Unemployed Imbeciles Gather to Protest

By Alan Caruba

I confess I have not paid much attention to the Occupy Wall Street protest. Watching New York cops arrest whole bunches of them on the Brooklyn Bridge for obstructing traffic was briefly entertaining, but it occurred to me I had no idea why they were protesting except for the fact that they were mostly young, mostly unemployed, and mostly led by the usual demonic Communists that have a beef with American exceptionalism.

As a sign of the times, Occupy Wall Street has a spiffy website, but it is filled with the most ignorant nonsense right out of the Communist Manifesto. Apparently the protesters have identified banks and corporations as the enemy. If you ask bankers and Wall Street folks, they will tell you the enemy is the federal government and they would be right.

Bankers and Wall Street want stability and predictability. They want to pile up money and loan it out to make more money or they want to sell stocks and make bets on which will go up and which will not. It’s called Capitalism and it works unless the government gets deeply involved in telling them what to do and picking winners and losers in the free market.

In the case of the most recent financial crisis, the government got into the home mortgage market back in the 1930s during the Great Depression. Fannie Mae and later Freddie Mac were set up to purchase mortgages from banks in order to “stimulate” the housing market.

You can read the U.S. Constitution from beginning to end and not find the words “housing market” in there anywhere. The house of cards the federal government created, combined with the pressure brought to bear on bankers to make “ninja” loans (no job, no assets) resulting in the 2008 meltdown when the “bundled” mortgages turned out to be worthless and generally untraceable. Wall Street didn’t create this, Washington did.

Of course, none of this means anything to those protesting in Zuccotti Park and elsewhere. It’s not a protest. It’s an excuse to party. Occasionally Leftist celebrities show up and shake hands with “the people” to give them a thrill. Then they go back to their tenured university faculty jobs, making movies and being hideously overpaid for doing so, and looking for a dictator to hug.

Journalists who have tried to determine what the protest is about have come up empty. Brad Knickerbocker, writing for the Christian Science Monitor, noted that “there’s no 10-point list of demands to be nailed Martin-Luther-like to the business and media establishment’s door.”

Cornell West, a Princeton University professor said, “It’s impossible to translate the issue of the greed of Wall Street into one demand or two demands. We’re talking about a democratic awakening. We’re talking about raising political consciousness.” Yada, yada, yada.

West is apparently unaware that the political consciousness of Americans has already been raised by the worst presidency in the history of the nation or that Republicans are heatedly debating who they want to elect to replace it. Democrats, too, because quite a few are looking at Mitt Romney with something close to affection.

Andrew Goodman of The Wall Street Journal reported that “Many of the protesters are young. Joblessness seems to be a persistent theme.” No surprises here. Goodman reported that a list of grievances has been circulating among the protesters and, “Among the complaints: bank executives who received ‘exorbitant’ bonuses not long after receiving taxpayer bailouts” and, even I would be happy to protest that.

An October 3rd Gateway Pundit report has listed 13 Occupy Wall Street demands and they read like an Obama-inspired wet dream. They include a universal single payer healthcare system, guaranteed living wage income regardless of employment, free college education, a trillion dollars in infrastructure projects, a trillion dollars in “ecological restoration”, open borders migration, and the immediate across the board debt forgiveness for all.

They are the demands of imbeciles.

You can find a lot of them camped out in lower Manhattan these days. Just wait until the nights turn really cold. They will go home to mommy and daddy.

© 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

Who the Hell is Reince Priebus?

By Alan Caruba

Okay, we have had two years of the token black man as the chairman of the Republican National Committee and it’s goodbye Michael Steele. Thanks for whatever, but the party’s broke and still has to raise a ton of cash for the 2012 elections. Bring in the white guy, Reince Priebus.

Reince Priebus? Who the hell is Reince Priebus? Well, for one thing he is the new RNC chairman. A former GOP leader in Wisconsin where the citizens were so totally fed up with the Democrats they voted in a score of Republicans. Priebus could and did take credit for it. Some say it was largely the Tea Party movement in Wisconsin that was responsible, but a win is a win.

Inside the Beltway Priebus is referred to as a “nuts and bolts” guy, another way of saying his job is to raise the money the RNC needs. Given that the Democrat candidate in 2012 will be Barack Hussein Obama that is not likely to be a problem.

I just sent the Republican National Committee my annual $25 contribution and my reward to be to get a call every two weeks for the rest of the year from the RNC asking for more. Believe it or not, I actually stop being unbelievably polite after the seventh or eighth call. No, really.

Of course, it is hardly my contribution that matters at this point. The real question is whether Wall Street will embrace the Republican Party and start backing whoever emerges as the GOP presidential candidate, along with the others.

As far as Wall Street is concerned it’s all about “access” to whoever might win and, aside from disliking Obama even more than he dislikes them, Wall Street has examined the tea (party) leaves and concluded Obama is, as the kids say, so over.

Beyond the money crowd there’s the business crowd and they have zero reason to back Obama unless they are solar panel and wind turbine manufacturers. Corporate America, with the exception of General Electric, is just sick of Obama and all the uncertainty he has created for them.

Obama and the Democrats have only two constituencies on which they can depend in 2012. One is the unions and the other is Afro-Americans. The Dems have a solid lock on the 25% to 30% of Americans who are so liberal they wish Obama, in addition to being black, was gay, a cross-dresser, trans-gendered, and a card-carrying member of the Communist Party of the USA.

Back to Priebus; in addition to having to raise a boatload of cash for the GOP, he has to worry about who gets selected to be its 2012 presidential candidate. His job is to remain neutral, but I’m betting he’s hoping it’s not the Great Straddler, Mitt Romney, capable of bestriding both sides of any issue.

The other reoccurring nightmare for Priebus is Sarah Palin. The Momma Grizzly says the right things for meat-eating, gun-shooting, fish-clubbing Republicans most of the time, but she would never get elected President.

Americans have tried electing a “novelty” with Obama and now they want a nice, old white man, but not too old as in John McCain. McCain spent so much time “crossing the aisle” they never knew where to seat him during a State of the Union speech.

There are, at this point, just way too many Republicans who want to be President and we shall have to wait for one of them to catch fire and ignite Republican passions.

In the end, it will be INDEPENDENTS who will defeat Obama in 2012 and elect, well, someone-anyone else.

I suppose, at this point, it doesn’t matter who Reince Priebus is unless he turns out to be as prone to making goofy public gaffs as the departing Michael Steele. If he does, all bets are off.

© Alan Caruba, 2011

Ignoring Reality While Killing the Economy

By Alan Caruba

The powers in Washington, D.C. seem to be living in a parallel universe from the one the rest of the nation occupies. Even worse is the way the Obama White House and Democrat controlled Congress appears to be hell-bent on destroying the economy before they can be voted out of office.

No Congress since the days of the Great Depression and the Roosevelt administration has been driven to pass legislation that is more injurious to the present and future of the nation. It began with the so-called Stimulus Act that is widely seen as a failure, followed by Obamacare, the government takeover of one sixth of the economy replete with the rationing of care that will literally kill some people.

On Wednesday the President signed "financial reform" legislation that will play havoc with the financial industry while expanding government regulation still further.

Let us examine the reality. Washington tells us that the unemployment rate is 9.5%. Raghavan Mayur, president of TechnoMetrica Market Intelligence has been closely following unemployment data. His survey in May revealed that 28% of a thousand households reported that at least one member was looking for a full-time job.

Mayur’s firm owns the TIPP polling unit, a polling partner for Investors’ Business Daily and Christian Science Monitor. The June poll revealed 27.8% of households experiencing unemployment and, in the second week of July, it showed 28.6%. That translates to an unemployment rate of more than 22%!

The so-called financial reform act is likely to be as great a power grab as Obamacare, but it totally ignores the root cause of the 2008 financial crisis, Fannie Mae and Freddie Mac, the two government sponsored “entities” whose collapse revealed that many of mortgages granted by banks and lending companies, and then purchased by Fannie and Freddie for bundling and resale were inherently unsound.

Why? Because the government had long been pressuring banks and mortgage lenders to issue mortgages to people who could not afford to borrow the price of a hamburger. They were called “Ninja” loans; no job, no assets.

The concept of the government getting involved in the housing market is based on the notion of “social justice” and the belief that everyone had a “right” to own their own home.

Social justice was the basis for Social Security when it was established in the 1930s and later for Medicare/Medicad. Both programs are insolvent.

Everything the FDR administration did prolonged the Great Depression for ten years until the advent of World War Two rescued the economy. The Obama administration is repeating the same mistakes.

In June, Bloomberg Business Week took a look at four scenarios regarding the cost of the bailout of Fannie Mae and Freddie Mac. Bear in mind that together they hold or guarantee 53% of the nation’s $10.7 trillion in residential mortgages. They operated as shareholder-owned corporations that financed home loans with the tacit support of the federal government.

In February the White House Office of Management & Budget estimated a bailout cost of $160 billion; a December report by Barclays Capital analysts put the figure at $230 billion based on a doubling of defaults and losses averaging 50% of each loan. According to a Congressional Budget Office estimate in August of last year, the figure was estimated to be $389 billion and Sean Egan, president of Egan-Jones Ratings estimated it would come in closer to $1 trillion.

Wall Street and the banks were being lambasted for having purchased the bundled securities Fannie and Freddie were selling them while the White House and Congress ignored these agencies. Well, not totally ignoring them. In October 2008 the government seized control of both. They are not, however, part of the new financial “reform” legislation.

Fannie Mae and the whole system in place since 1938 functioned on what can only be called a system of winks, nods and self-deception.

That mindset led to a 2004 scandal in which the Office of Federal Housing Enterprise Oversight revealed a pervasive misapplication of accounting standards. That, in turn, led to the resignation of Fannie Mae CEO, Franklin Raines. In a spooky sidebar, Raines owns the patent on the exchange system for the trading of carbon credits, the objective of the Cap-and-Trade Act under consideration in the Senate.

The debate about what to do with either or both will not even begin until next year. It is useful to keep in mind that the two legislators, Rep. Barney Frank and Sen. Chris Dodd, who have defended Fannie and Freddie for years, are the authors of the new financial reform bill. The foxes have been in the henhouse for a very long time.

Conservatives think that both Fannie Mae and Freddie Mac should be put out of business and that mortgage loans should be a fully private market enterprise. This alone would likely guarantee that a future financial meltdown regarding mortgage lending would be avoided. A trillion dollars or even several hundred billion dollars is too high a price to permit what has occurred to occur again.

When the new, expanded government reforms kick in, there is no telling what effect they will have on the economy, but they are unlikely to be good. Believing anything the government has to say these days is a very bad idea.

© Alan Caruba, 2010

We're Doomed and Other Thoughts on the Economy

By Alan Caruba

Writing about the national debt, Stephen Dunn, said, “At $13 trillion, that figure has risen by $2.4 trillion in about 500 days since President Obama took office, or an average of $4.9 billion a day.” – Washington Times, June 2, 2010.

There are reports that the U.S. Treasury is predicting U.S. debt will be $15 trillion by 2015. Federal Reserve chief, Ben Bernanke just warned Congress that this is “unsustainable.”

One of our favorite cartoon characters is the guy with the sign that says, “The end of the world is coming. Repent!” You can find him enshrined in the Old Testament’s Jeremiah, between Isaiah and Ezekiel.

“I am the laughing-stock all the day, every one mocketh me,” lamented Jeremiah (Chapter 20). He was, of course, warning his fellow Israelites that trouble was headed their way and, sure enough, it was. It always is. I am 72 and have not lived a day when there wasn’t a war in progress somewhere. This also means I was born in the midst of the Great Depression and have lived long enough to see another coming my way.

A lot of people are going to get all worked up over the predicted end of the world in 2012. The prediction will sell books, there will be a movie, but the world will not end. The Earth is 4.5 billion years old and has been around before and since the Mayans who are no more.

On the contrary, our present troubles will begin to end that year when we bid goodbye to Barack Obama after the national election and begin to undue the unbelievably awful “reforms” and “transformation” he has forced upon an unwilling America. The Supreme Court may or may not play a role in this, but it will mostly be up to the voters.

I was thinking about the current financial crisis while reading a recent issue of Business Week that gave a thumbnail description of just six U.S. States that are mired in debt. Leading the pack is California, mired in $272.4 billion worth of debt. Its governor is trying to close a $19 billion gap for the year starting on July 1.

Governor Chris Christie of New Jersey took office with a debt load of $207.4 billion. He is trying to bridge an annual budget shortfall of about $11 billion. He has stunned the State and the nation by speaking the truth about it.

Illinois has a debt load of $237.3 billion, Michigan comes in at $207 and New York State has $203.8. All of these States have one thing in common, legislatures controlled by Democrats, not unlike our current Congress.

The other thing they have in common are public sector unions representing government workers, teachers, and such that have negotiated wage increases, health care benefits, and pensions that make your eyes roll when you find out the details.

The old saying, “When you’re in a hole, stop digging” applies to the federal government in general and President Obama in particular. The “stimulus” bill was one huge earmarked monstrosity that has not and will not “create” jobs. That’s something the private sector does.

Also grabbing up General Motors, taking over one-sixth of the nation’s economy in the form of healthcare, and attempting to throttle the greedy pigs of Wall Street is not working and these efforts will be repealed in one fashion or another.

It is the federal government, however, that has to take much of the responsibility for the latest financial crisis.

By way of example, the Competitive Enterprise Institute just announced “The U.S. Supreme Court will soon hand down a major ruling which could put much-needed constitutional limits on an agency that imposes incredibly burdensome accounting requirements on American companies.

The case, Free Enterprise Fund v. Public Company Accounting Oversight Board, challenges the constitutionality of the Sarbanes-Oxley corporate accounting law, which since 2002 has imposed massive burdens on businesses, entrepreneurs, and investors, with costs passed along to consumers. A decision from the Supreme Court is expected imminently, possibly next week.”

The key words here are “massive burdens.” Very slowly the process of identifying the many ways the feds have burdened Americans and the economy in the name of “social justice” is being reexamined. Why doesn’t it cure unemployment? Why are there always poor people? And why does spending more money on education not improve test scores? Et cetera!

Business Week’s May 23 issue had an article, “Rethinking Fannie and Freddie” referring to the two federally-sponsored entities, Fannie Mae and Freddie Mac, the cause of the mortgage meltdown, that have since been seized by the government in the wake of a $145 billion bailout that is likely to cost more. Something is terribly wrong when the government owns 76% of all mortgage originations.

That said, the two other social justice programs, Social Security and Medicare, have fallen afoul of the unbending law of demographics as more people reaching age 65 take out more money than a declining number of younger workers who are required to pay into these two programs can provide. In the case of Medicare, it has never worked wherever it has been tried, whether it’s Massachusetts or whole nations like Canada and England.

Nouriel Roubini, the economist who predicted the 2008 financial crisis, was interviewed recently by Charlie Rose. He was full of bad news, but common sense. He noted that “generation after generation, we seem to forget the past.” The result is, of course, the latest generation makes all the same mistakes, excessive risk-taking, debt that they could have learned about and avoided.

As I have pointed out, when interest rates for borrowing money are at zero, that essentially means the money has no real value. That in turn devalues everything else such as the homes we bought, thinking they were really piggybanks or ATM machines. When that happens, people send the keys to the banks and walk away.

Roubini, though, also noted that “Most financial institutions are making huge amounts of profits in proprietary trading—borrowing at zero rates and making investments.” That may be good for the banks and investment houses, but it does nothing for the economy, for jobs, for the ability of businesses and people to get banks to lend them the money to start or maintain new businesses.

We have to get away from the notion that businesses and banks are too big to fail. That’s why bankruptcy exists as part of capitalism’s “create destruction.” General Motors and Chrysler should have been allowed to fail. When Wall Street firms tottered there were a number of shotgun marriages to enable them to become parts of banks that, in turn, became “too big to fail.” That just delays and distorts the natural cycle of capitalism.

The whole system is being propped up by a fearful Congress and Federal Reserve, the latter being responsible for determining lending rates. Ever since Alan Greenspan and now with Ben Bernanke, the hard decisions have been put off.

It’s not just the United States. It’s most of Europe with its socialist systems. When the Soviet Union collapsed in 1991, it was telling the world that communism/socialism doesn’t work. It’s time to take this message seriously.

© Alan Caruba, 2010

It's a Big Nervous World

Caruba's Crystal Ball

By Alan Caruba

I rarely make predictions. Events can change the entire direction of a nation in the blink of an eye. It happened in my lifetime with Pearl Harbor, the assassination of John F. Kennedy, the resignation of Richard M. Nixon, and with 9/11.

As this is being written, air traffic to, from, and throughout Europe is barely recovering because of an Icelandic volcano and no one really knows how long that will continue.

So, barring any catastrophic natural events or wars, I will look into my crystal ball and narrow my predictions to the period between now and the midterm election on November 2, 2010.

Having forced a healthcare program on America that 85% of the voters did not want, the Obama White House now knows it can do the same with other major pieces of legislation intended to “transform” America into a socialist wreck comparable to European nations, one of which, Greece, is bankrupt while two others, Spain and Italy, are close to it.

The Obama administration is getting ready to put a chokehold on the nation’s financial sector by claiming it needs more regulation. It is a lie. Few sectors of the nation are more heavily regulated by the government. What is needed is more effective enforcement of existing regulations. Had that been the case there would have been no Bernie Madoff and the 2008 crisis brought about by Freddie Mac and Fannie Mae could have been avoided.

The next piece of legislation to be imposed on Americans before November will be Cap-and-Trade, a law based on a “global warming” crisis that is not happening. It will impose “caps” on how much energy industries, businesses, and finally individuals can use and it will institute a “trade” mechanism in bogus carbon credits that will make a few companies, utilities, and individuals very rich while bleeding Americans by taxing energy use at every level.

The era of abundant and affordable energy will end and, with it, the economy of the nation. Companies that manufacture goods will move offshore to friendlier places such as China and India. Both were exempted in the United Nations’ Kyoto Protocol intended to force greenhouse emission caps on industrialized nations like America and Europe.

The coal industry, responsible for providing the source of half of all the electricity generated in America, will be under attack in every way at the government’s disposal. Mountain top mining will be the next target. Beyond that, all coal-fired plants will encounter a regulatory hell. There will be no offshore exploration for new sources of oil and natural gas.

When the brown-outs and black-outs begin, the nation will be five to ten years from providing new sources of electrical power whether it’s coal, natural gas, or nuclear. By then billions in government (your money) subsidies will have been wasted on “green” or “clean” or “alternative” energy in the form of wind and solar. They currently represent about one percent of all the electricity generated in America.

By the midterm elections, the unemployment rate will have likely increased. A growing, permanent class of the unemployed will be maintained with endless extensions of government support.

The southern border from Texas to California is becoming a war zone. There’s a reason the State of Arizona just passed a law allowing its citizens to carry concealed weapons and another law to empower its law enforcement authorities to rid the State of illegal aliens. Do not be surprised by the rise of southwestern state militias to deal with the constant invasion. Watch for an effort to pass an amnesty law as well.

What Americans have not caught onto as yet is that the Obama administration’s policies and actions are now fully controlled by people who did not have to go before the U.S. Senate for approval. They are Obama’s “czars” and they wield as much influence or more than constitutionally appointed cabinet secretaries.

So the real question between now and November is “How much damage can the Obama White House inflict?” and the answer is a lot.

© Alan Caruba, 2010

Haiti and other Hell-holes

By Alan Caruba

This is by way of just blowing off a bit of frustration in the wake of the non-stop news coverage of the latest disaster to hit Haiti.

To begin with, we are witnessing in this first day or so of news coverage that I call the "Five Known Facts" school of reporting; repeated endlessly!

That is to say, 98% of everything being "reported" is pure spectulation from the news room anchors and assorted experts, and the rest of the reporting is the most obvious stuff from the on-the-scene reporters. They are scrambling to say something more than just that hundreds, if not thousands, have died, buildings are destroyed, et cetera. We know that already!

It is the story of every major earthquake or comparable disaster anywhere.

For my part, however, it is a reminder that I have never heard anything about Haiti that was not a testament to the most vile aspects of despotism and corruption found in too many nations around the world.

How many millions have been poured into that chunk of Hispanola at this point? None of it ever reaches the people. None of it ever builds a road, a bridge, a school, or a hospital.

The minute Haitians can escape Haiti and come to America they become productive, wonderful citizens, but Haiti is a prison nation of no value to them or the rest of the world.

Haiti's current grief will be the focus of news organizations for perhaps two weeks at most. Forgotten or ignored is the way Haiti reflects comparable conditions in several African nations and elsewhere around the world where dictators continue to pillage whatever is of value and to oppress freedom.

Our attention span for such things is short and, if I dare to say so, America is in the early stages of becoming a failed nation, defaulting its debts, and rendering its dollar valueless.

The nation is being deliberately destroyed by Barack Hussein Obama and his cronies. That's why he doesn't care if he takes down the Democrat Party as well.

So, instead of really doing something about the rising unemployment occurring here, tending to the long-needed repair of our bridges and other infrastructure, cutting taxes so we can use our own money for our own needs, Americans blithly pass their time watching "American Idol" and discovering that yet another athlete is a failed human being.

Our Congress is no longer responsive to the millions of Americans, Democrats, Republicans and Independents, who hate the vile Obamacare program, something which the White House and Congress have wasted far too much time upon, given the fact that it is a hugely bad idea and occurring at the worst of times; wasteful and hurtful in more ways than one can count.

Is there death and destruction in Haiti? Yes. Will America do what it can to help? Yes. BUT! We have terribly serious problems here at home and, instead of solutions, we have been forced to deal with the failed ideology of socialism while abandoning the successful application of capitalist answers. The government will not let either Wall Street or Main Street function properly!

We need to stop beating up the bankers who were forced to make the bad loans and then to take TARP money. We need to stop kicking around the Wall Street crowd that risks billions to underwrite new technologies and help businesses and industries of every description grow and prosper.

The government must stop thwarting the building of more nuclear plants, more coal-fired plants, and the generation of the energy we will desperately need in the very near future. We need to Drill Here and Drill Now!

America is a treasure trove of coal, oil, and natural gas, but the government will not allow private industry to find it and extract it.

Do I feel bad about the Haitians? Sure, but five, ten, or twenty years from now they will still be wearing rags and living in shacks.

Right now, I want to avoid that future for more than 300 million Americans.

I want to stop the flow of illegal aliens draining our economy and using our services while contributing nothing in return. They have no right to be here. I want us to stop pretending that Islamists are not plotting to kill all of us and a nuclear Iran will give them the means to do it.

So, look at the television footage of the misery of the Haitians and think to yourself, unless we rid ourselves of those in power, fix our present economic problems without "bailing out" failed industries and financial institutions, and begin to prepare for the future, there but for the grace of God, go us.

Obama has Lost his Mojo

By Alan Caruba

The hours and the days speed by. It is almost five months since President Obama was sworn in. A million people gathered in Washington on a bitterly cold day to hear him and to leave behind a mountain of trash.

Granted that in the weeks leading up to the inauguration, first the White House and then the Congress panicked in the face of what looked like a total Wall Street meltdown. A frantic effort was made to secure a blank check for billions to purchase the “toxic” paper, the bundled mortgages that turned out to have no identifiable assets.

Major banks, investment houses, and a huge, international insurance company tottered on the brink of failure. Some did. Some were merged.

Americans, even the most unsophisticated, understood that such an implosion threatened the financial bedrock of the nation, but first the Bush administration and then the Obama administration said that such steps must be taken. Congress went along because they had no choice.

They did have a choice; indeed, a range of choices.

The bailed out automobile companies could and should have been allowed to proceed toward bankruptcy, a procedure which would allow them to reorganize. That would have saved taxpayers $70 billion of their money. The bailout was unconstitutional.

The banking bailouts were unconstitutional too. Public funds, treasury funds, are never to be used to favor one private entity or enterprise over another.

While it is called the Federal Reserve Bank, it is an institution in effect separate from the government that grants it the right to print money, determine interest rates, and exercise oversight over the financial health of the nation. It operates on its own set of imperatives.

Any Economics 101 student would tell you that flooding the nation and the world with dollars backed up by nothing more than “full faith and credit” is reckless and foolish. It always leads to inflation and it undermines the borrowing power of the Treasury. Top lenders like China have made it clear they will no longer underwrite the huge entitlement programs and a spending frenzy that knows no end.

Freddie Mac and Fannie Mae are known as “government entities”, but together they own some fifty percent of all the mortgage loans issued by banking and lending institutions. Their top officers earned millions, but they are the primary cause of the collapse of the housing/mortgage bubble. Why? Because the government required banks and lending institutions to literally make bad loans. It was the law.

So Americans, whether they voted for Barack Obama or not, have arrived at a point where the man whose entire campaign was based on the promise of “hope and change” find themselves rapidly running out of jobs, money, and hope.

As credit froze up, unemployment began to increase and it is getting worse. Despite what the White House says, there is no such thing as “jobs saved” and the only jobs government can generate are government jobs.

A bogus $700 billion “stimulus” bill, promising funding of “shovel ready projects” is moving along at the pace of all government programs, very slowly. It’s not easy to spend that kind of money. The rest of the bill is pure pork. Typically, some of the projects are obscenely stupid. It should more accurately be called the Democrat Reelection Bill.

While the price of a gallon of gas begins to increase along with the prices of food and other necessities, the Obama administration is trying to push through legislation that would tax “greenhouse gas” emissions in the name of a global warming that is not happening. In parts of the United States, there will literally be no summer because the Earth has been cooling for the past ten years. In the first week of June there were record low temperatures in eighteen States.

The “Cap-and-Trade” bill moving through Congress will drive up the cost of energy for all Americans to astronomical levels. It would drive down and drive out manufacturing of every description. When Microsoft Corporation tells the White House it is prepared to move its corporate headquarters and other operations overseas, it is not kidding.

Now the Obama administration is trying to push through “healthcare reform” that is little more than socialized medicine, systems that have failed in Canada and England, forcing people to wait weeks and months for treatment. It would require everyone to purchase health insurance or be fined for not doing so. Your personal medical records? Any government bureaucrat could look at them.

Many Democrats are making it known they will not vote for “Cap-and-Trade” and may not vote for the takeover of the best health system in the world.

I predict that neither of these programs will become law and, if they do, Obama will have used up every ounce of trust and good will that has been extended to him. I also predict he will not care because his purpose is to bankrupt the nation and to destroy a Constitution he deems to be filled with too many restrictions on the federal government.

I predict that Barack Obama is just over a year away from seeing the Republican Party regain control of Congress in the same way it did in 1994. The October 2010 midterm elections will leave Obama a lame duck and likely a one-term President.

We cannot know what events will occur to further erode Obama’s vaunted popularity, the product of a mainstream media that has thrown away all journalistic standards, but you can be sure they will happen. Like 9/11 they will be largely unexpected by the general public or like Hurricane Katrina they will be an act of Nature.

On July 4, 2009, there will be 1,145 “Tea Parties” held across the whole of the nation according to the American Family Association. TEA being “Taxed Enough Already.”

Barack Obama makes people nervous.

Popularity is a curious thing. It can disappear overnight.

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Is Obamamania Fading Amongst the Media?

By Alan Caruba

The day following President Obama’s State of the Union speech I opened my daily newspaper to read the headline “What the president said and what the facts say.” It was an Associated Press story and it drove a tank through the President’s various promises and assertions.

The AP reporters weren’t the only people who had some doubts. A Reuters news story confirmed my prediction, noting that “Stocks fell on Wednesday as investors found little new in a major speech by President Obama on how he planned to stabilize the economy, while gloomy home sales data weighed on the market.”

Facts are stubborn things. Eventually they cannot be ignored.

I have previously pointed out that this new President’s start in office has had what is surely the shortest “honeymoon” on record with both the public and the media. We’re not talking about FDR’s famous “first hundred days.” We are talking 56 days as this is being written.

There is, I suspect, a growing feeling among both the public and the media that this recession, if the White House and Congress had done NOTHING, would have run its course. All recessions do. But Obama came out almost immediately calling it a “catastrophe” in order to gin up support for a “stimulus” bill that surely had been in the works for the last two years that Democrats had control of Congress, but were unable to get passed because of a potential presidential veto by George W. Bush.

All that pent-up desire, for example, to reverse the welfare reform that occurred in 1996 after the GOP had gained control of Congress and for which then President Clinton took credit is now being undone. Never mind that it required people to find work in order to qualify for assistance. Never mind that it greatly reduced the cost of welfare to both the federal and state governments.

But I digress. While it is undeniably true that Obama knows how to deliver a speech, it is increasingly evident that he has great difficulty delivering the truth. Even his birth certificate is in doubt. The Hawaiian document put forth during the campaign has been declared a forgery by experts and a bad one at that.

There is no need for me to repeat what others have said about the contents of the State of the Union speech. It was a political statement, full of dubious promises and claims. I have this vision of a small group of historians some years far from now sitting around like a group of Talmudic scholars and laughing hysterically over what Obama said.

The problem for the rest of us, however, is that there is NOTHING to laugh at in his speech and the initial reaction of Wall Street had a lot of investors bailing out. The market will surely regain some, lose some, regain some, lose some. The operative word is “fluctuate.” Still, it is a window to how the speech was received by real people dealing in real money.

If the economy does improve, it will not be due to anything in the “stimulus” bill. It will be because a lot of people, small businesses and large, will make their own private bet that they must invest in their own future. Others will take advantage of the low housing prices and interest rates on mortgages. It’s called capitalism.

If public opinion about Obama is this tepid less than two months into his administration, I suspect the polls will report a continued dip in his numbers. This happened to the unlamented Jimmy Carter whose failure to deal with a recession and the taking of hostages by the Iranians gave him one term in office. I’m only surprised he has not moved to Iran and run for president there.

As to the Republicans, they are being handed the 2010 Congress on a platter. What they need is a real leader. Gov. Bobby Jindal is not that man. Louisiana, home of the populist Huey Long who gave FDR indigestion, is famed more for its history of corruption and general ineptitude than, say, Indiana, whose Republican Gov. Mitch Daniels was re-elected because of---not despite of---real fiscal prudence.

There are some potentially strong Republicans who could give Obama a real run in 2012. The party did the right thing in opposing the “stimulus” bill, but now it has to find some real courage and carry the fight to him every step of the way. It’s time to take the gloves off.

All this talk about being non-partisan makes me want to puke.

Early signs the media is already having second thoughts and buyer’s remorse must be acted upon before those sheep lead the other sheep over the cliff. Again.

My New Boots and the Economy

By Alan Caruba

I bought a new pair of boots today. This particular pair is made from soft leather that is casual in appearance and extremely comfortable. Though born and bred in New Jersey, I have worn cowboy boots since the 1960s. I attribute it to spending too many Saturday matinees watching cowboy movies.

Truth is, I had been looking to buy a new pair the replace the rather beat-up pair I have worn for a while, but the catalog just a few months ago was asking about $125.00 for the particular ones I wanted. Then, a few weeks ago it was asking $70.00 for them. And this morning the email offer cited a price of $50.00.

The economy is playing sheer havoc with folks who make things for a living. The news this morning is that holiday retail sales have been as bad as they have been in decades. You have to go back to 1959 to equal the low level of sales.

When I graduated from the University of Miami (FL) in 1959 and completed my military service two years later, jobs were plentiful and, as a journalist, I covered a lot of civil rights marches and such. Then the Vietnam War began to require a lot more young soldiers. History is messy and filled with wars that get young men killed because old men make serious errors of judgment.

People with a little spare cash are picking up some real bargains these days, but mostly consumers are beginning to do something they have not done in a very long time. They are either not buying stuff or buying a lot less stuff. That’s what people do when it occurs to them that the economy is in the toilet.

In a consumer society that is bad news for people who make and sell real stuff for a living. The flip side is that you can now buy a home for something approximating its actual value instead of the inflated prices of the last few years. .And you can get some very good terms on your mortgage. Time was you couldn’t get one unless you could put down at least twenty percent of a home’s price, but when those prudent mortgage loan standards went out the window so did the economy.

It didn’t help that the federal government via some truly bad “social justice” legislation was putting intense pressure on banks and mortgage loan firms to lend money to people who could not ever afford to pay them back. Now foreclosures are going to play social havoc in the same places the government thought it was helping.

I have a friend my age who has been on Wall Street for a very long time. I asked him this morning if all those people who were “bundling mortgage-backed assets” and other fancy securities knew that it was all a scam that had to go bad at some point. He said yes. He avoided them and advised his clients to avoid them.

There’s a very real difference between a new pair of boots and some gussied-up security whose value is going to disappear in thin air. You can put on a pair of boots and wear them for years. You cannot recover the value of something that never really had a value except for the folks trading them as fast as they could. Those folks made a lot of money, but they never made anything real like a pair of boots.

The new administration, we’re told, is ready to let loose a huge “stimulus package” to “jumpstart” the economy. The level of U.S. indebtedness is going to skyrocket, but the folks in Congress don’t seem to understand that the government cannot just keep printing money without turning the U.S. dollar into a Zimbabwe note for one billion dollars that won’t even buy a loaf of bread.

The level of lobbying to get a piece of this new government pie is going to be intense. In time we will learn of a slew of idiotic projects that skimmed off the federal largess. It always happens. As I recall, the last stimulus package did nothing at all for the economy.

It never seems to occur to Congress to dump the ponderous U.S. Tax Code and write a new, fairer one.

It never seems to occur to Congress to pare back the monstrous tangle of regulations that drive up the cost of doing business or anything else in America.

And it surely will not occur to Congress to not raise taxes at the very time when people need to hold onto every dollar they earn.

I expect Congress and state governments to start taxing everything. I mean everything! Tolls will go up. The price of public transit will rise. The poor will get poorer. The middle class will shrink. The number of bank heists will increase.

Cutting programs, laying off civil servants, and renegotiating pension plans, et cetera, just never occurs to most governors and legislators.

I’m pleased that I waited for the price of my new boots to decrease, but I feel sorry for the boot manufacturer and for his employees. It’s not their fault the U.S. economy is in trouble. We know whose fault it is, don’t we?

Beware of Experts

By Alan Caruba

I don’t know about you, but I have reached a point where, if someone is introduced as an expert on anything, I am almost automatically skeptical. Our popular media is filled with experts on politics, investing, dieting, and every other topic.

The problem is in knowing which one of these people really knows what they’re talking about or are just promoting themselves? Odds are, they’ve got something to sell you.

For example, there’s the phenomenon of “group think” where everyone coalesces around the most popular “truth” and puts in their two cents worth of advice on the topic. Did anyone foresee the collapse of the sub-prime mortgage market? Yes, a few people did and they were ignored by Congress.

Even Alan Greenspan spoke cryptically of “irrational exuberance” a dozen years back, but no one ever claimed to know what he was saying with regard to the economy. The last thing I heard from him was an apology for getting things wrong.

I saw Henry Kissinger on PBS television with Charlie Rose the other night. For the life of me, I have no idea whether his views, always cryptic, are any more valid than mine. The man gets paid for representing the interests of clients like the People’s Republic of China these days. Should I be wary? Yes; especially since I don’t know who his other clients are.

I am a long time book reviewer and I could build a stack several stories high of books on how to get rich. They’re published by the dozens every year. Their authors, we’re told, got rich and are sharing their secrets with the reader, but how many of those readers ever get rich? Or even try? Not many I suspect. And why would the author want to share his secret unless it was to get you to invest in his company?

Today I received a news release from “the Internet’s fastest-growing career site” purporting to identify the “job sectors and key professions that are most likely to grow as the result of President-elect Barack Obama’s economic stimulus politics.”

For one thing, Obama says he wants to throw billions at our present crisis to create “green jobs” and rebuild America’s infrastructure. Where is he going to get those billions when the U.S. is already billions in hock? As of October 1st, the budget deficit for the previous fiscal year was a record $438 billion. That was $25 billion more that the previous high in 2004.

Meanwhile, the news release says the new hot jobs will be all kinds of engineers. Good news for engineers, but it is so costly to get those degrees (and any other kind) in the United States that companies here have to import engineers from other nations. That’s why so many of our government laboratories and university faculty are populated with foreigners.

The “experts” we all sent to Congress and the “experts” over at the Securities and Exchange Commission all managed to miss the signs of an imploding economy or the massive $50 billion Ponzi scheme run by some Wall Street mobster. And he snookered people like Sen. Frank Lautenberg (D-NJ), an octogenarian who will be in his 90s if he lives to see the end of his new term. And he gets to vote!

The point of this is to be skeptical of those introduced to you as an expert on anything. They may well be, but in areas of personal finance and investment, do your own research. Want to diet? Do your own research. Raising kids? If you think your parents did an okay job with you, ask them, or do your own research.

The classic example is the person who tries to do his or her own pest control when they discover they have ants, cockroaches, or a rodent problem. It can’t be done even if you can buy pesticides at the local Home Depot. That’s why pest control firms nationwide stay in business. It’s a profession that dates back to the Middle Ages!

We are all conditioned to listen to other people. Sometimes they’re called experts, but other people have their own agenda, so do your own research.

Lastly, if you believe you possess a reasonable amount of common sense then trust your own judgment. You can actually be in charge of your own life if you exercise some personal discipline and question the wisdom being handed you by some expert.

Too Close to Call

By Alan Caruba

As someone who gives praise to a merciful God for the invention of the Internet connection to my banking information, I will not pretend that I understand much about the arithmetic of polls except that they seem to be wrong a great deal of the time.

There are so many variables regarding how a poll is conducted, the respondents, the nature of the questions asked, and the fact such things are then quantified and expected to be “accurate” in any sense of that word has got to qualify as a miracle.

To put it another way, people change their minds all the time. The candidates are essentially pitching their message at this point to the great, messy mob of “independents” and “undecideds.”

So here’s what I am thinking. I am thinking the race is so close that everyone involved, the candidates, their campaign teams, and the media mob pursuing them do not want to admit that it’s a toss-up.

The other day John McCain positioned himself as behind Barack Obama, telling a crowd that they had to turn out on Election Day and drag their Aunt Sarah to the polls with them. It was a passing statement and many candidates find it advantageous to suggest that they are battling to “come from behind” and need their followers to make a special effort.

Years ago, I used to assist the Republican committee in my little hometown. The town had been solidly Republican for decades, but then lots of young Democrats began to move in. One evening it was obvious that the only Republicans left were about a dozen of us sitting around in the mayor’s living room. All this talk of Red States, Blue States and Purple States is really a discussion of who has moved in or out.

The fact is that Obama is ahead in dollars and television commercials. I can’t remember the last campaign ad for McCain I’ve seen in the New York tri-state area.

I suspect that the GOP has had more than its share of problems getting the rank and file to pony up some bucks for McCain and other candidates. Since the base is definitively conservative and since the Republicans in Congress were spending as fast as the Democrats, the party is dealing with a lot of disaffected members.

Disaffected, but not suicidal. Even if they didn’t send money, that doesn’t mean Republicans won’t show up on Election Day. Most like what McCain is saying and, in the end, it is votes that matter.

Finally, the notion is beginning to circulate among the cognoscenti that this financial meltdown has occurred far too conveniently just before the election. To the extent that such things can be manipulated, the financial crisis could not have come at a more advantageous time for the Obama campaign.

I would bet that the financial crisis is the “October surprise” that people always talk about as affecting campaigns just before Election Day.

What I find more interesting, however, is how swiftly the stock market seems to be rebounding. The government opens the spigots of the Federal Reserve and, within a week or so, everybody has concluded that the problem has been solved.

Too close to call is my take on the campaign. Stay tuned.

"What We Have Here is a Failure to Communicate" Why You Should Ignore Rumors & Conspiracy Theories

By Alan Caruba

In one of the movies that made the late Paul Newman famous, “Cool Hand Luke”, one of the characters, a prison warden, utters the line, “What we have here is a failure to communicate.” His point being that he is in charge, not the prisoners.

The various members of the U.S. government, our elected legislators and the President, have failed to communicate—some have said misled—Americans regarding the reasons we are trying to cope with a financial crisis based largely on an issue of trust. We do not trust our government and we do not trust our banking and investment community, and they don't appear to trust each other.

It is at times like this that conspiracy theories and rumors abound.

Take, for example, one put forth by Wayne Madsen, a former naval officer who was assigned to the National Security Agency as well as being a former executive at a Fortune 500 company. Wayne now fashions himself a citizen journalist at WayneMadsenReport.com. That pretty much constitutes all that I know about Madsen other than he does some radio with something called the Republic Broadcasting Network.

On October 9, Madsen reported that he had learned from “knowledgeable Federal Emergency Management Agency (FEMA) sources that the Bush administration is putting the final touches on a plan that would see martial law declared in the United States with various scenarios anticipated as triggers.”

Were that the case, President Bush would become the nation’s warden. The triggers, according to Madsen, would include “massive social unrest, bank closures resulting in violence against financial institutions, and another fraudulent presidential election that would result in rioting in major cities and campuses around the country.”

At this point, let it be said that talk of rioting and martial law always circulates in times like these. It’s worth taking careful note of who is doing the talking.

There have been times when rioting occurred, but it has usually involved racial discord. One has to reach back to the days of the Hoover administration for protests regarding the economy, but in that case it was a government riot in which WWI veterans who had descended on Washington, D.C., to demand promised payments for their service were forced from their improvised “Hooverville” shacks by the U.S. Army.

Speculation that the present government and whichever one takes over in January would be dusting off plans in the event of such discord is predictable as well. It is not unlikely that the geniuses who created this financial mess, Congress in particular, are looking at contingency plans in the event the U.S. was to default on its loans and other debts. The fact that the current crisis is international in scope would portend military conflicts if not brought under control.

It is extremely doubtful events would come to that.

All one needs to do is recall the calm with which Americans waited out the Florida vote count and the result of the Bush-Gore election. No riots. Just a giant collective shrug.

What is happening is likely some kind of restructuring of how the international financial system operates in a new age in which a depositor can transfer funds with the click of a computer key. This new crisis is based on very old human error; spending too much, promising too much, pretending a problem does not exist until it can no longer be ignored.

The government has to ramp up its communication skills and programs to reassure Americans and others that, indeed, a rescue plan is in place and will begin to function soon. That’s really what people want to hear.

So far the public has been treated first to a rather panicky Secretary of the Treasury, followed by a droning, boring Secretary of the Treasury, in both cases doing a poor job of explaining anything. Let’s begin by keeping Hank Paulson way from microphones and television cameras. For that matter, President Bush has proven to be a very poor cheerleader.

If John McCain continues to “name names”, i.e., Barney Frank, Chris Dodd, Nancy Pelosi, et cetera, he might just get elected. He was once famous for “straight talk” and Americans are hungry to hear more of it.

Assigning Blame

By Alan Caruba

After listening to a week’s worth of “explanations” about why the financial system of the United States was in trouble, it occurred to me that, if we were China, a whole bunch of guys would have been hauled into stadiums in New York and Washington, D.C., and publicly executed.

Fortunately for them at least, we are not China, but what emerged from the chatteratti was the conclusion that, since everyone was to blame, no one was to blame. Guess who gets to bail out those who made predictably greedy and really stupid decisions? Everybody.

We are inclined to look back at previous administrations and think that their members of Congress were great statesmen and so much wiser, but even a glance over one’s shoulder reveals they were as avaricious and self-interested as the current bunch of boneheads. They gave us the Civil War, Prohibition, the Great Depression, and the United Nations, to name just four really bad events.

So why we should think that the present members of the quasi-criminal class we call Congress would not make a complete mess of the financial system, makes no sense. The most prominent aspect of modern era government is the way it has managed to expand into every area of life in America and, most particularly, the conduct of business, industry, and finance.

Congress knows little or nothing about agriculture, technology, science, medicine, and how to run a business, large or small. What it knows about is wasting taxpayer’s money on “earmark” projects to please the folks back in their district or state. It leaves wasting money overseas to the dictates of the State Department and assumes rightly that the military will do the same in the conduct of “nation building” projects.

If you wonder why Congress is forever holding committee meetings and inquiries of one sort or another, it is because these are the kids in high school who were never expected to grow up and be of any real use to anyone. They were the backslappers and glad-handers who, as often as not, ran for class office.

There are exceptions, of course. Rep. Ron Paul is a physician, though he has long since abandoned that profession in pursuit of saving us from ourselves. That is a losing battle.

This is why we have tended to look to state governors for leadership because, at the very least, they actually have to manage a real budget. We may be less inclined to do that in the future as we discover that the only thing too many of them are good at is running up more debt while killing energy projects because they think global warming is the most serious problem facing Kansas, New Jersey, or any state with a Democrat at the helm.

That includes California whose Governor is a Democrat in a Republican pinstripe suit.

The government will now step in and buy up all those mortgages that should not have been permitted if it had not insisted that people with no hope of making the payments, i.e., poor people, people living beyond their means, or just plain stupid people, had not decided they too should live in a McMansion.

In the process, I guarantee that the bailout legislation will have millions and millions tucked in there to do things like prop up Detroit’s auto industry problems that would not have occurred if government had not been busy mandating how cars should be built. This is the same government that, for thirty years, has been trying to destroy the oil industry.

Who is to blame for the financial mess? Apparently it’s you. After all, it’s your money that will be used to make things right again. Until the next mess.

The Economy is Anyone's Guess

By Alan Caruba

In my youth I was a professional magician earning money entertaining at birthday parties and even adult events. I learned a profound lesson. People like to be fooled. They will pay you money to fool them. They will applaud you at the end of your act.

I must confess, as the son of a Certified Public Accountant who thought the stock market was a fool’s game, I was always leery of investing in stocks. The few times I tried, I lost money. It began to dawn on me that no one really knows what a stock will do. A bit of bad news and its value drops like a stone. Or euphoria sends it upward like a fever.

There are the traditional stocks, thought to be safe, but tell that to the people who invested in General Motors, once the greatest manufacturer of automobiles in the world. It recently announced a $3 billion loss and, would you believe it, the stock price went up on that “good news” because the loss wasn’t as bad as investors thought it would be!

Being a writer by trade doesn’t necessarily lead to big bucks. Out of the few who make it to the bestseller lists with a novel or hot new diet book, there are literally thousands whose books went out into the world and ended up in landfills. In my time, the average writer of books was lucky to earn about $5,000 when published. I actually did earn that with a novel that was so vile I pray nightly that all of the copies have long since been incinerated.

Who anticipated the Great Depression? Few I suspect. Who made it worse? The government. Now, in an era of globalization and investing via the Internet, money can move in and out of various financial institutions and nations so fast there is no way to predict anything.

Is everybody from Hong Kong to London to New York and all points in between happy this morning? It’s mostly a matter of emotion as the sun sets on one side of the planet and rises on the other. It’s a million judgments being made every hour by people with a gambler’s nerve, perhaps some small bit of the knowledge of what is occurring, and a few dollars to spare. It’s about hope. It's about magic.

It was a shock, though, to discover that the great titans of Wall Street had gambled on subprime mortgage loans, bundling them in the amounts that ultimately cost some of their banks and investment houses billions. It was a shock to discover that Bear Stearns, the fifth largest investment bank on Wall Street, was at the brink of bankruptcy at the moment the Federal Reserve stepped in to extend a $30 billion line of credit to J.P. Morgan to snap it up.

The heads of Merrill Lynch and the Citigroup were fired for bad judgment. If they didn’t know what was going on, why should you or I? This brings us to the new or surviving titans who are assuring everyone that we are just about out of the subprime mortgage mess. Warren Buffett says we’re moving out of the mess caused by bad lending practices and worse borrowing ones.

Tell me, how many times in the past few years did you see a DiTech commercial on the air? Or one for Countrywide Home Loans? Ordinary people with no more idea of what it meant to borrow huge amounts of money than a Barbi doll just picked up the phone and received funds. It was magic!

The CEO of Goldman Sachs, Lloyd Blankfein, says, “We’re getting to the point where people are seeing the light at the end of the tunnel.” Which people? The ones with whom he has lunch at the Four Seasons?

The amazing thing about the financial meltdown is that people are getting back into the game as swiftly as they are. Investors seem to be less risk averse now than just a few months ago. It’s about hope. It’s about magic!

Americans may be the most optimistic people on the face of the Earth. Our economy is going through the equivalent of shock treatment as fuel and food prices rise. Big box retail outlets like Home Depot are shutting down a number of their stores and we are in the midst of an endless political campaign between two socialists from the Democrat Party and a Republican who's a tad liberal, but not enough to scare too many people.

America has been poorly managed for several decades. Congress hasn’t put the wheels in motion to tap our own vast natural resources. It has conjured up more entitlement programs than we can afford. It has printed “stimulus” checks and is sending them to millions of taxpayers, hoping the money will swiftly make its way back into the economy.

None of this makes me feel that good. It’s more like some slight-of-hand magic trick than smart, prudent economics.

What no one is talking about is a looming pension meltdown lurking on the horizon in which the federal government has a big stake and upon which the lives of many retirees depend.

What no one can predict is another 9/11 or an expanding war in the Middle East.

I have a cousin who is a vice president with a big investment house. He never offers me any advice, even when I ask him. He’s been in the business a long time. Maybe that’s why we get along so well?