Our Current Economic Crisis and How to Solve it

It’s Monday and time to get out the razor blades and draw a warm bath.

Good Morning!

I was looking forward to a relaxing weekend free from the political shenanigans going on in Washington over the debt crisis, I really was. But Friday nights’ dueling press conferences between President Obama and House Speaker John Boehner was too good to miss.

The contrast was glaring. President Obama held his presser first. Thanks to NiceDeb, here is the video.


What we saw was a president who is clearly aware he’s losing the battle of the budget. He was petulant and impatient; it was all over his face. His demeanor was unseemly for the Leader of the Free World. There was very little in the way of facts. All he did was try to shift the blame for the budget crisis onto the Republicans.

By comparison, Speaker Boehner was calm and collected, one could almost say defiant. Again, from NiceDeb, Boehner’s press conference.


Overall, I get the impression that Boehner is the adult in the room, not Obama, despite the presidents’ attempt to appear that way, aided and abetted by a compliant (and lying) media.

At some point, reality will intrude. I don’t think it will happen all at once, but there are growing signs that President Obama and the Senate Democrats, led by Harry Reid, are losing the public debate over the debt and the deficit.

If it weren’t so serious, it would be comical. On the one hand, there is Obama desperately trying to bankrupt the country and using every rhetorical trick in the Progressive playbook to make it appear as though it’s the Republicans who got us into this mess. Obama seems to be saying, “Who are you going to believe, me or your lying eyes?”

On the other hand is Boehner, whose exasperation level seems to be rising exponentially with every passing day. He truly does realize that something has to be done to cut spending and that right soon.

And so do the American people. Polls are showing the President losing support, even among Democrats. That’s a bit misleading, though, as the Dems are unhappy that he appears to be waffling in his insistence upon a larger and more intrusive federal government than the country has ever seen before.

Someone needs to explain that to me. How can anyone look around today and say that anything this president and the last Congress has done has worked to America’s benefit?

Unemployment stands at 9.2%. It was 7.8% at the beginning of Obama’s term. Real inflation is around 10%, not the miniscule number of around 1.5% that Washington uses. Gasoline prices are nearly double what they were in January of ’09. And I don’t have to tell you that the price of groceries has nearly doubled in four years.

Gentle reader, none of this is happening by accident. None of it.

It’s the direct result of a command-and-control economy that is being commanded and controlled by people who want us to suffer.

I hate to sound so pessimistic about that, but there’s no other explanation. We’re being screwed on purpose. And make no mistake, there are people who are profiting quite nicely, thank you, from our travails.

One of the most prominent beneficiaries just so happens to be one of the architects of this crisis, Nancy Pelosi. Her net worth increased, and you’d better sit down for this one, a whopping 62% last year. I’ll bet y’all know of at least one friend whose worth decreased that much over the last few years.

Harry Reid’s personal worth increased also, and to be fair, so did John Boehner’s. So it would seem everyone in Washington is on the gravy train.

Too bad we’re not on it too.

Now, there is a very popular misconception amongst radical leftists and Progressives (but I repeat myself) that capitalism is a zero-sum game. To decode this for you, that means that in order for one person to gain, that gain must come from someone else’s loss.

I’m sorry, but if you really believe that, you need a constant reminder to breathe. Nothing could be further from the truth.

If that were true, then no economy would experience any growth, period. Think about it and you’ll come to the inevitable conclusion that those who think that way have been conditioned, which is merely a polite word for brainwashed.

For the longest time, I, and probably you too, gave this administration the benefit of the doubt when it came to their economic policies. However, that was then and this is now. After two years of declining economic numbers, we are coming to the sad conclusion that what’s happening to our economy is being done on purpose.

I’ve outlined one possible cause, that of outside pressures being brought on our economy for the expressed reason of bringing us down. I’m not alone in considering that possibility. Here’s a link to an interview that you should hear. Yeah, it’s dull and dry, since it’s about economics, but it’s well worth listening to. It’s from an economist named Catherine Austin Fitts and its entitled “Now That We Got Your Money, We’re Going to Change the Deal.” Once more, thanks to NiceDeb, who’s proving to be a valuable source of the obscure, and a good blog buddy, too.

Of course, no discussion on economics would be complete without me doing my Ron White imitation and dancing on my soapbox. So, for your consideration, I’d like to propose a solution to our problem. I’m generous that way.

We need to retreat from this whole idea of a global economy. I know, we’re being told it’s the wave of the future and everybody’s doing it and there will be rainbows, unicorns and skittles for everyone if we do.

Much like global warming or climate change or whatever that’s being called this week, this whole notion of a global economy is based on the false premise of multiculturalism. As you know, that’s the idea that all cultures are equal and therefore equally good. We all share the same values and ideals and we will all work together in glorious harmony for the greater good of mankind.

Kinda sounds like a workers’ paradise, doesn’t it? Now, where have I heard that before? Hmmm...

It’s worth noting that environmentalism is part and parcel of the New World Order of things. Check any study on it, particularly from that august body of internationalism, the United Nations, and you’ll see the environmental buzzword “sustainability.”

Let me get my decoder ring out again for you. That word doesn’t mean what you think it means. It’s another false premise, that there are too many people in the world consuming too much of its natural resources and that the industrial economic model cannot support this growing population.

That’s just a lie, plain and simple. The only thing restricting the exploration and harvesting of our natural resources is government. Capitalism and freedom have done more to elevate the condition of man than any other form of economy.

And that’s a fact.

Why are third-world countries third-world countries? You need look no further than their governments, the overwhelming majority of which are dictatorships. The people aren’t free, nor will their strongman governments permit such freedom. Such is power.

Here’s my solution. I know that I’ll be called all sorts of names for even suggesting this like xenophobic and nationalist and all that, but I really don’t care.

A global economy cannot work. What we need to do is concentrate our efforts on America first. This means that we should be enacting new laws to spur investment by American companies here at home. We should also repeal laws that have been shown to be detrimental to our economy, like NAFTA and GATT. A robust and diverse economy at home should be the policy of our government along with a dedication for us to have the highest standard of living in the world.

We are still the world’s largest economy. We should be taking advantage of that market by making our own products here while producing enough extra for export and trade with other countries. We can compete in a global market, but it must be favorable to us first. And as this effort towards a global economy is currently being implemented, the goal is not for other countries to move to more freedom for their people, the goal is to dismantle our freedoms and our economy for redistribution to the rest of the enslaved world.

This is the wrong way to go and we know it.

The world isn’t fair or equal, despite the intentions of many powerful people to make it that way. They see our success as something to be plundered. This is nothing but envy on their part.

If we keep on electing politicians who think of themselves as ”citizens of the world” instead of Americans, we are doomed for no good reason.

It’s time for America to rediscover and reinvent herself.

Rhetoric vs. Reality: Obama Promises Regulatory Review Just as EPA Shuts Down Mine

In the wake of last November’s shellacking, President Obama has promised a government-wide review of the regulations that are strangling the nations’ economic growth. After two years of unprecedented intrusion by Washington into the private sector, Obama would have us believe that he's had a change of heart and now wants what we conservatives have wanted for years, a realistic reassessment of the negative effects of government regulations upon American businesses.

This is bullshit.

I know it, you know it, and everyone who is currently out of a job knows it. What’s worse is, Obama himself knows it. He has no interest in reviving the private sector. In fact, he is anti-business, as we’ve heard in his speeches. His open hostility toward the private sector and anyone in it is unique in modern times. He has consistently and uniformly criticized the creation of wealth and it’s benefits. He is playing the counterculture drumbeat that began in the ‘60’s.

Obama clearly has no understanding of how our free-market economy works. He has never run a business, in fact, his role as a community organizer was expressly designed to damage businesses. Only 19% of his advisors have any experience in the private sector.

Even his childhood primed him to be hostile to business in any form. His mother was a political radical, as was his mentor, the communist Frank Marshall Davis. All radicals hate business in any form. It’s what makes them part of the counterculture in the first place. They uniformly believe that wealth is evil.

It’s a perversion of the Bible verse, “Love of money is the root of all evil.” Notice it doesn’t say that money itself is the root of evil, the love of it is. What those “revolutionaries” lack is perspective, among other things. In their misguide quest to perfect humanity, they think that if money was eliminated, all of the ills of society would be cured forever. Ask yourself if their previous efforts to solve this problem have produced anything other than untold death and destruction to the society that they claimed to “help.”

But, I digress.

I’m sure you remember the famous conversation between Obama and Joe the Plumber during the campaign. Obama said, “When you spread the wealth around, it’s good for everybody.” The absurdity of his comment is evident in the fact that everyone who works receives a paycheck. These “evil corporations” that leftists regard as the devil incarnate do, in fact, spread the wealth around in the form of paychecks and stock. They also pay taxes. Remember that the next time you hear a Nancy Pelosi or a Barney Frank castigate business. This is another manifestation of what I call "progressive political psychosis" where a radical leftist politician demonizes an American institution that it depends on for its' very existence.

While progressive politicians love to point their bony fingers at business, we are somehow supposed to overlook their greed. “Corporate greed” has been supplanted with “government greed.” What is the one characteristic of liberal, “proud progressive” politicians that differentiates them from conservatives? Like knights on a modern-day Crusade, it is their holy quest to raise taxes, taking as much money as possible from business and consumers.

Who are the truly greedy ones again?

The timing of Obama’s claim just happens to coincide with the EPA’s cancellation of a four-year-old mining permit in West Virginia, shutting down a working coalmine, forcing hundreds of Americans out of work and reducing our supply of energy, in keeping with his campaign pledge to make everyone’s utility bills “necessarily skyrocket.” The mining company had dotted all the “i’s” and crossed all the “t’s” according to West Virginia Sen. Joe Manchin, when the EPA suddenly decided that the company must halt operations.

If President Obama were at all serious about reducing federal regulations, he would start with this incident. He has an opportunity to prove his intentions to the country by making sure that this mine is reopened as soon as possible.

Will his actions match his words? We shall see.

I’m not holding my breath while I wait.

Why Obama Likes Targeted Tax Credits, and Why They Don't Work

In his Labor Day speech last Monday, President Obama outlined his plan for another stimulus. He wants to spend $50B more on infrastructure to improve the nations' three R's: roads, rails, and runways, similar to his first Stimulus Bill. Also included in his New Stimulus is a targeted tax credit which allows businesses to write off investments in equipment and plants. There's also a tax break for research and experimentation thrown in.

Wow, that's one whole paragraph with no snark. I must be slipping.

In the name of all that's fair, I can't really fault the President for trying. He's slowly starting to understand what it's going to take to get our economic engine to start. Tax breaks for business are what we need, along with a drastic reduction in the government's footprint. However, there's a right way and a wrong way to do almost anything. Targeted tax cuts are the wrong way.

The Obama economic team lacks a firm grasp of free market economics. Indeed, their proposals so far have failed in spectacular fashion The outgoing Christina Romer recently admitted she had no clue what she was doing. Rush Limbaugh pointed out her lack of business experience during his radio show yesterday.

Obama's tax cut proposal for business is a step in the right direction, but he still manages to get that wrong. It's due to two flawed concepts: they're targeted and temporary.

Our President apparently likes picking winners and losers. That's somewhat understandable given his early home life. Many things happened to him that were beyond his control, primarily the fact that his parents abandoned him in order to study radical political theory at the feet of real radicals. Unable to control his situation as a youngster, his frustration remained with him into adulthood, when he was finally able to gain a modicum of control, only this time, over other people. This psychological yearning was probably the main reason he wanted to get into politics.

When carried forward to today, we see this emotional scar in the form of favoritism, primarily shown towards those who are supportive of him, either directly or indirectly. The takeover of General Motors and Chrysler Corporation are prime examples of this. As I pointed out in yesterday's post, we already had a mechanism which would have allowed those companies to restructure their debt: it's called bankruptcy, of which there are several types, suitable for the many different instances of financial trouble.

President Obama could have, and should have, allowed these companies to file for bankruptcy protection. We know now why he didn't: bankruptcy would have permitted these corporations to renegotiate the contracts with their respective unions, a move that would almost certainly have caused the union members to receive a reduced wage and benefit package. Since the labor unions contributed handsomely to his presidential campaign, their support would have been reduced, since a percentage of union dues go to political efforts, often against the wishes of the rank and file members.

Obama's favoritism towards selected groups is on display again in this latest Stimulus proposal. Overall, tax breaks for businesses are welcome and needed, but the problem is the fact that they're only for selected groups, or for specific reasons, or temporary. That's no way to foster long term economic growth.

What is needed is permanent tax relief for all businesses, regardless of the size or the nature of their investments. Tax credits for new plants and machinery are great, but what if your company needs to spend money on something else? Then what? Wouldn't it be far better for the country to reduce taxes for as many businesses as possible? That would go a long way towards government acting for the "general welfare." Or not acting, depending on how you look at it.

This notion of Washington picking winners and losers is an idea whose time has come to die. Other administrations have also attempted this with similar results: they just weren't enough to benefit everybody.

The allure of power causes people to do some mighty unwise things.

It's Time to End Class Warfare

Divide and conquer. It's an age-old strategy, but it works.

Originally, it came from a battlefield maneuver that divides a large group of fighters into smaller groups who are more easily defeated. It also works quite well when it comes to politics.

Let's say you wanted to destroy a country like the US. You can't do it from the outside, because the US has the world's best armed forces. So that idea is off the table.

No, prudence dictates that it be done from within. You would need to find some institution like Congress that the people hold in high regard and infiltrate it, fill it with fellow operatives and the weak-willed who won't question your arrogance and who will politely go along with whatever you propose, regardless of how inane or contradictory to American values it is because they don't wish to appear to be confrontational. Think of the term "useful idiots" and you'll have the right idea.

Understand that this won't be done overnight, lest the people start thinking that something might be wrong. You don't want to arouse any suspicions or draw attention to yourself, at least not yet. Not until the time and conditions are just right. But you'll keep up your pressure against your enemy (America) and find new ways to express it. You won't stop.

So your battle will become one of the mind. Through your words, you'll plant the seeds of doubt and confusion. You'll say one thing in order to get into office, and your actions, once you get there, will be the opposite of your rhetoric. This will make your constituents question themselves, not you.

So far, so good.

As part of your campaign to turn the country from one of a unified population into smaller groups who are more easily defeated (or converted to your point of view), you'll start to foster unrest. This will be done through one of mankind's most powerfully destructive emotions: envy.

Instead of promoting the idea that anyone in America can make their mark on the world through hard work and determination, you'll take the opposing point of view that Americans can't possibly make it on their own. You'd just be realistic, that's all. You'd only be admitting what is plain old common wisdom, as though everyone already knew it, but was hiding it in some secret recess of their mind. You'd just be bringing in out into the open. Of course, your definition of "the wealthy" is far lower that that of the average guy on the street, dollar-wise. They think multi-millionaire but your threshold will be far lower, around $250K per year. That's a big difference, but you won't say that out loud.

You'd tell the nation that it's not fair that there are rich and poor. You'd tell everyone that those who gained their fortune did so by exploiting others. You won't say how, that part you'll imply as though it's something so repulsive that you can't discuss it in polite company, but you'll leave no doubt about it.

There's just something about all those rich people that isn't right...

You'll say that you just want to make things right again. You'll just want equality. Why, everyone wants a fair shot in life. That's the American way. It's always how we've done things. Look, even our founders were wealthy land owners, so it's encoded into our national DNA.

Then you'll say it's unfair that there are so many rich people and in order to make life fair, you'll want them to pay their "fair share" of taxes. After all, they have plenty, so they won't be harmed at all. They'll never feel a thing if their taxes go way up. After all, they're rich.

You'll conveniently leave out some details about the rich, because you'll need to paint them as heartless and cruel. In fact, the worse you can make them appear, the better for you and your real goals. Your goals are to control others, in every way you can. Since you're in government, you'll use the best tools at your disposal: government itself. You'll create more and more government agencies with so many regulations that the average citizen can't possibly read them all, never mind understand or comply with them.

You'll leave out details, like the people you want to tax so heavily also happen to own the majority of the country's small businesses and are responsible for the lion's share of job creation. You also won't mention the fact that since there are already so many governmental rules and regulations, it's becoming increasingly expensive to hire someone new. You'll criticize common sense alternative opposition to your plans by calling the critics simplistic or out-of-touch or some other nonsense. But, you'll make it sound plausible, because you're just that good.


And the biggest detail you'll omit is the fact that you are quite wealthy yourself.

Economics 102

The Bush tax cuts are scheduled to expire at years' end. The economy is in dire straights. If you were to ask the average American what should be done, chances are you'd hear the admonition not to raise taxes during a recession/depression. That's just common sense.

So, what are we hearing from this administration concerning tax cuts? It's, um, uh, well, let's just say it's not common sense. Not by a long shot. What we're getting, instead of concrete action that will help our economy regain some steam, is the rhetoric of class warfare.

That's right. All we're getting is words. Just words. And false ones at that.

At the risk of flagellating a deceased equine, I must restate the painfully obvious: economics is no more complicated than balancing a checkbook. Anyone who tells you anything else has either been grossly misinformed or is lying to you on purpose. In a normal world, this knowledge wouldn't even need to be discussed. But this is politics, where reality takes a back seat to power.

As everyone outside of Washington already knows, taxes reduce economic activity. The higher the tax rate, the less activity there is. A fee is any tax paid to any government for any reason, it's just named differently. A fishing license is also a tax. Ditto your vehicle registration. Some of these taxes are right out in the open for you to see while others are hidden, but you pay them anyway.

For example, let's say there's a new tax in a recently passed piece of legislation, like the new healthcare bill, but it's not a consumer tax, it's paid by businesses. Let's say it's a 5% tax. A business has to pay that tax, but it reduces the amount of money that the business will make. Now, let's also assume that the business only makes a 4% total profit. This means that the business will now lose money at the rate of 1%. Since no business can operate at a loss, they must offset the new 5% tax by passing that cost along to the end consumer.

You end up paying the tax anyway. The cost of the product must rise to cover the increased cost to the business, in this case, figure on at least a 6% increase to include the cost of keeping track of the company's compliance with the new tax law. This might even be a bit more than 6% depending on the size of the company.

So, the politicians who levied this tax get to boast that it's not a tax on the middle class, and it's true, but only in a strict technical sense, you are being taxed indirectly. The politicians can claim it's the business who's the bad guy, when it's really the politician who is at fault.

Now let's say, instead of a tax, the EPA wants to require businesses to adopt a new way of disposing of shredded documents. This new regulation requires the use of some new piece of equipment in order to dispose of the documents. This piece of equipment is expensive and also requires much more electricity to operate. The business must now pass along the cost of the new equipment and the increased utility bill to the end consumer.

It doesn't take long to see that an activist government intent upon poking its nose into every facet of life with rules and regulation in addition to taxes has the potential to become very expensive. In the case of the Obama administration, we can argue that the saturation point has been reached. Our economy can no longer afford the demands that a regulation-happy government imposes on it. Something must yield, and so far, it's been the private sector. Many formerly silent business leaders and groups are starting to voice their concern over the stifling policies of this administration.

With his poll numbers heading downward at a rapid pace, President Obama seems intent upon not reversing course and implementing proven solutions to our economic woes, but doubling down on his misguided attacks on the private sector. The same goes for Congress, who should be questioning the results of their policies, but are also engaged in creating even more bills to force upon an unwilling populace, with even more disastrous effects. Even they admit that 10% unemployment is the new normal. It certainly will be as long as they remain in power, taxing and regulating our economy to death. After four years of Democrat control of Congress and eighteen months of a Democrat in the White House, any more cries of "It's all Bush's fault!" will fall on increasingly deaf ears.

There's a gage I use in determining who I'll vote for in any election, and I change it as the situation warrants. Previously, it was a belief in "climate change" and those who were gullible enough to believe in a blatant hoax. Now it's class warfare. Any time I hear the term "tax cuts for the rich", I'll know that the utterer of that phrase is seeking to divide our country in order to gain power for themselves. Such a politician is unfit for office and does not possess the mental attitude of a public servant.

You, armed with nothing more that your checkbook and common sense, already know more about economics than all the so-called experts in Washington.

O/T - Journolist Update! For your derision, here's another list of the Journolistas, courtesy of the Free Republic. Do not forget their active role in the downfall of our nation.

Flat, Not VAT

As the old saying goes, there are only two certainties in life: death and taxes. We need to add one more truism: Democrats will raise your taxes. That, my friends, is as sure as the sunrise.

Paul Volker officially floated this trial ballon yesterday. Charles Krauthammer has been warning us for months that this would be the natural result of the out-of-control spending binge by this Congress, populated as it is by corrupt progressives in both parties. It's an idea that should be shot down, burned, and its ashes spread over salted earth. Then nuked from orbit, just to be sure.

For a quick primer of a VAT, click here. (h/t Flopping Aces)

Noticeably absent in this discussion is the common-sense solution to our mounting deficit: spending reductions. If there were ever a time to reign in government spending, it would be now. Just as most households in America have had to drastically tighten their belts, Washington should be doing the same. Reduced government spending would go a long way towards freeing up much needed capital for the private sector, which would then be multiplied by private businesses as wealth is generated.

We need a flat tax of around ten percent and a mechanism in place that restricts government spending to no more than it takes in. Don't look for that to happen with this Congress, however. As we've seen, drunken sailors have nothing on them, as the deficit chart shows. As bad as the Bush era deficits were, the Obama deficits have the potential to inflict real harm on our country. At least during W's terms, we had a chance to reduce them with a growing economy and full employment. Now, with the economically destructive policies of the Obama administration, we find ourselves mired in a recession that is only getting worse.

Just remind yourself of this very simple rule: each time the price of a good or service goes up, you receive a cut in pay.

Thanks, Washington. Thanks a lot.