Free Markets, Free People

Daily Archives: September 24, 2009


The Kangaroo is Still Hopping

Today was one of those days when a couple of trends came together that should be making us think seiously about changing our current fiscal and monetary policies.

The first thing I was was this debt chart from John B Taylor that shows how our current policy will effect the national debt.

Projected national nebt as a percentage of GDP

Projected national nebt as a percentage of GDP

This what you call your unsustainable debt path.

Then, there was this:

Since the crisis began, the Fed has pumped more than $800 billon into the banking system, kept the federal funds rate near zero and purchased so many Treasurys and mortgage-backed debt that the amount of assets on its balance sheets has now swollen to $2.14 trillion.

“If you think the Federal Reserve had it tough devising a strategy to rescue the U.S. economy from of the worst recession in 70 years, just wait,” wrote Bernard Baumohl, chief global economist, at the Economic Outlook Group. “We think it is going to be hellishly more complicated this time to come up with a plan that encourages growth and keeps inflation expectations well anchored.”

All of which leads directly to this:

Chinese central bank governor Zhou Xiaochuan, who supervises more than two trillion dollars worth of dollar reserves, the world’s largest, raised the stakes by calling for a new reserve currency in place of the dollar.

He wanted the new reserve unit to be based on the SDR, a “special drawing right” created by the International Monetary Fund, drawing immediate support from Russia, Brazil and several other nations.

“These countries realize that they would suffer losses if inflation eroded the value of the dollar securities they own,” said Richard Cooper, a professor of international economics at Harvard University.

Here’s the problem.  Because we are on an unsustainable debt path, we will eventually accrue more debt than we can possibly repay.  There are many people who think that–since our debt, coupled with Social Security and Medicare obligations currently outstanding, are greater than the entire capital stock of the United States–we’re there already.  We ill be unable to pay the debt, so our choices are to repudiate it outright, or to destroy the value of the currency and inflate it away, both of which amount to essentially the same thing.  In doing so, the government will destroy the life savings of everyone in the country, save those that are in hard assets

The Chinese, whatever else they may be, are not stupid.  they know this, and they want a new worldwide reserve currency now, before everyone realizes that the dollar is in very serious danger of becoming worthless.  They don’t want to be stuck holding dollars when that happens–although their holdings in bonds will probably have to be written off.

I’ve written previously that China moved their gold reserves into the BoC a few months ago.  Some international trade deals are already being denominated in gold, tool.  It looks very much like the dollar’s days as the world reserve currency are numbered.  In fact, the dollar’s days may very well be numbered.

Federal Reserve Monetary Base. Click to enlarge.

Federal Reserve Monetary Base. Click to enlarge.

And we’ve let it happen.  Over the past 80 years, we’ve sat by and watched as the Fed–whose primary mission was supposed to be the stability fo the currency–has presided over a tenfold reduction in the dollar’s value.  For the last 30 years, we’ve watched as the debt has mushroomed–yes, even during Bill Clinton’s presidency–and we’ve refused to either cut spending or to raise taxes to a level commensurate with our increased spending.  In short, we’ve looted the system, and the looting is nearly complete now.

And now, with all the trumpetings of a coming economic recovery, the Fed has to try and figure out how to re-call the more than doubling of the monetary base we’ve engaged in in the past year without completely crashing the economy.  Failure to do so, of course, means serious inflation–which will further degrade the value of the dollar.

Hop.  Hop.  Hop.


Obama, Clinton and the State Department Are Wrong About Honduras

I think we know the answer to the question “what in the world are Constitutions for if not to be followed” as we address it to those named in the headline, but we now have the Congressional Research Service weighing in on Honduras and it isn’t good news for the US’s policy toward that country.

David Freddoso reports that the CRS’s Senior Foreign Law Specialist Norma Gutierrez has completed a study of the Honduran actions as they relate to former president Mel Zelaya and they don’t reflect well on the US. Freddoso has distilled them to the following:

* The Honduran Congress appears to have acted properly in deposing President Manuel Zelaya. Unlike in the United States, the Honduran Congress has the last word when it comes to interpreting the Constitution. Although there is no provision in Honduras’s Constitution for impeachment as such, the body does have powers to disapprove of the president’s official acts, and to replace him in the event that he is incapable of performing his duties. Most importantly, the Congress also has the authority to interpret exactly what that means.

* The Supreme Court was legally entitled to ask the military to arrest Zelaya. The high court, which is the constitutional venue for trials of the president and other high-ranking officials, also recognized the Congress’s ouster of Zelaya when it referred his case back down to a lower court afterward, on the grounds that he was “no longer a high-ranking government official.”

* The military did not act properly in forcibly expatriating Zelaya. According to the CRS report and other news stories, Honduran authorities are investigating their decision, which the military justified at the time as a means of preventing bloodshed. In fact, Zelaya should have been given a trial, and if convicted of seeking reelection, he would have lost his citizenship. But he is still a citizen now, and the Constitution forbids the expatriation of Honduran citizens by their government.

* The proper line of succession was followed after Zelaya’s ouster. Because there was no Vice President in office when Zelaya was removed (he had resigned to run for president), Micheletti was the proper successor, as he had been president of the Congress.

So the only unlawful or improper act, according the the CRS, was the forceful expatriation of Zelaya. Despite the desire to avoid bloodshed, the military should merely have removed and arrested him. Other than that, everything appears to go precisely as it should according to their constitution and their legal interpretation of it.

For a man who just stood up in the UN and claimed the right of people for self-determination (except in Iran, of course), he sure is working awful hard to ensure Honduras’s citizens don’t enjoy that right.

He’s wrong. Secretary of State Clinton is wrong. The State Department’s actions against Honduras are wrong. No equivocation here – the US is on the wrong side of this issue. This needs to be rethought and readdressed quickly and Mel Zelaya ought to be treated like he deserves – as someone who broke the law of the land.

[HT: looker]

~McQ


School Indoctrination? Where? Cult of Personality? No way!

This was filmed around June 19, 2009 at the B. Bernice Young Elementary School in Burlington, NJ.

[HT: NRO]

Appropriate?

Lyrics (some unintelligible noted – if you can understand them help fill in the “something-somethings:)):

Barack Hussein Obama
He said that all must lend a hand [?]
To make this country strong again
Mmm, mmm, mm!

Barack Hussein Obama
He said we must be clear today
Equal work means equal pay
Mmm, mmm, mm!

Barack Hussein Obama
He said that we must take a stand
To make sure everyone gets a chance
Mmm, mmm, mm!

Barack Hussein Obama
He said Red, Yellow, Black or White
All are equal in his sight
Mmm, mmm, mm!

Barack Hussein Obama
Yes
Mmm, mmm, mm!

Barack Hussein Obama

segue to

Hello, Mr. President we honor you today!
For all your great accomplishments, we all [do? doth??] say “hooray!”
Hooray Mr. President! You’re number one!
The first Black American to lead this great na-TION!
Hooray, Mr. President something-something-some
A-something-something-something-some economy is number one again!
Hooray Mr. President, we’re really proud of you!
And the same for all Americans [in?] the great Red White and Blue!
So something Mr. President we all just something-some,
So here’s a hearty hip-hooray a-something-something-some!
Hip, hip hooray! (3x)

Is this what school is about now?

And you have to love the “Jesus Loves Me” rip off …

I’m sorry – but this is just a bit over the top for me. Your tax dollars at work.

~McQ


This Is Why Obama’s Health Care Support Continues To Erode

Along with his credibility.  When the House bill on health care (H 3200) came out, anyone who read the bill, to include Republicans, noted that it planned to pay for much of what was offered through Medicare cuts. And, in speeches and talks following that, President Obama said that he wanted to “end subsidies” to Medicare Advantage, a Medicare supplemental program very popular with those using Medicare (because it covers what Medicare doesn’t).

Even the CBO has come out, as noted yesterday, and said what President Obama is talking about when it comes to Medicare will cut the level of benefits for Medicare users.

Be that as it may, and as he has in many things, he claims everyone else is wrong, he’s right and those disagreeing with him are simply doing it for political purposes. In talking points distributed by the White House today, they say:

Talking Points: Republicans’ Disingenuous Scare Tactics on Medicare

• Recently, as part of an ongoing effort to revive their political fortunes by killing health insurance reform, many Republicans have been attempting to scare America’s seniors with false myths about what reform would mean for Medicare.

• These distortions and outright falsehoods would be offensive under any circumstances, but they’re especially disingenuous coming from a group who has a long history of opposing Medicare and who very recently tried to kill the program as we know it.

• Just this past April, nearly four-fifths of Republican House members voted to end Medicare as we know it by turning it into a voucher program that provides a fixed sum of money to buy private insurance.

• And this most recent assault on Medicare is just the latest in a war Republicans have been waging on the program for decades.

They also attempt to spin away the CBO finding that benefits will indeed be cut and they further attempt to justify the Medicare Advantage cuts.

But this just isn’t selling to those at whom it’s aimed.

Gallup reports that seniors 65 and older are the demographic with the largest percentage against the reform being offered. By a margin of 10% (42% to 32%) they oppose it.

I think it is pretty safe to say that seniors, at this point, don’t trust the Democrats and certainly aren’t now going to buy into the old “Republicans are using scare tactics” canard. Nor are seniors going to be mollified by claims that Medicare Advantage “overcharges” and therefore should be eliminated.

I’ve talked about the erosion of independent support for the administration and Democrats in general. If the Democrats want to ensure a minority in the Congress in 2010, continue to alienate the seniors as they are presently doing and they’ll get their desire. And that might also mean 2012 won’t be looking so hot for them either.

This is a demographic which knows their issues (especially health care) and votes them. Screw with this program (and yeah it’s ironic that we’re talking about leaving a government program alone, but again, since they don’t have a choice, that says nothing about its quality or efficiency) and you can almost bet the house (pun intended) that 2010 will find a new majority in one of the chambers of Congress.

~McQ


“Do As I Say, Not As I Do”

Any guess as to who this is?

He dumps salt on almost everything, even saltine crackers. He devours burnt bacon and peanut butter sandwiches. He has a weakness for hot dogs, cheeseburgers, and fried chicken, washing them down with a glass of merlot.

And his snack of choice? Cheez-Its.

If you said Michael Moore, give yourself partial credit. But, in reality, it’s the Mayor of New York City, Michael Bloomberg. Yes, the same guy who seems to think it is his job to be your mommy (banning transfats, forcing fast food places to post calorie counts, telling to diners to use less salt and subway riders to drink less soda) even salts his pizza.

But the mayor’s press secretary, Stu Loeser, said Mr. Bloomberg “works as hard as any New Yorker at keeping off extra pounds, and he has trimmed himself down to his college weight, which isn’t at all easy for a 67-year-old.” The mayor, he said “has days when he eats more than he should.” But, he added, “unlike most of us, he has the discipline to even it out the next day.”

Got that Gotham? He has “the discipline”. The rest of you proles need him to take care of it for you because “most of us” can’t handle it for ourselves.

This, my friends, is the most dangerous of political creatures. The one who thinks that it is the function of government to tell you how to live your lives, down to and including what you should and shouldn’t eat, assumes you don’t have the wherewithal to do it yourself and finally, doesn’t even follow the rules he lays down for you because he’s the exception and has the “discipline” to overcome the problem.

[HT: Megan O]

~McQ

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