put in circulation” will only lead to inflation.

Spending enormous amounts of borrowed money does not address the fact that it has to be paid back at some point. It is, in fact, stealing from future generations of Americans.

The process is called deficit spending and it is the same as if you ran up a huge debt on your credit cards. At some point you will not be able to pay it off. At some point the collection agencies will be calling. At some point you will have to greatly restrict your spending because your credit is shot.

What is happening around the world is a tightening of credit. It’s not just the United States. The losses encountered by American banks are reflected worldwide. While job losses are increasing at home, the amount of job losses in China with a population of a billion are far greater. Now multiply that by job losses in other nations.

When the European Union discovered that the stimulus bill included a provision to “buy American” products as opposed to imported ones, they saw the specter of protectionism, the same action that prolonged and deepened the last Great Depression in the United States.

With an existing federal deficit of $1.2 trillion, how great is the insanity of adding additional spending and interest payments to it? The cost of borrowing will increase.

At some point, Congress will demand that the Federal Reserve begin to print more money. The result, as noted, will be inflation. Or, as was the case in the 1970s, “stagflation” as Congress relies on the Fed to finance a huge deficit.

We’ve been here before and all the “answers” Congress is proposing and has passed into a law awaiting the President’s signature will simply repeat all the errors of the past.

Congress and the White House is in the process of bankrupting America, compounding the excessive spending of the Bush administration while adding layer upon layer of government control to every aspect of a free market economy that was once the envy of the world.

Recall that the “stimulus” action taken toward the end of the last administration failed. Why would anyone seriously think that doubling down on the same mistake will produce anything other than a similar result?

Buddy, can you spare a dime?

Hey Kids, It's a Depression!

By Alan Caruba

Here’s the difference between a recession and a depression as defined by Bloomberg Business News:

A recession occurs when a nation’s living standards drop and prices increase. This downturn in economic activity is widely defined as a decline in a country’s gross domestic product for at least two quarters.

A depression is defined as an economic condition caused by a massive decrease in business activity, falling prices, reduced purchasing power, excess of supply over demand, and rising unemployment.

If this isn’t the beginning of a depression, it sure feels like one. Just check the daily headlines. On Monday, the Financial Times informed readers that “Gloom deepens as 75,000 global jobs go.” Among the companies laying off people were Caterpillar, General Motors, Sprint Nextel, Home Depot, Pfizer, and Texas Instruments. My guess is the General Motors declares bankruptcy by March.

The Financial Times still called it a recession, but we know what it is, don’t we? And if we just look at the 1930s and see how every move the administration of Franklin Delano Roosevelt made only deepened and prolonged the Great Depression, we will also see what should be done, but won’t be done. Indeed, with every passing day, the Obama administration looks and sounds just like FDR’s.

As to the stimulus bill, here’s what Monday’s Wall Street Journal had to say about it:

“The stimulus bill currently steaming through Congress looks like a legislative freight train, but given last week's analysis by the Congressional Budget Office, it is more accurate to think of it as a time machine. That may be the only way to explain how spending on public works in 2011 and beyond will help the economy today.

According to Congressional Budget Office estimates, a mere $26 billion of the House stimulus bill's $355 billion in new spending would actually be spent in the current fiscal year, and just $110 billion would be spent by the end of 2010. This is highly embarrassing given that Congress's justification for passing this bill so urgently is to help the economy right now, if not sooner.”

Much, if not most, of the proposed $825 billion “recovery act” will go to various government agencies. Even a cursory review of the 600-plus page document suggests that not much of its billions will create private sector jobs. Those portions devoted to infrastructure projects are not only worthy, but polls indicate are greatly favored by the public. By contrast, the bill includes nutty energy stuff about solar and wind farms, neither of which can produce enough steady, dependable energy to keep the lights on anywhere.

Contrary to the madness that has gripped most of Congress, government spending should be cut. There is enormous waste in government at almost every level except the local level that must answer to people directly.

There should be major cuts in the tax rates from the wealthy to the lowest paid job holders. Putting money back in the hands of people will shorten the duration of the depression by stimulating purchasing, investment, and the risks involved in beginning or expanding a business of any size.

There should be a marked reduction in government regulation of all manner of business and industry in order to avoid increasing the cost of production and facilitate research and innovation.

NONE of these options, proven, known, effective, are being discussed by the Obama administration that, in office less than two weeks, is issuing executive orders that will increase the cost of manufacturing cars in the name of fighting “global warming” or “climate change.”

Apparently word has not reached the White House that it just snowed in a Middle Eastern desert nation, the United Arab Emirates, for the first time ever! That the world outside (and including) Washington, D.C. is experiencing some serious cold weather.
It’s so cold in D.C. that Al Gore’s Wednesday testimony to the Senate Foreign Relations Committee that the Earth is warming will likely be rescheduled.

While there is talk of tax cuts, it remains just that, talk.

Meanwhile things are going to hell in a hand-basket, so maybe it would be a good idea to (1) pay attention to the history and lessons of the Great Depression, (2) avoid repeating the same mistakes, and (3) not take your eye off the ball here at home with talk of finding a Mideast peace where none has not existed since the days of Harry Truman and, for that matter, all previous presidents.

The folks in Washington, D.C., being politicians, are all delusional and guess who’s going to pay the price for that? Phone, fax, email your Senators and Representative, and tell them to put the Recovery Act back on the shelf.

King Obama has Spoken

By Alan Caruba

It has taken less than two weeks in office for Barack Obama to confirm that his delusions of grandeur, evidence of which we saw throughout his campaign, are real. I am tempted to refer to him from now on as King Obama, not President Obama.

His executive orders, coming fast and furious, are revealing. Let me begin by pointing out as I seem to do on a daily basis of late that there is no global warming. The Earth is fully a decade into a cooling cycle. This may account for why it snowed a few days ago in the United Arab Emirates for the first time in recorded history.

Secondly, just because the greatest moron to ever hold the office of Speaker of the House, Nancy Pelosi, thinks that “greenhouse gases emissions from vehicles” have anything to do with a non-existent global warming is not a justification for imposing so-called “efficiency standards” on automakers to reduce them.

King…er…President Obama, via executive order, has endorsed efforts in several states to restrict tailpipe emissions and require higher fuel efficiency standards. I have a suggestion. Eliminate blending ethanol with gasoline. Ethanol reduces the mileage of every gallon of gas. Get rid of it and you improve efficiency.

What could be more inefficient than to allow the states to introduce their own emissions standards? As it is the EPA has for years required dozens of different gasoline blending standards depending on what part of the nation it’s sold. That plus the ethanol requirement has been an unseen tax that everyone pays along with the state and federal taxes on gasoline.

All this is being sold to the public as a way to reduce U.S. dependence on foreign oil. I have another suggestion. Why not allow U.S. oil companies to drill for oil in---oh, I don’t know—ANWR? Or maybe off the continental shelf of the nation?

Did you know that the U.S. Geological Service released a report in April 2008 in which it estimated that there are from 3 to 4.3 billion barrels of technically recoverable oil in the North Dakota and Montana Bakken formation? The Bakken is the largest domestic oil discovery since Alaska’s Prudoe Bay.

The U.S. does not lack for oil reserves. It lacks a President and a Congress that will permit it to be drilled, extracted, refined and sold without having to import a comparable amount from foreign producers.

According to Speaker Pelosi, though, “This morning, President Obama signaled that our country can no longer afford to wait to combat the climate crisis and our dangerous dependence on foreign oil.”

I repeat: there is no global warming. There is a climate crisis, however. The Earth is beginning to cool and, indeed, could be on the cusp of a new ice age. At the very least, we could be entering another one of the Earth’s previous mini-ice ages such as occurred from 1300 to 1850.

We can reduce our dependence on foreign oil, but neither the United States nor any other nation can ever be “energy independent.” Talk of energy independence is a deliberate lie that ignores the global marketplace for energy sources such as oil, coal, and natural gas.

Lastly, we are in a recession. The rest of the world is in a recession with us. Congress cannot “spend” us out of recession. That was tried during the Great Depression of the 1930s and it not only failed, it prolonged it well beyond the normal time such economic crises take to recover.

Obama is not a king. He is an elected President and, if these first two weeks are any indication, he and his Democrat controlled Congress are going to make every mistake made by FDR and his Congress.

By 2010, Americans will have an opportunity to return Congress to the control of a sobered Republican Party that can and should return to its principles of smaller government, fiscal prudence, and a strong defense policy.

The IRS Will be Hiring

By Alan Caruba

If Barack Obama is elected, the Internal Revenue Service had better double its workforce because the amount of cheating on tax returns will rival Italy’s.

The scariest thing about the final debate between the candidates is that both appear to be utterly oblivious to the way the Stock Market dropped 700 points on Wednesday after a brief rally the day before.

Hearing either candidate talk about spending billions to fix this or that was surreal. I don’t even know how deep in debt the nation is at this writing, but I am of the view that we don’t have billions to “fix” education, health care, or anything else. Of course, John McCain did talk about taking an axe to the budget and Barack Obama did talk about using a scalpel, but who’s kidding who here?

Any budget cutting would be an improvement over the last eight years of George W. Bush’s failure to veto any spending bill Congress, controlled by Republicans until 2006, sent his way. Only after a Democrat epiphany did W actually wield the veto in the name of fiscal prudence. By then it was too late and talk of $700 billion bailouts filled the air.

It is essential to remember that the current crisis is entirely the creation of Democrats. Starting with Roosevelt’s New Deal programs, exacerbated by Jimmy Carter’s and Bill Clinton’s exploitation of Fannie Mae and Freddy Mac, ignored by congressional oversight, the Democrats own this one.

It’s no comfort that Speaker Nancy Pelosi cannot wait to get the House to enact a bushel of new spending bills. The Senate historically has been a break on the short-term Representatives (two years versus the Senate’s six year terms) who, when not devoting most of their day raising money for reelection, spend the rest of it on, well, spending the public treasury for various pet projects and special interests.

Congress seems to exist in some parallel universe that has no connection to the rest of the nation. Its disconnect can be seen in the way, since Jimmy Carter was in office, Congress has actively worked against any exploration or extraction of the nation’s oil, natural gas, and coal reserves. It imposed “windfall taxes” and other restrictions until now there are only three oil companies of any size, mostly due to mergers. Now Congress apparently hates coal, too.

Then there was the creation of the Department of Education, contrary to the Constitution that excludes federal involvement by not mentioning it. It effectively has nationalized the education system with a one-size-fits-all policy that totally ignores the fact that different children in different places learn at different rates. The failure of urban schools has less to do with the enormous amounts of money spent per pupil than the crime-infested, jobless streets they must walk to get to school. It’s not like their parents don’t want better schools. They do. The grip of the teacher’s unions makes that nearly impossible.

I could list other government programs, but the point is they all cost a lot of money and a lot of that money is just totally wasted. For example, the government has a host of idiotic programs involving “climate change” when no government on Earth can do a thing about the climate. Likewise, the only reason to maintain a “space” program is to hoist spy and communications satellites into position. Explore Mars? Are you kidding me?

John McCain and the Republicans are right about cutting taxes. If that doesn’t happen, this Recession I assume we’re in, will turn into a full-fledged Depression just like 1929. At that point, we won’t be able to borrow money from China, Japan, and elsewhere. At that point, it won’t matter who’s in Congress or the White House because they created the problem.

Needed: A Calm Approach to a Very Big Problem

By Alan Caruba

Your local bank isn’t called a “trust” for nothing. The only thing that keeps the banking and investment community going is trust. And liquidity. Money moving in and out. Since they underwrite all business and industrial expansion—essential for capitalism to succeed—that trust is essential.

If the bank grants you a mortgage or auto loan, they are trusting you to pay it back with interest. Your bank has to trust a network of other banks as they process their customer’s transactions. In addition, since they issue credit cards, they have to trust holders to pay their debts and to pay them for their use.

Everything seems to funnel back to the Federal Reserve whose job it is to protect the value of the U.S. dollar by raising or lowering the interest it charges when it loans money to banks. Why wouldn’t banks feel confident if they knew money would continue to flow from and through the Federal Reserve?

That’s what the current financial crisis is about. If banks cannot or will not trust the Federal Reserve and other banks, and if they will not trust you with a loan, the entire economy grinds to a halt. Money is like manure. You have to spread it around to get any value from it.

My late Father was a Certified Public Accountant. I was born missing the gene for addition, subtraction, and multiplication. He eventually made his peace with a son too idiotic to balance his checkbook, granting that I had stronger skills in other areas. I grew up largely disinterested in acquiring wealth. That was a mistake, though I do live quite well by most standards. My needs are few.

Having lived through the Great Depression, both my parents were more than content to earn enough to enjoy a classic suburban life in a lovely, three bedroom home with a car in the garage. After World War II, Mother began a career teaching haute cuisine and the appreciation of wine. Many of the men who had returned from war also returned with a taste for foreign foods and Mother taught them and their wives how to prepare them.

Thus, with two incomes, my parents were able to put two sons through college and still enjoy “the good life.” They avoided dabbling in the stock market.

Despite their experiences during Great Depression, they trusted the local bank to keep their savings safe for them, but their trust had been restored only after considerable regulation of the banking and investment industries. As far as they were concerned, Franklin Delano Roosevelt saved the nation.

As historian Donald J. Mabry notes, “[President] Hoover broke precedent because the national government assumed some responsibility for what happens during an economic depression, but he was not willing to go far enough. He believed that the depression was part of the normal business cycle and had been caused by international factors and not U.S. ones. To him, ‘prosperity was just around the corner.’ The best thing for the country to do would be to wait the crisis out.”

The crisis got worse and worse and worse. Bank robbers like Bonny and Clyde became folk heroes.

In 1932, Democrats nominated FDR for President and he would serve until his death in 1945. Government got very involved and has remained involved. It became the federal government’s responsibility to ensure that the trust that kept banking, investment, business and industry functioning was maintained. This explains why the Secretary of the Treasury and the Chairman of the Federal Reserve have been testifying non-stop before Congress.

However, the American people are being told that, without immediate intervention, largely without prudent oversight, we will be right back to October 29, 1929 and the appalling decade that followed. There were vast numbers of jobless men, soup kitchens, lost farms, failed businesses, and a desperation that defies description.

We are being told that we must act in haste and that the federal government should buy what those on Wall Street call “toxic paper”, the questionable sub-prime loans.

Calmer voices are suggesting that other steps should be taken to restore trust in the system. These involve changing the current accounting system and other options beyond this writer’s area of expertise. On the face of it, saving those investment houses that did not act prudently does not seem a good idea. The Federal Reserve has already allowed Lehman Brothers to fail.

If no one really knows what all that sub-prime mortgage paper is worth, throwing $700 billion at it might, in fact, just be the beginning and not the end to the problem. That said, doing nothing might be a whole lot worse.

Social Justice or a Bad Idea?

By Alan Caruba

I have a close family member who is as liberal as I am conservative. We talk every day and, mostly, we avoid discussing politics. Most of us have family members whose politics differ from our own and most of us are wise enough to avoid such discussions.

Since my family member has spent his life dealing with Wall Street and advising people of great wealth how to protect and enhance it, one would think that the conservatism he brings to that goal would extend into his broader vision of the nation and the world, but it does not.

Indeed, Wall Street is a hotbed of liberals. Many of those who migrated to politics from Wall Street brought their desire to improve the lives of those less fortunate with them, but unfortunately, this is precisely what has led the nation to the present crisis.

The crisis of the Great Depression led to the politics of the 1930s and 40s, and demands for government intervention to ease the terrible burdens of a broken economy. The result were programs designed to alleviate the then-immediate crisis, restore trust in the banking system, provide make-work projects, and create Social Security to protect people against a penniless old age.

The driving political motivation was to introduce “social justice” into a society where many people had been impoverished through no fault of their own. Leading up to that earlier crisis was extensive speculative investment, often by people who could ill afford to do it.

If this scenario sounds familiar, all you have to do is consider a system put in place that permitted people who could ill afford to do it, to get mortgage loans and then required mortgage lenders and banks to make these loans.

The banks and mortgage companies were told that Fannie Mae and Freddie Mac, two government agencies masquerading as private entities, would back them up in the event of defaults on those loans. They bought what was essentially worthless paper based on the concept of “social justice.” Investment firms “bundled” that paper and sold it as a form of securities.

The current crisis is rooted in the “solutions” to the Great Depression. A reading of history reveals that it was World War II that employed a lot of people in the struggle to overthrow authoritarian dictatorships. Many unemployed men volunteered or were conscripted into the military. Opportunities for women to work opened up in the nation’s factories that thrived in the effort to provide munitions and the many products necessary to achieve victory. In a very real sense, though the threat was real, it was WWII that restored the nation’s economy.

When men returned from that victory, a grateful government provided the means by which they could attend college, learn new skills, and swiftly begin to contribute to a growing economy. Other men replaced women on the assembly lines.

In a new century the United States is attempting to function with ideas and institutions left over from the last major, economic, and military crisis. A lot has changed since then, but the concept of “social justice” has not. It has been the justification for the insane expansion of the federal government into every aspect of life in America.

While no one would argue that there is not a need for regulation. It is equally true that the banking and investment community is possibly the single, most regulated element of the nation’s economy. What failed was the judgment of those imposing “social justice” ideas from the 1930s and 40s on a $13 trillion economy embarking on a new century in a global marketplace.

Old ideas. Bad ideas.

Telling Detroit to build cars based on a false “global warming” belief that carbon dioxide emissions are a threat to the environment is a bad idea.

Influencing what farmers choose to plant based on the three-decade-old failed and false belief that ethanol can or should replace gasoline is a bad idea.

Imposing a one-size-fits-all straight jacket on the states’ educational systems is a bad idea.

Adding billions of new entitlements to already shaky Social Security and Medicare programs is a bad idea.

Refusing to allow the exploration and extraction of the nation’s vast reserves of oil, natural gas, and coal, is a bad idea.

Giving the Secretary of the Treasury a blank check to purchase billions in worthless loans will no doubt stem the panic regarding the stability of the nation’s banking system, but doing so without congressional oversight is a bad idea.

Adding to that blank check by including student loans and a host of other credit obligations is a bad idea.

At some point you run the risk of literally bankrupting the nation and that is a very bad idea.