The British Left Now Hail the Expert Advice of Keynesian Economists: Spend More and More. New Political Support for California’s Spending Revealed.

Abstract: A socialist politician has secured the advice of several Keynesian economists to keep on spending for the good of the British subjects and reject a plan by the opposition for any deficit reduction at that time. Joseph Stiglitz leads the charge to support Brown’s massive spending drama that will bankrupt the British economy and bring more chaos in the EU as if the  current financial woes of Greece and Spain were not enough to sink the European Union. Wondering about his credentials and ability to help out, we find that one of Stiglitz’s hand maidens, Peter R. Orszag, now Director of the Office of Management and Budget for Obama, previously joined with Stiglitz in 2002 to tell us that Fannie Mae and Freddie Mac were sound and wouldn’t fail.  California needs to enlist either of this pair to educate the people of California on the urgent need for more spending so they can finesse the debt and enjoy more marijuana. The teachings about debt that crashed Iceland, Argentina, Brazil and others in the past are being rewritten with novel nuances on how massive spending is necessary at all costs. This folly will crash most of Europe thus giving them ample proof that capitalism has failed so the leftist government can nationalize everything and bring peace and prosperity though Marxism or some similar variant.

Addiction to bad advice is a mental problem:

There is a dependent psychological aberration in which the clinical mental patient can always justify their atypical behaviour by citing some appropriate ‘expert advice’ from some obscure source.  Thus, any action is deemed positive by the patient and thus decidedly advisable in his cloudy mental state and this builds self confidence, attracts friends and admirers who can now testify to his competence and forward vision and offer support along with more similar advice. This affliction seems to be more prevalent in politicians as a cadre of such experts seems to spontaneously blossom and haunt the core leadership of any party so as to be able to supply wonderful scenarios for just about any political choice the leader must make. “God told me to do this” is frequent claim that is difficult to refute and can be compared with the also effective “I hear voices and they tell me to do…whatever.”  Gordon Brown can now attest that Nobel Prize laureate Joseph Stiglitz told him to do it. Arnold Schwarzenegger needs to pay close attention to this notion as he needs experts of this caliber.  Arnold should not accept any “loosey goosey[1]" criticisms of spending and taxation encouraged by the drug-crazed left in Sacramento without experts to stand at his back. Go ahead and spend more and lift California[2][3][4][5] [Our National Leper[6] and counterpart of Greece] into prosperity they chant. Experts and advisors have an interesting history of assisting their charges:

Hitler, for example, listened attentively to his astrologer Ernst Krafft while the British also had their own specialist Louis de Wohl at hand to divine what the paper-hanger-turned-politician was up to.[7] Sometimes the mentoring process leads to some final outcome that makes one wonder exactly what the specific advice was as in several cases such as: Oliver Wendell Holmes, Jr. (former US Supreme Court Justice) mentored the criminal and Soviet spy Alger Hiss[8] (lawyer, peace activist),  how Malcolm X might have  advised Louis Farrakhan in various matters or we can cite the strange case of the interactions among Julius Caesar,  Mark Antony and Caius Trebonius[9], who distracted Mark Anthony outside the Senate during the March assassination.[10] Sometimes the details of the advice seem to have been lost in the shuffle of politics as there is little to connect Augustin de Robespierre’s apparent mentoring advice that might have influenced the life and times of Napoleon Bonaparte if we look at the respective outcomes of this pair.

A cynical scenario[11] thus springs forth from all this in the form of reasoning that any politician can conjure any ‘plan’ from the vapors, the  wraithlike lights or from the crass requests from  his patrons or handlers  and then identify some stooge masquerading as a ‘expert’ who will sanctify the plan with pomp and circumstance and proudly justify its implementation.

Today, we inspect the curious advice given Gordon Brown by a group of some 60 ‘economists’ who now advise the continuation of massive government spending:

“''They are using the talk of action on debt to conceal the hard fact that their real position is that they remain wedded, as they have always been, to an ideology that would always make government the problem and deny people the helping hand that government can be.''”[12]--Gordon Brown warns voters of Conservatives' ideological 'hatred' of the state Telegraph 19 Feb 2010 [Emphasis is mine in all quotes]

I wonder if we could include Stalin or Lenin when talking about helping hands. We can be assured that the government is not the problem in this case because Gordon Brown tells us so in flat terms. It never is. This is a classical diversion technique used in advanced propaganda missives. Here the prospect of debt burying the sovereign state and threatening sovereign default, as is the case in Greece[13] and Spain, is being masked with oratory and Broadway Bravado whereas the opposition is blamed for threatening the future of the good people. Brown must be doing the right thing and he has experts to testify to this fact in public!

Blame the opposition:

“''Instead of helping the recovery in our country, Conservative dislike of government, bordering on hatred of government action, would risk recovery now,'' he said”-- Gordon Brown warns voters

Brown claims that cutting spending would put the people at risk in terms of the ‘recovery.’ It turns out that this list of 67 economists refutes a previous list of 14 economists who supported the opposition with recommendations to cut spending.[14] They win by the vast majority. We have the battle of the experts to witness to the truth! Which truth side do we choose? It is interesting that Stiglitz[15] gained fame for his criticism of markets that was attributed to the  lack of precise information  by participants  in those  markets thus inducing inefficiencies and hence the obvious need for government intervention. He also lectured numerous times and shares a book with Peter R. Orszag “…that the risk to the government from a potential default on GSE [Fannie Mae and her challenged little brother Freddie Mac e,d.] debt is effectively zero."[16] Orszag is currently Director of the Office of Management and Budget under President Barack Obama. Does he support the massive US spending with TARP and stimuli and jobs programs and clunkers and all that? Can there be a coincidence here?

Can Brown take advice from California or conversely?

“California's situation in some ways is more worrisome than Greece's. Having a state that is one-seventh of the national economy in dire straits is a threat to the nation's economic recovery. It is analogous to having Germany struggling instead of Greece, striking at the heart of Europe.”[17]-- Lessons for Europe from California The financial aftershocks being felt in Greece will show the EU what 'union' really means By  Steven Hill,  guardian.co.uk,  Wednesday 17 February 2010[Emphasis is mine in all quotes]

“But California and the US do have one advantage over Greece and the European Union. Certainly Europe has the capacity to handle this crisis – its economy is nearly as large as the US and China combined – but that's only if its big euro zone economies, Germany and France, are willing to lead. While the American federal government is used to playing the role of financial backstop for the states, making loans and other guarantees to weaker EU members is a new role for Germany or France to play.”-- Lessons for Europe from

The garbled message from the  leftist Guardian is hereby deciphered to enlighten us that: somebody ought to bail out these entities and maintain their jobs, healthcare desires and the status of their illegal aliens and must find the money somewhere  to do so.  The notion that Europe can ‘handle this crisis’ apparently is derived from estimating how much wealth France and Germany have  and offering a significant fraction of that sum to the Greeks as gifts. The essay also appears to omit the salient fact that Spain [with 20% unemployment and 7 continuous quarters of negative growth to mention a few problems[18]], Portugal, Ireland, Italy and some neighbors in the area of Old Prussia need help as well. The article also reaches back to the idea that California receives only 0.80 return on federal taxes while other states get more thus implying some latent debt that might be repaid like the Greeks asking for more reparations from World War II.  I wonder if the federal government would have any revenues if all the states received 100% of their tax contributions. Perhaps Alabama can hustle up some speedy reparations for California as settlement for their ‘sins of the past.’ This is also a bold and unsubstantiated proclamation since the US is now nearly 14 trillion in national debt alone and struggling with some 30 trillions in Social Security liabilities and some think that is a lot 0f money since the net worth of all our citizens is only 54 trillions. US national debts are massive and Californian bears a massive load of debt of its own.  Maybe California and Greece can simply swap debts, mutually default on the loans and null them out!

The tax load:

Since there are only 65 million workers to handle 12 trillion dollars in National Debt [soon to be 14 and rising] and only half of them pay taxes above the median of $32,000 then this works out to $192,000 each for these workers.[19] California has 36,756,666 million people while the US has 304,059,724 with about 65 million total workers above the median.[20] 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 exceeding $400,000 at this time. So, at a time of high debt we are listening to the environmentalists by generating more debt to fund projects that will produce the goods and services at a higher cost using the cases of electric cars, solar power and windmills. This is the way the thinking goes now in leftist circles. This is probably the new economics as long as it lasts.[21]

Some humorous solutions from ‘moderates:”

“Some think the Terminator ought to resort to his own devises. One solution is for California to secede from the Union, declare war on the United States by firing an unmanned, unarmed missile from Vandenberg Air Force Base, concede defeat and receive foreign aid to rebuild. At least the feds can print its own money which states can’t as well as that tacky requirement of balancing their budgets.”[22]-- California’s Case for Worst Posted by Jerry Remmers

I favor secession as Mexico needs some more ‘education’ to help them and they could work up an annexation scheme and hold a plebiscite and win by letting Mexicans living anywhere on the planet vote. We continue to add to this the looming debt from the green revolution [EcoNazism] in California and Europe with monstrous Cap and Trade taxes.[23] But, getting back to the experts:

Stiglitz concludes [2002] that Fannie Mae and Freddie Mac have a slight risk assessment:

“Conclusion

This analysis shows that, based on historical data, the probability of a shock as severe as embodied in the risk based capital standard is substantially less than one in 500,000 – and may be smaller than one in three million. Given the low probability of the stress test shock occurring, and assuming that Fannie Mae and Freddie Mac hold sufficient capital to withstand that shock, the exposure of the government to the risk that the GSEs will become insolvent appears quite low.”-- Joseph E. Stiglitz, Jonathan M. Orszag and Peter R. Orszag.

Well, now that was sound advice and this conclusion was based on much banter and froth over well-studied risk management and other follies. These GSE institutions are now bankrupt and our society is now trapped with some 3-5 trillion dollars in worthless mortgages known now as ‘toxic assets.”

The solution is always bigger government:

“"The theories that I (and others) helped develop explained why unfettered markets [indicating need for bigger government intervention e.d.] often not only do not lead to social justice [crass redistribution of wealth rhetoric e.d.], but do not even produce efficient outcomes. Interestingly, there has been no intellectual challenge to the refutation of Adam Smith’s invisible hand: individuals and firms, in the pursuit of their self-interest, are not necessarily, or in general, led as if by an invisible hand, to economic efficiency"[24]-- Joseph E. Stiglitz

We can wonder if governments control too much of the GDP and participate in the markets that the resulting debt from over spending is ‘efficient’ in market terms. If we look at this conundrum we can ask the following questions: If Stiglitz can divine market efficiencies by the proving the existence of some presumed absence of information [circular logic and an attempt to prove a zero] then how could he miss predicting the collapse of our G.S.E.s and simultaneously dismiss the notion of an invisible hand [the term economists use to describe the self-regulating nature of the marketplace[25]] that guides the natural supply and demand process? Stiglitz might examine the possibilities that many markets worked smoothly with little government interference since ancient times, a bit before Stiglitz was born.  Capitalism and free markets did work fairly well until Stiglitz told us we didn’t know what we were doing.

This essay by Stiglitz is just a sophistic manifesto and a boiler plate excuse for people like Obama and Brown to grab wealth and power and divert them to their own nostrums. I failed to find out if Paul Krugman signed this letter.[26] He is famous for having two special views of government participation in society: [1] tax and spend, or [2] spend and tax.  I am sure he approves.

This is actually a race against the Depression Clock when some state or nation finally collapses from debt, socialist government or a combination of the two and the world can witness the wreckage and study the rehabilitation antics with riots, succession and poverty. The Greeks now blame Goldman Sachs for assisting them in ‘hiding their debt’ from their EU overlords and pencil pushers.’[27] If true, wouldn’t they be thankful?

Losers need lots of excuses and forming a merry band of excuse mongers to blindly justify whatever you are doing is now popular or even functional is the political new games. Next, we may hear that unsustainable debt is merely an ‘investment’ in the future as we heard from Bill Clinton in a similar comment about taxation.

Greece is too stubborn to take advice from other members of the EU  in exactly the same way California repels advice from states with positive balance sheets like Texas or Utah. I have to wonder if these people are that ignorant or if they have a separate agenda to grab power[28] Mussolini-style amidst the certain collapse of the economy. Benito had the Italian king Victor Emmanuel III[29] on his side but Brown has Stiglitz.

The EU may collapse before the US does.

rycK [a 5^th generation Californian in exile]

Comments to: ryckki@gmail.com