WELL, NOBODY'S A GENIUS IN A BEAR MARKET WARREN, BUT MAYBE YOU SHOULD HAVE SAID SOMETHING ABOUT FISCAL AND MONETARY POLICY!
From the NYTimes:Berkshire Hathaway, reported a 62 percent drop in net income for 2008 and posted negative results for only the second time since he took control in 1965. Berkshire recorded a loss of $5.1 billion, after adjusting the value of its derivatives holdings.
Also blissfully ignored, Buffett he wrote, were the perils of relying on mathematical models devised without worst-case situations in mind. Too often, he wrote, Americans have been enamored of “a nerdy-sounding priesthood, using esoteric terms such as beta, gamma, sigma and the like.” Some skepticism about these models is overdue, he added.
NEW YORK – As the Obama administration attempts to push through Congress a nearly $1 trillion deficit spending plan that is weighted heavily toward advancing typically Democratic-supported social welfare programs, a rebellion against the growing dominance of federal control is beginning to spread at the state level.
Analysts expect that in addition, another 20 states may see similar measures introduced this year, including Alaska, Alabama, Arkansas, California, Colorado, Georgia, Idaho, Indiana, Kansas, Nevada, Maine and Pennsylvania.
The interesting thing is that the Repubs, everywhere, paint the Dems as the biggest spenders of all time-- which is true. But how can we not say the Dems just took a page from the Republican playbook from the Bush years. Listening to the Hollow Rage of all the phony "conservatives" (esp. Limbaugh and Hannity: To listen to these guys you wouldn't know that Republicans were in charge for the last 8 years) you just have to smile, even if rage is the appropriate response. When the Repubs had power they did NOTHING but Spend and Elect, Spend and Elect... The phoniest bunch of "Conservatives" since, well, Bill Buckley.
The most Conservative Congress in 60 years was elected in 1994. The end result was the election of Dubya, and Republican control of Congress for many of those years. The effect? National debt in 1994? 4.6 trillion. National debt in 2001? Around 5 trillion. National debt in 2008? 10 trillion. Thank God for the Conservatives! Too bad they wanted only to Conserve their own power.
And both parties recommend themselves to the electorate by pointing at the other and saying "at least we're not them". Can you say "intellectual bankruptcy" boys and girls?
The D's and the R's will continue to be One Party with two wings, as long as they think they are the only game in town. Don't waste your vote in the next election: vote third party.Better yet, vote Libertarian. -flynn
Pelosi and Reid called Bush's budgets "dangerous" and "unpatriotic," but with Obama, they've changed their tune
Back in 2006, when Democrats were hoping to win control of the House and Senate, party leaders worked themselves into a righteous outrage over the issue of out-of-control federal spending. Rep. Nancy Pelosi, D-Calif., called the Republican budget “irresponsible” and “unpatriotic” because it increased the amount of U.S. debt held by foreign countries. Sen. Harry Reid, D-Nev., accused Republicans of going on “an unprecedented and dangerous borrowing spree” and declared GOP leadership “the most fiscally irresponsible in the history of our country … no other president or Congress even comes close.”
President Barack Obama, accompanied by Vice President Joe Biden, are seen in the State Dining Room of the White House in Washington, Monday, Feb. 23, 2009, before they addressed the National Governors Association regarding the economic stimulus package. (AP Photo/Charles Dharapak)
You won’t find too many defenders of George W. Bush’s record on spending these days, even among Republicans. But a check of historical tables compiled by the Office of Management and Budget shows that the spending that so distressed Pelosi and Reid seems downright modest today. After beginning with a Clinton-era surplus of $128 billion in fiscal year 2001, the Bush administration racked up deficits of $158 billion in 2002, $378 billion in 2003, $413 billion in 2004, $318 billion in 2005, $248 billion in 2006, $162 billion in 2007, and $410 billion in 2008. Read the rest... DC Examiner
OBAMA JUSTICE DEPARTMENT WILL STOP MEDICAL MARIJUANA RAIDS!
WILL IT TAKE A JOINT SESSION OF CONGRESS?
Obama Attorney General Eric Holder said that the Justice Department will no longer raid medical marijuana dispensaries established under state laws but technically prohibited by the federal government.
The decision marks a shift from the Bush Administration, which was more draconian in its approach to hunting those who sought to dispense marijuana for medical purposes. Numerous states have decriminalized marijuana in recent years, and new fiscal pressures are turning more states toward being more lenient toward first-time drug offenders as the cost of keeping drug users in jail becomes untenable for state budgets.
The Drug Enforcement Administration continued to carry out such raids after Obama's inauguration, despite an Obama campaign promise to cease the practice. But asked at a press conference Wednesday, Holder said it wouldn't be the Administration's policy going forward.
For today's generation, Hitler is the most hated man in history, and his regime the archetype of political evil. This view does not extend to his economic policies, however. Far from it. They are embraced by governments all around the world. The Glenview State Bank of Chicago, for example, recently praised Hitler's economics in its monthly newsletter. In doing so, the bank discovered the hazards of praising Keynesian policies in the wrong context.
The issue of the newsletter (July 2003) is not online, but the content can be discerned via the letter of protest from the Anti-Defamation League. "Regardless of the economic arguments" the letter said, "Hitler's economic policies cannot be divorced from his great policies of virulent anti-Semitism, racism and genocide…. Analyzing his actions through any other lens severely misses the point."
The same could be said about all forms of central planning. It is wrong to attempt to examine the economic policies of any leviathan state apart from the political violence that characterizes all central planning, whether in Germany, the Soviet Union, or the United States. The controversy highlights the ways in which the connection between violence and central planning is still not understood, not even by the ADL. The tendency of economists to admire Hitler's economic program is a case in point.
In the 1930s, Hitler was widely viewed as just another protectionist central planner who recognized the supposed failure of the free market and the need for nationally guided economic development. Proto-Keynesian socialist economist Joan Robinson wrote that "Hitler found a cure against unemployment before Keynes was finished explaining it." Lew Rockwell
“His ideas were rooted entirely in Marshallian economics, which was in fact the only economics he knew.” (Collected Works, Vol. 9. p. 241)
“[H]is aim was always to influence current policy, and economic theory was for him simply a tool for this purpose.” (Collected Works, Vol. 9. p. 248)
“Keynes was not a highly trained or a very sophisticated economic theorist.” (Collected Works, Vol. 9. p. 242)
“his knowledge of nineteenth-century history and even of the economic literature of that period was somewhat meager.” (Collected Works, Vol. 9. p. 228)
“John Stuart Mill’s profound insight that demand for commodities is not demand for labour, which Leslie Stephen could in 1878 still describe as the doctrine whose “complete apprehension is, perhaps, the best test of a sound economist”, remained for Keynes an incomprehensible absurdity.” (Collected Works, Vol. 9. p. 249)
“[Keynes] was neither a highly trained economist nor even centrally concerned with the development of economics as a science.” (Collected Works, Vol. 9. p. 248)
ARM YOURSELF AGAINST THE REACTIONARY KEYNESIAN CULTS
A generation ago Keynesian economics was dead and buried, abandoned even by the most influential Keynesian economist of them all, John Hicks. It had been killed by the re-discovery of Hayek (by Robert Lucas , Alex Leijonhufvud, and John Hicks, among others), by Milton Friedman — and by stagflation. Keynesian economics was rejected by the great political figures of the time. By Thatcher and Reagan who looked to Hayek, not Keynes. And by the leaders of the states of the former Russian Empire, by the Chinese, and across the European continent, who again looked to Hayek (and Friedman), and not Keynes.
But today the free market and the ideas of Friedrich Hayek are under massive assault. The Keynesians are again in the saddle, riding the whipping horses of “crisis”, “deflation” and “stimulus” to the largest takeover of the free economy in the nation’s history.
EUROPE IS FATED TO BE NOTHING MORE THAN THE SOURCE OF HOUSEBOYS AND MAIDS FOR THIE CHINESE IN THE NEXT GENERATION!
GREAT INTERVIEW WITH DOUG CASEY:
"Most people are unaware that Homeland Security, which is one agency that should be abolished post-haste, is building a 400-acre campus in southeast Washington, D.C., where initially they’re going to put 25,000 employees. That’s as many as the Pentagon has and with 400 acres, Homeland Security has a lot more room to grow.
Ironically, the property is at the site of St. Elizabeth’s Hospital, the first federal insane asylum in the United States..."
"Look at the Soviet Union. They suffered a depression that lasted 70 years from its founding. Look at China. The whole reign of Mao was one long economic depression. That could certainly happen in the U.S., too, where the government misallocates capital in such a way that technology doesn’t advance as it could and people can’t build individual capital the way they would..."
"I’ve been to 175 countries and lived in 12. My feeling is that the best thing that you can do is set your life up so that you’re not to be considered the property of any one government. You might have a passport or several passports and, therefore, that government thinks they own you. But if you don’t spend time in a country, practically speaking, there’s nothing they can do about it..."
"I really just like to look at long-term trends. In terms of long-term trends, you’ve got to be long gold, long silver, long oil; you’ve got to be short bonds. I think that’s really all you need to know. The other things we mentioned such as agricultural commodities and so forth are worthy of attention..."
Obama today, after criticizing "chaotic capitalism," said it was essential to get the "credit flowing," so consumers and business people could go into debt. But why would anyone with a brain want to go into debt? Production is never mentioned, of course, just the mantra of borrowing as prosperity. The whole establishment apparently has the insano-year of 2006 in their heads as utopia. LewRockwell.com blog
Sen. Robert Byrd (D-W.Va.), the longest serving Democratic senator, is criticizing President Obama’s appointment of White House “czars” to oversee federal policy, saying these executive positions amount to a power grab by the executive branch. In a letter to Obama on Wednesday, Byrd complained about Obama’s decision to create White House offices on health reform, urban affairs policy, and energy and climate change. Byrd said such positions “can threaten the Constitutional system of checks and balances.
Byrd repeatedly clashed with the Bush administration over executive power, and it appears that he's not limiting his criticism to Republican administrations.
Byrd also wants Obama to limit claims of executive privilege while also ensuring that thes White House czars don’t have authority over Cabinet officers confirmed by the Senate. “As presidential assistants and advisers, these White House staffers are not accountable for their actions to the Congress, to cabinet officials, and to virtually anyone but the president,” Byrd wrote. “They rarely testify before congressional committees, and often shield the information and decision-making process behind the assertion of executive privilege. In too many instances, White House staff have been allowed to inhibit openness and transparency, and reduce accountability.”
Low blood levels of vitamin D may be associated with an increased risk for dementia, a British study has found.
Scientists measured blood levels of the vitamin in a representative sample of 1,766 people over 65 and assessed their mental functioning with a widely used questionnaire. About 12 percent were cognitively impaired, and the lower their vitamin D level, the more likely they were to be in that group. Compared with those in the highest one-quarter for serum vitamin D, those in the lowest were 2.3 times as likely to be impaired, even after statistically adjusting for age, sex, education and ethnicity. Men showed the effect more strongly than women.
Fascism will come at the hands of perfectly authentic Americans who have been working to commit this country to the rule of the bureaucratic state; interfering in the affairs of the states and cities; taking part in the management of industry and finance and agriculture; assuming the role of great national banker and investor, borrowing billions every year and spending them on all sorts of projects through which such a government can paralyse opposition and command public support; marshalling great armies and navies at crushing costs to support the industry of war and preparation for war which will become our nation’s greatest industry; and adding to all this the most romantic adventures in global planning, regeneration, and domination – all to be done under the authority of a powerfully centralised government in which the executive will hold in effect all the powers, with Congress reduced to the role of a debating society.
"... crude cheerleading for world-saving Wilsonianism, social utopianism, and a cloth-eared, moon-booted Republican administration."
The American Conservative Magazine: Taking the conservative project as a whole—limited government, fiscal prudence, equality under law, personal liberty, patriotism, realism abroad—has talk radio helped or hurt? All those good things are plainly off the table for the next four years at least, a prospect that conservatives can only view with anguish. Did the Limbaughs, Hannitys, Savages, and Ingrahams lead us to this sorry state of affairs?
They surely did. At the very least, by yoking themselves to the clueless George W. Bush and his free-spending administration, they helped create the great debt bubble that has now burst so spectacularly.
THEN START BY CONSIDERING HOW MUCH SILVER THERE IS IN THE WORLD - COMPARED TO GOLD!
Ted Butler: Gold world inventories, including jewelry, have increased from 1 billion ounces in 1940 to 5 billion today, according to all reputable sources like the World Gold Council.
Silver inventories have declined from 10 billion ounces in 1940 to 1 billion today. The U.S. government, the largest owner of silver in 1940, with over 5 billion ounces, now owns zero ounces.
Currently there are up to 5 times more gold in the world than silver, depending on how you define inventory.
I ask you to think about that for a moment, there being more gold than silver aboveground, as this is one of the most important factors in silver today. It is also one of the least known facts, even though it is easily verifiable and has evolved over such a long time. When people first hear or read it, they instinctively disbelieve it. 99.9% of the people on the planet, to this day, would tell you that it can’t possibly be true that there is more gold than silver in the world. Or even that there is an equal amount of gold and silver.
Perle has tried to sell the story that neither he nor his fellow neoconservatives had any significant influence on the foreign policy of the Bush administration, and especially the decision to invade Iraq.
Given that Iraq turned into a debacle that the United States is having trouble escaping, it is hardly surprising that Perle is denying his role now. But that's not what he said back when the war looked more promising:
"If Bush had staffed his administration with a group of people selected by Brent Scowcroft and Jim Baker, which might well have happened, then it could have been different, because they would not have carried into the ideas that the people who wound up in important positions brought to it."
The "people who wound up in important positions" were key neoconservatives like Douglas Feith, I. Lewis "Scooter" Libby, Paul Wolfowitz, and others, who had been openly calling for regime change in Iraq since the late 1990s and who used their positions in the Bush administration to make the case for war after 9/11, aided by a chorus of sympathetic pundits at places like the American Enterprise Institute, and the Weekly Standard.
The bottom line is simple: Richard Perle is lying. What is disturbing about this case is is not that a former official is trying to falsify the record in such a brazen fashion; Perle is hardly the first policymaker to kick up dust about his record and he certainly won't be the last. The real cause for concern is that there are hardly any consequences for the critical role that Perle and the neoconservatives played for their pivotal role in causing one of the great foreign policy disasters in American history. If somebody can help engineer a foolish war and remain a respected Washington insider -- as is the case with Perle -- what harm is likely to befall them if they lie about it later?
...Sophie Scholl was one of the leaders of this group and she along with others were executed by beheading in 1943. But her words are an indictment of complacency in the face of encroachment on human freedom and human decency. Sophie Scholl wrote the following about the damage to the German people caused by fascism:
“The real damage is done by those millions who want to ’survive.’ The honest men who just want to be left in peace. Those who don’t want their little lives disturbed by anything bigger than themselves. Those with no sides and no causes. Those who won’t take measure of their own strength, for fear of antagonizing their own weakness. Those who don’t like to make waves or enemies. Those for whom freedom, honour, truth, and principles are only literature. Those who live small, mate small, die small. It’s the reductionist approach to life: if you keep it small, you’ll keep it under control. If you don’t make any noise, the bogeyman won’t find you. But it’s all an illusion, because they die too, those people who roll up their spirits into tiny little balls so as to be safe. Safe?! From what? Life is always on the edge of death; narrow streets lead to the same place as wide avenues, and a little candle burns itself out just like a flaming torch does. I choose my own way to burn.”
...But there can be little doubt that we are turning over control of our economic life to the state as they did in Nazi Germany in the 1930s, and we must remember that the loss of our economic freedoms does entail an effective loss of political freedoms. F. A. Hayek 's The Road to Serfdom warned a free people how quickly they can lose their political freedom due to the pursuit even of well intentioned but poorly thought out ideas related to economic policy. Hayek's warning was directed at the Western allies, namely the UK and US, and he used Germany and Russia as his examples. At the time he wrote, intellectuals in the UK and US thought they could avoid the political pitfals of Germany and Russia while benefiting from the presumed 'superiority' of the economic model of government planning. Hayek's classic warning challenged that belief in the workability of democratic socialism... Read the whole post...
Harvard economic historian Niall Ferguson predicts prolonged financial hardship, even civil war, before the ‘Great Recession' ends!
Policy makers and forecasters who see a recovery next year are probably lying to boost public confidence, he said. And the crisis will eventually provoke political conflict, albeit not on the scale of a world war, but violent all the same.
“There will be blood.”
“There will be blood, in the sense that a crisis of this magnitude is bound to increase political as well as economic [conflict]. It is bound to destabilize some countries. It will cause civil wars to break out, that have been dormant. It will topple governments that were moderate and bring in governments that are extreme. These things are pretty predictable. The question is whether the general destabilization, the return of, if you like, political risk, ultimately leads to something really big in the realm of geopolitics."
IT SOUNDS TO ME JUST LIKE A BOILER-ROOM SALES PITCH:
"It's a safe investment. The United States has a well-deserved financial reputation."
US Secretary of State Hillary Clinton has pleaded with China to continue buying US Treasury bonds amid mounting fears that Washington may struggle to finance bank bail-outs and ballooning deficits over the next two years.
Chinese media reports say Mrs Clinton has offered emphatic assurances to premier Wen Jiabao and President Ju Jintao that the Obama administration intends to restore the health of US public accounts and safeguard the interests of bondholders once the economy has begun to recover. - UK Telegraph
CHARLES SAYS:That's it? "Emphatic assurances"? "It's a safe investment"? I can get emphatic assurances about safe investments in spam from the Nigerian oil minister!
HOW DO YOU ASK A MAN TO BE THE LAST MAN TO DIE FOR A MISTAKE?
IF ONLY THESE WERE THE LAST...
Monday: 3 US Soldiers, 11 Iraqis Killed; 23 Iraqis Wounded
ANTIWAR.COM: Three U.S. soldiers were killed in combat along with their interpreter. At least 11 Iraqis were killed and 23 more were wounded across Iraq today.
A glitch in satellite sensors caused scientists to underestimate the extent of Arctic sea ice by 500,000 square kilometers (193,000 square miles), a California- size area, the U.S. National Snow and Ice Data Center said.
The error, due to a problem called “sensor drift,” began in early January and caused a slowly growing underestimation of sea ice extent until mid-February. That’s when “puzzled readers” alerted the NSIDC about data showing ice-covered areas as stretches of open ocean, the Boulder, Colorado-based group said on its Web site. FMNN
American Express Co., the largest U.S. credit-card company by purchases, is paying some cardholders US$300 each to close accounts so the lender can reduce the risk of defaults as the recession deepens.
People who got the offer to "simplify" their finances must pay off their entire credit-card balance by April 30, according to New York-based American Express. Enrolling in the program cancels a customer's account and may lead to forfeiture of reward points or rebates, the company said on its Web site.
This new capital will not cost anyone anything. It will be dispensed by magic fairies and recovered at a later date. We cannot share exactly how this magic works because under the rules of the magic ministry, we would be stripped of our magic hats and lose the rights to dispense magic if we did. Trust us. This is the proverbial free lunch that everyone says does not exist. However, like magic pixie dust, it does exist, it really does.
Las Vegas edged Detroit for the title of America's most abandoned city. Atlanta came in third, followed by Greensboro, N.C., and Dayton, Ohio. Our rankings, a combination of rental and homeowner vacancy rates for the 75 largest metropolitan statistical areas in the country, are based on fourth-quarter data released Feb. 3 by the Census Bureau. Each was ranked on rental vacancies and housing vacancies; the final ranking is an average of the two.
... empty neighborhoods are becoming an increasingly daunting problem across the country. The national rental vacancy rate now stands at 10.1 percent, up from 9.6 percent a year ago; homeowner vacancy has edged up from 2.8 percent to 2.9 percent. Richmond, Va.'s rental vacancy rate of 23.7 percent is the worst in America, while Orlando's 7.4 percent rate is lousiest on the homeowner side. Detroit and Las Vegas are among the worst offenders by both measures--the Motor City sports vacancy rates of 19.9 percent for rentals and 4 percent for homes; Sin City has rates of 16 percent and 4.7 percent, respectively.
6. Phoenix 5. Dayton 4. Greensboro 3. Atlanta 2. Detroit
Benjamin M. Anderson’s Economics and the Public Welfare: A Financial and Economic History of the United States, 1914–1946, first appeared in 1949. Anderson was in a unique position to observe, record, and analyze this history. He had three professions: professor, practicing economist, and writer-journalist. For 20 years (1920–1939), he was economist for the Chase National Bank. "During these years, he was in intimate contact with bankers, investment bankers, brokers, and industrialists throughout the world, with the Federal reserve System and with foreign central banks, with government officials and leading journalists of many countries, as well as with academic students in the United States and abroad." In real time, Anderson published his insights in the Chase Economic Bulletin. He was not a distant observer of events but an active participant who knew personally many of the participants.
I recommend highly the entire book for those seeking deeper knowledge of these matters. One may not always agree with Anderson in every instance, but one will always find his comments thought-provoking as one considers our times.
We know that Austrian economics has no place in the economic knowledge and policies of our financial and economic leaders: our establishment. Apparently, neither does the kind of economics steeped in keen observation and experience of practice that we find in Anderson. Adherence to Keynesian orthodoxy leaves no room for either von Mises or Anderson. Their wisdom has been rejected. The contrast between Anderson’s statements and well-known attitudes expressed by our leaders, past and present, is startling. Even a cursory reading would have taught them the lessons needed to avoid the current economic and financial tragedy. If they did read him, they rejected his wisdom in favor of fallacious doctrines. Or they lacked the courage to stand up for proper policies. Or our educational system is so bankrupt that it has considerably dumbed down our leadership. Or our system is so corrupt that it no longer attracts men with the capacity to manage it properly, while thwarting and corrupting many men who might do the right things. Read the rest... Michael Rozeff, LewRockwell.com
Many Americans are looking to the new administration to solve our economic problems. Unfortunately, that is probably a vain hope. Although we were promised "change," we are likely to get a continuation of the same superficial economic fixes that have damaged so many economies in the past, and that will only delay the return of prosperity.
These fixes are based on the false belief that the free-market economy has failed. But it is not the market that has failed. It is intervention into the market that has failed. The Federal Reserve and its manipulation of money and interest rates have failed. None of this can be blamed on the free market, but that isn’t stopping newspaper columnists from doing so anyway.
Keynesian so-called economists, led by Paul Krugman, are vainly reaching into their usual bag of tricks to try to solve the problems of intervention with more intervention, and nothing is working. But they are persistent. They’ll keep scrounging around in that bag all throughout the Obama administration. The slump will continue, since none of these tricks has the slightest thing to do with the underlying problems in the economy. All we’ll have to show for them is an empty Keynesian bag and lot more unpayable debt. Read the rest... LewRockwell.com
NEW YORK (MarketWatch) -- Everyone knows the crash of 2008 was caused by financial deregulation except Thomas E. Woods, who blames financial regulation, in the shape of the Federal Reserve.
That's par for the course for Woods, a fellow of the Auburn, Ala.-based Ludwig von Mises Institute, advocates of "Austrian economics," a particularly embattled faction of free market economists -- all of whom are pretty embattled, or out of fashion, right now.
The Austrian school argues that business cycles are driven by central banks keeping interest rates too low, expanding credit and encouraging uneconomic investments, creating an unsustainable boom, inevitably followed by a bust.
That's what happened here, says Woods, most recently with the Fed's multiple interest rate cuts to stave off the 2000-2002 slowdown.
Woods argues the crash of 2008 was a perfect storm. Other elements included immense government pressure on mortgage lenders to loosen standards and make loans to questionably credit-worthy but politically favored demographic groups; and securitization, which spread the effects of bad mortgage lending around the world.
Recovery from even serious business cycle downturns can be swift, says Woods, citing the almost-forgotten 1920-1921 slump. But that's because the federal government did not step in. It allowed excesses to correct themselves. In contrast, the federal government did step in after 1929, as Japan's government did in a similar downturn after 1990. Result, according to Woods: the Great Depression in the U.S.; 18 years of stagnation in Japan.
If Woods is right, public policy is on exactly the wrong course right now in trying to sustain demand and asset prices, just as it was in the early years of the Depression. Ironically, this wrong course is bipartisan. Both Hebert Hoover and George W. Bush, Woods notes, were highly interventionist presidents just like their successors, contrary to myth.
Woods' cheerful prediction: prolonged stagnation, eventual inflation and an even bigger collapse.
Nobody wants to hear this argument, least of all Wall Street, which has benefitted enormously from the boom and now appears to be benefiting (some of it) from the bust. I've argued before that a second Pujo Committee is needed to look into some of the suspect stuff that's gone on. (See Sept. 29, 2008 column)
Of course, you have to be careful. The Pujo Committee led to the creation of the Federal Reserve.
I do have a couple of questions about Woods' work:
Why didn't this decade's credit expansion show up in consumer price inflation?
(Wood's suggestion: something similar happened in the 1920s. Expansionary monetary policy met a supply surge -- just like the recent falling price of computer power -- resulting in apparently stable prices.)
What about the U.S. dollar-Chinese yuan peg? Arguably, China's determination to keep its currency underpriced relative to the dollar has been a statist intervention in the global economy to match that of the Fed in the U.S. domestic economy. (See Oct. 19, 2006 column)
China's motive may be "exchange-rate mercantilism" -- maximizing its manufacturing capacity rather than living standards. Washington's complaisance may be because China buys U.S. Treasury bonds, thus bankrolling federal government spending (while bankrupting U.S. manufacturers).
Yet it could strengthen his case -- an undervalued yuan would have meant lower import prices, which would have masked inflation by keeping U.S. consumer prices low. Market Watch -flynn
THE PROBLEM ISN'T A LACK OF LIQUIDITY, IT'S SOLVENCY!
Three weeks ago George thought all we needed was a little financial engineering. Now he sees “no prospect” of resolution and says we’re falling like the Soviet Union. What changed?
My guess is that George finally started to think outside the box; he put his big brain to work thinking about the very foundation of our economic system and realized it’s broken.
Why highlight this particular flip-flop with a blog post? I think it’s emblematic, and not in a good way.
I continue to be struck by the level of ignorance among our captains of industry, our leading politicians, our financial elite and, most ominously, our economic “experts.” Few appear to recognize the depth of the crisis we face. Most still aren’t prepared to ask the hard, fundamental questions about our economic system. Anyone who mentions the gold standard, for instance, is treated as a novelty. Nevermind that fractional reserve banking—or perhaps our central bankers’ management of it—is the most important contributing factor to the crisis.
The problem, I think, is that so many of our leaders are tied immovably to legacy ways of doing business. A man will make himself believe most anything if his salary depends on it. Lots of salaries are at risk, so lots of heels are digging themselves in.
Anyway, as I’ve argued for awhile, the only way to “solve” the crisis is to let asset prices fall. And that means the balance sheets on which those assets currently reside need to recognize substantial losses.
With millions of homeowners now struggling to repay money they clearly never should have borrowed, our leaders have been righteously wagging fingers at predatory lenders who allegedly enticed innocent borrowers, and the country, into a financial snake pit. While the mortgage industry clearly deserves a good share of the blame, unindicted co-conspirators abound. The ringleaders are still at-large and are, in fact, busy hatching a plan to dwarf the earlier mistakes.
Contrary to the message bouncing off the marble walls of the Capitol, most borrowers in the inflating housing bubble clearly understood the terms of their loans. Most knew that they could not afford their mortgage payments once their teaser rates expired, but enthusiastically jumped into the debt pool anyway believing that guaranteed real estate appreciation, or a quick and profitable sale, would keep them afloat.
Although both lenders and borrowers were acting in their own perceived self-interest, what can we say of our economic policymakers who are expected to protect the good of all? Their actions encouraged the whole sad circus. Were it not for the excessively low interest rates provided by the Fed, the lax lending standards and moral hazards supplied by Congress courtesy of Freddie, Fannie, and the FHA, and the many real estate subsidies built into the tax code, none of these predatory loans would have been possible.
Had lenders exercised better judgment and had borrowers avoided overly burdensome debt loads, both parties would clearly be in better financial positions today. Instead, as borrowers were demanding the credit to fuel their dreams of instant real estate riches, lenders were being pressured to accommodate them.
In past generations, homebuyers were required to save for down payments and postpone their purchases until they could actually afford conventional 30-year fixed mortgages. But in recent years, as home ownership became a matter of public policy, the government accused lenders of discrimination and urged lower standards and easier terms. With government guarantees in place, the mortgage industry was happy to both expand their revenues and promote a better society.
But by denying credit, even if it requires borrowers to forgo something they clearly want, lenders not only provide a valuable service to borrowers, but to society. Given the mess in which we now find ourselves, due to the bad loans made during the real estate bubble, this lesson should have been well learned. Unfortunately it hasn’t, as the same dynamic is now playing out on a much larger scale. Read the rest...
... it was estimated that 25 percent of the world’s cranes were in Dubai.
The government in Dubai said Sunday that it had issued a $ 20 billion bond.
The central bank in the United Arab Emirates has said that it is going to sign up for $10 billion of the loan, according to Reuters news agency.
As a result of falling oil prices and the global financial crisis a considerable fear has developed that Dubai, which has led a very expansive building policy in recent years, would have problems servicing its debt.
The bond “will ensure adequate funding so that Dubai will be able to meet its financial obligations and continue its development program,” according to a message from the authorities in Dubai.
Several of the world’s most luxurious hotels are situated in Dubai, with one of the two 7-star hotel - Buj al Arab - as the great lighthouse.
Among the other attractions in operation or under construction, we find the world’s largest artificial slalom ski slope, the world’s largest collection of artificial islands, the world’s largest amusement park and the world’s tallest skyscraper.
I remained amazed concerning the mass hysteria of my chosen profession in times of adjustment. Why do we even talk of "depression economics" as if the lessons of economic science drastically change? Would it makes sense to talk of "depression physics" or "depression biology"? Wouldn't the teachings of physics and biology have a more universal claim?
To admit that institutions matter --- political/legal/cultural context --- is not to say that the principles of economics are transformed. Those principles transcend time and place, but the manifestation of those principles in action are context dependent. The basic teachings of economics do not go out the window because governments are engaging in fiscally irresponsible behavior and pursuing expansionary monetary policy and regulating and even nationalizing industries. In fact, it is the teachings of economics in that context that allows us to predict the results of such a policy path.
So here are some words from great economic teachers over the years to contemplate as my professional peers decide to collectively loose their heads and make arguments for nationalization, for inflation, for deficits, for collectivism, etc. Read the rest... Peter Boetkke
"... JUST AN ARTIFACT OF THE DATA COLLECTION PROCESS."
No, the lost city of Atlantis has not been found.
Google Earth images showing what appeared to be a grid of streets on the ocean floor off the coast of Africa were actually tracks left by boat sonar.
The Daily Telegraph caused the brief flurry of excitement among Atlantis hunters by publishing Google Earth pictures on Friday of an unexplained grid on the seabed 1,000km off the north-western coast of Africa.
"It's true that many amazing discoveries have been made in Google Earth - a pristine forest in Mozambique that is home to previously unknown species, a fringing coral reef off the coast of Australia, and the remains of an Ancient Roman villa, to name just a few," Google said in a statement.
"In this case, however, what users are seeing is an artifact of the data collection process. "Bathymetric (or seafloor terrain) data is often collected from boats using sonar to take measurements of the seafloor. The lines reflect the path of the boat as it gathers the data," Google said. - AFP
WHITE HOUSE BLASTS CNBC'S SANTELLI OVER "THE RANT"
CBSNews: “I also think that it’s tremendously important that for people who rant on cable television – to be responsible and understand what it is they’re talking about. I feel assured that Mr. Santelli doesn’t know what he’s talking about,” (White House spokesman Robert) Gibbs said during the daily White House briefing for reporters.
The site lies 620 miles off the west coast of Africa near the Canary Islands — a location for Atlantis seemingly suggested by the ancient philosopher Plato.
He believed it was an island civilisation sunk by an earthquake and floods around 9,700BC — nearly 12,000 years ago.
Situated in an area called the Madeira Abyssal Plane, the grid was spotted by aeronautical engineer Bernie Bamford as he browsed through Google Ocean.
It ahows a perfect rectangle the size of Wales lying on the bed of the Atlantic Ocean nearly 3½ miles down.
A host of criss-crossing lines, looking like a map of a vast metropolis, are enclosed by the boundary.
THE IMPLOSION OF MODERN AMERICAN LIBERALISM, AKA: FASCISM
A must read. -flynn
I have lived through three monumental historical events. I remember only two of them.
I do not remember the dropping of the two atomic bombs in August of 1945. As symbols of scientific world transformation, this constituted the most momentous event of the 20th century. This breakthrough, so far, has not led to nuclear war, even though on several occasions, it looked as though nuclear war was a distinct possibility. Nevertheless, the arrival of the nuclear age heralded a transformation of the modern world. We have not yet seen the end of that transformation.
Martin van Creveld, the great military historian in the state of Israel, has argued that the nuclear age ruined the plans of empire for large nations. They could no longer risk a war with each other. Yet spending on empire increased. Today, large states face resistance from nonstate groups. The Soviet Union went down when the Afghans beat them by using Stinger missiles. The USSR was an empire, and an empire that loses to insurgents has lost its reason for existence.
We are about to experience a similar defeat in the same country...
We are now seeing what hard-core liberals always predicted would happen: the economic convergence of the two systems, USA and USSR. The system of economic convergence is fascism. That was what the liberals always wanted, but called it something else: "economic democracy" or "the government-business alliance."...
I wonder sometimes if there is anything coherent remaining in what is generally called the conservative movement. Do any of these people have a clue as to what has been taking place? We are seeing the disintegration of the fractional-reserve banking system all over the world. It is being held together by bailouts, which are the government equivalent of bailing wire and chewing gum... Read the rest... Gary North
It’s fun to watch how supporters of Obama, including the hysteric, Andrew Sullivan, are getting nervous as their Savior continues Bush’s wars and his anti-civil liberties policies and appoints war-mongers and global interventionists to key positions. They bought into the wily Chicago machine politician’s empty rhetoric about “Hope,” “Change we can believe in,” “We are the ones we’ve been waiting for,” and the rest of the blather. Now they’re excited about his plans to bankrupt the country and destroy the dollar for the benefit of the banksters. Thank heavens for Ron Paul, Bob Higgs, and the Mises Institute!
CNBC's Rick Santelli and the traders on the floor of the CBOE express outrage over the notion they may have to pay their neighbor's mortgage, particularly if they bought far more house than they could actually afford, with Jason Roney, Sharmac Capital. Click here to view.
Pat Buchanan: "America had best brace herself for difficult days ahead. "
Partisans of President Bush may blame Obama for presiding over a strategic retreat, but it is the Bush administration that assured and accelerated such a retreat.
As Robert Pape of the University of Chicago writes in The National Interest: "America is in unprecedented decline. The self-inflicted wounds of the Iraq war, growing government debt, increasingly negative current-account balances and other internal economic weaknesses have cost the United States real power in today's world of rapidly spreading knowledge and technology. If present trends continue, we will look back at the Bush administration years as the death knell of American hegemony."
"The true measure of a career is to be able to be content, even proud, that you succeeded through your own endeavors without leaving a trail of casualties in your wake."
- Alan Greenspan, June 1999
"The Federal Reserve chairman will be labeled a fool who is greatly responsible for the collapse."
If the Swiss thought their system of secret banking took a serious blow this morning when UBS agreed to hand over the names of a few hundred US clients, they ain't seen nothing yet. Today US prosecutors filed a law suit seeking the identities of tens of thousands of US customers.
AP WASHINGTON (Feb. 18) - An odd, greenish backward-flying comet is zipping by Earth this month, as it takes its only trip toward the sun from the farthest edges of the solar system. The comet is called Lulin, and there's a chance it can be seen with the naked eye — far from city lights, astronomers say. But you'll most likely need a telescope, or at least binoculars, to spot it.
The best opportunity is just before dawn one-third of the way up the southern sky. It should be near Saturn and two bright stars, Spica and Regula.
On Monday at 10:43 p.m. EST, it will be 38 million miles from Earth, the closest it will ever get, according to Donald Yeomans, manager of NASA's Near Earth Object program.
The story behind the comet is more intriguing than its appearance — the greenish tinge may be hard for many to discern. The color comes from a type of carbon and cyanogen, a poisonous gas. Lulin was discovered by a Chinese teenager two years ago. It still has many of its original gases — gases that are usually stripped away as comets near the sun. Unlike most comets viewable from Earth, this one hasn't been this close to the sun before, Yeomans said.
Michael King: Not long ago, the lecture topic in my undergraduate course on corporate finance was ratio analysis. We were using the financial statements of a publicly traded company that day, so I began the class by demonstrating how students could retrieve these statements from financial-market websites.
As I was navigating through a list of component stocks of the Dow Jones Industrial Average, one student asked a perfectly reasonable question for a student to ask his finance professor: "If you had $500, what would you invest in today?" Without hesitating, my response was, "I would buy a half-ounce gold coin and put it in a safe place."
My attention returned to the web browser and my thoughts to ratios. However, my answer had surprised the students, and more hands quickly shot into the air. They wanted an explanation, and their questions came in rapid succession: the economy, the banking sector, the Fed, the government. Their voices revealed genuine concern and a desire to understand these uncertain times. It was soon obvious that the lecture on ratio analysis would have to wait for another day. Anyone who has taught, especially at the college level, understands what happened next... Read the rest... Mises.org
Former C.I.A. officer Phillip Giraldi details the ineptness and woes of today’s CIA in The American Conservative. He says the agency serves contractors and bureaucrats—not the nation!
Some tidbits:
The 26 CIA employees who abducted radical preacher Abu Omar from a Milan street in 2003 used passports and cell phones in false names but called their families in Virginia and claimed frequent flyer miles at their hotels in their true names, enabling Italian investigators to identify nearly all of them.
An Agency Inspector General’s report released in August 2007 recommended disciplinary action against Tenet and three of his top aides over failure to perform adequately in the lead-up to 9/11. But the recommendation was ignored by Porter Goss and Michael Hayden, the two directors who succeeded Tenet.
An officer operating in the Middle East once betrayed an entire network of agents when he tried to pass through an airport metal detector with their passports carelessly stuffed into a pocket with a steel pen. Officers in Europe in the early 1990s sent identical letters from the same mailbox on the same day to every agent in Iran, leading to the roll-up of every Agency source in that country. The agents paid with their lives; the officers involved were not punished. One became the chief of the Near East Division.
An officer operating in the Middle East once betrayed an entire network of agents when he tried to pass through an airport metal detector with their passports carelessly stuffed into a pocket with a steel pen. Officers in Europe in the early 1990s sent identical letters from the same mailbox on the same day to every agent in Iran, leading to the roll-up of every Agency source in that country. The agents paid with their lives; the officers involved were not punished. One became the chief of the Near East Division.
...don't think that the slippery Mr. Geithner doesn't have a solution for our present economic malaise. He does! He would like to see Congress appoint an Uber-regulator that has the authority to monitor market activity and decide whether individual players pose a threat to the overall system.
Sounds great. And to whom should these sweeping new powers be entrusted? You guessed it; the Federal Reserve, the wealth-shifting, price-fixing, social-engineering scamsters who preside over the bankers cartel which just blew up the financial system. Is there any doubt where Geithner's loyalties really lie?
In the present recession, advocates of government intervention often evoke the specter of the Great Depression. Unless the government intervenes massively, we are told, we risk an economic collapse comparable to that of the 1930s. To see the fallacy of this claim, it is imperative to understand that government intervention both led to the depression and prevented recovery from it. The following books, I hope, will assist those interested in grasping what happened in this vital historical era. When it appears, Robert Murphy’s forthcoming The Politically Incorrect Guide to the Great Depression and the New Deal will no doubt be a notable addition to the list below. Read the rest... David Gordon LRC
WHOSE FORECAST IS THIS? ROSIE SCENARIO'S OR BEN BERNANKE'S?
FED EXPECTS MILD DOWNTURN OF 0.5% to 1.3%
Maybe we should review Bernanke's forecasting record!
Bernanke, May 2007: "All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system."
Obama plans to give people in shaky financial situations low loan-to-value refinanced mortgages with interest rates that start out really low and only get bigger after a few years. What could go wrong?
Let’s assume that there are two banks in society, with Bank A paying an interest rate on deposits of 5 percent and Bank B paying 25 percent. Let’s also assume that there is no FDIC and no banking regulations to protect people from the choice they make on which bank to deposit their money in.
Both banks use the deposits to lend money out to businesses, which is how they aim to profit. Bank A lends its money only to well-established businesses, and its loans are fully collateralized. The loan interest rate charged is 8 percent, giving Bank A a profit of 3 percent.
Bank B plays it differently. Its loans are to speculators who are using the money to invest in the futures market. Those loans, which are unsecured, are made at an interest rate of 50 percent, which provides an anticipated profit of 25 percent.
Both banks disclose all material facts to their customers.
Most people decide to play it safe, putting their money in Bank A. A few people, however, attracted by the 25 percent interest rate, decide to go with Bank B.
One day, big swings in the market cause massive losses for the speculators, causing many of them to go broke, preventing them from repaying their loans to Bank B. Bank B goes bankrupt. The customers lose their entire deposits.
The customers of Bank B are angry and outraged. “It’s not fair!” they cry, forgetting that it was they who made the decision to place their money in the higher-risk bank while most everyone else was playing it safe with Bank A.
CONGRATULATIONS ON YOUR STIMULUS BILL, MR. PRESIDENT
DID GEITHNER OR SUMMERS BRIEF YOU ON THE REAL COST? NO? WELL, TAKE A LOOK!
With 90 million tax filers who actually pay taxes, the $787 billion means the average taxpayer will pay over $8,700.
By itself, adding $8,700 to the average tax bill should get everyone’s attention. But that is on top of everything else that we are spending this year. With the stimulus bill, the $700 billion financial bailout (half spent by Bush and half by Obama), and the bailout for the auto companies, this year’s deficit is already at about$1.7 trillion — almost $19,000 per taxpayer. With more possible bailouts for the auto industry and others, that total might rise further.
But the stimulus won’t just raise government expenditures for the next two years. The Congressional Budget Office estimates that from 2010 to 2019 government expenditures for just 20 provisions will increase by almost $2.4 trillion. Assuming a 4.5 percent interest rate, that is the equivalent of about $1.9 trillion today. Adding that to the previous total brings the total to about $40,000 owed per taxpayer.
But that is not all the money that taxpayers are going to be on the hook for. Last week, the Obama administration promised another $2 trillion for the financial bailout. The decisions that we are making just this year are adding up to $5.6 trillion — $62,200 per taxpayer. Just to let this sink in — the amount of money that the government is committing to spend this year is equivalent to the average taxpayer just writing the government a check today for $62,200.
Barrons: “When Friedrich Hayek won the Nobel Prize for economics in 1974, he embarrassed many economists by noting their failures. Speaking in the midst of a great inflation that caused a greater loss of stock-market wealth in the U.S. than the Great Depression, he noted that the inflation was “brought about by policies which the majority of economists recommended and even urged governments to pursue.” He added, “We have indeed at the moment little cause for pride: As a profession, we have made a mess of things.”
Hayek pronounced the failure of economics to be rooted in a “scientistic” attitude that employed the habits and methods of physical science where they were not appropriate. He faulted particularly, “the assertion that there exists a simple positive correlation between total employment and the size of the aggregate demand for goods and services; it leads to the belief that we can permanently assure full employment by maintaining total money expenditure at an appropriate level.”
Hayek conceded that there was quantitative evidence for the assertions and beliefs adduced by John Maynard Keynes and his followers [hmm, is this really what Hayek was saying?], but he warned that the evidence was not good enough: “In the study of such complex phenomena as the market, which depend on the actions of many individuals, all the circumstances which will determine the outcome of a process…will hardly ever be fully known or measurable.”
Economists, Hayek continued, “happily proceed on the fiction that the factors which they can measure are the only ones that are relevant. The correlation between aggregate demand and total employment, for instance, may only be approximate — but as it is the only one on which we have quantitative data, it is accepted as the only causal connection that counts. On this standard, there may thus well exist better ’scientific’ evidence for a false theory, which will be accepted because it is more ’scientific,’ than for a valid explanation, which is rejected because there is no sufficient quantitative evidence for it.”
Hayek, of course, was on the side that had less quantitative evidence.”
It should be noted that the special kind of statistical evidence (which is only one kind — and by far the weakest kind — of evidence in economics) supports Hayekian macro far more strongly than it supports Keynesian macro, which has a truly disreputable empirical record:
Swiss banks have given billions of credit to Eastern Europe - now the customers cannot pay back the money. Switzerland is threatened with the fate of Iceland, says economist Arthur P. Schmidt.
In countries such as Poland, Hungary and Croatia, the Swiss franc has become an important currency. Thousands of households and small firms took out loans in Swiss francs, and not in the national currency zloty, forint, or kuna because of lower interest rates. In Hungary, 31 percent of all loans are in Swiss currency. Amongst household loans, they are almost 60 percent.
Borrowers in distress
Now, the financial crisis has ended the era of cheap credit. As a result, Eastern European currencies are falling. At the end of September, one had to pay 46 francs for 100 Polish zlotys. Today it is 30 francs. That means more and more borrowers are having problems with interest payments and repayment. So the question is what effect this has on the Swiss financial marketplace. One who sees a dark future for Switzerland is economic expert Artur P. Schmidt.
He believes that the Swiss franc is in danger because of the loans in Eastern Europe. In Poland, Hungary and Croatia, the Swiss franc has become an important foreign currency - the dollar, so to speak, of Eastern Europe. Thousands of households and businesses have franc loans. Why? The rapid growth in many countries of Eastern Europe was stimulated through loans in Swiss francs. Swiss banks and offshore institutions loaned the local banks francs, which passed the francs onto their customers. The loans were attractive because borrowers pay interest rates much lower than required for loans in local currency.
"Hayek’s The Road to Serfdom is currently #779 in books at Amazon. Month after month, year after year, decade after decade, Hayek’s The Road to Serfdom remains among the top 1,500 books sold on Amazon. This is a truly remarkable record for a book which has been in print now for more than 60 years." Greg Ransom
Over the weekend, a widely-distributed story by AP science writer Randolph Schmid voiced the concerns of several scientists that humans were emitting greenhouse gases in the atmosphere at a rate much faster than anyone expected. Funny thing is, Schmid failed to mention that during the same time, global warming proceeded at a rate much slower than anyone expected.
Schmid described the situation like this:
Carbon emissions have been growing at 3.5 percent per year since 2000, up sharply from the 0.9 percent per year in the 1990s, Christopher Field of the Carnegie Institution for Science told the annual meeting of the American Association for the Advancement of Science [AAAS].
“It is now outside the entire envelope of possibilities” considered in the 2007 report of the International Panel on Climate Change, he said. The IPCC and former vice president Al Gore received the Nobel Prize for drawing attention to the dangers of climate change.
The largest factor in this increase is the widespread adoption of coal as an energy source, Field said, “and without aggressive attention societies will continue to focus on the energy sources that are cheapest, and that means coal.”
When it comes right down to it, carbon dioxide emissions are not bad in and of them selves; in fact, they are a direct fertilizer for the earth’s plant species. The potential problem surrounds how and how much they may impact the climate. So to complete his coal-is-bad tale, Schmid should have included some comments about how badly the earth’s climate was behaving.
Problem is, such data is getting hard to come by. In fact, while Schmid was busy covering the AAAS meeting in Chicago, Patrick J. Michaelstestified before the U.S. House Subcommittee on Energy and the Environment that global warming was proceeding at a rate that was at the lowest values projected by a large suite of climate models. Dr. Michaels further told the Subcommittee members in the nation’s capital that another year or so of little warming would put global temperature trends outside the accepted range model prognostications.
So, clearly, the picture is a lot more complicated than CO2 in/catastrophic climate change out. It is just that most environmental alarmists (reporters included) don’t like to think of it as such.
I wasn’t the only one who noticed the slanted reporting coming from the coverage of the AAAS meeting. University of Colorado researcher and renowned climatologist Roger Pielke Sr. had this to say at over at his ClimateScience blog:
Since papers and weblogs have documented that the warming is being over-estimated in recent years, and, thus, these sources of information are readily available to the reporters, there is, therefore, no other alternative than these reporters are deliberately selecting a biased perspective to promote a particular viewpoint on climate. The reporting of this news without presenting counter viewpoints is clearly an example of yellow journalism;
“Journalism that exploits, distorts, or exaggerates the news to create sensations and attract readers.”
When will the news media and others realize that by presenting such biased reports, which are easily refuted by real world data, they are losing their credibility among many in the scientific community as well as with the public.
HARMONY IS DISCORD... HAPPINESS IS SADNESS... YOUR MAMA IS YOUR DADDY
From Bob Murphy's blog: Glenn Greenwald Is Not Happy With Obama on Rendition Position
Despite a campaign that certainly led you to believe otherwise, the Obama Department of Justice has not altered the Bush position on whether victims of rendition could sue the Boeing subsidiary that facilitated their torture. GG is fuming, and rightly so. (HT2SR)
Here's a great part in one of the updates:
It's really remarkable what happened. One of the judges on the three-judge panel explicitly asked the DOJ lawyer, Doug Letter, whether the change in administrations had any bearing on the Government's position in this case. Letter emphatically said it did not. Instead, he told the court, the new administration -- the new DOJ -- had actively reviewed this case and vetted the Bush positions and decisively opted to embrace the same positions.
There's no doubt about that....This was an active, conscious decision made by the Obama DOJ to retain the same abusive, expansive view of "state secrets" as Bush adopted, and to do so for exactly the same purpose: to prevent any judicial accountability of any kind, to keep government behavior outside of and above the rule of law.
Finally, Wizner noted one last fact that is rather remarkable. The entire claim of "state secrets" in this case is based on two sworn Declarations from CIA Director Michael Hayden -- one public and one filed secretly with the court. In them, Hayden argues that courts cannot adjudicate this case because to do so would be to disclose and thus degrade key CIA programs of rendition and interrogation -- the very policies which Obama, in his first week in office, ordered shall no longer exist. How, then, could continuation of this case possibly jeopardize national security when the rendition and interrogation practices which gave rise to these lawsuits are the very ones that the U.S. Government, under the new administration, claims to have banned?
I suppose the die-hard Obama fans will say that he needs to placate the right on civil liberties, in order to push through his trillion-dollar spending spree. But notice that's exactly how Bush partisans excused his capitulation on prescription drug benefits and spending in general: Bush "had" to go along on those matters in order to get the Democrats to go along with national defense.
Wouldn't it be great if the parties compromised the other way? For example, the Democrats say, "OK we'll support tax cuts, but only if you join us in insisting that the FBI gets a warrant before tapping an American's phone." And the Republicans would say, "OK fine, we'll have all the troops out of Iraq by 2011, but only if you agree to abolish the Department of Education by the same deadline." Ahhh...
The theme of my book, The Left, the Right, and the State, is that both sides of the political aisle represent a grave threat to liberty — though each of a different sort. It is like two people tugging at a turkey's wishbone: the turkey is liberty, and you are the bone.
We've lived through eight years of the threat from the Right. It was all about nationalism, militarism, war, torture, state secrets, attacks on privacy, the use of tax funds to subsidize "conservative values," the outsourcing of government in a fascistic business-government partnership, the banning of products and services that government doesn't like, the regimentation of educational life, government impositions in the name of security, and so on.
With the end of the Bush years, many of these threats have receded, if only slightly. Consider the problem of nationalism, for example. The neoconservatives who ran the country during the last two Bush terms exploited this dangerous impulse for all it was worth. Lew Rockwell
The Bush/Obama 21st century policy of guns and butter makes LBJ look like a piker.
Paul Craig Roberts, Counterpunch.com: The 2009 and 2010 federal budget deficits will be monstrous even without guns. But Obama is exiting (apparently) the Iraq War in order to start two, possibly three, more wars.
Before Obama overcommits the US both financially and militarily, he needs to find some competent advisors. Overreach is heading for new levels that will bring America to its knees.
Bush’s largest guns and butter deficit was $455 billion. Obama’s 2009 budget deficit will be at least $2 trillion, a five-fold increase in one year, to be followed by another monster deficit in 2010.
The US has never had such near-term massive financing requirements, much less at a time when the rest of the world is in economic turmoil and very displeased with the US.
Obama needs a reality check and an escape from Washington hubris. If the US cannot finance its monster deficits except by printing money, it will mean the end of the dollar as reserve currency and the end of American power.
MISSING IRAQ BILLIONS MAY BE BIGGEST FRAUD IN U.S. HISTORY!
The United States loaded 363 tons of cash on palettes and airlifted it to Iraq during the reign of provisional authority L. Paul Bremer.
The US Special Inspector General for Iraq Reconstruction, the Army's criminal Investigation Command and the Justice Department are investigating US soldiers and officials in the alleged misuse of a portion of the $125 billion initially sent to Iraq for reconstruction shortly after the fall of Saddam.
Monday, The Independent's Iraq correspondent Patrick Cockburn reported the inspectors believe misuse may account for over $50 billion, exceeding the scope of Bernie Madoff's massive Ponzi scheme and making it potentially the "greatest fraud in US history."
IRELAND COULD DEFAULT ON ITS DEBT! Debt-market investors now rank Ireland as the most troubled economy in Europe. Fears are mounting that Ireland could default on its soaring national debt pile, amid continuing worries about its troubled banking sector.
The cost of buying insurance against Irish government bonds rose to record highs on Friday, having almost tripled in a week.
There could be one hundred billion Earth-like planets in our galaxy...
Dr Alan Boss of the Carnegie Institution of Science said many of these worlds could be inhabited by simple lifeforms.
He was speaking at the annual meeting of the American Association for the Advancement of Science in Chicago.
So far, telescopes have been able to detect just over 300 planets outside our Solar System. Very few of these would be capable of supporting life, however. Most are gas giants like our Jupiter, and many orbit so close to their parent stars that any microbes would have to survive roasting temperatures.
But, based on the limited numbers of planets found so far, Dr Boss has estimated that each Sun-like star has on average one "Earth-like" planet.
Dr Boss estimates that Nasa's Kepler mission, due for launch in March, should begin finding some of these Earth-like planets within the next few years.
I don't, as a rule, endorse legislation: being a libertarian and all, my faith in the ability of government action to have any beneficial effect is exactly nil. However, in the case of the Executive Accountability Act of 2009 [.pdf], I'm making an exception. This is because, unlike most if not all legislation that seeks to regulate or otherwise shape the behavior of ordinary people, the Executive Accountability Act regulates the behavior of government officials, namely POTUS and his underlings – and exacts severe penalties in case of violation.
Rep. Walter B. Jones, Republican of North Carolina, has introduced a bill that makes it a federal crime for a U.S. president or "an officer or employee of the executive branch of the government" to "knowingly and willingly" mislead Congress and the American people to gain authorization for U.S. military action. The five-year statute of limitations, moreover, doesn't begin to run until the president leaves office.
"Who/whom," or "Who does what to whom?" ~ The central question of politics, according to Vladimir Lenin.
A nineteenth century pundit wearily observed that British political parties behaved like competing carriage drivers, energetically splattering each other with mud while frantically pursuing the same course to the same destination.
An unknown Russian long ago devised the now-familiar joke in which a bright college student, drowning in impenetrable ideological cant, asks the smug Party hack posing as a professor to explain, in easily understood terms, the material difference between capitalism and socialism.
"Oh, that's easy to explain," replied the professor, his face twisted into a triumphant smirk. "Capitalism is based on the exploitation of man by man; socialism works exactly in the reverse!"
Granted, the latter gibe ignores or misrepresents the ideal of free market capitalism. But it is part of a large and ancient literature of wisdom – much of it encoded in humor – regarding the myriad ways that embittered enemies who supposedly represent diametrically opposed principles can wind up mimicking each other even as they seek to annihilate each other. More: LewRockwell.com
Read the comments section below the article. Very interesting. Like this one: "Society must learn to differentiate science-based 'ideologies' from ideology-based 'science'." -flynn
The belief that only government can do this is the real stale ideology of the past. What is really causing the problems in this economists opinion, is that government action has produced an uncertain investment environment. The rules of ownership and control are unclear, or clear but counter-productive for indiviudual initiative; monetary policy guided by the rhetoric of fighting inflation, but fearing deflation has been so loose that long term inflation that threatens the viability of the dollar should be a real concern to investors; and fiscal policy which is so out of control that US public debt will bankrupt the future generations with an astronomical tax burden and/or a monetization that will destroy the currency through hyper-inflation. Whatever way you slice it, our current policy path is the PROBLEM not the SOLUTION. But if your intellectual range is from M-N (lets say Larry Summers to Paul Krugman), then don't be surprised when in being "rational", examining the "evidence", weighing the "arguments" and assessing the "theories", you fail to consider the fiscal arguments of a James Buchanan, the monetary and capital theories of F. A. Hayek, the comparative institutional analysis of law and politics in Ronald Coase, and the monetary and fiscal policy arguments of Milton Friedman. Each of these gentlemen, President Obama, won the Nobel Prize in Economic Science. Their ideas may have been used by politicians in rhetoric, but none have been political appointees (well Friedman served as an economist during WWII, Hayek and Buchanan fought for their countries in WWI and WWII respectively) and their ideas have not been used in political practice --- no denationalization of money; no balanced budget ammendment; no full scale school voucher program, drug legalization, monetary rule, etc.. Friedman had more success than the others in carrying the day, but compare the policy prescriptions in Capitalism and Freedom and Free to Choose with the reality of public policy that we got even under Ronald Reagan, and compare the policy prescriptions in Hayek's The Constitution of Liberty with what was achieved under Margaret Thatcher. There is a far distance from the ideas in these books to the reality of the policy world. A really radical notion of hope and change might be to get government out of the business of attempting to manage the economy, stop demanding of economics results that it as a discipline cannot produce, and lets depoliticize political economy.
Economics is NOT social engineering, it is instead a philosophical science. Political economy is the best label for it, but at its best it is not political in the ordinary meaning of that term. And the intellectual range is not limited to M-N, but instead travels at least from A-Z. Because President Obama has failed to grasp this, to him economics disagreements are inherently political, economics science is Keynesian, and economic policy is pro-active.
YES, THIS DEPRESSION CAME RIGHT OUT OF THE BLUE, NOBODY SAW IT COMING, QUACK QUACK
Stefan Karlsson from: 11/08/04
Many people were relieved when they saw how mild the 2001 recession was—in fact it didn't even technically count as a recession since there were not two consecutive quarters of falling real GDP—although 3 out of 5 quarters after the second quarter of 2000 saw a falling GDP. Of course, given how lousy the labor market has been since then most people still feel that the economic downturn was a lot sharper than those numbers would indicate, and that the following expansion was a lot slower than the ofiicial numbers would indicate.
Still, given the bursting of the great stock market bubble of the late 1990s, the 2001 recession was indeed surprisingly mild even if the official numbers underestimate its severity somewhat. Compared to Japan in the 1990s and even more so America in the 1930s, America today has seemingly absorbed the bursting of a stock market bubble seemingly well. Or have the problems simply been mostly postponed? Read the rest Mises.org
One of the central myths of our financial system is that the Federal Reserve enjoys "independence" from the federal government. The public can trust Bernanke to create hundreds of billions of dollars out of thin air, and give them to whomever he pleases without even telling Congress the details, because the Fed chair is a pure scientist and technician, uncorrupted by politics.
“If we tried to suppress the expansion of the subprime market, do you think that would have gone over very well with the Congress?” Mr. Greenspan said. “When it looked as though we were dealing with a major increase in home ownership, which is of unquestioned value to this society — would we have been able to do that? I doubt it.”
I loved this excuse too:
The Fed’s “easy money” policy created an excess of cash that inflated equity and asset prices, leading to both the technology bubble of the late 1990s and the housing bubble in this decade.
While Mr. Greenspan acknowledges that he could have done something to avert the housing crisis, he contends his hands were tied. ... Mr. Greenspan said that if he had taken steps to prevent the crisis, the outcome would have been painful.
“We could have basically clamped down on the American economy, generated a 10 percent unemployment rate,” he said. “And I will guarantee we would not have had a housing boom, a stock market boom or indeed a particularly good economy either.”
Is the economy "particularly good" right now? Does Greenspan go to the dentist when he has a toothache, or does he take an aspirin and explain that those office visits are painful? Bob Murphy's blog
As Russia has as great an interest in preventing an Islamist Kabul, and has assisted NATO's resupply of its forces, why would Moscow seek to expel us from a base vital to the war effort?
Does Russia simply seek to be recognized by the United States as the hegemon of Central Asia, the sole great power that decides who can and who cannot use former Soviet bases?
... If Moscow now holds the whip hand in the old Soviet republics, what is Moscow's price to let us remain in Manas or use other Soviet bases over which it wields veto power?
The answer is obvious. Neither Georgia nor Ukraine is to be brought into NATO. The independence of Abkhazia and South Ossetia, won in the August war with Georgia, is not to be challenged. The U.S. anti-missile missiles planned for Poland are not to be deployed.
In turn, Russia will cancel any missile deployment in Kaliningrad, recommits to the terms of all conventional forces agreements in Europe and assist in the effort in Afghanistan. Russia rejoins the West, and the West stays off Russia's front porch.
Close to two-thirds of those surveyed said there should be investigations into allegations that the Bush team used torture to interrogate terrorism suspects and its program of wiretapping U.S. citizens without getting warrants. Almost four in 10 favor criminal investigations and about a quarter want investigations without criminal charges. One-third said they want nothing to be done.
Even more people want action on alleged attempts by the Bush team to use the Justice Department for political purposes. Four in 10 favored a criminal probe, three in 10 an independent panel, and 25% neither.
The ACLU and other groups are pressing for inquiries into whether the Bush administration violated U.S. and international bans on torture and the constitutional right to privacy. House Judiciary Chairman John Conyers and his Senate counterpart, Patrick Leahy, have proposed commissions to investigate.
Historian William Marvel is a past winner of the Lincoln Prize and the Douglas Southall Freeman Award for his scholarship. The author of Lee’s Last Retreat, Andersonville, and A Place Called Appomattox is described by the renowned Steven Sears as "The Civil War’s master historical detective." He is also unique among all the "Lincoln scholars" who I have read in that his books do NOT read like defense briefs in The War Crimes Trial of Abraham Lincoln, filled with hundreds of bizarre rationalizations for every odious or barbaric act. Instead, they read like they are written by a man searching for historical truth.
Marvel’s 2006 book, Mr. Lincoln Goes to War, says this on the inside cover: "Marvel leads the reader inexorably to the conclusion that Lincoln not only missed opportunities to avoid war but actually fanned the flames – and often acted quite unconstitutionally in prosecuting the war once it had begun." This is obviously not how to win another "Lincoln Prize."
The book is about Lincoln’s entire first year in office. It accurately portrays Lincoln’s henchman William Seward not as some Great Statesman but as "a coward & a sneak." Marvel does not hide the fact, as most other Lincoln "scholars" do, that Seward, on Lincoln’s instructions, orchestrated the passing through the U.S. Senate of a "constitutional amendment specifically prohibiting congressional interference with slavery" in the South. The Amendment, known as the Corwin Amendment, did pass the House and Senate before Lincoln’s inauguration. In his first inaugural address Lincoln explicitly pledged his support for the amendment. In that speech Lincoln also said that there need be "no bloodshed" unless a state refused to pay the tariff tax, which had just been doubled (the Morrill Tariff) two days before Lincoln’s inauguration. Since the Southern states that had seceded had no intention of paying taxes to the U.S. government any more than they intended to pay them to the British government, this was an explicit threat of war over tax collection. DiLorenzo LRC
TIME TO REVISIT THE LESSON ABOUT THE SHOPKEEPERS WINDOW...
In fact there are many good arguments against trying to stimulate the economy through government spending. Frédéric Bastiat, the 19th-century French economist, summed them up well with his fable of the broken window. A young boy throws a rock through a shop window, and as the townspeople lament the shopkeeper’s sad fortune, someone finds a silver lining. The shopkeeper’s spending on a new window will stimulate the local economy because his money will pass from hand to hand in a burst of commercial activity.
The fallacy becomes obvious if we try to extend the “logic” and propose to really stimulate the economy by smashing all the windows in town. What the optimist in the story forgot is that if the window had not been broken, the shopkeeper would have used his money some other way in order to increase his welfare. Now he has to spend the money just to restore his condition to what it was before the window was broken. He, and therefore the community overall, are poorer, not richer, but the losses are unseen while the glassmaker’s gain is obvious.
The lesson for the current situation is that if the government were not about to borrow close to $800 billion, that money would be available for private investment to create jobs and improve living standards. But since we can’t see what we would have gotten for that money — just as the townspeople couldn’t see what the shopkeeper would have done with his money — those forgone benefits are not counted as losses. But they are real losses. In effect, we have traded consumer-oriented investment for politically motivated projects. It’s a bad deal.
When we see Congress getting ready to pay for 40% of 2009 federal budget expenditures with money created from thin air, there's no getting around it. Our money will lose its capacity to serve as an honest measure, a meaningful unit of account. Our paper currency cannot provide a reliable store of value.
So we must first establish a sound foundation for capitalism by permitting people to use a form of money they trust. Gold and silver have traditionally served as currencies -- and for good reason. A study by two economists at the Federal Reserve Bank of Minneapolis, Arthur Rolnick and Warren Weber, concluded that gold and silver standards consistently outperform fiat standards. Analyzing data over many decades for a large sample of countries, they found that "every country in our sample experienced a higher rate of inflation in the period during which it was operating under a fiat standard than in the period during which it was operating under a commodity standard."
Given that the driving force of free-market capitalism is competition, it stands to reason that the best way to improve money is through currency competition. Individuals should be able to choose whether they wish to carry out their personal economic transactions using the paper currency offered by the government, or to conduct their affairs using voluntary private contracts linked to payment in gold or silver.
The Mises Institute's new book catalogue is here. A fantastic resource that presents classic and contemporary books that promote various aspects of a free society. Check it out here.
Michael Oakeshott and Ludwig von Mises were arguably two of the twentieth century’s most profound theorists of human action. Unarguably, both of them regarded the nature of the social sciences in a way that differed significantly from the positivist views prevalent during their lives. One result of their outsider status is the scores of scholars, popular political commentators, and politicians who consider one or the other of the two thinkers as a—or even the—major influence on their intellectual development. Another outcome has been the academic mainstream’s neglect of their distinctive—or, as their critics might say, idiosyncratic— views.
If one attempted to gauge either Mises’s or Oakeshott’s influence by tallying citations to his work in academic journals, one would conclude that it has been slight. However, most scholars cited more frequently have not had think tanks or scholarly associations established to focus on their thought, well-attended conferences devoted to discussing their ideas, and dozens of books commenting on some aspect of their work. Read the rest... Gene Callahan
I hope you will forgive me for quoting the increasingly specious and embattled Marc Ambinder, but I couldn't find any other source for this apparent story (perhaps one of Ambinder's anonymous BFFs told him?). It could be highly significant, if true:
Sens. Specter, Leahy, Feingold, Whitehouse and Kennedy unveiled the 2009 version of their State Secrets Protection Act today. Its aim is to provide guidance to federal courts currently considering cases involving the ever-so-controversial State Secrets Privilege. The legislation codifies best practices that some courts use but others don't, like the appointment of special masters to independently evaluate intelligence information. The government would be required to disclose the evidence behind its particular privilege claims to judges, and not merely assert that such evidence exist. Also, judges wouldn't be able to dismiss the case solely because the privilege has been asserted; the pleadings stage must have been underway, along with document discovery. (Note: judges can still dismiss the case solely based on the privilege claim, but he or she must vet the information in a legal proceeding beforehand, and must allow the defense to make a counterlcaim.) The legislation would establish new safeguards for protecting classified information and provide a way for judges to report on the cases to Congress.
Specter, Leahy, Feingold, Whitehouse, and Kennedy. Those are not nobodies. Perhaps this will have a good chance of passing, as Obama will likely feel the need to prove he is not "just as bad as Bush" on secrecy and abuses of power.
As I wrote yesterday (among quite a few other things), there needs to be an institutional response to these continuing executive Inside-out the Beltway
Former Vice President Dick Cheney, obviously in perpetual fright mode, is continuing to do his best to frighten the American people. He claims that 61 of the inmates that have been released from Guantanamo have “gone back into the business of being terrorists.” He also predicted a “high probability” of a nuclear or biological terrorist attack on the United States.
... Cheney’s statistic raises an interesting question: Why did the Pentagon release those prisoners, especially since it obviously contended that they were guilty of acts of terrorism? After all, they’ve got their kangaroo court system all set up. All they had to do was to present their evidence before their military tribunals and the men would have been quickly convicted and sentenced to serve time or be executed.
One possibility that cannot be ruled out is that at least some of the released prisoners who have “gone back into the business of being terrorists” were innocent.
Cheney and other neo-conservatives would respond that the “return” of the “terrorists” to the battlefield would constitute definitive proof that they were terrorists in the first place.
Not necessarily though. After all, what greater incentive for a man to hate the U.S. government than to be forced to give up seven or so years of his life in isolation in a prison faraway from home, where he has been tortured, sexually abused, and humiliated, without any hope of due process and a fair trial that would establish his innocence?
Suppose hundreds of American men were kidnapped by the government of Iran and taken to a secret Iranian prison, where they were treated the same way that the Pentagon has treated the prisoners at Guantanamo — isolation, torture, sex abuse, humiliation, no trial, no hope of release, and indefinite incarceration. Finally, after 7 years of this treatment, the Iranian government suddenly lets the men go.
CHINA SHOULD SEEK GUARANTEES THAT ITS U.S. DOLLAR HOLDING WON'T DEPRECIATE...
GOOD LUCK!
Feb. 11 (Bloomberg) -- China should seek guarantees that its $682 billion holdings of U.S. government debt won’t be eroded by “reckless policies,” said Yu Yongding, a former adviser to the central bank.
The U.S. “should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way,” Yu, who now heads the World Economics and Politics Institute at the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing. He declined to elaborate on the assurances needed by China, the biggest foreign holder of U.S. government debt.
Benchmark 10-year Treasury yields climbed above 3 percent this week on speculation the government will increase borrowing as President Barack Obama pushes his $838 billion stimulus package through Congress. Premier Wen Jiabao said last month his government’s strategy for investing would focus on safeguarding the value of China’s $1.95 trillion foreign reserves.
The federal government is about to pass a law that authorizes $800 billion or so of new expenditures. The Secretary of the Treasury will be introducing other new measures today. More such will be forthcoming. In addition, the Fed’s monetary policy will support this spending.
These measures will not turn the economy around in a meaningful sense. The government cannot spend our way to more wealth. Lawmakers and bureaucrats are empowered to make laws and enforce them. They are in no position to do what millions of businesses do, which is find out what we want, produce it, and distribute it at affordable prices. They are in no position to select and invest in effective capital goods that make production more efficient and raise real wages and incomes.
It is not that the government cannot print money and spend it, and get others to borrow and spend. It can. It has. It will. The government can get every post office in the U.S. painted, if it wishes. It can stimulate the paint and paint brush businesses for a while.
It is not that the government cannot make the unemployment statistics look better (usually after a considerable lag). It can. It can hire the unemployed to take up paint brushes. Who will pay them? The government? How? If it taxes those who are working, they will produce less and have less to save and consume. Transferring wealth does not create wealth; it discourages the production of wealth. If it borrows, there is that much less available for private investment to meet real needs. If it prints money, it imposes an inflation tax on all those who have money balances and find that prices are rising.
It is not that the court economists cannot eventually find some statistics to crow over. They can and will. Michael Rozeff LRC
President Barack Obama picked up support for his stimulus package from an unexpected source today as Yankee slugger Alex Rodriguez said that he was "totally in favor of stimulus."
"Sometimes when you have to get the job done, you need a shot in the arm," said Mr. Rodriguez at a press conference in the parking lot of Yankee Stadium. "This stimulus sounds like it could be that injection."
The slugger, known to his fans and detractors alike as A-Rod, said that the U.S. economy may not seem very muscular at the moment, but that "juicing the economy" could change that overnight.
"Mark my words," he said. "If the economy gets the right injection, its muscles will bulge to monstrous proportions."
Mr. Rodriguez's words were in stark contrast with remarks made last week by another athlete, swimmer Michael Phelps, who said that the economy "just needs to chill."
"As far as the economy goes, I'm comfortably numb about it," Mr. Phelps said. "Dude, did I just say that out loud?"
At his press conference today, Mr. Rodriguez bristled when asked questions about steroid use, at one point throwing a car at a reporter.
President Obama is under the impression that history owes him $1 trillion right now to spend on whatever he wants. His language is strident and full of irritation that anyone would question his right to live out his personal dream of being Franklin Roosevelt to George Bush’s Hoover. This, he says, is what the election was all about.
The arrogance reminds me of George Bush after 9-11, who similarly believed that history owed him a gargantuan war in the tradition of FDR. And look how that arrogance led to disgrace and loss, as he unwittingly presided over the destruction of American prosperity while searching for bugbears abroad.
It just goes to show you that the presidency is something like a drug. It makes people lose all connection to reality. Part of the reality that Obama needs to recognize is that the New Deal was a calamity far worse than the initial market downturn that began it. He needs to stop basing his policies on dumbed-down civics texts versions of events and consider the economic logic... Lew Rockwell
"Advocates of the free market must confront the fact that both the Great Depression and the current financial chaos were preceded by years of laissez-faire economic policies," write Katrina van den Heuvel, editor of The Nation, and author Eric Schlossel.
I wrote Meltdown in order to give the free-market point of view the advantage of being one of the first, if not the first, of the inevitable avalanche of books on the crisis. (Paul Krugman, as well as the editors of The Nation, have published books of rehashed columns, but those don’t count.) I also wanted the free-market point of view to have the advantage of a book-length defense in the first place. I know of one self-described libertarian who has a book on the economy coming out this year, but since he supported the bailouts, his prescription isn’t exactly going to be traditional laissez faire.
And that, as we know, is the one position the establishment is trying to pretend doesn’t exist. It’s not exactly clear how the Federal Reserve’s policy of pushing interest rates well below where the free market would have set them, thereby inflating the biggest asset bubble in the history of the world, could be the fault of the free market, or attributable to "laissez faire." But since hardly anyone discusses the Fed, no one has to answer this inconvenient question. The Fed’s very existence is a violation of laissez faire. Yet the destructive effects of what it does are then blamed on the market. This charade has gone on long enough.
Here are some of the topics the book covers:
The housing bubble and its causes
Fannie and Freddie, the Community Reinvestment Act
The Federal Reserve System: the elephant in the living room
Is this a simple matter of "regulation" vs. "deregulation"?
Who predicted the crash, who didn’t, and what that means
The "too big to fail" dogma
The bailouts: truth and propaganda
Where the boom-bust cycle comes from
The foolishness of fiscal "stimulus"
Previous booms and busts in American history, from the Panic of 1819 to the dot-com boom, and what we can learn from them
The policies that failed in Japan, and their eerie similarity to the policies urged upon us now
"Great Myths About the Great Depression"
Money, inflation, gold, silver, legal tender – and why they matter now
Common fallacies answered
How to minimize the (inevitable) pain
A very nice foreword from Congressman Ron Paul, for whom being vindicated is probably becoming a wearying thing, is an extremely welcome addition to Meltdown.
The Austrian School is not going to have another opportunity of this magnitude to get its message heard for a long time. If we don’t seize this chance, we have only ourselves to blame. That’s why I decided to write this book.
U.S. Rep. Walter Jones, R-N.C., has introduced legislation that would impose fines or prison time on presidents or executive-branch officials who "knowingly and willfully" mislead Congress to gain authorization to use U.S. military forces.
"We're saying, 'Mr. President, be sure,'" Jones said in an interview. "Be sure that if you are going to ask us to commit our boys and girls to risk their lives, that all the facts are on the table. ... Make sure there are no questions. ... Mr. President, you better be sure."
CHARLES SAYS: "I'm all in favor of punishing presidents, but I thought it was Congress's job to lie us into war!"
President Barack Obama has cast doubt on his promise to put an end to secret government by allowing his Justice Department to follow a path frequently taken by his predecessor.
Before a federal appeals court in San Francisco Monday, lawyers from the Obama Department of Justice invoked the same "state secrets privilege" used by the administration of President George W. Bush to argue that a lawsuit brought on behalf of Guantanamo Bay detainee Binyan Mohamed and four other alleged victims of the CIA's "extraordinary rendition" program should not go forward because revealing the evidence would harm national security
If the appeals court agrees, it will mean that the alleged victims will not have their day in court. The court has not yet ruled on the case. Antiwar.com
WASHINGTON (AP) - The chairman of the Senate Judiciary Committee is proposing a "truth commission" to investigate abuses of detainees, politically inspired moves at the Justice Department, and whole range of decisions made during the Bush administration.
Sen. Patrick Leahy, D-Vt., said the primary goal of the commission would be to learn the truth rather than prosecute former officials, but said the inquiry should reach far beyond misdeeds at the Justice Department under Bush to include matters of Iraq prewar intelligence and the Defense Department.
"I'm doing this not to humiliate people or punish people but to get the truth out," he said. The panel he envisions would be modeled after one that investigated the apartheid regime in South Africa. It would have subpoena power but would not bring criminal charges, he said.
After the Sept. 11 attacks, the government created a 9/11 commission to examine failures within government anti-terror efforts.
Leahy said that commission was hampered by a lack of cooperation from the administration, and would like a new commission to have access to everything they needed.
CHARLES SAYS: What's wrong with the unsworn, hand-holding Bush-Cheney Bobbsey Twins, tag-team testimony before the 9/11 Commission? The commission that Bush opposed. Isn't that good enough for Leahy?
TAXPAYERS ON THE HOOK FOR $9.7 TRILLION IN BAILOUT PROGRAMS!
ENOUGH TO COMPLETELY PAY OFF 90 PERCENT OF HOME MORTGAGES!
The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged up to $5.7 trillion more. The Senate is to vote this week on an economic-stimulus measure of at least $780 billion. It would need to be reconciled with an $819 billion plan the House approved last month.
Only the stimulus bill to be approved this week, the $700 billion Troubled Asset Relief Program passed four months ago and $168 billion in tax cuts and rebates enacted in 2008 have been voted on by lawmakers. The remaining $8 trillion is in lending programs and guarantees, almost all under the Fed and FDIC. Recipients’ names have not been disclosed.
“We’ve seen money go out the back door of this government unlike any time in the history of our country,” Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor Feb. 3. “Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?”
The Psychological Toll of Global Warming Propaganda
Posted by Bill Anderson at February 9, 2009 09:08 AM
It seems that the propaganda campaign that teachers have been unleashing in schools is working quite well: youngsters are beginning to demonstrate the psychosis of absolute fear, as they become convinced that a Big Lie is the truth.
Last year, an anxious, depressed 17-year-old boy was admitted to the psychiatric unit at the Royal Children's Hospital in Melbourne. He was refusing to drink water. Worried about drought related to climate change, the young man was convinced that if he drank, millions of people would die. The Australian doctors wrote the case up as the first known instance of "climate change delusion."
Robert Salo, the psychiatrist who runs the inpatient unit where the boy was treated, has now seen several more patients with psychosis or anxiety disorders focused on climate change, as well as children who are having nightmares about global-warming-related natural disasters.
The rest of the article goes on to present the global warming claims as truth, and the psychosis as a response to a real problem. Oh, there is a problem, but it is not "climate change." No, the problem is the fact that people are being propagandized and falling for all of the "sky is falling" nonsense that environmentalists have given us for years. LRC blog
Why the heck is this happening to us? What happened to mortgages, to banks, to large retailers, to retirement savings, to stock prices, to the availability of credit? How could so many errors have coincided?
To the media pundits and government officials, this is a market failing that requires the government to take trillions of dollars from you and run the money presses full time. Otherwise we are doomed.
But there is another way to look at the great market collapse of 2008: the whole thing, including the bubble that preceded it, is the fault of the government and the Fed. All attempts to "fix" the problem are like forcing the patient to swallow more of the poison from which he currently suffers.
Mises.org has been making this argument, and warned of the coming crash years ago. But where can you find the argument explained for the average person in a convenient package, without technical jargon and with logic and facts?
Enter Tom Woods with his blockbuster book Meltdown. It's all here, all the information you need to understand what is happening and what to do about it. It is billed as a free-market response to the crisis but it is more precisely an Austrian School response. Read the rest... LRC Tom Woods' website
But not to worry…the simpletons are on the case. The price tag on Obama’s emergency plan had risen to nearly $1 trillion last time we looked. The Senate bowed to global scorn and ridicule, taking out many of the “Buy America” provisions. Of course, they didn’t do it as a matter of principle…they don’t have principles. Instead, someone must have warned them that if Americans insist on “buying American” the Chinese might insist on “investing Chinese.” And then the whole game would be up. The Ponzi scheme that is U.S. finance requires new money from foreigners in order to pay off the old money that foreigners put in last year and the year before.
The news this morning is that the senators burned the midnight oil…taking out the protectionism and putting in more boondoggles – including a $15,000 tax break for people who buy houses.
So we have no worries. The feds are on the case. And they’re going to spend, spend, spend…until daddy takes the T-bird away! Bill Bonner@LRC
LEARN ALL ABOUT FINANCE, AND THE PEOPLE YOUR ELECTED SWINDLERS ARE BAILING OUT WITH YOUR MONEY
This is a fun ride -flynn
"...They’d be in what Wall Street people were now calling the sand states: Arizona, California, Florida, Nevada. The loans would have been made by one of the more dubious mortgage lenders; Long Beach Financial, wholly owned by Washington Mutual, was a great example. Long Beach Financial was moving money out the door as fast as it could, few questions asked, in loans built to self-destruct. It specialized in asking homeowners with bad credit and no proof of income to put no money down and defer interest payments for as long as possible. In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000." Michael Lewis
INSTEAD OF A "STIMULUS" THE GOVERNMENT SHOULD DO NOTHING!
LITERALLY NOTHING!
Federal intervention rests on the presumption that officials know how to manage the economy and will use this knowledge effectively. This presumption always had a shaky foundation, and we have recently witnessed even more compelling evidence that the government simply does not know what it's doing. The big bailout bill enacted last October; the Federal Reserve's massive, frantic lending for many different purposes; and now the huge stimulus package all look like wild flailing – doing something mainly for the sake of being seen to be doing something – and, of course, enriching politically connected interests in the process.
Our greatest need at present is for the government to go in the opposite direction, to do much less, rather than much more. As recently as the major recession of 1920-21, the government took a hands-off position, and the downturn, though sharp, quickly reversed itself into full recovery. In contrast, Hoover responded to the downturn of 1929 by raising tariffs, propping up wage rates, bailing out farmers, banks, and other businesses, and financing state relief efforts. Roosevelt moved even more vigorously in the same activist direction, and the outcome was a protracted period of depression (and wartime privation) from which complete recovery did not come until 1946.
The US government has shown repeatedly that as an economic manager it is not to be trusted. What we need most are authorities wise enough to follow the dictum, "First, do no harm." The stimulus package will do enormous harm. The huge debt burden it entails, by itself, ought to condemn the measure. America is already drowning in debt. But the measure will also wreak harm in countless other directions by effectively reallocating resources on a grand scale according to political priorities, rather than according to individual preferences and economic rationality. As our history shows, the economy can recover strongly on its own, if only the politicians will stay out of the way.
"I think a lot of people back here [in the U.S.] incorrectly think the war is over. We may be only halfway through this thing," Ricks told NBC's David Gregory on Meet the Press Sunday morning.
U.S. commander in Iraq General Raymond Odierno, who the Washington Post calls a "dissenter," sees negative effects of the surge, Rick says: many Iraqis used the breathing space the surge created to "step backwards" to become more sectarian and divided.
The Gamble ends with this haunting line from the outgoing U.S. ambassador to Iraq, Ryan Crocker: "The events for which the Iraq war will be remembered have not yet happened."
The key point in Sam Tanenhaus's new essay, it seems to me, is his distinction between movement conservatism and classical conservatism. My own stab at this was the distinction between a conservatism of faith and a conservatism of doubt. Another way to look at it is the contrast between partisan Republicanism in the past forty years and the classical conservative temperament, originating in Burke, and celebrated by Kirk and Hart. In practice, few people on the American right fit entirely within one camp or the other. But the distinction still matters...
I did my best to make my case for this kind of conservatism here. My first expression of this conservatism I wrote twenty years ago, here. I should add that for all these reasons, I do not agree with the headline on Sam's piece "Conservatism Is Dead." I do agree that the current conservative movement deserves to die; and that the Republican party deserved the massive defeats it just received. But I do not believe the conservative temperament in politics can ever truly die. it is part of human nature, nurtured to a degree of sophistication in Britain and America that is too useful to lose. I see more of it in the Obama administration right now than I do either party in Congress. This is a conservatism of no party or clique. But it is conservatism.
Sam Tannenhaus, biographer of Whittaker Chambers, has written an article in which he proclaims the Death Of Conservatism. It staggers from intriguing and insightful to incomprehensible and downright loony. But worth reading. Check it out. -flynn
"In the tumultuous history of postwar American conservatism, defeats have often contained the seeds of future victory. In 1954, the movement's first national tribune, Senator Joseph McCarthy, was checkmated by the Eisenhower administration and then "condemned" by his Senate colleagues. But the episode, and the passions it aroused, led to the founding of National Review, the movement's first serious political journal. Ten years later, the right's next leader, Barry Goldwater, suffered one of the most lopsided losses in election history. Yet the "draft Goldwater" campaign secured control of the GOP for movement conservatives. In 1976, the insurgent challenge by Goldwater's heir, Ronald Reagan, to incumbent president Gerald Ford was thwarted. But Reagan's crusade positioned him to win the presidency four years later and initiate the conservative "revolution" that remade our politics over the next quarter-century. In each instance, crushing defeat gave the movement new strength and pushed it further along the route to ultimate victory.
Today, the situation is much bleaker. After George W. Bush's two terms, conservatives must reckon with the consequences of a presidency that failed, in large part, because of its fervent commitment to movement ideology: the aggressively unilateralist foreign policy; the blind faith in a deregulated, Wall Street-centric market; the harshly punitive "culture war" waged against liberal "elites." That these precepts should have found their final, hapless defender in John McCain, who had resisted them for most of his long career, only confirms that movement doctrine retains an inflexible and suffocating grip on the GOP..." Read the rest... The New Republic
GOVERNMENT TO SUSPEND "MARK TO MARKET" ACCOUNTING?
You have two cows.
You write down on a piece of paper that the cows are worth $100 each.
You notice the cows are on fire.
Your paper still says $100.
Fortunately, mark to market has been suspended so you don't have to pay attention to the fire.
Your cows are dead from fire.
Your paper still says $100.
Fortunately, mark to market has been suspended so you don't have to pay attention to the dead cows.
You notice that you aren't getting as much milk as expected, so you adjust the model and mark the cows down to $98. You are confident, however, that the dislocated stream of milk revenue will quickly revert to expectations.
You need to borrow some money so you ask investors for a loan against the cows. The investors tell you the cows are dead, and you already owe them $200 dollars you borrowed to buy them in the first place. You show them the paper that says the cows are worth $98 each.
They light your paper on fire.
You ask the government to buy the dead cows at $98 each.
The government holds meetings all weekend and finally comes up with a plan to inject $45 dollars into your cattle ranch. In exchange, the government gets a right to milk generated from the cows at some point in the future. It expects you'll buy a new cow with the $45.
You have two dead cows, $45 and $200 in debt to your investors. You have no plans to buy new cows.
I hadn't seen this before, but Bryan Caplan today refers to Brad DeLong's worries about the unwashed masses reading Hazlitt's Economics In One Lesson. DeLong wrote back in 2005:
We all know that the market system is an amazing decentralized social planning and allocation mechanism if externalities are small, if returns to scale are in general diminishing, if we are happy with the distribution of wealth and the concommitant distribution of economic power it gives rise to, and if Say's Law holds--if supply does indeed create its own demand, and we don't have to worry about large-scale unemployment and deep depressions.
Hazlitt doesn't recognize any of these ifs. And that is what makes his book very dangerous indeed to a beginner in economics, because the ifs are, all of them, important qualifications and caveats....
I find it astonishing that [Hazlitt] doesn't recognize any of these ifs. I find it especially astonishing that he doesn't recognize the last of them. The 1930s were the era of the Great Depression--the time when Say's Law was most irrelevant. Hazlitt lived through them. Yet the Great Depression years seem to have had no impact on Hazlitt whatsoever.
Hmm that's interesting. You know what I find astonishing, Professor DeLong? That you don't acknowledge that Hazlitt wrote a several hundred page, almost line by line critique of the General Theory. So, did you not realize that, or just think it wasn't worth mentioning to your readers?
Also, at the end DeLong accuses Hazlitt of misrepresenting Keynes with the "in the long run we're all dead" line. DeLong gives the original context, and...I don't get it. Keynes is saying the short-run commands the attention of policymakers, because in the long-run we're all dead. So where's the misrepresentation? That's exactly what Hazlitt said was an awful perspective, to tell policymakers to focus just on the crisis and ignore the long-run consequences of the interventions.
For those newcomers who never read Hazlitt, I strongly recommend his slender volume. It is truly the single best introduction to economics ever written--superior even to the Politically Incorrect Guide to Capitalism. Here it is free (pdf).
Brad DeLong criticizes Henry Hazlitt's Economics in One Lesson. First, "because at least half its pages hint that the works of John Maynard Keynes are an abomination without ever grappling with the Keynesian argument."
There are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as the way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: "In the long run we are all dead." And such shallow wisecracks pass as devastating epigrams and the ripest wisdom.
According to Brad this quote is "dishonest" and a "misrepresentation," but Keynes did deprecate saving and recommend squandering. Famously:
To dig holes in the ground, paid for out of savings, will increase, not only employment, but the real national dividend of useful goods and services. (General Theory, Ch. 16).
Brad seems to think that Hazlitt quoted Keynes out of context because "What Keynes actually wrote in his Tract on Monetary Reform" was:
Now 'in the long run' this [way of summarizing the quantity theory of money] is probably true.... But this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.
But the misreading is Brad's not Hazlitt's. Keynes is criticizing classical economics for focusing on the long run and this certainly includes the classical focus on savings as a key to economic growth. Hazlitt, as Brad notes, is restating classical economics so when Hazlitt points out the long-run problems with using spending to increase short-run aggregate demand, Keynes does, in effect, reply "We are all dead in the long run."
An occasional and insightful, funny, or outrageous quote from Human Action.
No government and no civil law can guarantee and bring about freedom otherwise than by supporting and defending the fundamental institutions of the market economy. Government means always coercion and compulsion and is by necessity the opposite of liberty. Government is a guarantor of liberty and is compatible with liberty only if its range is adequately restricted to the preservation of what is called economic freedom. Where there is no market economy, the best-intentioned provisions of constitutions and laws remain a dead letter.
Bank lending has stalled despite the large sums of cash provided to recapitalize banks. Why? Well, bank deposits are down. And we have to remember that there is a systemic relationship between savings and investment that is at the heart of institutions of financial intermediation. That is, in fact, why these institutions exist in the first place --- to coordinate economic affairs in a way that the savings of some become investment funds for others.
Now politicians such as Barney Frank are demanding that banks lend even if their deposits don't justify it because, well, that is why we gave them the money. Interesting that this comes from Barney Frank, one of the main political agitators for riskier lending practices that got the banks into trouble in the first-place. Barney Frank personifies the politician as economic criminal throughout this entire episode of public policy errors. His current policy urgings will just lead to the same sort of behavior by banks that got us here. I am pretty sure Barney and his friends would think an earthquake in NYC would be good for economic growth because we would have to rebuild the city so construction would go up. What is seen and what is unseen anyone?
What we have here in the case of the bank bailout is another confirmation of a general rule that is seen in a variety of walks of economic life --- aid just doesn't work, whether to a foreign country or your local bank or to a private citizen, unless it is (a) embedded in a favorable rule environment, and (b) results in fundamental change to the practices of the recipient. Ironically, if the receiver is already embedded in a good rule environment, they would already be making the fundamental changes due to profit/loss signals. Countries, for example, that have good poliitcal/economic rules of the game will attrack foreign direct investment and thus do not need foreign aid. As Vernon Smith is fond of saying: "It is trade, not aid that is needed." Similarly, local banks that are in a rule environment that protects private property, permits free price adjustment, and works on the basis of profit and loss statements will either act in ways to meet consumer demand in the most profitable way available to them, adjust in that direction, or go out of business. Government bailouts only reinforce BAD decisions by making the consequences of those bad decisions less deterimental than they should be to the firm and the individuals making them. So we are back to an age old economic concept --- if you subsidize something you get more of it, if you tax something you get less of it. It is an empirical question about "how much", but the tendency and direction is a theoretical point.
In the efforts to kick start the banking industry, US policy has simply subsidized bad decision making. The money transfers have "recapitalized" banks in name only. Insolvent banks have used the funds to stay afloat, to cover their acquisitions of other failed banks, to cover their own bad decisions, etc. They have NOT used the funds to lend and fuel investment.
The relationship between savings and investment isn't broken as in the simplest Keynesian model. But, it is the Keynesian policy responses that have been pursued which are preventing private actors from making the correct adjustments to the new economic realities and thus bring into alignment saving and investment in a prudent and productive manner. Why is it so hard for everyone to see this?
IF ONLY THE RIGHT DISTRUSTED WAR AS MUCH AS DOMESTIC SOCIALISM AND REPUBLICAN POWER AS MUCH AS DEMOCRATIC POWER...
It did not take long for conservatives to once again see the state as their enemy. Bush was so universally disliked by the end of his second term, and the financial collapse and his socialist response were so staggering, that even the right began to buckle in its support for his regime by late last year. The rise of Obama, who hit the ground running with a trillion-dollar spending package and a wish list of leftwing government goodies, has turned most of the right into loud dissenters on domestic policy.
But it goes further than criticizing Obama’s management. The right now speaks about government in philosophical terms. Its radio spokesmen say government cannot solve the recession or manage the economy. They sometimes even recommend the economic tracts of Hazlett and Mises and share airtime with libertarians in mutual horrified protest as the nation moves quickly toward socialism.
RON PAUL INTRODUCES BILL TO RESTORE AMERICAN PROSPERITY...
... BY ABOLISHING THE FED
Madame Speaker, I rise to introduce legislation to restore financial stability to America's economy by abolishing the Federal Reserve. Since the creation of the Federal Reserve, middle and working-classAmericans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve's inflationary policies. This represents a real, if hidden, tax imposed on the American people.
From the Great Depression, to the stagflation of the seventies, to the current economic crisis caused by the housing bubble, every economic downturn suffered by this country over the past century can betraced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial "boom" followed by a recession or depression when the Fed-created bubble bursts....
In conclusion, Mr. Speaker, I urge my colleagues to stand up for working Americans by putting an end to the manipulation of the money supply which erodes Americans' standard of living, enlarges big government, and enriches well-connected elites, by cosponsoring my legislation to abolish the Federal Reserve.
So much to read and learn, and so little time. Thanks in no small measure to the energy that Ron Paul's candidacy unleashed, more people than ever are eager to cut through the propaganda and uncover the truth. But where to start? And how can you get the most out of the time you have to devote to reading and study?
I put together the resources that follow as my way of answering these questions. I've included books (many in free online versions) and articles, as well as audio and video files that are also free. For the current crisis, see especially The Bailout Reader. Take a look also at the reading list Dr. Paul includes in his book The Revolution: A Manifesto. Many of these titles also appear in the categories below: economics, sound money, foreign policy, the Constitution, and civil liberties.
Can we read our way to freedom? No, but we cannot be effective activists in the Ron Paul tradition unless we know some economics and history, and the various depredations, foreign and domestic, of the regime. Read the rest... LRC
Are you frustrated at the loss of freedom and responsibility in America, while the growth of government and taxes continues unabated? Do you want to live in strong communities where your rights are respected, and people exercise responsibility for themselves and in their dealings with each other?
If you answered "yes" to those questions, then the Free State Project has a solution for you.
What the Free State Project is... The Free State Project is an effort to recruit 20,000 liberty-loving people to move to New Hampshire. We are looking for neighborly, productive, tolerant folks from all walks of life, of all ages, creeds, and colors who agree to the political philosophy expressed in our Statement of Intent, that government exists at most to protect people's rights, and should neither provide for people nor punish them for activities that interfere with no one else.
When you sign our Statement of Intent, you signal your commitment to move to the chosen free state, New Hampshire, within five years of obtaining 19,999 other people who commit to move. The more signatures we get, the more secure people can be in their decision to move, because they know that many other people will also be moving— enough to make a real difference! You don't have to wait until we have 20,000 signatures to move, of course, but that option is there to let you be more secure in your decision.
What the Free State Project is not... We are not a political action organization. We are not tied to any political party or organization; we do not run candidates for election, we do not financially support or endorse candidates, and we do not oppose or endorse legislation. All these things will be done by local activist organizations with which many Free Staters are involved.
There's no better place for freedom-loving Americans than New Hampshire... In a vote that ended in September 2003, FSP participants chose New Hampshire because it has the lowest state and local tax burden in the continental U.S., the second-lowest level of dependence on federal spending in the U.S., a citizen legislature where state house representatives have not raised their $100 per year salary since 1889, the lowest crime levels in the U.S., a dynamic economy with plenty of jobs and investment, and a culture of individual responsibility indicated by, for example, an absence of seatbelt and helmet requirements for adults.
The Anderson-Obama interview this week wrapped by congressional hearings on government collusion with friends and relatives (otherwise known as the Bernie Madoff scandal) have brought forth only more government whining, moaning and self-justification. In them, we have also been given a pale notice of future full-fledged American fascism.
Our government is bloated past the point of repair, and those in government understand this perfectly. We still have an overstretched, poorly led, and unreliable military web, funded by various other confused governments and unborn American taxpayers. Before long, the state will not only demand we spend what paltry savings we have as a civic duty, but that we bear more children to ensure the kingdom has serfs.
The military empire abroad is a bubble. It looks big, even shiny; it hovers over lesser entities as if it is something. The old alchemist fantasy of creating gold from lead at least led to many productive inventions – only when the fantasy became opportunistic dogma and blind faith were people fooled. In terms of American empire – 700 military installations around the world fearing for their collective future as they watch their individual backs – is not gold, is not powerful, and is not fooling anybody.
The American financial empire exists as a thin, transparent, vulnerable shell of its former self. It too is a bubble – yet unlike the military fantasy, Americans readily conceive of financial bubbledom. Our money – that fiat paper which we have been using for our houses, our cars, our pay-later purchases – is vaporous in the sense that we do not really see it, feel it or understand it. We do not control it – that role is extra-constitutionally, extra-democratically ceded to the Federal Reserve, an entity cloaked in mystery until the 2008 presidential campaign of Ron Paul pulled the unraveling thread.
Like the US dollar, signing your name, making your promise, has become quaint and archaic. Our money is promises to pay by those who do not produce or save. The bundled promises of such payments, much like the social security lockbox, Medicare, and government pensions, we now call "toxic assets," bringing to mind poisonous vapors. Vaporous from the beginning, their metaphorical description falls not far from the tree. Vaporous, as this definition explains: "vaguely formed, fanciful, or unreliable." US fiat currency today, as it has been for some time, is exactly this.
As abrupt and painful as it is for bubbles to burst, we get over it. Individual creativity, hard work, and indeed love will get people through, as it generally does in all things. The military bubble will burst happily, and troops will flow homeward, bases will languish, orders will be given but not followed. Defection will be of the heart, even as economics keeps many on the payroll. The financial bubble will also be overcome – as people shift down and shift forward in their lives and dreams. We will read of Zimbabwe’s reality-based decision to abandon its currency and allow freedom of commerce – a classic case of Gandhi’s reported response of "There go my people; I must run to catch up with them for I am their leader" – with interest, and be inspired. We will share Representative Kucinich’s contempt of the state’s frantic spasms of the past several months as "an unprecedented fraud."
We can survive and thrive in the collapse of both the US military empire, and its financial house of cards. Patriots of all political persuasions should welcome these collapses, encourage them, cheer them, and revel in them. Like the great lion with a painful but removable thorn in its paw, we the people will be far better after the military empire and financial fakery is expelled. Not corrected, not improved, just gone.
The problem isn’t that these bubbles are collapsing. The problem is that unsupportable federal and state level liabilities don’t automatically lead to the linear collapse of the state itself. Logically, they should. We cannot, and will not pay to support the parasitic state. The people will naturally assume the property and any pertinent authority of the state at a far more personal and neighborly level. Less government is needed, less government is wanted, less government is more enlightened, more moral, and more economically and scientifically liberating. This the founders understood, and this many Americans still understand.
But while we cheer the necessary contractions of the state, we may find that we are a small country with a very large and well-equipped standing army. Before our very eyes, the grappling hook of constitutional debasement, government "jobs" programs, and a state propaganda machine par excellence is psychologically if not physically preparing us for fascism at home, both in terms of national socialism proper, and the less talked about but innately understood pressure to conform in speech and in deed to state edicts and state priorities. Key to tolerating fascism is fear – of our neighbors, for ourselves, and about the future – and the state has both the means and the motive to produce this domestic fear.
How else can it be explained that Dick Cheney, possibly the most despised and concretely wrong man in America gets a propaganda pulpit for his opinion (or is it hope?) that America will be attacked catastrophically in coming years?
Like our shady financial dealings and our military empire, fear is vaporous, yet temporarily influential. A decade or two from now, we will certainly discover that the fear was real – but we will understand that it was the state’s own fear gone viral. We will recall how the state projected its own existential disaster on us, attempted to force we the people to own the state’s festering self-destruction, and when we resisted that toxic deal, ramped up the state’s only remaining asset – force – on the non-conformer.
What to do? A great religious leader known for challenging the state advised that we must become as little children. In our current American predicament, this might mean proceeding as any four or 14-year-old would. When the state is looking, stay alert and listen carefully not only for words, but for intent. When the state turns its back, stick out your tongue and do what you damn well please.
Fascism will come at the hands of perfectly authentic Americans who have been working to commit this country to the rule of the bureaucratic state; interfering in the affairs of the states and cities; taking part in the management of industry and finance and agriculture; assuming the role of great national banker and investor, borrowing billions every year and spending them on all sorts of projects through which such a government can paralyse opposition and command public support; marshalling great armies and navies at crushing costs to support the industry of war and preparation for war which will become our nation’s greatest industry; and adding to all this the most romantic adventures in global planning, regeneration, and domination – all to be done under the authority of a powerfully centralised government in which the executive will hold in effect all the powers, with Congress reduced to the role of a debating society.
All popular business histories are replete with lies. Or to be more charitable, they are filled with untruths based on a stupid version of cause and effect: inventions happen because people take out a patent on them. This assumption is hardly ever questioned in the mainline literature. Writers look through patent records and assume that they are a record of technological advance.
The truth is far messier. The patent records are a snap shot of those who filed a patent, and nothing more.
It is because of patent-based historiography that people believe that the Wright Brothers invented the airplane, when in fact they made only a tiny contribution of combining wing warping with a rudder. It was Sir George Cayley in Britain and Otto Lilienthal of Germany who did the bulk of the work of inventing the airplane. But it was the Wright Brothers who applied for the patent and quickly used it against Glenn Curtiss who improved wing warping with movable control surfaces.
So it was with the radio, which is conventionally attributed to Guglielmo Marconi, the Nobel Prize winner in 1909. What about the contribution of Oliver Lodge in the UK or the forgotten genius Nikola Tesla or the Russian Aleksander Popov or the British Naval engineer Henry B. Jackson?
All Marconi did was ground the antenna, and also manage to win the patent wars thanks to the deep pockets of fellow aristocrat and partner Andrew Carnegie. Fifty years after the patent was granted, the Supreme Court conceded that it was unjustly given but by then, the other claimants were dead! (Marconi was consistent at least: he was a big supporter of fascism in Italy.)... LRC
Just a year after the world's fastest supercomputers broke the petaflop barrier by performing one thousand trillion calculations per second, nuclear physicists are planning a 20-petaflop machine in conjunction with IBM.
Nicknamed Sequoia, the Department of Energy computer will most likely be the most powerful in the world when it is released. If it were running today, it'd be more than 10 times faster than any machine in existence....
By almost any standard, the new computer will be staggering. It will have 1.6 million processing cores, 1.6 petabytes of memory, 96 racks and 98,304 computing nodes. Yet, the new computer will have a much smaller footprint at 3,400 square feet than the current fastest computer's 5,200 square feet. And it will be much more energy efficient than its predecessors, only drawing 6 megawatts of power a year. That's about how much energy 500 American homes use in the same period.
Hyperinflation in the U.S. hasn’t happened for quite some time. The last two instances that come to mind are confederate money in the 1860s and the continentals in the 1770s. In both these cases, governments used inflation to finance wars because their tax systems were weak.
A strong tax system (from the government’s perspective) has several aspects. It has a large productive capacity that it can tax without causing production to decline by a great deal. It can enforce tax collections. The required taxes are low compared to the overall government spending.
The U.S. tax system is not weak, but it is weakening. The productive capacity is difficult to evaluate, but it too has probably weakened. The U.S. economy has a large government sector (at least 40 percent) that is relatively inefficient. It also interferes with and distorts the private economy. The federal government has not been able to finance its spending by current taxes in a long time. Instead it has resorted to borrowing (deficit spending) and inflation. The results are a large national debt and a depreciating currency. Michael Rozeff, LRC
Our rulers are destroying the economy. Not little by little, as they usually do, but in huge swaths. Each great assault on the free market, whether it be denominated a bailout, a stimulus, or some other species of purported salvation, brings us visibly closer to the complete ruin of an economic order that required centuries to build. Awestruck, as if we were observing a tsunami sweep across an island, we can only watch the rulers' devastating actions, for which, strange to say, they expect the public to be grateful―and, truth be told, most people are grateful, and clamor for more of the same. We listen to the kingpins' lunatic ravings as they describe their perceptions of the current situation and solemnly declare their determination to "do something" to restore the prosperity that they themselves have demolished by previously "doing something" of the very same kind.
They gaze out at a financial debacle rooted in various government policies that induced lenders to do business with millions of borrowers who had no realistic prospect of repaying the loans. And what do these überguardians propose? They aim to relieve the unfaithful borrowers of their contractual obligations, to purchase the disappointed lenders' "toxic assets," and to "get credit moving again," so that new loans will be made, again at artificially reduced interest rates to borrowers who have no realistic prospect of repaying them. They are pouring credit madness on credit madness because they have no real understanding of how the economic world actually works and, even if they did understand, they are politically beholden to the owners and managers of failing economic behemoths who profited handsomely from the artificial prosperity of the boom and are now staring into the abyss... Robert Higgs, LRC
The Federal Reserve is now trapped by its own policies. It has dramatically increased the monetary base, and it does not want this money to be spent into circulation. Federal Reserve economists understand the fractional reserve banking process. They know that the only way that the M-1 money supply will not match the doubling of the monetary base is for the Federal Reserve to impose an increase in the reserve requirement. It has not done this. Instead, it has paid a small amount of interest to banks to persuade backers to see keep money on deposit with the Fed, which sterilizes the increase in the monetary base.
If banks begin lending money to the general public, the Federal Reserve will have to sell assets in order to offset the increase in its balance sheet, which is a result of the big bank bailouts and buying T-bills. The problem is, the Federal Reserve is running out of Treasury debt certificates to sell. The only asset that the Federal Reserve now holds in its balance sheet that can be sold at face value to the general public is Treasury debt. There is no way for the Federal Reserve to unload the toxic assets that block from the banks.
Furthermore, with the proposal of the so-called bad bank, which is one of those rare circumstances where the name given to it is appropriate for what the organization is, somebody has got to buy the toxic assets that are unloaded by the banks, so that the banks can get their balance sheets solvent again. Who is going to put up the money to buy all of this debt? The Treasury can buy it, but then the Treasury then must sell a comparable amount of debt to the general public. Who is going to buy that? Whoever does will invest money in a government-guaranteed bailout rather than in the private sector. Kiss the recovery goodbye.
Once the banks get their balance sheets in good shape again, by unloading hundreds of billions of dollars of junk assets onto the bad bank, they will start lending again. They will reduce their holdings of excess reserves at the Federal Reserve System. At that point, the money multiplier will start multiplying again, M-1 will grow dramatically, and we will be into mass inflation. I don't mean 10% or 20% or 30% price inflation. I mean 50%, 60%, or 100% per annum.
The vast increase of the monetary base, once it is translated into an increase in M-1, will create mass inflation in the United States. That money will be spent. Anyone who thinks the US Treasury will not send money to Social Security recipients, Medicare insurance programs, and all the other groups that are clamoring for bailouts, has been smoking something funny.
REMEMBER THE DRUNK AMERICA WEST PILOTS? PASSENGERS MUTINY OVER DRUNKEN RUSSIAN AEROFLOT PILOT
You won't believe what the airline's representative told the passengers:
Aeroflot representative boarded the aircraft and told the passengers it wasn't a big deal if the pilot was drunk.
"Really, all he has to do is press a button and the plane flies itself," the representative allegedly said. "The worst that could happen is he'll trip over something in the cockpit."
"I don't think there's anyone in Russia who doesn't know what a drunk person looks like," a passenger, Katya Kushner, told The Moscow Times. "At first, he was looking at us like we were crazy. Then, when we wouldn't back down, he said, 'I'll sit here quietly in a corner. We have three more pilots. I won't even touch the controls, I promise'."
The airline later issued a statement claiming the pilot may have suffered a stroke before take-off.
THERE ARE ONLY TWO "RESPECTABLE" VIEWS ABOUT THE STIMULUS BILL:
One view belongs largely to Democrats, the other to Republicans!
A Big Bill, or a Bigger Bill. All other viewpoints are cast into the outer darkness. The R's and D's agree: You will have a statist and crippled U.S. economy and YOU WILL LIKE IT!
See this piece from the NYTimes: ("Printing All the News that Fits the Paradigm")
The most serious charge against the stimulus package is that it does not pack enough punch.
Two different camps have been making this argument over the last few weeks.
The first camp says that the stimulus is simply too small...
The second camp says that, dollar for dollar, the current package is not as effective as it should be.
OBAMA CONSIDERS TAX ON HIS CABINET! Would Create Budget Surplus, Experts Believe!
President Barack Obama is mulling a controversial new tax program that would require members of his Cabinet to pay taxes owed under the Federal tax code, the White House confirmed today. While the unorthodox tax proposal is reportedly "only in the planning stages," it is being eyed as a possible way to balance the Federal budget.
"According to projections, if members of the Cabinet actually paid their taxes, we could wind up with a budget surplus in excess of $18.2 billion," said Obama economic adviser Paul Volcker.
Mr. Volcker said he strongly favored the plan, but added, "Fortunately for me, I'm not officially in the Cabinet."
When told of Mr. Obama's plan to make his Cabinet members pay taxes, Fmr. Sen. Tom Daschle responded, "Whew! Sounds like I dodged a bullet."
Political analysts frequently consider what it means to be a libertarian. In fact, in 1997, Charles Murray published a short book entitled "What It Means to Be a Libertarian" that does an excellent job of presenting the core principles of libertarian political philosophy. But almost no one ever discusses what it feels liketo be a libertarian. How does it actually feel to be someone who holds the principles described in Murray’s book?
I’ll tell you. It feels bad. Being a libertarian means living with a level of frustration that is nearly beyond human endurance. It means being subject to unending scorn and derision despite being inevitably proven correct by events. How does it feel to be a libertarian? Imagine what the internal life of Cassandra must have been and you will have a pretty good idea.
Imagine spending two decades warning that government policy is leading to a major economic collapse, and then, when the collapse comes, watching the world conclude that markets do not work.
Imagine continually explaining that markets function because they have a built in corrective mechanism; that periodic contractions are necessary to weed out unproductive ventures; that continually loosening credit to avoid such corrections just puts off the day of reckoning and inevitably leads to a larger recession; that this is precisely what the government did during the 1920's that led to the great depression; and then, when the recession hits, seeing it offered as proof of the failure of laissez-faire capitalism.
Imagine spending years decrying federal intervention in the home mortgage market; pointing out the dangers associated with legislation such as the Community Reinvestment Act that forces lenders to make more risky loans that they otherwise would; testifying before Congress on the lack of oversight and inevitable insolvency of Fannie Mae and Freddie Mac to legislators who angrily respond either that one is "exaggerat[ing] a threat of safety and soundness . . . which I do not see" (Barney Frank) or "[I[f it ain’t broke, why do you want to fix it? Have the GSEs [government-sponsored enterprises] ever missed their housing goals" (Maxine Waters) or "[T[he problem that we have and that we are faced with is maybe some individuals who wanted to do away with GSEs in the first place" (Gregory Meeks) or that Fannie Mae and Freddie Mac are "one of the great success stories of all time" (Christopher Dodd); and arguing that the moral hazard created by the implicit federal backing of such privately-owned government-sponsored enterprises is likely to set off a wave of unjustifiably risky investments, and then, when the housing market implodes under the weight of bad loans, watching the collapse get blamed on the greed and rapaciousness of "Wall Street."
I remember attending a lecture at Georgetown in the mid-1990s given by a member of the libertarian Cato Institute in which he predicted that, unless changed, government policy would trigger an economic crisis by 2006. That prediction was obviously ideologically-motivated alarmism. After all, the crisis did not occur until 2008.
Libertarians spend their lives accurately predicting the future effects of government policy. Their predictions are accurate because they are derived from Hayek’s insights into the limitations of human knowledge, from the recognition that the people who comprise the government respond to incentives just like anyone else and are not magically transformed to selfless agents of the good merely by accepting government employment, from the awareness that for government to provide a benefit to some, it must first take it from others, and from the knowledge that politicians cannot repeal the laws of economics. For the same reason, their predictions are usually negative and utterly inconsistent with the utopian wishful-thinking that lies at the heart of virtually all contemporary political advocacy. And because no one likes to hear that he cannot have his cake and eat it too or be told that his good intentions cannot be translated into reality either by waving a magic wand or by passing legislation, these predictions are greeted not merely with disbelief, but with derision.
It is human nature to want to shoot the messenger bearing unwelcome tidings. And so, for the sin of continually pointing out that the emperor has no clothes, libertarians are attacked as heartless bastards devoid of compassion for the less fortunate, despicable flacks for the rich or for business interests, unthinking dogmatists who place blind faith in the free market, or, at best, members of the lunatic fringe.
Cassandra’s curse was to always tell the truth about the future, but never be believed. If you add to that curse that she would be ridiculed, derided, and shunned for making her predictions, you have a pretty fair approximation of what it feels like to be a libertarian.
If you’d like a taste of what it feels like to be a libertarian, try telling people that the incoming Obama Administration is advocating precisely those aspects of FDR’s New Deal that prolonged the great depression for a decade; that propping up failed and failing ventures with government money in order to save jobs in the present merely shifts resources from relatively more to relatively less productive uses, impedes the corrective process, undermines the economic growth necessary for recovery, and increases unemployment in the long term; and that any "economic" stimulus package will inexorably be made to serve political rather than economic ends, and see what kind of reaction you get. And trust me, it won’t feel any better five or ten years from now when everything you have just said has been proven true and Obama, like FDR, is nonetheless revered as the savior of the country.John Hasnas
Given our economic crisis, the estimated trillion dollars we spend each year on the military and its weaponry is simply unsustainable. Even if present fiscal constraints no longer existed, we would still have misspent too much of our tax revenues on too few, overly expensive, overly complex weapons systems that leave us ill-prepared to defend the country in a real military emergency. We face a double crisis at the Pentagon: we can no longer afford the pretense of being the Earth's sole superpower, and we cannot afford to perpetuate a system in which the military-industrial complex makes its fortune off inferior, poorly designed weapons.
The inevitable day of reckoning, long predicted by Pentagon critics, has, I believe, finally arrived. Our problems are those of a very rich country which has become accustomed over the years to defense budgets that are actually jobs programs and also a major source of pork for the use of politicians in their reelection campaigns.
Given the present major recession, whose depths remain unknown, the United States has better things to spend its money on than Nimitz-class aircraft carriers at a price of $6.2 billion each (the cost of the USS George H. W. Bush, launched in January 2009, our 10th such ship) or aircraft that can cruise at a speed of Mach 2 (1,352 miles per hour).
However, don't wait for the Pentagon to sort out such matters. If it has proven one thing over the last decades, it's that it is thoroughly incapable of reforming itself.
In one sense, the critics are right when they ask, "Oh, so we should just sit back and do nothing and let the market fix itself?" Yes, that would be a perfectly good idea. The whole reason we are in a recession in the first place is that the capital structure of the economy had become unsustainable due to the Fed's massive credit expansion following the dot-com bust and 9/11 attacks. Resources — most notably, labor — are currently idle, because the economy needs to readjust. Overextended lines such as housing and finance need to shrink, while others need to expand. (And no, I don't know what those understaffed lines are; that's why we have a price system.) Because Americans lived beyond their means for so many years, they now need to live below their means, consuming less while they rebuild their checking accounts and portfolios.
Given the diagnosis, we can be sure that efforts to borrow and spend our way back into prosperity, or massive bailouts of the banks and homeowners, are only pumping air into a flat tire with a gaping hole. And Bernanke's unbelievable injections of new funny money into the credit markets will only ensure that those failed institutions remain afloat, paralyzing true recovery in the loan market, and risking very large price inflation if Bernanke does not soon reverse course.
However, even though "nothing" would be much, much better than all of the alleged remedies being bandied about, the Austrians actually do have concrete proposals for President Obama. The following list includes items that I would have endorsed even before the crisis, but inasmuch as they would definitely help things, I offer them with sincerity to the new administration.
One last caveat: I know there are many purists who read the Mises Daily, and will be aghast at my watered-down recommendations. Yes, yes, I agree that the best thing would be for Obama, Pelosi, Reid, and all my friends to say, "You know, if you look at the history of this company, it always ends up wasting money and getting innocent people killed. I think we should just quit and go volunteer at a church instead."
But, if I said that as an Austrian recommendation, it would be dismissed as "unserious," a very grave charge indeed. Thus, the following list of recommendations are not politically impossible, just exceedingly unlikely: Read the rest... Robert Murphy, Mises.org
He'll use your money to buy crap assets from banks for more than they are worth, thus secretly recapitalizing the banks at your expense.
The same crap asset that the government will buy on your behalf has four different values:
The carrying value: $0.97. The dreamy hallucination that the bank that is stuck with the assets is telling its shareholders it is worth. The fact that there is almost no scenario that would lead to the crap asset actually being worth this much is why no one trusts banks anymore.
A third-party assessment of value: $0.87. S&P's sharp analysts, the ones who almost certainly rated this security AAA when it was first dumped on unsuspecting buyers, say it is worth more than 10% less than the bank says it is worth.
A conservative third-party assessment of value: $0.53. What S&P estimates the crap asset is worth if the economy doesn't immediately rebound, which is about half of what the bank says it is worth.
The market's objective assessment of value: $0.38. Unlike the bank and S&P, markets have no incentive to misrepresent the true value of an asset (or to look at it through rose-colored glasses). And the market says the asset is worth about a third of what the bank says it is worth.
So what price will the goverment's "Bad Bank" pay for that crap asset on your behalf?
CHARLES SAYS:
Financial assets are only worth what willing sellers and willing buyers agree upon in non-coercive transactions. It is the continual effort to thwart this principal that prolongs the downturn, prevents recovery, and enriches malefactors and inpoverishes the people. This meddling is the sole enthusiasm of Republicans and Democrats alike and is the primary occupation of official Washington.
Dutch to Launch Independent Investigation of Support for U.S. War in Iraq!
AMSTERDAM, Feb 2 (Reuters) - Dutch Prime Minister Jan Peter Balkenende ordered on Monday an independent commission to examine the government's decision to support the U.S.-led invasion of Iraq in 2003.
The Netherlands did not send troops into Iraq but supported the U.S. push to invade Iraq because of the threat of weapons of mass destruction, which was later found to be unjustified. Dutch critics of the war say the government put the country, which is host to several international courts, at legal risk.
The salary for senators and representatives just got bumped up an extra $4,700 from $169,300 to $174,000. The pay bump occurs automatically every year, thanks to a piece of legislation written in 1989 meant to prevent legislators from voting on their own raises.
In an extraordinary move, cabinet minutes of Tony Blair's decision to invade Iraq may be made public shortly, raising the possibility of serious criminal charges -- even war crimes -- against senior British officials.
While glasnost sweeps London, in Washington, it's deja vu. President Barack Obama vows to plunge the U.S. ever deeper into the eight-year-old Afghan conflict begun by former president George W. Bush by doubling the number of U.S. troops and aircraft there.
Obama's unfortunate move demonstrates political inexperience. A change of administration in Washington, and departure of the reviled Bush, offered an ideal opportunity for Washington to declare a pause in the Afghan war and reassess its policies. It also offered an ideal chance to offer negotiations to the Taliban and its growing number of supporters.
The Afghan war will have to be ended by a political settlement that includes the Taliban-led nationalist alliance that represents over half of Afghanistan's population. There simply is no military solution to this grinding conflict -- as even the secretary general of NATO admits.
... The U.S. could survive a defeat in Afghanistan, as it did in Vietnam. But the NATO alliance might not.
INDIA TO FOLLOW UP ITS $2,000 CAR WITH A $20 LAPTOP!
NEW DELHI -- India is planning to produce a laptop computer for the knockdown price of about $20, having come up with the Tata Nano, the world's cheapest car at about $2,000.
The project, backed by New Delhi, would considerably undercut the so-called "$100 laptop," otherwise known as the Children's Machine or XO, that was designed by the Massachusetts Institute of Technology of the US.
A prototype will go on show at a National Mission on Education launch in Tirupati, Andhra Pradesh, tomorrow. Pioneered in India by scientists at the Vellore Institute of Technology, the Indian Institute of Science in Bangalore, the Indian Institute of Technology in Madras and at the state-controlled Semiconductor Complex, the laptop has 2Gb Ram capacity and wireless connectivity.
All recessions have cultural and social effects, but in major downturns the changes can be profound. The Great Depression, for example, may be regarded as a social and cultural era as well as an economic one. And the current crisis is also likely to enact changes in various areas, from our entertainment habits to our health.
First, consider entertainment. Many studies have shown that when a job is harder to find or less lucrative, people spend more time on self-improvement and relatively inexpensive amusements. During the Depression of the 1930s, that meant listening to the radio and playing parlor and board games, sometimes in lieu of a glamorous night on the town. These stay-at-home tendencies persisted through at least the 1950s.
In today’s recession, we can also expect to turn to less expensive activities — and maybe to keep those habits for years. They may take the form of greater interest in free content on the Internet and the simple pleasures of a daily walk, instead of expensive vacations and N.B.A. box seats.
It has been pointed out already in what respect we are free to call an improvement in the quality and an increase in the quantity of products economic progress. If we apply this yardstick to the various phases of the cyclical fluctuations of business, we must call the boom retrogression and the depression progress. The boom squanders through malinvestment scarce factors of production and reduces the stock available through overconsumption; its alleged blessings are paid for by impoverishment. The depression, on the other hand, is the way back to a state of affairs in which all factors of production are employed for the best possible satisfaction of the most urgent needs of the consumers.
Human Action, Ch. XX, sec 9 (p. 575).
Here's why I've tended to call the boom the "crisis" and the bust the "correction." Our crisis occured over the past several years; now the state is fighting the correction. Boettke's blog
What is on the table in Washington today simply has nothing to do with any serious economic thinking, as Pete's post below suggests. This is why people like Krugman and DeLong have to accuse their opponents of acting in bad faith: there is precious little economic evidence for the benefits of large fiscal policy initiatives. What these are really about is enacting programs and policies that people like them have wanted for years on their own supposed merits, independent of any "stimulus." The crisis is just the reason to carpe diem. So rather than a debate over the merits of particular programs, we get the language of crisis and fear thrown at us so that we'll swallow them all, whole hog, with little debate. Accusing your opponents of being "ethics-free Republican hacks" and refusing to examine the actual evidence of the Hoover and FDR years means you don't have to argue for the merits of the individual pieces, just scare the public and demonize the opposition. Of course, that's exactly what these same folks complained about after 9/11. Meet the new boss, same as the old boss indeed. (And the evidence against The Shock Doctrine is now approaching that of The Population Bomb.)
Bottom line: the more that those of us who are skeptical continue to even refer to this as a "stimulus" plan, the more we play into the other side's hands. This isn't a stimulus package, it's a whole bunch of programs designed to extend the state's role in the economy and in our personal lives, and to do so at enormous cost to us, and to our children and grandchildren. Let's challenge the rhetoric of fear and crisis and name this for what it is: the current majority's attempt to do exactly what the Bush Administration did post-9/11, which is to use fear and crisis to pass programs that will impoverish us and curtail our freedoms, and to do so with the minimum of serious debate possible. Boettke's blog
"Never let a serious crisis go to waste. What I mean by that is it's an opportunity to do things you couldn't do before."
So said White House Chief of Staff Rahm Emanuel in November, and Democrats in Congress are certainly taking his advice to heart. The 647-page, $825 billion House legislation is being sold as an economic "stimulus," but now that Democrats have finally released the details we understand Rahm's point much better. This is a political wonder that manages to spend money on just about every pent-up Democratic proposal of the last 40 years.
We've looked it over, and even we can't quite believe it. There's $1 billion for Amtrak, the federal railroad that hasn't turned a profit in 40 years; $2 billion for child-care subsidies; $50 million for that great engine of job creation, the National Endowment for the Arts; $400 million for global-warming research and another $2.4 billion for carbon-capture demonstration projects. There's even $650 million on top of the billions already doled out to pay for digital TV conversion coupons. WSJ
- Calculated Risk
Where the boom-bust cycle comes from
How else can it be explained that Dick Cheney, possibly the most despised and concretely wrong man in America gets a propaganda pulpit for his opinion 
