Frank [the Crank] of the NYT Moans in Agony about the Massachusetts Massacre. The End is in Sight.

Abstract: Frank Rich is nearly hysterical as he gropes for reasons to show us that the loss of the revered Kennedy seat is not Obama’s fault.  The Crank cranks out brats in all directions as he convinces himself that this anti-liberal contagion will not spread beyond Massachusetts although he fails to mention that this is strike three against the White House after Virginia and New Jersey. He sees Obama descending into the political and economic maelstroms that consumed LBJ and Jimmy Carter. Socialism is at stake here along with other phony debacles such as global warming and ‘affordable housing.’ Rich grants and grabs all he can in an episode of sound and fury signifying noting but terror for Democrats in November. The economy sinks and Obama is stuck with the next economic dip and the aftermath.

We are always rewarded when we elect to study and digest the political facts as presented (and frequently misrepresented) by Frank [the Crank] Rich[1][2][3] of the New York Times. Frank Rich is well known for his unsurpassed facility to crank out sophomoric and keyhole dogmatic leftist brats with sausage-machine precision even when they apply to nothing in particular, but this one today is a big one for him and he shows off his skills. He is an artist. Without exception, as always, we are compelled to read about how the right wingers have bungled the job of government in the last few decades and the valiant acts of self-denial and heroism by liberals have preserved our freedoms. Something has changed here.

As we start to peruse the instant egalitarian minutiae that define the latest political proclamations from the New York Times—aka the Walter Duranty Papers[4], we sometimes are treated to a tirade-based detonation of anger and fear, probably rooted in self-loathing and now incorporating impending doom, and this current episode is ignited from the recent desecration of the Sacred Kennedy Seat in the US Senate. Teddy can no longer vote from the grave.[5]

Propaganda pieces usually initiate with some highlighted banner that signals the central message and then begins to weave a web that is supposed to instill doubt in the reader along with some sadness to jerk some tears from the toughest roughneck and then to slip in some confounding information and opinions that are used to close up the argument in the accustomed circular manner of the sophist. Not this time! Frank uploads in the first line!

The Crank unloads:

“It was not a referendum on Barack Obama, who in every poll remains one of the most popular politicians in America. It was not a rejection of universal health care, which Massachusetts mandated (with Scott Brown’s State Senate vote) in 2006. It was not a harbinger of a resurgent G.O.P., whose numbers remain in the toilet. Brown had the good sense not to identify himself as a Republican in either his campaign advertising or his victory speech.”[6]—After the Massachusetts Massacre By Frank Rich Op-Ed Columnist Published: January 23, 2010 [Emphasis is mine in all quotes.]

This is like some tent revival preacher launching off with the bottom-line mandate that there are no sinners in the audience and then explaining that forgiveness is a phantasm conjured up in Disneyland we are will be fine. It is written in the rare form of a stumbling triple negative narrative and is a masterpiece of denial.

Conditional prophecy unfolds before our very eyes:

“And yet Tuesday’s special election was a dire omen for this White House. If the administration sticks to this trajectory, all bets are off for the political future of a president who rode into office blessed with more high hopes, good will and serious promise than any in modern memory. It’s time for him to stop deluding himself.”—After the Massachusetts Massacre

This is a stunning piece of psuedohyperbole.  Obama is a disciple of Saul Alinsky. We now are persuaded to understand all the input parameters that failed to tarnish our wonderful president and will be given the names of the culprits in the next few paragraphs. Obama’s glass slippers are in pieces all over the ballroom floor and we are not permitted to surmise that this event was a rejection of Obama’s primary campaign platform plank healthcare.  What else could it be?

Nobody is mad at Obama?

“Obama’s plight has been unchanged for months. Neither in action nor in message is he in front of the anger roiling a country where high unemployment remains unchecked and spiraling foreclosures are demolishing the bedrock American dream of home ownership. The president is no longer seen as a savior but as a captive of the interests who ginned up the mess and still profit, hugely, from it.”—After the Massachusetts Massacre

This fish is more difficult to unwrap. What ‘interests?’ The unions? ACORN? The polls say otherwise: Gallop reports that “The 65 percentage-point gap between Democrats' (88%) and Republicans' (23%) average job approval ratings for Barack Obama is easily the largest for any president in his first year in office, greatly exceeding the prior high of 52 points for Bill Clinton.”[7] Obama is seen to be slowing down things such as his State of the Union Message.[8] Obama has failed in everything he has attempted except to infuriate the voters with his Marxian cram-down politics as his lackeys squirrel away in dark corners and plot to create sweeping laws that most of us do not want.  He is a loser, but, lest we stray from the central thrust of the NYT—the prime objective is to rescue losers like this.  So, we need to read further before archiving this article in one of the lower layers of your parrot cage and see if we can get a sense of the direction of the way for Democrats to extricate themselves from this wreckage.

Frank then constructs an imaginary cabal of angry voters who have a common cause: Dump on the banks!

“If the tea party right and populist left agree on anything, it’s that big bailed-out banks have and will get away with murder while we pay the bill on credit cards — with ever-rising fees.”— After the Massachusetts Massacre

We must assume that some common contempt for the banking system exists among the restless masses  and will lead to some joint bipartisan adventure to micromanage the banks and thus satisfy and sooth the voters and thus excuse Obama for his failures. This is laughable. I suggested we let the banks go down like we did for Bear Stearns and Lehman. Why subsidize failure like we do Amtrak and the post office? The Fed could have wired emergency reserve funds in less than a minute so we didn’t need week of cronyizing and bumbling.

Old news rehabilitated and dressed up as the new finding:

“Politically, no other issue counts. In last weekend’s Washington Post/ABC News poll, 42 percent of Americans chose the economy as the country’s most pressing concern. Only 5 percent picked terrorism, and 2 percent Afghanistan.”— After the Massachusetts Massacre

This is a diversion. What could the banks have to do with the economy if they are open for business and, incidentally, they pay high wages and some very large bonuses? They don’t set interest and credit rates. Businesses do not want to borrow and banks will not lend to deadbeats with lousy credit ratings any more. The economic recovery depends on a good business climate and that means that small businesses will have to be encouraged to borrow and hire new employees. But, this pathway is scattered with numerous concerns such as unknown tax levels, fees, punitive measures for doing certain kinds of business or avoiding government mandates, the notion that we must go ‘green’ despite the higher costs and energy inefficiencies of this direction.  Small business, those who produce 65% of the jobs have received no help whatsoever. Money was wasted in the GM and Chrysler Circuses where unions were given power and bondholders told to take a haircut. This is a good business climate? Apparently Obama thought so.

What is Cranking Up here is the urgent bleat for the banks to further subsidize subprime mortgage wreckages[9] that were the heart of the far leftist nostrum of ‘affordable housing’ and most of the reason the banks collapsed was due to toxic assets  undermining their balance sheets.[10] They are greedy capitalists so they can just eat the losses. We are awash in debt so deep that the average taxpayer who makes more than the median of $32,000 now has a tax liability of $192,000 and rising toward $220,000 if the debt limit is raised. If you consider some test case like California[11][12][13] you find a bigger mess when you add in the massive state costs of the greens and their phony global warming follies.[14][15] This ‘affordable housing’ was some obvious social mandate and Congress passed the CRA [Community Reinvestment Act][16][17] that resulted in AAA rated 2007 subprime mortgage bundles descending only 28 cents on the dollar.[18] Lower rated bundles are less than 5 cents on the dollar. We want more of this? Yes, if you are a Marxist or a socialist. Those levels are more than just ‘toxic.’ They signal a long-term bank crisis that may be with us for a decade or two.

But, Frank needs to make his little case:

“Does health care matter? Not as much as you’d think after this yearlong crusade. In the Post/ABC poll, the issue was second-tier — at 24 percent. Obama has blundered, not by positioning himself too far to the left but by landing nowhere — frittering away his political capital by being too vague, too slow and too deferential to Congress. The smartest thing said as the Massachusetts returns came in Tuesday night was by Howard Fineman on MSNBC: “Obama took all his winnings and turned them over to Max Baucus.””— After the Massachusetts Massacre

Apparently, we are to now to embrace the soggy belief that Obama’s prime political theme was detected as having major holes in it so he passed off the wreckage to some potentially expendable Senator and let him take the heat. Obama did not, we are instructed, go too far to the left in terms of socialized medicine with eternal government micromanaging hence bungling the health and deaths or our citizens who are satisfied with their current system. Rich fails to tell us that socialized medicine and public transportation are the crown fungi in the rotting mass we call socialism. They are a must and the people rejected this stuff and Frank must slither around these political rocks and grope for some middle case where Obama is not directly blamed for this.

Obama is messageless? That IS news.

“Worse, the master communicator in the White House has still not delivered a coherent message on his signature policy. He not only refused to signal his health care imperatives early on but even now he, like Congressional Democrats, has failed to explain clearly why and how reform relates to economic recovery — or, for that matter, what he wants the final bill to contain. Sure, a president needs political wiggle room as legislative sausage is made, but Scott Brown could and did drive his truck through the wide, wobbly parameters set by Obama.”— After the Massachusetts Massacre

Here Rich zooms out into the vapors on gossamer wings waving flags and spreading confetti and misstates history. Obama promised and promised that his new HC scheme would save money and that it had to be deficit neutral so they taxed the early years and then decided to let the full weight of this gorilla come crashing down after 2014—a very convenient time course in politics.  He has jabbered about little else. Given the history of government in construction  of such metastatic diseases can we suggest, for discussion,  an analysis of the  infected  string of social programs that failed like: The Great Society, HUD, War on Poverty, Social Security, Medicare, WW1, WW2, federal welfare and Amtrak to suggest a  very few? What is the Social Security liability now? Oh we must add an additional $141,000 to the almost $200,000 dollars the persons above the income median must now be liable for.[19] Is it time to mention that CA, NJ, MA, MD, MI and NY may default soon and add some more debt to the pile?

“Ask yourself this: All these months later, do you yet know what the health care plan means for your family’s bottom line, your taxes, your insurance?”— After the Massachusetts Massacre

No, Frank and neither do you.

“Obama needs more independent economists like Paul Volcker, who was hastily retrieved from exile last week after the Massachusetts massacre prompted the White House to tardily embrace his strictures on big banks.”— After the Massachusetts Massacre

Does The Crank tell us that Volcker was the guy who instituted 18% interest rates in the 70s and forced high unemployment to sweep up after the Jimmy Carter mess? No. Volcker’s financial policies were ignored by people who thought that we could spend our way back to prosperity such as Romer:

History flashback: The Christine Romer Prophecy:

“…, even with the large prototypical package, the unemployment rate in 2010Q4 is predicted to be approximately 7.0%, which is well below the approximately 8.8% that would result in the absence of a plan.”[20][21]--CNSNews.com Monday, July 06, 2009

The Christine Romer Un-Prophecy: Did Romer recant?

“Most analysts predict that the fiscal stimulus will have its greatest impact on growth in the second and third quarters of 2009,” Romer said. “By mid-2010, fiscal stimulus will likely be contributing little to growth.”[22]— Christine Romer Oct. 22

The final Crankling:

“J.F.K. threatened to sic his brother’s Justice Department on corporate records and then held firm as his opponents likened his flex of muscle to the power grabs of Hitler and Mussolini. (Sound familiar?) U.S. Steel capitulated in two days. The Times soon reported on its front page that Kennedy was at “a high point in popular support.”

Can anyone picture Obama exerting such take-no-prisoners leadership to challenge those who threaten our own economic recovery and stability at a time of deep recession and war? That we can’t is a powerful indicator of why what happened in Massachusetts will not stay in Massachusetts if this White House fails to reboot.”— After the Massachusetts Massacre

A clarion call for more government! How about a Marxist Revolution so we can have Power to the People? Harry Truman tried this too and was swatted down by the Supreme Court.

We expect such fluff and hokum from the NYT as they grope for any solution to ‘save ‘ the presidency and keep the fires burning on socialized medicine, EcoNazism[23] and other wasteful projects. The Crank’s plate is overloaded with maudlin rescue notes and other scribblings as he recoils from the biggest act of desecration of the Kennedy Image the world has ever seen.

The voters were very angry at Bush and now their anger is redoubled at Obama so let Frank make all the excuses he can but November 2010 will probably be equivalent to the French Revolution in political terms. Weave some fresh baskets.

rycK

Comments: ryckki@gmail.com

The Babbling Brooks of the NYT Babbles about Four Choices for the Dems

 Abstract: David Brooks shows off his deep perceptive talents and scoops up four scenarios for paths forward [and backward] for the Democrats to pursue into a neat four square package.  He personally chooses the mumble and sob option. The Democrats have lost credibility and Obama has just struck out three times in VA, NJ and now MA by losing the Eternal Chair of Kennedyism. The massive healthcare juggernaut is stalled and our spending and debt must be highlighted and the evil consequences pinned on Obama and his progressives.  Hopefully, the voters were listening to Anita Dunn, Van Jones, Harry Reid, Nancy Pelosi and other far left radicals and weighted what they were saying against reality. Obama has struck out three times [VA, NJ and now MA] and lost the 60 Senate votes necessary to take over the government for decades. So, now the Republicans need to purge their ranks of liberalism and get back to capitalism, spending cuts, tax breaks for small business and repairing the damage to the economy.

As we read the NYT—aka the Walter Duranty Papers[1][2]--a turn-of-the-crank Marxian siren, we must always be alert for deviations from obvious facts,  veiling of true political designs and other odd bits of propaganda that are thoughtfully woven into the fabric of the average op-ed piece presented before us. Usually, more talented writers and web-spinners like Maureen Dowd, the Old Red Lady [3][4][5]offer us interesting political enigmas to dissect as she sandwiches literary clichés, unlikely metaphors and newsworthy characters with leftist political demands with sound and fury and the messages is usually very clear. But today our Chief Babbler David Brooks[6],[7] [8] speaking as a token, which is permitted only to offer mild and seemingly incontrovertible comments against the manifold fault of liberalism, gives the Democrats four thoughtful avenues to escape their self-inflicted dilemma on the ugly and testy issue of healthcare and other matters. We can wonder how Brooks managed to leap above the sticky cliché that we need to ‘hear both sides of the story.’ This is a new adventure into unexplored analytical jungles for Brooks and we wonder if he can follow the crumbs he uses to mark the trail in the forest to get back to reality.

Brooks begins with some ancient history that languishes in the lost dust on some lonely bookshelf begging for a restroke:

“In November 2008, William A. Galston and Elaine C. Kamarck wrote a report called “Change You Can Believe In Needs a Government You Can Trust.” Galston and Kamarck, who served in senior positions in the Clinton administration, threw up some warning flags for the incoming Obama administration.”[9]--Politics in the Age of Distrust By David Brooks Op-Ed Columnist

Published: January 21, 2010 [Emphasis is mine in all quotes.]

“Despite the Democratic triumph that month, they noted, public distrust of government remains intensely high….Therefore, they counseled, the new administration should move cautiously to rebuild trust before beginning a transformational agenda.”--Politics in the Age of Distrust

This is not exactly astonishing news and we wonder if there was ever an Era of Trust where the good citizens were thankful for the paternalism that drove many of them into bankruptcy or the grave from miscues from our government. How do the good citizens assess the likes of with Jeremiah Wright[10], Bill Ayers and others who make Obama look like an ideological racist[11][12], a liar[13] and a Marxian advocate or a simple stooge[14] and how he learns from associations with Jeremiah Wright[15], Van Jones[16], Anita Dunn[17], Andy Stern[18], Harry Reid, Nancy Pelosi[19] , Barney Frank[20][21], Chuck Schumer and others into this trust equation? What happened to the stimulus and jobs? What about the secretive meetings in the House and Senate to quickly pass a bill with text that nobody had read? What about the massive debt and wild spending?? Where did transparency fly off to?

The New Deal pitched again as predicted:

“The Obama administration interpreted the political climate in an entirely different way. As John F. Harris and Carol E. Lee wrote in a smart piece in Politico on Wednesday, the administration interpreted the 2008 election as a rejection of not only George W. Bush-style conservatism, but also Bill Clinton-style moderation. The country was ready for a New Deal-size change. It had a leader in Barack Obama who could uniquely inspire a national transformation.”--Politics in the Age of Distrust

This comment transcends the usual sophomoric mumblings we read in ‘expert quotes’ cited by Brooks in the past. He recovers somewhat here:

“As happens every four years, hubris defeated caution, and the administration began its big-bang approach. As always, it backfired. Instead of building trust in government, the Democrats have magnified distrust.”--Politics in the Age of Distrust

Okay, now for the solutions to restoring trust in Obama:

“The Democrats now have four bad options.

[1] The first is what you might call the Heedless and Arrogant Approach. … We know this is unpopular, but we think it is good policy and we are going to ram it through and you voters can judge us by the results.

[2] The second route is what you might call the Weak and Feckless Approach. Democrats could say: We have received and respect the message voters are sending. We are not going to shove the biggest social transformation in a generation down the throats of a country that has judged and rejected it. We are not going to concentrate immense new powers in a Washington the country detests.

[3] The third approach is the Dangerous and Demagogic Approach. This begins with the presumption that what Americans really want is a bunch of pseudopopulists to tell them they can have everything for free.

[4] The fourth approach is the Incoherent and Internecine Approach. This would involve settling on no coherent policy but just blaming each other for cowardice and stupidity for the next month. Liberals, who make up 20 percent of the country, could complain because they didn’t get their version of reform. The Senate and the House could bash each other. The intelligentsia could bash the public.”--Politics in the Age of Distrust

Well, he did select four bad options, at least in my view. Now for his selection:

“I support the Weak and Feckless Approach. Trust is based on mutual respect and reciprocity. If, at this moment of rage and cynicism, the ruling class goes even further and snubs popular opinion, then that will set off an ugly, destructive, and yet fully justified popular rebellion. Trust in government will be irrevocably broken. It will decimate policy-making for a generation.

These are the choices ahead. Have a nice day.”--Politics in the Age of Distrust

With choices like this the Democrats have no realistic choices. Clearly, the factors that caused this mess [subprime mortgages and the debt-driven deflationary spiral[22] that almost crashed our financial system and massive social spending that continues to drives us further downward] are beyond the scope of this missive. There is no mention of the salient fact that this green revolution [read EcoNazi[23] administered in the worst interests of nations by EcoQuislings[24]] merely builds new asset bubbles because the left is using borrowed or printed monies to set up expensive and inefficient replacements for existing systems that will raise prices, cost more jobs and lower the efficiency of our economy. Fecklessness is the disease of indecision and that attribute does not characterize many left-liberals who are going for broke here.[25] I guess Brooks just wants us to mumble about our 100% debt-to-GDP ratio and just shuffle off down the merry pathway. 

Where is the suggestion for Obama that he try to change the general view that he is anti-capitalism and pro Marx? What can Obama reasonably do to persuade the voting public that he is not soft on Islamo-Fascism[26] and or the kind of Marxism brewing in South America? There is no remedy for trust reclamation here.

Brooks chooses a default pathway designed to keep as much of the recent loot in the hands of the left as they keep their heads down and slink from publicity, as is his mission in his current job, and wants to mumble the salient points away. The unspoken analysis here is that we are mired in debt from both Bush and Obama and if conservatives get their way spending will be slashed and taxes will be cut for corporations and that means unemployment in the government sectors will soar and phony energy programs like the sort that temporarily prevent California[27][28][29] from going into default will tip them into bankruptcy when defunded. MA, NY, NJ and MD follow along soon after. They must not be bailed our as the NYT pleads.[30]

This is the equivalent to the juvenile game of ‘hot potato[e]’ where the ticket to the train wreck is passed off to someone else to deal with.

I have never thought that Obama was anything other than a Marxist, a follower of Saul Alinsky, a radical stooge of the far left who hates America and its heritage, a person who will do or say anything including exploiting racism and bigotry to grow government and debase the business community and to spend everything we have to and then gleefully deal with a collapse of our currency or economy or both and then to announce that ‘capitalism has failed’ and we need something else.  He is a stooge of ACORN, the unions like SEIU and any and all far-left political organizations even if they are as phony and unconvincing as the environmentalists.

He had at least a chance to restroke Leninism in America in this try with the wild applause of those oppressed and brainwashed people of the Euro zone and most of South America. He missed his chance.  He is a failure in so many ways.

So, the Republicans need to [1] purge their ranks of RINOS, [2] pin every single nasty and fruitless vote, the debt and massive spending and recite the speeches of any and all Democrats that supported Obama and to [3] tear down any and all phony social programs that he built up. They need to show the world that this massive spending is threatening our currency and economic future and showcase every single leftist who make accommodative speeches on the subject and voted for such legislation. They all need to be voted out of power in local, state and federal elected positions.

We can probably save the currency if we stop spending now and cut numerous phony social programs but only at the expense of more unemployment especially in government where ‘employment’ is the least needed. States like CA ,MA, NJ , NY and MD and probably IL will have to be forced to avoid default by implementing  massive government cuts in both spending and jobs and to stop subsidizing bankrupt businesses for political reasons like GM, Chrysler and most of the big banks.

Obama has shown the voters his true side and now they are outraged. I have having a nice day as Brooks suggested.

rycK

Comments to: ryckki@gmail.com

The Bursting of the GanGreen Bubble.

Abstract: Government funding of inefficient programs of the green sort tends to guarantee that an asset bubble is forming and will soon burst because of economic reasons.  California is the best place to study this phenomenon outside of Europe where Spain and Germany are going through a green bubble exercise of their own.

We are all learning some elementary lessons on debt and finance at this time and there will unquestionably be some further rapt instruction in the near future.  The folly of offering credit to those who cannot pay their debts off as in the ‘affordable housing’ bubble[1] we just experienced has not yet been fully accepted by the masses. The notion that wealth is lost after a collapse in house prices was hazy or vague until the public was forced to accept the notion that home equity was credit which is money and a lot of that vanished. Collapsing home prices erases equity and thus vacates the collateral for credit thus preventing borrowing to buy things. The second wave of debt problems comes in when that lost wealth causes businesses to lay off people and corporate earnings fall and the stock market crashes. The second bubble next up on deck is actually a mixture of two simultaneously occurring bubbles: commercial real estate[2] and consumer debt monthly in the form of credit cards. It is difficult to believe that major banks who issue millions of credit cards at 25% interest rates are losing money on the deal, but that is what they now report so a contraction in this credit market is now bubbling away and will commence.

These debt-to-bubble lessons have not been learnt in sufficient depth and with a true conviction because many governments suppose they can just borrow and replace the lost equity in homes for some of the citizens or provide a stimulus to the economy to get things started again. Thus when house prices raise so do taxes and when they fall the government needs to borrow and replant this equity so as to keep some notion of balance or fairness. They used debt to finance this government spending in the name of the first stimulus and thus risk creating more bubbles. That is what they are doing now with this furious thrust into the realm of EcoNazism where we must spend and spend to save the earth from catastrophe with green goodies like electric cars, windmills, carbon dioxide scrubbers and other follies. Apparently our failure to act promptly in Copenhagen on the Cap and Trade taxes has led directly to current punitive, reflexive earthquakes in Haiti.[3]

There are two basic problems with this: [1] a new green bubble is forming as the asset base for this project is being manufactured directly from wholesale and naked debt, [2] the replacement of cars and electric power with solar panels and such and other big ticket items with their green equivalents is not cost effective.  Thus, to switch to solar cells drastically increases the cost of electrical energy and attempting to use batteries to propel cars in inefficient as the batteries are heavy, inefficient and will not give the car much range. These batteries are expensive, do not last very long, and are expensive to replace and add greatly to the cost and operation of the car. Spain is reported to have lost 2.1 private sector jobs for each new green job in that country.[4]

This notion, then leads to more debt and boosts risks by creating new debt-driven asset bubbles. Places like California which is 64 billion dollars in debt with an additional projected 20 billion dollar deficit [20% or so of their budget] that must be financed somehow and the implied notion that they will cut spending is apparently not acceptable.[5] Thus, California is heading toward financial oblivion created by massive debt they cannot repay from state tax revenues and are simultaneously funding massive green projects that act as economic gangrene and rots out the financial infrastructure of the state.  The novel solution to this is to grow, sell and tax dope and to raise taxes wherever possible except on homes which are protected by the infamous Proposition 13. A philosophy like this drives out tens of thousands of high-wage earners every year from the state and tax revenues plummet. Isn’t this strange?

The US national debts are massive and Californians bears a massive load of debt of its own. Since there are only 65 million workers to handle 12 trillion dollars in National Debt and only half of them pay taxes above the median of $32,000 then this works out to $192,000 each for these workers.[6] California has 36,756,666 million people while the US has 304,059,724 with about 65 million total workers in above the median.[7] Thus California has about 12.1% of those workers and since about 21.1 % of the workforce on average across the country pays the taxes we find that the 7,850,000 are liable for the total CA tax burden and that works out to about $8,100 in state debt per worker in the upper half of the income bracket. This puts the total tax burden at $200,000 each. For households with two workers and a total income of at least $62, 000 or twice the median this gives the household debt at $400,000 at this current time. So, at a time of high debt we are generating more debt to fund projects that will produce goods and services at a higher cost. This is the way the thinking goes now in leftist circles. This is probably the new economics as long as it lasts.

Now, the costs of solar power cells and installations are rapidly increasing as Germany has shown. Germany subsidizes its power that is generated from solar and other sources and will soon cut those subsidies by about 18%.[8] The problem here is this new green business is raising consumer costs for such power. France and Spain now follow suit in attempts to minimize this subsidy and stock prices in solar cell companies are plummeting. The key here is that such generators of solar power were guaranteed some 56 cents per kWh and that was double the price the consumers paid. When solar power was a mere 1% of the total power generated then this could be spread around with minimal cost elevation. But, when solar approaches 10% of the total power generated subsequently the burden suddenly becomes excessive and expensive. The German Solar Industry Association warns that many businesses will not survive these cuts. This is bubble formation by government.

Now, the confluence of high taxes, high debt and high costs form some common vector in the economy where the poor efficiency of the solar cells compared to coal now shows up in the market place as excessive cost. If the subsidies, like the stimuli here in the US for ‘cash for clunkers’ and home buyers, are reduced the business balance sheet lines will show lower income [top line] and higher middle line costs. The Obama stimulus #1 has not worked and neither did cash for clunkers or the housing subsidies. The recent ‘jobs’ program spent $92,000 per job[9] and, then, we spent $24,000 per car on the Clunker Follies and a mere $43,000 per house on the housing scam.[10] And, none of these had a lasting effect. All of the money to propel this was either borrowed or printed up quickie fashion by our government.

Thus, these expensive and inefficient green businesses cannot stay in business for long if the government subsidies falter so the bubble will burst with rising unemployment and wasted fixed assets.

But, this is the logic of the Neo-Keynesians and Paul Krugman[11][12][13][14][15][16] and his followers and such follies will remain with us until another collapse in our economy convinces us otherwise. Our debt levels were way too high before this nonsense started metastasizing in our economy and if it lasts too long then our debt will bury us.

rycK

Comments to: ryckki@gmail.com

Deflation, Inflation, Politics and Insanity Stewed to Perfection.

Abstract: Half the economists and most of the government leaders do not know what they are doing. They tempt fate with higher and higher debt ratios to their GDPs. Most are divided as to the answer to the essential question whether we are in deflation or heading for inflation. Their analytical tools are either rusty or their economic vision is blurred by politics. Whatever the theories or politics we are clearly entering some new arena of massive world debt.

We might presume, given the mountain of books and theories of economics, the queen of the social sciences[1], that some general consensus of how to handle government spending, unemployment and its concomitant debt and the effect on the value of currencies of the world might be readily found and shown, when appropriate, to political leaders and bankers in words of few syllables.  We might further presume that they would pay attention to the laws of economics, if they are known with any certainty[2], and adjust their policies accordingly. These presumptions are faulty at best. Those who ‘study’ the grand science of economics and finance can agree on little and much of this posturing appears to be based on the salient fact that they are thinking backward from their political indoctrinations thus their conclusions derived from objectively perusing the data and arriving at a sound conclusion are phony if not fraudulent.

They cannot decide if we are deflating or inflating at this point in the economic space-time continuum. This appears to be as comical as the hypothetical case where some new NFL team is created with pomp and circumstance, the stadium built and adorned, the cheerleaders selected by acclaim for their many desirable attributes and then the process is stalled for wondering why the ball is not round.

The quest for capital is essential to business and we may question the role of government and the now hollow zombie banks in their ability or desire to ‘make loans’ to business given the entanglements and interference from Congress.

Many, like Mr. Evans-Pritchard’s of the Telegraph believe, and have demonstrated quite convincingly, that we are in a downward debt-driven deflationary spiral.[3] Others like David Galland think we are heading for massive inflation and disagree.[4] This is not possible simultaneously, but deflation could transition to inflation very quickly.

At the expense of being accused of seeking a reasonable and unexpectedly valid source of information on this dilemma, we might look at the markets, relying on such obtuse capitalism notions as the once-sufficient law of supply and demand, for a quick view:

Surprisingly, the junk bonds have done well raising some 163 billions and “Junk bonds returned 31 percentage points more than the Standard & Poor’s 500 Index’s 26.5 percent in 2009.”[5]

So, junk bonds of the CCC [high risk rating] type are selling well and have good returns.

Paul Krugman guessed wrong on this one[6] and predicted a bubble, but recall that junk bonds have little or no government inference or oversight and thus offer a degree of freedom beyond the clutches of the Marxists and their lackeys. Krugman is a liberal political activist who only advocates taxation and bigger spending by bigger and bigger government without exception.[7] Rogoff thinks this form of finance might trigger an asset bubble due to the short terms on the bonds and the upward pressure on the assets.[8] It is interesting that our government is doing the same thing with its short term Treasury sales [30 day T-bills at zero %] and frantic attempts to make up for the lost fraction of the GDP this recession has brought.  Apparently, our government believes that if wealth is lost, as in the housing bubble and the credit contraction aftermath, with more to come, they can just print money and use that to subsidize lost home equity with the intent of reproviding ‘affordable housing’ for the poor so we can all be ‘equal.’[9] Didn’t this result in a housing asset bubble? Spending all of what we have and then borrowing from the future is the preferred way in California[10][11][12] and other near destitute states awash in debt and now mere beggars but groping for money in the same fashion.

Getting back to market thinking, Bill Gross of PIMCO now cautions us that the government’s ‘sugar daddy’ performance in buying 1.25 trillions in mortgage goodies must [or will]  halt and thus a vacuum may exist.[13] Maybe deadbeat homeowners can issue their own junk bonds. The leftists cannot force themselves to cope with the bond markets even after a few centuries of examination and fitful moaning.[14] Bonds are the major financing arm of governments and have been for 5 centuries. Gold is soaring for what reason?[15] CCC rated junk bonds return almost 9% now while AAA treasuries are still near zero coupon. The corporations could borrow from banks that get federal funds at zero % for 3-5 % or a smidgeon higher and are not doing so.  Why is this? They must pay 8-12% on junk issues. The reason is not clear, at least to me, as the banks may be hoarding cash and lending only to AA rated borrowers and that leaves out many if not most small businesses. If true, the smaller players in this game have no other options for raising capital other than selling their own equities or bonds. Markets usually open doors to the path of least resistance like water seeks the lowest possible level and big banks with government chains wrapped tightly around them may deliberately lock out the little guys. Tax breaks go to unions and just about everybody else except small business and this is probably by design. Government can control and steer big business as they did with GM, Citi, BoA[16], AIG and Chrysler employing their apparent Socialist-Neo-Fascist blend of governmental[17]mechanisms, but cannot do the same for lesser business entities. Scarce capital may be the result of lending institutions being forced to favor green projects otherwise known as EcoNazism.[18][19] California will, hopefully, show us the folly of this clever maneuver by crashing their economy and fulfilling my prediction to the greatest extent as Spain has apparently done and put breaks on this novel infatuation with debt. Thus there is a large supply of corporate bond sellers and numerous junk bond buyers all content with the process so far. This is called a market.

Thus, we wonder if we have missed any outer barrier warning markers in this quest for financial oblivion we are heading into based on debt.  An article in the Irish Times peruses the views and options of bonds, debt and gold and is highly authoritative and soberly inquisitive in my view.[20] Some think we are entering into the second phase of our second great depression.[21]

We need to revisit the 1937 theories again and ponder some of this:

The Deflation fundamentals from Irving Fisher:

“Following the stock market crash of 1929 and the ensuing Great Depression, Fisher developed a theory called debt-deflation. According to the debt deflation theory, a sequence of effects of the debt bubble bursting occurs:”[22]

1.     Debt liquidation and distress selling.

2.     Contraction of the money supply as bank loans are paid off.

3.     A fall in the level of asset prices.

4.     A still greater fall in the net worth of businesses, precipitating bankruptcies.

5.     A fall in profits.

6.     A reduction in output, in trade and in employment.

7.     Pessimism and loss of confidence.

8.     Hoarding of money.

9.     A fall in nominal interest rates and a rise in deflation adjusted interest rates

How many of these parameters do we now fulfill in the U.S. or world wide?  For me, I see [1-4] in full force by home owners and civilians with falling home prices and saving rates soaring and [5] being stabilized only by cost cutting measures leading to higher efficiency thus higher profits and thus higher unemployment thus amplifying [6] and I think many corporations are hoarding money as in [8] while selling junk bonds while we have the Fed offering AAA rated bonds (while this still lasts) at zero percent or slightly above. [7] is obvious.

Spain and Ireland, that are two of the PIGS [Portugal, Ireland, Spain and Greece], are selling 34 billons in bonds via banks.[23] Both of these two countries are line for exciting sovereign defaults as did Iceland.  Austria, Belgium, Poland are selling at junk rates too while Cyprus, Hungary and Slovenia are in the que.

So, instead of cutting jobs and spending and trending toward austerity, the PIGS and others are going to borrow their way out of debt like California. We may get some novel coaching in basic finance in the next few quarters along with some defaults and other disasters if this continues. But, half the ‘experts’ consent and offer praiseworthy acclaim for massing spending by government—a group dominated by Neo-Keynesians. Perhaps debt can be converted into profits somehow in some new process yet to be unveiled in its glory. We shall see.

rycK

Comments to: ryckki@gmail.com

Krugman Unlearns for Us by Distorting Learnings about Europe and Its Failing Economies.

Abstract: Paul Krugman gives us a rosy picture of how well Europe is doing as they begin to crash in multiple debt-driven sovereign defaults following the path that Iceland just showed us on the way down to financial oblivion and we are invited to join them. Here, the usual propaganda tricks of cherry-picking only the positive elements of a disaster while glossing over the ugly parts are displayed in song and verse with all the magic and artistry we have come to love from our Economics Nobel Prize winner. Krugman convinces us, very unconvincingly, that Europe does not have much of an unemployment problem and that although their taxes are 8 to 16% higher than ours that their system is better and we ought to emulate them. He fails to mention that a major part of their employment is government subsidized and that several EC members are set to default on their debts. He ignores their debt to GDP ratios that are soaring like ours as if we can ignore this crushing debt sometime soon in the future. As usual, the solution to all economic problems is taxation and spending to achieve social justice.

One way to play the political game when the topic is the success of some program or idea, or perhaps the lack thereof, is to select a cluster of entities that displays some composite character and then to be choosy in sorting out the attributes thus presenting the bright side for approval and applause and ignoring the worst parts.  The selections, forced by the subsequent ‘analysis’ must produce some proven fact or trend that can be used as analogy our government to focus upon so we will all enjoy egalitarianism or something better. We could expect that an ant colony or perhaps the NFL or even organized crime families might be analyzed in various ways where only the positive elements of such groups are publicly exhausted, splashed in glitter as their signal achievements are displayed boldly on the doors of taxi cabs, or in more cryptic latrinalia in lesser public places such as university textbooks and thus serve as sterling examples of success. Europe is offered up to us as a prize using this logic and process today.

The New York Times sports a cadre of ‘journalists’ [1][2][3][4][5][6][7][8] and staff[9] that sift through the news to angrily force an alignment of selected observations with grand ideological visions much in the manner of their honored Pulitzer Prize winner Walter Duranty.[10] Paul Krugman[11] is one of these gifted players in the ideological propaganda games, specializing in Keynesian economics, whatever that means,  and has been given a special warrant from the Peace Loving Swedes [read dirty, third world  gun peddlers and mass murderers in cahoots with their inbred lackeys the Norwegians—now known as  EcoQuislings]. This majestic endorsement brightens the view of the New York skyline with iridescent tinsel and other illuminations driven by the fame and fortune of the Nobel Prize[12] so he can continue to turn the old rusty Marxist crank and generate new nostrums with license [avec le permis d'almagest] and fluff [guirlandes] that amplify and define his economics in a strictly political manner. A swami[13] adorned with purple pantaloons and a magic turban could do nothing better.

Today, Paul Krugman guides us through the economic mysteries of Europe and demonstrates how this collection of worn out, pathetic ensemble of socialist losers is actually successful. Keep in mind that this is a little game we play with him where we need to count the number of times he advocates taxation and spending and watch out for the elusive notions of either smaller government or the horrible case of tax cuts.  I am confident we shall learn of the splendor of more taxation and bigger government as we plough through this fluff and resist the temptation to unlearn some basic economics and finance and tax cuts or smaller government will not be mentioned.

The First Lesson:

“As health care reform nears the finish line, there is much wailing and rending of garments among conservatives. And I’m not just talking about the tea partiers. Even calmer conservatives have been issuing dire warnings that Obamacare will turn America into a European-style social democracy. And everyone knows that Europe has lost all its economic dynamism.”[14]--Learning From Europe By Paul Krugman Op-Ed Columnist Published: January 10, 2010 [Emphasis is mine in all quotes.]

There are two major problems at this junction professor: [1] we have no clue what this healthcare reform is all about or will cost and [2] whatever it is it is unlikely that it will be financed in the US like it is in Europe with taxes imposed early and benefits delayed a few years so that it will be appear to be a deficit neutral program. It is an economy killer. A side corollary here is that the US government has never produced any successful social program[15] of any sort and has only wrecked Social Security, Medicare, Amtrak, the Post Office and numerous other entities with their bungling. The cynical comment, in jest, about Europe’s economic dynamism will no doubt be corrected in the next few paragraphs.

So, professor, we start with nothing but fluff.

“Strange to say, however, what everyone knows isn’t true. Europe has its economic troubles; who doesn’t? But the story you hear all the time — of a stagnant economy in which high taxes and generous social benefits have undermined incentives, stalling growth and innovation — bears little resemblance to the surprisingly positive facts. The real lesson from Europe is actually the opposite of what conservatives claim: Europe is an economic success, and that success shows that social democracy works.”--Learning from Europe By Paul Krugman

We wonder what this means and if we should look at the EU or just Europe excluding the United Kingdom or what here. If we elect to look at Spain and Greece we can see some major problems with their economies and astronomical unemployment levels that sort of tarnish the idea that there might be “surprisingly positive facts.” We should also inject some history here and mention, casually, that Europe had two world wars that killed a mere 100 million people and a Communist revolution that wiped out another 40 million and they wasted their best people in this war process that somehow defied diplomacy and the survivors competed with the rats in the rubble of bombed cities to form some government that offered ‘peace and security’ first among all things and the pitiful survivors were willing to lick any boot or kiss any backside for this chance. And, they did. It is interesting that we would copy the Europeans on any measures other than winemaking and cooking.

Some comments are extracted from the text here to focus on his metrics:

“In any case, the statistics confirm what the eyes see.

[1] America’s real G.D.P. has grown, on average, 3 percent per year.

[2] European Union before it was enlarged to include a number of former Communist nations — has grown only 2.2 percent a year. America rules!”

[3] And what about jobs? Here America arguably does better: European unemployment rates are usually substantially higher than the rate here, and the employed fraction of the population lower.

[4] In 2008, 80 percent of adults aged 25 to 54 in the E.U. 15 were employed (and 83 percent in France). That’s about the same as in the United States. -- Learning From Europe By Paul Krugman

Let us pause here and review some facts:[16] The EU is experiencing a monstrous increase in sovereign debt. France, for instance will see its national debt to GDP ratio increase from 63.6% in 2006 to 89.7% in 2014. The numbers for the U.K. shoot up from 43.3 to 87.8 in this time span while the US will go from 61.9 to 106.7 by 2014 or sooner. Germany’s debt will rise from 66% to 91%.  This means that this ‘prosperity’ we learn about in Europe is just temporary until the time comes to repay the debt and then we shall see unemployment soaring beyond 10% or massive sovereign defaults or both. High debt ratios also lead to much lower growth as we learn from Reinhart and Rogoff in their new book.[17] The EU is in a downward spiral and are capping off their future with massive costs and inefficiency of the novel EcoNazi [18]Cap and Trade scam. Their real problem now is competition and they want the US to fall in their latrine while they beg India and China to step in too. Europe is a social and economic leper colony.

On this employment record, Krugman fails to tell us that Germany has a social program called  Kurzarbeitergeld [19]that pays workers part of their salaries  for not working full time.[20] In economics, we call this government-subsidized excess capacity and this keeps costs high and burdens businesses and the entire economy. Krugman fails to tell us that Greece[21] is probably collapsing because their debt is 98% of their 2009 GDP[22] [Jan 19, 2009 report] so the IMF is sending a team on Jan 12, 2010 to look at this mess.[23] They talk about control but there is no accounting for Greece’s military on their public books, an interesting way to share economic and financial information in the EU. Another major problem is Spain while Iceland is completely finished as a functioning state.  Spain’s unemployment rate for young people is a staggering 43.8%[24] and 19.4% overall with riots and social unrest ongoing for months. Iceland has just defaulted[25]so their credit rating is worthless, but, they did have great employment? Or did they? Unemployment is now 10% in the Eurozone we find and probably rising.[26] Paris is famous for burning 500 cars per night[27] and seems to tolerate bands of Islamo-Fascists preaching hate and recruiting jihadists on numerous streets by howling mullahs that are on welfare as the French copy the London Model of Social Cowardice. We are expected to extract some useful information or guidance from this pack of fools?

Krugman withholds all of this and fails to tell us that this spate of prosperity from the socialist world is being paid for in near term debt. A good socialist only looks at the next election and will scrounge every last ducat to sprinkle around his podium so as to convince the polis that they are in good hands and vote for him again. England is being destroyed by debt by their one-eyed monster Gordon Brown who seeks some supreme form of state capitalism[28] [this is the definition of Fascism] and is spending the state into bankruptcy.

Krugman wanders around these hard facts above with this little ensemble of blather and cavalier rhetoric:

“The point isn’t that Europe is utopia. Like the United States, it’s having trouble grappling with the current financial crisis. Like the United States, Europe’s big nations face serious long-run fiscal issues — and like some individual U.S. states, some European countries are teetering on the edge of fiscal crisis. (Sacramento is now the Athens of America — in a bad way.) But taking the longer view, the European economy works; it grows; it’s as dynamic, all in all, as our own.” -- Learning From Europe By Paul Krugman

Forced to discuss some glaring problems and dealing with  some probable sovereign  defaults like Iceland and probably Greece and Spain,  Krugman chooses to push this off to the future with the  implied assumption that this debt is manageable and the EU can return to its ‘dynamic’ status.  We can just ‘tax the rich’ he thinks and pay all that back.

What this guy fails to tell us in all his assaults on the rich is that, for tax calculations, this ‘rich group starts off at a mere $50,233 on a household basis[29] but for the case of individual incomes at the median is right at $32,140[30] and that our current tax liability for persons who pay federal taxes [only those above the median] is thus about $192,000 for the individual. You can certainly double that amount for a household with two incomes above the median. There is no way a person making $32,000 a year can handle a debt of $192,000 on average. To pay this off in 30 years would require a monthly payment of $1,030 or a 38% additional tax rate.  Who can handle this? If you exclude those who make less than Joe Biden’s [Plugs[31] the Buffoon[32]] famous $250, 000 income cutoff[33] we find that there are only 13,215,000 of these people who would have to pay off 12 trillion dollars at the rate of $908,059 per person. Such a mortgage at 5% would mean payments of $4,874.66 per month.[34] Note that this is 12 x $4,874.66 or $58,495.92 per year that that is a constant tax of 23% for debt repayment alone and excludes other taxes state and local and federal income taxes. It is easy to see that for a person making $250,000 this debt repayment service piled on top of other taxes may exceed 100% or matching the Soviet Dream. It is easier to imagine that these people will flee the country to seek lower tax rates as many are doing in California[35][36][37] and New York, now cesspools of boiling caustic taxes.

There is no way we can pay off this debt but Krugman plunges forward into an ocean of debt to buy some socialism for us at least for a while:

“So why do we get such a different picture from many pundits? Because according to the prevailing economic dogma in this country — and I’m talking here about many Democrats as well as essentially all Republicans — European-style social democracy should be an utter disaster. And people tend to see what they want to see.” -- Learning From Europe By Paul Krugman

It is an utter disaster and we can see that.  Krugman apparently sees what he wants to see.”

“Europe is often held up as a cautionary tale, a demonstration that if you try to make the economy less brutal, to take better care of your fellow citizens when they’re down on their luck, you end up killing economic progress. But what European experience actually demonstrates is the opposite: social justice and progress can go hand in hand.” -- Learning From Europe By Paul Krugman

Have we forgotten about the ‘social justice’ they got from the USSR? The EU is being crushed by debt and Portugal Ireland, Greece and Spain [The PIGS[38]] and probably Latvia and Rumania will probably join Iceland in defaults. The taxes are already astronomical:

“Taxes in major European nations range from 36 to 44 percent of G.D.P., compared with 28 in the United States. Universal health care is, well, universal. Social expenditure is vastly higher than it is here.”-- Learning From Europe

And what happens when the debt has to be repaid? Here we see a difference of 8 to 16% lower taxes in the US with comparable debt and better healthcare now.

This is a terminal episode where the only outcome is currency debasement, massive inflation or worse. Export income will suddenly vanish for countries like Iceland that just defaulted yesterday and that fraction of their GDP will be LOST!

But, to be fair, we have to acknowledge that socialism, even for a while, is better than watching the leftists face the daunting horrors of capitalism where only about 85% of the people can enjoy the fruits of their work. [39] So, we can all rejoice that we can go broke for Krugman and his liberals to ‘save’ the 15% from the lousy lives they lead until we all go broke, the world economy collapses and we are all poor. This is a fair price for the successful parts of our society to pay according to a dedicated liberal as he commits nothing to the game expect criticism, spite and sophistry.  This is the social theory of a parasite: Let us all be poor so we can become equal and enjoy, at par, social justice.

With Krugman it is always tax and spend or, to be novel, spend and then tax.

rycK

Comments to: ryckki@gmail.com

Herbert of the New York Times Bawls for Alms or Thinking Backward without Thinking

Abstract: Herbert of the NYT offers us maudlin theatre with an irritating display of alms grubbing as he carefully sidesteps the only solution to our massive debt problems that are sinking this economy and that is government spending. He wants to rescue some states with federal funds. CA and NY are hopeless cases where spending is out of control and hundreds of thousands of taxpayers are fleeing these places while their governments import illegal aliens and poverty to bolster their voting roles. Tax and spend are the only two operative words in this piece.

All humans posses different attributes and can be ranked by standardized tests on some and by subjective or casual analyses on others. The complex mixture of such attributes forms part of the personality and the manner by which these characteristics are expressed in communication complete the person. Presumably, education or one of its political variants is impressed upon the student in early years to enhance some of these attributes and even more important becomes the use of refined thinking skills to make analyses and extract new information from current events. This is all very complex, but what we view from reading samples of a large number of persons’ works is that some people can think and then write and others can write without thinking by substituting dogma or by intercalating clichés among the blank spaces of their written works.

Now, political machines like the New York Times employ a variety of writers[1][2][3][4][5][6][7][8] and staff[9] that may appear to have spent some time thinking and analyzing the news and to compile that information into some article for, in this case, the op-ed section. There is fame and fortune in this business if they can rise above the rubble of yellow journalism and launch some new concepts or discover the hidden secrets and unleash them upon the public.  Many must thrash about in a contest of ideological rivalry to see if any are noble enough to match the elegant essays of their honored Pulitzer Prize winner Walter Duranty.[10]He set standards of journalism that, while not based on truth, were politically stimulating and formed the basis for political decisions since politicians seem to read this paper often to learn about their agendas. He was a role model whose mantle few expect to wear.

Today, we are treated to examine a grand example of a cogitatively deficient process, although apparently  an acceptable variant of what some call journalism, wherein some written work is composed while the salient  facts are omitted, any hints of objectivity are scrubbed away and suddenly a maudlin propaganda piece of tear-jerking majesty is unveiled for us. We have been invited to a disaster and here it is in cognitive terms:

Herbert recites our mistakes and our inattention to danger:

“We didn’t pay attention to the housing bubble. We closed our eyes to warnings that the levees in New Orleans were inadequate. We gave short shrift to reports that bin Laden was determined to attack the U.S. And now we’re all but ignoring the fiscal train wreck that is coming from states with budget crises big enough to boggle the mind”[11]--Invitation to Disaster By Bob Herbert Op-Ed Columnist Published: January 8, 2010  [Emphasis is mine in all quotes.]

Propaganda pieces frequently launch off with threats of impending doom that sway the reader and make him cry or thrash about in anguish but usually there is some ‘solution’ to the problem that will save the day for all of us and this piece is no exception. He fails to mention the $12 trillion dollar federal national debt now running at $192,000[12] on average for every single taxpayer who makes more than $31,000. Herbert[13] is going to tell us have to avert this disaster:

The call for more fees and taxes:

“The states are in the worst fiscal shape since the Depression. The Great Recession has caused state tax revenues to fall off a cliff. Some states — New York and California come quickly to mind — are facing prolonged budget nightmares. Across the country, critical state services are being chopped like firewood. More cuts are coming. Taxes and fees are being raised. Yet the budgets in dozens and dozens of states remain drastically out of balance.”-- Invitation to Disaster By Bob Herbert

This is not news. Why not just raise taxes some more?? There are many reasons why certain states are crashing into the financial shoals and we might be impressed if some of them were mentioned in this propaganda spread.  Where is the comment on excessive government spending? The only hint that some of this mess was self-inflicted comes from this little snippet:

“State governments are not without fault. Very few have been paragons of fiscal responsibility over the years.”-- Invitation to Disaster By Bob Herbert

This paragraph then continues with:

“California is a well-known basket case. New York has a Legislature that is a laughingstock. But for the federal government to resist offering substantial additional help in the face of this growing crisis would be foolhardy. You can’t have a healthy national economy while dozens of states are hooked up to life support.”--Invitation to Disaster By Bob Herbert

Here we go! We have a problem that must be solved by throwing somebody else’s money into the snake pit before we learn what caused this and what must be done to ameliorate this sickness. We read nothing about punitive taxation of the sort that drives high income earners and businesses out of California and New York. We learn nothing about the wild spending habits of the political creatures that cluster in small groups in Sacramento and Albany to feed upon the taxpayers. We hear nothing about the millions of illegal aliens who infest these two states and require all sorts of social programs including free medical care and education and how these costs might burden the tax revenues. We learn nothing about the drug problems and phony drug rehab experiments that are costly and largely disingenuous and actually tend to exacerbate this problem with the bawdy tinsel and song fests rather than minimize it.

Herbie then solicits the opinion of an ‘expert’ on all this:

““Expenditure cuts [read spending cuts here, ed.] are problematic policies during an economic downturn because they reduce overall demand and can make the downturn deeper. When states cut spending, they lay off employees, cancel contracts with vendors, eliminate or lower payments to businesses and nonprofit organizations that provide direct services, and cut benefit payments to individuals. [Emphasis is mine in all quotes.]

“In all of these circumstances, the companies and organizations that would have [read SHOULD NOT HAVE here ed.] received government payments have less money to spend on salaries and supplies, and individuals who would have [read SHOULD NOT HAVE ed.] received salaries or benefits have less money for consumption. This directly removes demand from the economy.””—Quoted from the Center on Budget in Invitation to Disaster By Bob Herbert

Translated, this means the federal and state G.D.P.s should be maintained at previous levels with spending. So, the singular metric that drives up deficits and drives down tax revenues and discourages citizens and forces them to flee is spending cuts and this is the first thing Herbie wants to scratch off his little list. The argument presented by this ‘expert’ pleads for more spending in all cases and just amplifies the budget deficit mess. But, the states can wiggle out of this mess and get back to the normal process of more taxation and more spending if only we do what?

Print more money and give it to the states:

“The Obama administration has provided significant help to states through its stimulus program, and it has [NOT] made a difference. It prevented the crisis from being much worse….and… We need more responsible and less wasteful fiscal behavior from all levels of government. But the country is still faced with a national economic emergency, with tens of millions out of work or underemployed. We can hardly afford any additional economic shocks. Turning our backs on the desperate trouble the states are in right now is nothing less than an utterly willful invitation to disaster.”-- Invitation to Disaster By Bob Herbert [Emphasis is mine in all quotes.]

 Spend spend spend. We already have a disaster as our economy is collapsing and our currency is going to be debased one way or the other and inflation[14] is the major avenue. There is no evidence that the stimuli to the states have done anything as yet. Cash for clunkers[15], [$24,000 spent per car at a sales level of $35,000 or less], shovel-ready projects that never started, mortgage ‘adjustments’ for the ‘poor’ were tried then the recidivism rates hit 70%[16] are examples of this stimulus joke.  This folly and other phony measures have done nothing but waste federal funds and plunged us further into debt. The call for fiscal responsibility in these two states [CA and NY] is like whistling in the forest for a lobster and champagne dinner to suddenly appear on an old stump along with some mariachi music and a belly dancer for entertainment.

This never ends. This is just bawling for alms. This is begging and whining and glubbering and making a joke out of the whole process in terms of debt. This last resort to government handouts and more state spending is the very last measure we need to employ because both states and the federal government will add to their deficits and the depression we inherited from this debt-driven deflationary spiral[17] will continue to get worse. Many in the Obama administration and pseudo economists at the New York Times [such as their resident ‘economist’ Paul Krugman[18][19][20][21][22][23] ] insist that we can spend our way out of massive debt! Debt can apparently be minimized by adding more debt, a nostrum that only a Marxist, a Methodist or a Moron would suggest.

And, if, we did give CA a $20 billion dollar grant to ‘fix’ their budget problems just what would they do with it? How about some new studies on how to grow more marijuana or some free AIDS clinics or more green projects that are inefficient but expensive and will only add to the budgetary problems. Can we depend on California to get their budget deficit to zero in 2011? Or, will they just take more drugs and spend more and hike the budget deficit to $30 billion and crawl back to Obama sob stories and beg for more in 2012. What happens after the 3^rd or 4^th iteration of his nonsense? Drug addicts cannot be cured any more than pedophiles can and we can add to this sorry list of addicts and protosimian beings the liberals of the Democratic Party who can only spend money they don’t have. If we give them anything they will just spend it and beg for more next year. This is hopeless.

Look for a resumption of the 2008 depression we cooked up for ourselves with massive spending and the phony ‘affordable housing’ legislation to resume mid year in 2010. We have no hope of paying off this debt and people like Obama and Herbert think we can just ‘tax the rich’ and pay for all this.  Wait until the ‘main street’ folk find out that soaking the rich with massive taxes starts off at $31,000.

rycK

Comments to: ryckki@gmail.com