AOL carries this picture, h/t Jim Crum.
Wednesday, February 10, 2010
America In Extremis
The time has come to spin off the federal government and download it onto the states, leaving just national defense, interstate commerce and conflict resolution to the federal government. The federal government has proven itself to be unmanageable, with the growth of special interests, Medicare and Social Security, not to mention the many bureaucratic government agencies like the Department of Agriculture and the Department of Labor that should be simply shut down.
The states ought to be parceled out the federal responsibilities, and given the option to discontinue or continue them. States like New York, Massachusetts and California would undoubtedly continue the wasteful stupidity, and better and more intelligently run states will discontinue it. This will put the sharp regional differences between the backward "blue" states and the more enlightened "red" states into focus. Ultimately the "blue" states will lose population and go bankrupt as population will emigrate to the "red" states.
The states ought to be parceled out the federal responsibilities, and given the option to discontinue or continue them. States like New York, Massachusetts and California would undoubtedly continue the wasteful stupidity, and better and more intelligently run states will discontinue it. This will put the sharp regional differences between the backward "blue" states and the more enlightened "red" states into focus. Ultimately the "blue" states will lose population and go bankrupt as population will emigrate to the "red" states.
GOP Should Nominate Paterson
A few weeks ago Cindy Johansen forwarded an e-mail in which New York's Governor David A. Paterson (D-NY) calls for a spending cap to stem the out of control growth of New York's finances. For a New York Democrat, that is darn good. I e-mailed back Cindy that I would be surprised if New York's Progressive GOP came up with someone better than Paterson.
In the e-mail, Paterson wrote:
"Last week, I proposed an Executive Budget for 2010-2011 that includes a spending cap to control state spending. Tied to that cap is a property tax circuit breaker that would provide property tax refunds to New York's working families. The spending cap will impose long-term fiscal discipline by forcing state government to live within its means. The cap puts New York State on a path to economic recovery that will lead to future budget surpluses -- which will then be returned to taxpayers through property tax relief."
I went to my dentist in Manhattan today but when I returned home I stopped in the Boiceville supermarket and saw headlines in the Post and the Daily News about Paterson's "beleaguered" administration. Apparently, rumors have emanated from misinformation about a forthcoming New York Times article.
According to the liberal blog Huffington Post, Lawrence Schwartz, Paterson's chief of staff, wrote a letter to the Times. The Huffington Post observes that misinformation about a Times article was circulating with the Times's knowledge but the Times did nothing to correct the rumors and the article will do nothing to correct the rumors when it is released.
Perhaps Paterson should consider running as a Republican. He is probably more conservative than most of GOP front runners, with the exception of Rudy.
In the e-mail, Paterson wrote:
"Last week, I proposed an Executive Budget for 2010-2011 that includes a spending cap to control state spending. Tied to that cap is a property tax circuit breaker that would provide property tax refunds to New York's working families. The spending cap will impose long-term fiscal discipline by forcing state government to live within its means. The cap puts New York State on a path to economic recovery that will lead to future budget surpluses -- which will then be returned to taxpayers through property tax relief."
I went to my dentist in Manhattan today but when I returned home I stopped in the Boiceville supermarket and saw headlines in the Post and the Daily News about Paterson's "beleaguered" administration. Apparently, rumors have emanated from misinformation about a forthcoming New York Times article.
According to the liberal blog Huffington Post, Lawrence Schwartz, Paterson's chief of staff, wrote a letter to the Times. The Huffington Post observes that misinformation about a Times article was circulating with the Times's knowledge but the Times did nothing to correct the rumors and the article will do nothing to correct the rumors when it is released.
Perhaps Paterson should consider running as a Republican. He is probably more conservative than most of GOP front runners, with the exception of Rudy.
Monday, February 8, 2010
No Such Thing as a Safe Currency, Save One
Jon Nadler of Kitco quotes Bloomberg's Ben Levisohn:
“For all the concern over the $1.6 trillion US budget deficit and record debt load, the dollar is as valuable now as 35 years ago. Measured against a basket of currencies from the G-10 nations proportioned against each other, the greenback is up about 3 percent since 1975, according to the Bloomberg Correlation-Weighted Currency Index. That was four years after the Bretton Woods agreement set up in 1944 to link currencies to gold, collapsed.”
At the same time, Nadler bears bad news about the darn euro, quoting The Sydney Morning Herald, which notes that even prostitutes in Greece are threatening strikes because of loss of welfare benefits:
"The stakes are high, not just for Greece but for the entire euro zone, where efforts to forge a common economic identity are threatened. Last week, the panic spread to Portugal and Spain, and the cost of insuring their debt against a default soared to record levels as investors bet that, like Greece, governments in those countries won't be able to rein in bloated budgets."
Nadler points out that the continent's financial problems are linked to Democratic Party-style social welfare programs that have decimated its economic growth. Again quoting the Sydney Morning Herald:
"on a continent where the culture and legitimacy of the mother state are so deeply ingrained - and now in some cases unaffordable - a question remains: can the European Commission say 'no more' to prodigal nations like Greece and, to a lesser extent, Spain and Portugal? And how will the countries themselves confront the political fallout of economic distress?"
Given the failure of Democratic Party-style economics in Europe, it is amazing that anyone reads the European-style New York Times anymore, or that Americans have elected an administration that is committed to instituting Europe's failed tribalist philosophy here in the more civilized, individualist United States.
Also of importance are the implications of the dollar's strength. I just blogged about the effects on employment of a strong dollar and how the US government and the Fed have orchestrated the exit of high wage jobs via monetary policy. No currency is safe because the others will inflate as much as we do. What is amazing about this process of dollar repatriation given risk in Europe, which, quoting Nadler, I predicted a month ago using my coin flip method of investing, is that massive deficits and expansion of the monetary base, have been accompanied by increasing DEMAND for the dollar. When the supply of dollars goes up, cheapening them, demand also goes up? Is this a curious application of Say's Law, that supply creates its own demand?
I think not. There is a chasm between Wall Street's short term thinking and longer term reality. Keynes said that in the long term we're all dead, but Keynes is dead and we won't have to wait that long, hopefully (from a death standpoint).
If, given the high inflation rates of the past 40 years the dollar has held its own against other currencies, there is no such thing as a safe currency, save one. Spell it G-O-L-D. That does not mean that gold is going up next week or next month. But the world is on a welfare addiction habit, and the welfare addiction is destroying the source of the "good faith" of the US government. By raising spending, providing stimulus handouts and increasing the money supply, the US government is telling America's hard working employees: "You are fools. Look at the looters at Goldman Sachs." By taxing incomes, the US government is telling you: "Do not work, live off government." By subsidizing the welfare mothers on Wall Street, the US government is telling any entrepreneur: "Why waste your time? Get a value-destroying job in New York City."
If you trust the current pattern of events, trust the current strength of the dollar. Otherwise, think about alternatives. Stocks are fine, but inflation confuses investment, credit is overextended, lending is on hold and the US economy is a mess, starting with over-investment in real estate. This will result in downward adjustments in consumers' wealth and reductions in access to credit.
How will those problems be cured? Ben Bernanke has already done it. Expand the amount of money. But entrepreneurship has been hammered through decades of high tax rates, regulation and harassment of small business. My local pharmacist says he spends half his day filling out government forms. The same in other businesses. So stocks are not exciting. Too much regulation; too much mismanagement; too much malinvestment that needs to be cleaned up.
That leaves commodities. But in the short run, they will be subject to ongoing attacks from the central banks. But are you willing to trust the federal government and the dollar over the long haul?
“For all the concern over the $1.6 trillion US budget deficit and record debt load, the dollar is as valuable now as 35 years ago. Measured against a basket of currencies from the G-10 nations proportioned against each other, the greenback is up about 3 percent since 1975, according to the Bloomberg Correlation-Weighted Currency Index. That was four years after the Bretton Woods agreement set up in 1944 to link currencies to gold, collapsed.”
At the same time, Nadler bears bad news about the darn euro, quoting The Sydney Morning Herald, which notes that even prostitutes in Greece are threatening strikes because of loss of welfare benefits:
"The stakes are high, not just for Greece but for the entire euro zone, where efforts to forge a common economic identity are threatened. Last week, the panic spread to Portugal and Spain, and the cost of insuring their debt against a default soared to record levels as investors bet that, like Greece, governments in those countries won't be able to rein in bloated budgets."
Nadler points out that the continent's financial problems are linked to Democratic Party-style social welfare programs that have decimated its economic growth. Again quoting the Sydney Morning Herald:
"on a continent where the culture and legitimacy of the mother state are so deeply ingrained - and now in some cases unaffordable - a question remains: can the European Commission say 'no more' to prodigal nations like Greece and, to a lesser extent, Spain and Portugal? And how will the countries themselves confront the political fallout of economic distress?"
Given the failure of Democratic Party-style economics in Europe, it is amazing that anyone reads the European-style New York Times anymore, or that Americans have elected an administration that is committed to instituting Europe's failed tribalist philosophy here in the more civilized, individualist United States.
Also of importance are the implications of the dollar's strength. I just blogged about the effects on employment of a strong dollar and how the US government and the Fed have orchestrated the exit of high wage jobs via monetary policy. No currency is safe because the others will inflate as much as we do. What is amazing about this process of dollar repatriation given risk in Europe, which, quoting Nadler, I predicted a month ago using my coin flip method of investing, is that massive deficits and expansion of the monetary base, have been accompanied by increasing DEMAND for the dollar. When the supply of dollars goes up, cheapening them, demand also goes up? Is this a curious application of Say's Law, that supply creates its own demand?
I think not. There is a chasm between Wall Street's short term thinking and longer term reality. Keynes said that in the long term we're all dead, but Keynes is dead and we won't have to wait that long, hopefully (from a death standpoint).
If, given the high inflation rates of the past 40 years the dollar has held its own against other currencies, there is no such thing as a safe currency, save one. Spell it G-O-L-D. That does not mean that gold is going up next week or next month. But the world is on a welfare addiction habit, and the welfare addiction is destroying the source of the "good faith" of the US government. By raising spending, providing stimulus handouts and increasing the money supply, the US government is telling America's hard working employees: "You are fools. Look at the looters at Goldman Sachs." By taxing incomes, the US government is telling you: "Do not work, live off government." By subsidizing the welfare mothers on Wall Street, the US government is telling any entrepreneur: "Why waste your time? Get a value-destroying job in New York City."
If you trust the current pattern of events, trust the current strength of the dollar. Otherwise, think about alternatives. Stocks are fine, but inflation confuses investment, credit is overextended, lending is on hold and the US economy is a mess, starting with over-investment in real estate. This will result in downward adjustments in consumers' wealth and reductions in access to credit.
How will those problems be cured? Ben Bernanke has already done it. Expand the amount of money. But entrepreneurship has been hammered through decades of high tax rates, regulation and harassment of small business. My local pharmacist says he spends half his day filling out government forms. The same in other businesses. So stocks are not exciting. Too much regulation; too much mismanagement; too much malinvestment that needs to be cleaned up.
That leaves commodities. But in the short run, they will be subject to ongoing attacks from the central banks. But are you willing to trust the federal government and the dollar over the long haul?
Subscribe to:
Comments (Atom)
