A Grim Jobs Report for America
By Larry Kudlow
Posted on May 17, 2012
by Dr. Paul Craig Roberts
KINGSTON, NY, 08 MAY 2012
— An emerging foreign policy trend is Cold War II. The US military/security complex, with help from Obama and Hillary Clinton, is working overtime to revive the profitable long-term stalemate of the Cold War that lasted four decades from the Berlin airlift to the Reagan-Gorbachev accord. During this long period Congress and the public supported an endless array of weapons systems to deter the “Soviet threat,” which, until President Richard Nixon’s opening to China in the early 1970s, comprised together with China the “Communist threat.”
This threat was not all spin. It had an element of real potential, but the threat was hyped to the limit. In the 1950s in Atlanta, Georgia, and elsewhere school children were issued military dog tags, just like the ones GIs would yank off the necks of their dead colleagues in the war movies, with their blood type in event of a nuclear attack. Some Americans built bomb shelters on their home properties. Senator Joseph McCarthy led a witch hunt for communists, and although there were some communists and communist sympathizers in sensitive positions, McCarthyism had many innocent victims, just like “the war on terror.”
Anyone with a social conscience was suspect. The Hollywood blacklist or equivalent suspicion fell upon the likes of Bertolt Brecht, Charlie Chaplin, Aaron Copland, and Lena Horne. Even Carl Foreman, who wrote the screenplay for High Noon, the Gary Cooper Western, was blacklisted, and the stripper, Gypsy Rose Lee, was investigated by the House Committee on un-American Activities. Even Robert Oppenheimer, the director of the Manhattan Project and the “father of the atomic bomb” was under investigation for “left-wing associations” while he developed the first nuclear weapon for the US government. Oppenheimer was on the FBI’s Custodial Detention Index for arrest in case of national emergency.
Whether serious or not, the “Soviet threat” was more real than the “Muslim threat.” The Red Army had defeated Hitler’s previously undefeated armies. In the aftermath of World War II many believed that only nuclear weapons could stop the Red Army from overrunning Western Europe. When the Soviet Union acquired the hydrogen bomb, the public was willing to support the amounts of military spending and security measures necessary to protect the West from the Soviet threat.
New Threat Needed
When the Soviet threat disappeared 20 years ago, the military-security complex was at a loss. A new threat was needed to keep the money and power flowing into the military-security complex. China wasn’t an option. Its new leaders were embracing capitalism, and China was on its way to becoming Washington’s largest foreign creditor. How do you bash your banker? Moreover, China was welcoming American corporations that had discovered that it was profitable to produce in China the goods and services that they sold in US markets. The influential American interests that were becoming allies with China caused the military-security complex to look elsewhere for an enemy.
With the help of the neoconservatives, the military-security complex found the enemy in the Muslim Middle East among the independent states that were not US puppets.
The Muslim wars of the first and into the second decade of the 21st century have not been satisfactory replacements for the “Soviet threat.” There is nothing powerful about Iraq, Afghanistan, Syria, and Iran comparable to the Soviet Union or even to 1950s Red China, which fought the US superpower to a standstill in Korea.
The problem with the “war on terror” is that it is a hot war, not a cold one, that goes on forever. Although expensive and, thereby, rewarding to the profits and power of the military-security complex, the problem with hot wars is that when they do go on forever, no one believes you are a superpower.
Why is it that Superpower America was in Iraq for eight years and only “won” after putting the insurgents on the US military payroll and paying them to stop killing American troops? How come after 11 years in Afghanistan the US Superpower and its NATO mercenaries have failed to subdue the Taliban, a few thousand guys armed with AK-47s? Recently, the Taliban took over Kabul, the American occupied capital of Afghanistan, and attacked the Western embassies for several hours. Last week the Taliban confidently announced its spring offensive against “the invaders.”
Eight- and eleven-year hot wars are definitely profitable, but when they cannot be won, what happens to the Superpower’s reputation? What happens to the morale of its armed forces? The evidence is in: military suicides exceed combat deaths.
To protect its superpower status and morale of the military, Washington needs a new enemy, an enemy it can hype without coming to blows. Washington’s first choice was Russia. Washington did everything possible to provoke Russia. Washington took NATO into Eastern Europe. Washington unilaterally withdrew from the anti-ballistic missile treaty in June 2002. Since this time, Washington has surrounded Russia with anti-ballistic missile bases designed to negate Russia’s nuclear deterrent and to make Russia impotent in the event of US aggression against Russian interests. Washington sponsored “color revolutions” in former Soviet republics and has attempted to make Georgia and even Ukraine members of NATO.
It has taken the Russians a long time to understand that Washington is not a trustworthy ally for peace. Finally, the Russian Chief of General Staff, Nikolai Makarov said at an international conference on May 3 attended by Washington’s operatives and its NATO puppets that Russia will preemptively strike the anti-ballistic missile sites “if the situation worsens.”
Washington has told the Russians the transparent lie that the anti-missile shield is directed at Iranian nuclear missiles. However, the Russians understand full well that Iran has no such missiles. In other words, Washington is doubly provoking Russia by providing an obvious false reason for its naked aggression against Russia.
It took the Russian government a decade to understand the American threat. In the meantime, Washington gave up on drawing Russia into a new cold war and turned to China.
This turn was not completely easy. China had become Washington’s largest foreign creditor, purchasing with its export earnings the US Treasury bonds that finance the military-security complex’s profitable wars. Moreover, China is the site of a number of major US corporations that produce in China for their US markets.
Starting trouble with China is not without costs.
But costs mean little to the profits of the military security complex, because the costs are almost entirely external to their own profits. The costs fall on the population and the world as a whole, not on the military-security complex.
It is difficult to demonize Russia, as Russia does not own massive amounts of US debt and does not have large trade surpluses with the US that can be attributed to “currency manipulation.” The fact that China pegged its currency to the dollar in order to solidify its value as China entered world trade allows Washington to claim that China is “manipulating its currency to America’s disadvantage.”
China is being constructed into America’s new bogyman, with Putin in reserve. Once the military-security complex discovered that China was no longer needed as a creditor, because the Federal Reserve was willing to assume the role of all creditors and purchase the entirety of the debt issued to cover Washington’s huge annual operating deficit, every provocation possible has been thrown at China.
The insults heaved at China go beyond hypocritical human rights accusations or asylum for Chinese dissident Chen Guangcheng. A year ago Secretary of State Hillary Clinton declared that Washington has a “national interest” in the South China Sea. This interest showed itself last month in joint US-Philippines military exercises. China’s response was a warning that the joint military exercises raise the risks of armed confrontation over the disputed South China Sea. The Liberation Army Daily put the warning bluntly: “Anyone with clear eyes saw long ago that behind these drills is reflected a mentality that will lead the South China Sea issue down a fork in the road to military confrontation and resolution through armed force.”
Despite such warnings, Washington continues to stick its nose into China’s disputes with Philippines, Vietnam, and Malaysia, revealing, in the words of the Liberation Army Daily “the United States’ intention of trying to draw more countries into stirring up the situation in the South China Sea.”
To increase its military presence in the Asia-Pacific, Washington intends to construct a naval base on South Korea’s Jeju Island. Washington has sent US Marines to Australia and is reassigning US Marines from Japan to other Asia-Pacific locations. Pentagon spokesman George Little said the reassignment “signals our commitment to Asia Pacific and it is a reflection of our emphasis on Asia Pacific.” A deal is being cut for the US Navy to return to Subic Bay, and according to some reports Washington is working to get the Philippine government’s agreement for Japanese Self-Defense Forces to be stationed alongside US troops on Philippine bases.
Thus has Washington positioned itself on the side of the Philippines in the dispute with China over the Spratly Islands and Scarborough Shoal, and on the side of Japan in the dispute with China over the Diaoyu Islands. Washington has intentionally militarized the area as its means of instigating a profitable long-term cold war with China.
Unlike Cold War I when the US economy was growing and the incomes of Americans were rising, today the US economy remains mired in years of recession. Much of the US industrial and manufacturing base has been lost. For a decade or longer the economy has been unable to create high-productivity, high-wage jobs. Both citizens and government are deeply in debt. The unemployment rate declines because discouraged Americans unable to find jobs drop out of the work force and cease to be counted as unemployed.
Washington might imagine that the Federal Reserve can continue to finance $1 trillion annual military/security budgets by monetizing the government’s debt. However, printing money with which to buy things eventually means high inflation.
There are only two ways to finance Cold War II. One is to continue to collect the payroll tax but cease to pay Social Security and Medicare benefits. The other is to seize the remaining wealth in private pensions and IRAs.
Cold War II is going to be a bad experience for Americans.
The Chinese economy is dynamic and vibrant. It has been growing at unprecedented rates for 30 years. China has trade surpluses, large reserves of foreign exchange, and has raised 600 million people out of poverty. The US is broke, and its citizens are sinking into poverty.
In other words, the US has lost Cold War II before it begins.
Publisher’s Note: Dr. Paul Craig Roberts is a former associate editor of the Wall Street Journal, columnist for Business Week, and professor of economics, Dr. Roberts served on personal and committee staffs in the House and Senate and as Assistant Secretary of the Treasury for Economic Policy during the Reagan Administration.
By Dave Cohen
June 1, 2012
I don't write about the economy as much as I used to. It's been three long years since the NBER announced that the Great Recession ended in June, 2009. When I started writing DOTE in January, 2010, the recession had been officially over for 7 months. During the first two years of DOTE I thought it was important to tell people that the economy was not going to come back and tell them why it would suck for many years to come, if not forever.
But I don't have to fight that battle anymore because the so-called "bears" have already won it. The "green shoots" talk, the mindless optimism, the obligatory hope and all the other propaganda we got from economists, politicians and the mainstream media was simply bullshit. I knew it, some of you knew it, and I wanted make sure that others knew it too. That's all over now, or should be. The jury is in. What's the verdict?
Even those issuing the official government data are having trouble hiding the fact that the economy sucks. Today we got the May jobs report from the Bureau of Labor Statistics. Here's Bloomberg's take on yet another dismal report. I'm using that story because it quotes the consensus forecast.
American employers in May added the smallest number of workers in a year and the unemployment rate unexpectedly increased as job-seekers re-entered the workforce, further evidence that the labor-market recovery is stalling.
Payrolls climbed by 69,000 last month, less than the most pessimistic forecast in a Bloomberg News survey, after a revised 77,000 gain in April that was smaller than initially estimated, Labor Department figures showed today in Washington. The median estimate called for a 150,000 May advance. The jobless rate rose to 8.2 percent from 8.1 percent, while hours worked declined...
Estimates of the 87 economists surveyed ranged from increases of 75,000 to 195,000 after a previously reported 115,000 rise in April. Revisions subtracted a total of 49,000 jobs to payrolls in March and April.
April was revised down to 77,000 jobs gained from 115,000 and the number the BLS came up with for May was worse than the most pessimistic estimate in a Bloomberg survey prior to the report. The clueless optimists are still out there and they're still doing what they do best, which is get everything wrong.
Weekly jobless claims rose to 383,000 and the 4-week moving average now stands at 374,500. Do you remember when claims started dropping earlier in the year? Everybody got very excited! Simultaneously with the declining weekly claims, the BLS was busy lowering the unemployment rate all the way down to 8.1%. (It's 8.2% now.) Sometime during this burst of optimism about our economic prospects I wrote that we should wait and see about the jobless claims trend. I thought it was a mirage and couldn't last. I was right.
And finally, the BEA revised real (inflation-adjusted) GDP for the 1st quarter. Downward, of course. Rick Davis of the Consumer Metrics Institute keeps on top of this stuff, so I rely on him to tell me what's going on. After the revision, I got an e-mail from Rick.
In their second estimate of the first quarter 2012 GDP, the Bureau of Economic Analysis (BEA) lowered the annualized rate of U.S. domestic economic growth to 1.88% (down about a third of a percent from the 2.20% previously reported), and now more than a percent below the growth rate for the fourth quarter of 2011. This revision to the prior month's report does not reflect actual monthly changes in the economy, but rather another month's improvement in the BEA's understanding of what was happening during the prior quarter..
The BEA continued to use "deflaters" that at first glance seem to understate the inflationary experiences of the public. To correct the "nominal" data into "real" numbers the BEA assumed that the annualized inflation rate during 1Q-2012 was 1.65%.
As a reminder, lower "deflaters" cause the reported "real" growth rates to increase — and once again very low seasonally adjusted BEA inflation "deflaters" have contributed a significant positive bias to the headline number.
In fact, if the raw "nominal" numbers were instead "deflated" by using the seasonally corrected CPI-U calculated by the Bureau of Labor Statistics (BLS) for the same time period the economy would have been reported to have been contracting at a -0.13% annualized rate.
If the BEA hadn't used a custom "deflator" which disregards CPI-U inflation, which itself is understated, and thus overstates GDP, the economy would have shrunk at an annualized rate of 0.13% in the first quarter. Those who have been predicting a recession can't be pleased about this development. How can you be right about predicting a recesssion if the government won't admit that it's happening?
So there you have it, my brief overview of the American economy. There's no need to drone on and on about it because the economy looks exactly the way we would expect it to look—the American economy sucks.
Have a nice weekend.
Doctor Roy wrote: I know you have problems with the other two but what's the problem with shared sacrifice?
Dear Comrade Doctor,
There is noting wrong with shared sacrifice if it’s the type of sacrifice Winston Churchill talked about when he told England he had “nothing to offer but blood, toil, tears and sweat.”
But that’s not what Obama is talking about. He’s talking about rewarding one sector of society, for example the flat-earth society which posses as global alarmists, against the poor and middle class who have to pay more for energy because of Obama.
Let me ask you this: Who the hell in their right mind would appoint someone Secretary of Energy who thinks that gas prices being substantially higher is a good thing for the country? Or tolerates people in their administration who think that crucifying oil and gas companies somehow serves a higher purpose.
I don’t care that Chu uttered those words about high gas prices when he was a private person. How do we take him seriously as a policy executive when he’s just that freakin’ dumb?
That’s not shared sacrifice. That’s a group delusion. We’re verging into people who have delusional views in the same way David Koresh’s followers did.
It spreads from the leader outward.
This is no longer a presidential administration. This is a chapter from the Conrad novel Heart of Darkness better known to Boomers as Apocalypse Now.
Kris in Kalfornia wrote: Just a reminder. When Obama took office on January 20, 2009, the average price of a gallon of Gas was $1.78. Here in CA, the lowest I can find these days is $4.05. If Obama's policies had worked and in light of his refusal to let the oil companies actually produce as much oil as they could if not for stupid rules and permit delays, how high would that be now if the economy had actually improved? $6,00 a gallon? $7? Even higher probably since supply and demand always dictates price.
I think the GOP would make a serious mistake betting on gas prices being high a few weeks out from the election. As we saw in 2008, gas prices can swing pretty rapidly.
I think we have entered a very dangerous economic period where a flash crash in commodity prices are not just possible, but likely.
Same goes with the stock markets. The banking crisis in Europe in no different that the one we faced in 2008 and 2009. The entire banking system “over there” is going to have to be recapitalized. That could cause serious problems in the US as well.
Ray the Anarchocapitalist wrote: The "dirt" on Romney is that he's a serial flip-flopper. Expect Obama to hit him with it over and over again.
Dear Comrade Ray,
Yeah. That really seems to be working.
Wasn’t it George H.W. Bush who tried to hit Clinton on that same deal by going to the Waffle House?
Hope that works out for better for the anarchocapitalists than it did for Bush.
Who’s running for president as the anarchocapitalist candidate?
Mac 287 wrote: Wow...maybe if products were made in this country and less were imported from "patriotic" business owners based in China, Walmart would not be as powerful...or politically involved. I know, I know...our taxes make our patriotic American business owners flee to Mexico, China and other "offshore" places. Not their fault. Lies about Solyndra have been "on the loose" since George Bush first approved bucks for them.
Dear Comrade 287,
If it’s possible for someone to know less about how economics works than you do, well then, I’d be scared.
Fortunately all liberals are about as ignorant as you, no more or less.
I think you are trying to say: 1) Walmart should by more products from union shops here in the US and pass along higher prices to consumers in order to help pay bloated union pension benefits. As result, you would then ask the various attorney generals of the various states to investigate Walmart claiming price gouging so that in a multi-state settlement you could use the billions extorted from Walmart on some bogus educational program that teaches 5 year-olds how to put condoms on carrots- they’re not just for eating!- and also gives them matchbooks with the Planned Parenthood number on it; and 2) That George Bush was born about the same time that the Solyndra executives were, and therefore it must be George Bush’s fault because otherwise the Solyndra families knowing of the failure that the company honchos would be subjected to would have opted for a late term abortions as the only obvious choice- and so therefore, once again, if we didn’t hear it before: IT MUST BE BUSH’S FAULT.
Gosh, I scare myself. I could be a darn good writer for Democrats too.
Upsetvet wrote: Yea, well, I haven't seen the contempt of Congress charges that were supposed to be given to Holder if he didn't comply by May 30 to produce all the Congressional Investigation requested documents of the Fast & Furious debacle.
Yes, it’s going slower than many would like. But take heart.
From the Daily Caller:
California Republican Rep. Tom McClintock has joined scores of his House colleagues in pushing for Attorney General Eric Holder to be held accountable for his role in Operation Fast and Furious.
McClintock’s signature on Arizona Rep. Paul Gosar’s official House resolution of “no confidence” in Holder over Fast and Furious makes him the 129th House member to demand Holder’s resignation, sign the resolution or both. Presumptive GOP presidential nominee and former Massachusetts Gov. Mitt Romney, three U.S. senators and two sitting governors join those members in demanding Holder’s removal from the Department of Justice because of Fast and Furious.
I think this is ultimately up to Boehner not Issa. Boehner will make a decision based on election politics, not the law, unfortunately.
XJ wrote: Yes, we'll remind you of that when the next story surfaces about when Obama was 6 years old and was given dogmeat to eat when he lived in Indonesia where it's common practice. And, for what it's worth, the man's family didn't deny that Romney did it -- the victim's sister didn't know about the incident, which means absolutely nothing -- it's not exactly the kind of humiliating experience you would share with your sister.
And don't fool yourself about corruption -- anyone with even the most rudimentary political knowledge understands that both political parties are equally as corrupt.
Dear Comrade X,
I think both the dog meat story and the haircut story are really tasteless examples of why we have such poor leaders. Who would put up with such nonsense? Only people who have incredibly big, stupid egos.
You hit on the real problem though.
Yes both parties are corrupt. Power does that. I’ll say even more: All political parties are corrupt. And the only way to combat the corruption is to lessen the influence government has on day-to-day life and decisions that properly belong to individuals.
Knowing that political parties are corrupt, how can you turn over our entire healthcare system to the government? Or our banking system? Or the mortgage business? Or our educational system?
The rationalization of everyone does it doesn’t change the fact that you have identified the fatal flaw of liberals.
Government is corrupt. And the more power you give it, the more corrupt it becomes. We used to know this in this country.
I suspect you know it. You just don’t care. You likely think that corruption in the pursuit of socialism is not a vice at all, but a side benefit.
Doctor Roy wrote: You mean politicians actually peddle influence for campaign contributions? Scandalous. I wouldn't look for too much from the GOP on this. People in glass houses you know. Good luck with that Johnny.
Dear Comrade Doctor,
Thanks. Luck has nothing to do with it. I’m just that good.
WotanofAzgard wrote: Does anybody still like Ransom? Anybody . . . ?
Dear Comrade Wotan,
Does it really matter? I’m not running for president of the United States am I?
I got really good advice when I started writing about politics from a well known columnist. He told me it didn’t matter if people hated me or loved me. They just had to read me. And the easiest way to do it is to get people love me or hate me.
Guess which I picked for you?
Truth001 wrote: Ransom said: “I think in part CEO confidence is surging because it looks increasingly likely that some or all of the following could happen in between now and the first of the year: Obama will be defeated, Obamacare will be overturned, and the GOP could pick up seats in the Senate and the House.” John spoken like the true conservative you are. At least we can never accuse you of unbias reporting. Did you ever give consideration to maybe, just maybe, the CEO's of this country are smart enough to see the economy getting traction to spite the Republican congress attempts to sabotage the current administration? Just think what we could do if we stopped the bi-partisan in fighting and acutual compromised.
Dear Comrade Pravda,
Oh, I though Obama didn’t want to compromise. Wasn’t that the gist of his remarks when he said “I won,” back in 2009?
Look, this might be one of the dumbest comments you have ever made. It certainly suffers from the bad timing award.
Because in the interim new employment numbers have come out which are a disaster for Obama.
Forget the 69,000 jobs which were created last month. That number will be revised downward. The previous month’s estimate has been cut in half from 150,000 to 77,000.
My reporting isn’t unbiased I will admit.
But it’s not like we haven’t predicted this here at Townhall Finance.
One of the jobs I have as editor is picking stories to feature on Finance. Here’s a story that you should have read back in on May 3rd regarding unemployment and jobs. If you had, you wouldn’t be surprised by the poor numbers.
I will say it once again: If you guys aren’t reading some of the other authors here you will be as misinformed as Comrade Pravda.
Stephen East Coast wrote: In answer to your question, John, he does[like himself] , and he'll tell you he's done such a good job that he should rank as at least fourth best president ever - even after only three years at it. Best reply comes from Moonbat Exterminator: Let's see, that means that 10 are tied for first, 15 for second, and 18 for third.
Hisemiester wrote: You know one of the things I dislike so much is the way facts are presented. This one for instance. The confidence measure plunged from 68.7 in April to 64.9 in May. Plunging to me would be from 68.7& to say 40% Not a bit less than 4%.
Why are facts not just reported as such. We no longer have reporters we have journalists or commentators. Truth and/or facts are tools used the way the writer wants.
Dear Comrade Hisemiester,
First of all I’m not a reporter. I’m a columnist. That means that I get to use all the words in the dictionary, not just the ones that match with your grade level.
That said when I used the word “plunged” to describe the drop in consumer confidence it was because it was the highest drop in eight months and it was unexpected.
BusinessWeek wrote: Consumer confidence in the economy plunged in May. So did most other media outlets. Here’s a simple search you can do to verify the headlines.
ArtF. wrote: Hey John, how is that Facebook IPO working out for you? I don't doubt that it will eventually get some of its value back but not all of it. It seems their income stream is not quite as plentiful as originally thought. Now you can understand why it reminded me of the dot.com era.
It’s working out great for me. I wrote three times in the Facebook IPO column that I hated the IPO. So naturally that means that I didn’t buy it.
In the future, don’t make your reading disorder my problem.
Shubi wrote: It is interesting to analyze which trolls show up at which articles and correlate that with what the left might fear from the article. In this case, Ransom struck a nerve with the truth.
We have them on the run that’s all. It’s going to be a really bad summer to be a progressive.
Sylvia J wrote: Thank you Mr. Ransom, for remembering the VETS.
I live with one of those VETS, we have been married for over 30 yrs. and the honeymoon has never ended for either of us. My husband was wounded nearly mortaley on three occations and was awarded a Multi-Purple Heart for those three times. Thank GOD he is here body and soul with me and we are having a cook-out with the two sons and and remembering his Brothers he had to say good bye to in Viet Nam.
GOD BLESS AMERICA.
God bless you and yours. Thanks for the service and the sacrifice.
That’s all for this week,
Tibor Machan on the US Economy, Business and President Obama's Growing Market Prejudice
Sunday, June 03, 2012 by Anthony Wile - www.thedailybell.com
The editors of The Daily Bell are pleased to present another interview with well-known libertarian philosopher Tibor R. Machan (left).
Introduction: Tibor Machan is currently Professor Emeritus, Department of Philosophy, Auburn University, Alabama, and holds the R. C. Hoiles Endowed Chair in Business Ethics and Free Enterprise at the Argyros School of Business & Economics, Chapman University. He is also a research fellow at the Hoover Institution, Stanford University. Machan, who earned BA (Claremont McKenna College), MA (New York University) and Ph.D. (University of California at Santa Barbara) degrees in philosophy, has written numerous books and papers in the field of philosophy, including on issues surrounding the free market. Machan was selected as the 2003 President of the American Society for Value Inquiry, and delivered the presidential address on December 29, 2002, in Philadelphia, at the Eastern Division meetings of the American Philosophical Association, titled "Aristotle & Business."
Daily Bell: You are a most thoughtful analyst of liberty. In this interview we want to delve into freedom, how it works and why it is preferable to the kinds of command-and-control social structures that are so often suggested in this day and age. We want to use your recent editorials as a jumping off point and we'd like to start with the issue of business itself. Why are more and more top business people so disparaging of their own professions and welcoming of government interference?
Tibor Machan: That's a good question. I've written on this in the past. One example that comes to mind is Ted Turner who traveled to Washington to ask Congress to "shove down the throats of broadcasters" a TV violence rating system. Then there's Donald Trump who not so long ago wanted the government to put a tax on Native American casinos. It didn't occur to Trump to ask the government to lighten his tax load – or taxes generally. No, he just wanted to extend taxes to a new population!
Turner's advocacy of government censorship of broadcasting is horrible. He wanted the First Amendment to be voided even though he had built a business around its successful implementation and the protections it provided.
Turner and Trump are good examples of self-hating businesspeople who take advantage of freedoms in the US but then want to deprive others of a similar opportunity. Multiply their attitude by a thousand, perhaps a million. It's a kind of modern disease, in that such for one reason or another never seem to think about the ramifications of their actions – or how they will affect the prospects of their children. It's really sad, and immoral as well, in my view.
Daily Bell: Can you put that in the context of the recently bungled Facebook IPO? Was that a group acting in their own selfish self-interest? Is there a parallel?
Tibor Machan: There is certainly a lot of complaining about the Facebook IPO ... but no, I don't think it is the same. I am somewhat skeptical about all these claims regarding market manipulation. The bottom line is that a relationship has been consummated between shareholders and management and now it is time for the Facebook officials to get to work and build the business they've been paid handsomely to create. Shareholders have entrusted Facebook with their wealth and now Facebook technologists will decide what to do with their newfound resources. Hopefully, there will be ROI but there is no guarantee, of course.
Daily Bell: Let's move on to another topic of interest, the case of George Zimmerman. You made a point in an editorial about Trayvon Martin's use of a hoodie and how that might have affected Zimmerman. But in doing so you were trying to make a larger point as well.
Tibor Machan: Yes, actually it was Fox reporter Geraldo Rivera's perspective. He mentioned that hoodies tend to cover up a person's face, much the way large sunglasses do. That is, it could be suggested that the use of a hoodie might have made Zimmerman even more suspicious than he already was.
Of course, it would be politically incorrect to mention this, which is probably why I haven't read any analysis of Martin's use of a hoodie. It may also be sending a message of defiance of public authority, though I'm not trying to connect hoodies to crime or criminal actions. But the use of a hoodie and the lack of ANY commentary about it other than Rivera's is just one more aspect of why people are tuning out on the mainstream media. Its political correctness is a kind of sickness.
The Martin shooting, no matter how it turns out, was a tragedy for the Martin family and for the larger community. But it is also going to be a tragedy, or at least a debacle, for the mainstream media, which is once again, generally speaking, proving its incompetence and bias.
Even the apology of Zimmerman was spun in a totally inaccurate way. An apology implies that Zimmerman was taking responsibility for doing something wrong. It wasn't an apology. It was an acknowledgement. He said, "I am sorry for the loss of your son." But he didn't admit guilt. He didn't start down the slippery slope toward confession. He expressed sorrow to grieving parents.
It's really incredible that his statement can be reported as an apology of sorts, with the added implication that it is a kind of confession. But this case seems to me to have significant political overtones anyway, starting with President Barack Obama's statement that if he'd had a son, that individual would "look a lot like Trayvon."
Daily Bell: We've written about this ourselves. The Obama administration seems intent on demagoguing a number of issues, but our feeling is that he doesn't have much to run on so he's going to run on issues having to do with race or gender, anything to avoid running on his economic or foreign policy record.
Tibor Machan: I agree ... though he's like any politician in that regard. He'll run to his strengths, so we shouldn't be surprised. All politicians seem to be pragmatists, certainly in this day and age. But the Obama administration even more than usual has elevated pragmatism into a kind of operative philosophy.
Daily Bell: In the past you've mentioned a friend of the administration, Cass Sunstein ...
Tibor Machan: Yes, Sunstein's main claim to fame as a "public intellectual" is his idea of "nudging" or "libertarian paternalism." He's an expert at using government to create incentives that shove people with greater or lesser force toward activities that are said or perceived to be desirable. His ideas reference research done by late Harvard behaviorist psychologist, B. F. Skinner. It's behavior modification, not to put too fine a point on it. I recently made the following comparison:
Suppose my neighbor wants his guests to stop wearing shoes in his home, so he leaves bits and pieces of suggestions to them as they enter it that lead them to take off their shoes and proceed into the home only in socks. OK, but they need not visit him in the first place. So when they realize they're being manipulated into doing stuff they don't want to do – say, showing people the condition of their socks – they can just not visit at all or take some evasive action. There are numerous such situations in our lives, when those with whom we interact desire for us and try to induce us to act in certain ways and we can either comply or opt out.
The difference between private sector nudging and public sector nudging, however, is that with governmental nudging, force is involved. There's no escape from the nudging.
Daily Bell: Example?
Tibor Machan: Around the country now you have to step outside an establishment, even a bar, if you want to smoke. This is a kind of nudging but it is not one that gives you a choice. If you don't submit to the nudge and take your cigarette outside, you can be fined or even go to the jail. That's some nudge.
Daily Bell: An incarceration kind of nudge.
Tibor Machan: But it's the kind that Sunstein seems to favor. It is part of a larger philosophy that I find highly offensive. It has to do with Sunstein's certainty that government itself is not just the protector of rights but the provider as well. This approach predictably discards one of the principles of the Founding Fathers' exceptionalism when it came to the US. They enshrined the idea – rhetorically anyway – that natural law ought to be respected when it came to government power.
You can find this reflected in the Declaration of Independence that speaks of a natural right to life, liberty and the pursuit of happiness. As I wrote, "they are unalienable so long as we remain human!" But Professor Sunstein co-authored a book, The Cost of Rights: Why Liberty Depends on Taxes, that argues almost exactly the reverse of what Thomas Jefferson and the founders believed.
Sunstein is of the opinion that the state is not the guarantor but the fount of all human rights. This moves the conversation about liberty back a good deal. He basically gives monarchs, czars and dictators a free pass. The head of state has the power to determine what's good for us, even though he doesn't bother to justify it with any philosophical underpinning that I can see. For Sunstein and others like him, the state's access to force and expertise with brute physical power is justification enough.
Daily Bell: Doesn't this touch on a larger issue having to do with a basic lack of respect for the organizational elements of the free market itself and its ability to structure elements of a livable society far more efficiently for the most part than government?
Tibor Machan: Obama is certainly the child of thinkers who have influenced him – people like Sunstein, unfortunately. He has said, for instance, that he believes in job creation rather than wealth creation, as if one could have either/or in a still relatively free society.
It's not just Obama, of course, but the entire milieu in which he moves and functions. I've written about this extensively. There is a portion of the American intelligentsia that is just possessed by the notion that the marketplace is intrinsically evil − writers like John Grisham, directors like Oliver Stone, playwrights like Arthur Miller. And people like Sunstein as well. The goal of all these people is a kind of command-and-control economy that will allow them to organize the world according to their vision of what the world should be.
Daily Bell: Markets get in their way.
Tibor Machan: Markets are messy exactly because their workings and outcomes cannot be predicted. Many of the West's leaders and leading thinkers are uncomfortable with this kind of process. It is human nature to want one's prejudices reflected and confirmed by governance. Human nature actually hasn't changed in that regard. To some degree a contempt for commerce is hard-wired into the system of any ruling elite.
Plato bashed traders in his dialogues, and Aristotle didn't have much use for them either. Jesus threw the moneylenders out of the temple. But is business really a lowly profession? Is the pursuit of commerce somehow distasteful?
Aristotle thought a life devoted to contemplation was ideal so you're not going to find much admiration for practical, wealth-creation types there. And his attitude is with us still. Theoreticians, not practical people, get the headlines and Nobel Prizes. We've inhaled the idea that only the life of the mind is worthwhile, or something to be emulated. Men of action who seek worldly wealth and fame are regarded with admiration if they succeed – but there's something else as well, a sense that such worldly ambition is a not so admirable as a life of the mind.
This is untrue, of course, and even immoral. There is a great deal to be said for commerce and enlightened self-interest generally. Without people in business, our quality of life would be no better now than it was millennia ago when we were still living in caves. Archeologists now say that cities were created for purposes of trade and that civilization evolved to cultivate a critical mass of markets.
Charles Baudelaire once said that that "Commerce is natural, therefore shameful" but, in fact, that is just the point. Commerce is part of a larger natural law – we're commercial animals – traders – and there is nothing shameful about it. Those like President Obama and his advisors feel they are above such things, though I notice that Obama usually finds the business class more attractive as new election campaigns draw close. Then he generally stops the wealth bashing, at least for a while.
Daily Bell: That seems to be happening now, though we read he's not getting as good a reception from his donors as he once did.
Tibor Machan: It's astonishing how many donors he does still have given his general attitude toward business. I've pointed out that he once said, "When you're president, as opposed to the head of a private equity firm, your job is not simply to maximize profits. Your job is to figure out how everybody in the country has a fair shot."
This all sounds very presidential but when you unpack it, it's downright scary. He is not the Czar of US economic affairs, though he seems to think he is. In the deepest sense, he's in office to administer the laws that matter most, having to do with everyone's rights to life, liberty, and pursuit of happiness. I put it this way:
Just like the cop on the beat, the task isn't to get everyone to where he or she is going but to secure everyone's liberty to go wherever he or she wants to go, including, if that's how the citizenry chooses, staying put. (Freedom has no particular goal; it has to do with making it possible for citizens to choose their goals, so long as these are peaceful ones.)
You see? The cop is there to help secure your freedom. But it is up to YOU where you want to go. It is not up to the officer to consult with you about your destination. That is your business. He is simply there to help secure your right to travel as you wish to.
I think President Obama and too many other lawmakers are mightily confused about this point. Over time the boundaries have blurred and today Obama really does believe it's his business to consult with you on your goals and how you are going to travel to your destination – and even why you are headed there.
Daily Bell: He's becoming a "minder" rather than a public servant.
Tibor Machan: There's something else as well. As Obama believes that wealth creation is somehow demeaning, he's biased toward a society that discourages wealth creation. He's not just going to mind society; he's going to actively take it in the wrong direction. I've studied his thinking and actions, and it seems evident to me, for instance, that he really believes wealth can be created by taking taxes and putting them into public works.
Of course, this doesn't work very well for the most part because it is almost impossible to know what, if any, public works are actually going to create long-term jobs. But he really believes that if he throws enough money at government-created enterprises that some of it will stick.
What he's trying to do is replace the market itself – which he finds messy and distasteful – with the predictable command-and-control approach of government-managed "economic" policies.
Daily Bell: He seems to find the military-industrial complex attractive in that regard.
Tibor Machan: Yes, another good point. The military-industrial complex inhabits a gray area between government-initiated job creation and the private market. Military enterprises are attractive to bureaucrats generally because they are not strictly speaking public sector creations, but they are much more controllable in many ways than the usually unpredictable private sector
Daily Bell: Of course, as Randolph Bourne wrote famously, "War is the health of the state."
Tibor Machan: The state does have a role in defense of the nation but the US government has gone far off course in this regard. There were strictly limited functions laid out in the Declaration of Independence and the US Constitution as regards military procedures. Government was to be restrained and act only to defend the country in the face of a clear and demonstrable danger.
Think how far we've drifted away from that. Just as the government interferes endlessly in the lives of the average American citizen, so it does overseas as well. This is definitely a disease of modern liberalism, in my view, the idea that government can always "do it better." It provides justification for any kind of meddling.
What Obama and modern bureaucrats generally have "evolved beyond" is the whole idea of limited government. President George Washington warned about foreign entanglements and built his farewell address around limited government. The idea was that you couldn't attack another country simply to gain a competitive or industrial advantage. If you coveted a resource, you had to trade to receive it – not invade.
But the trouble is, once a country abandons self-restraint and begins to act in a bullying way, it's very difficult to return to limitations. For one thing, it will have developed a class of individuals that will have a stake in justifying the status quo. These individuals will be apologists in a way for violence.
Even more importantly, the country indulging in this sort of action can be seen to have lost its collective moral compass. When it comes to the US, a country that has traditionally been an example of restraint, the world is now a more dangerous place because rogue regimes see justification for their own violence in the example the US is now setting. The US is regularly providing justifications for international thuggery now. This has both economic and security-oriented ramifications.
Daily Bell: From your perspective, then, the US government under Obama has lost its way both economically and militarily.
Tibor Machan: It's not just under Obama. It's larger than any one administration. It's what the ancient Greeks used to call sophistry, a redefinition of what freedom is. That's what makes it so pernicious. Now, there are, admittedly, several senses of the term "freedom" in use. In particular, there is negative and positive freedom. The former is strongly associated with the American political tradition – spelled out, for example, in the Declaration of Independence and the Bill of Rights – the latter with the ideas of FDR's New Deal.
The first means being free from the dictates of others; the second means being supported by those dictates and hopefully advantaged. The free society as understood by classical liberals attempts to secure the ability to be free from interference. Modern liberals have stood this idea on its head. Today's liberalism stresses ways that government can affirmatively provide "rights" via various methodologies of confiscatory taxation. Freedom in the classical sense meant an absence of coercion. Freedom in the modern sense means the state is to be employed as a guarantor and facilitator of one's life and even one's lifestyle. I find this to be a big problem.
Daily Bell: Do you see any solution?
Tibor Machan: Well, I'm afraid it is not going to come via the political process at this point, though perhaps the election of Congressman Ron Paul might have helped. That seems more and more unlikely. What it is going to take is extensive education to reacquaint people with limited government and the perils of redefining freedoms and rights the way modern liberals want to define them.
Daily Bell: Sounds like we have our work cut out for us. Is the Internet helping?
Tibor Machan: The Internet is providing us with a very good tool, a kind of megaphone, but ultimately it is still up to us, those who believe in limited government and personal freedom, to state the message and offer the education.
Daily Bell: You've certainly been doing that, Dr. Machan. Thanks for sitting down with us again and for providing so many insightful articles about freedom.
Tibor Machan: Thanks for having me back.
by Patrick J. Buchanan
June 2, 2012
When Hillary Rosen said that Ann Romney had "never worked a day in her life," it was among the better days of the Romney campaign.
For Rosen – present whereabouts unknown – both revealed the feminist mindset about women who choose to become wives and mothers and brought Ann Romney center stage.
Before a Connecticut audience recently, Mrs. Romney spoke of her reluctance to see her husband pursue the presidency a second time and said she resisted, until she got an answer to one critical question.
"Can you fix it?" she asked Mitt. "I need to know. Is it too late?"
Mitt Romney replied, "No, it's getting late, but it's not too late."
Yet Ann's question lingers. Is it still possible to turn this country around? Or has a fate like that of Europe become inevitable?
If one focuses on the deficit-debt crisis, and what a president can do, the temptation is to succumb to despair.
Consider. The U.S. government spends a peacetime record 24 to 25 percent of gross domestic product. Most of that is expended on five accounts: Social Security, Medicare, Medicaid and other Great Society programs, interest on the national debt, war and defense.
Now assume the best of all worlds for the GOP. Mitt wins, and the party captures the Senate and holds the House.
Would that assure a rollback of the federal budget? And, if so, how?
As Romney is committed to expanding the armed forces by 100,000 personnel, to growing the Navy by 15 ships a year, from today's nine, to raising defense spending to 4 percent of GDP from the present 3.8 percent, defense spending would not be going down but up.
What about interest expense?
Given the Federal Reserve's present policy of holding interest rates near zero, the only way interest on the debt can go – is up.
Medicare, Medicaid, Social Security and the Great Society would have to sustain almost all of the cuts if the budget is to move toward balance.
But if the Republicans cut current benefits, they would antagonize 50 million seniors already on Social Security and Medicare.
If they cut future benefits, they will anger the baby boomers who are reaching eligibility for these retirement programs at a rate of 300,000 a month, 10,000 a day, and will continue to retire at that pace until 2030.
Would a President Romney and Republican Congress roll back benefits for scores of millions of seniors, raise the retirement age for Social Security and Medicare, reduce funds for Medicaid, Head Start, Pell grants, student loans, primary and secondary education, and shed federal employees by the tens of thousands?
Republicans argue that the corporate tax rate of 35 percent, highest among advanced nations, and the personal rate of 35 percent should be cut. The other piece of tax reform is the elimination of deductions and credits so a lower rate on a broader tax base will yield the same or additional revenue.
Looks good on paper.
But today 50 percent of all U.S. wage-earners pay zero income tax. Will that half of a nation reward a party that ensures that many of them, too, contribute? Free-riders on the federal tax code are voters, too.
Again, the crucial question: Does the Romney Republican Party have the courage of its convictions – to carry out a fiscal program consistent with its conservative philosophy?
For when, ever, has the modern GOP done that?
Richard Nixon funded the Great Society. Gerald Ford bailed out the Big Apple. George H.W. Bush increased spending and raised taxes. George W. Bush gave us No Child Left Behind, free prescription drugs for seniors, two wars, tax cuts and the largest increase in domestic spending since LBJ.
Even Ronald Reagan ruefully conceded that he failed to do what he had set out to do in cutting federal spending.
Now, we are assured that this generation of Republicans has come home to the church and confessed its sins, and is prepared to face martyrdom in the name of fiscal responsibility.
Yet, if it is difficult to see how the GOP advances toward a balanced budget, it is impossible to see how President Obama does.
Would the party of Nancy Pelosi and Harry Reid, triumphant, scale back programs that are the pride of their party – Social Security, Medicare, Medicaid? Would Pelosi, Reid and Obama cut the number of bureaucrats and beneficiaries of federal programs, thereby demobilizing the unionized armies on which they depend at election time?
When FDR came to power in 1933, after his running mate, "Cactus Jack" Garner, accused Herbert Hoover of taking us "down the road to socialism," the Federal government was spending 4 percent of GDP.
Today, it spends 24 percent. Under both parties, under every president since FDR, domestic spending has moved in one direction.
Ann Romney's question remains relevant.
Is the trend inexorable? Is there any turning back? Is it too late?
Submitted by Mark Grant author of 'Out of the Box'
A Loss of Credibility
Once at a social gathering, Gladstone said to Disraeli:
"I predict, Sir; that you will die either by hanging or of some vile disease".
"That all depends, sir, upon whether I embrace your principles or your mistress."
We have reached a point where the shepherd has shouted “wolf” one too many times, where the theatre goer has shouted “fire” one too many times and the crowd no longer believes the jargon and is standing pat. From one politician to the next in Europe the words are strikingly the same; “bold actions, courageous decisions, decisive plans” which are meant to stoke the propaganda machine and assure the world that all is well. We have had the bank stress tests; the first pockmarked by inaccurate data checked by no one and the second humiliated by an inaccurate construct which discredited it by its own shameless manipulation. We face a world where contingent liabilities, promises to pay and guarantees of debts are NOT counted and where asset guarantees, illusionary firewalls and unfunded rescue programs ARE counted and in some cases counted more than once. Europe has, in fact, provided a complex system of hoaxes, inaccurate data and false financial reports that have been for the most part believed but that belief system is now crumbling as every quarter presents new data that proves the inaccuracy of what we have been told.
“In my youth, I, too, entertained some illusions; but I soon recovered from them. The great orators who rule the assemblies by the brilliancy of their eloquence are in general men of the most mediocre political talents: they should not be opposed in their own way; for they have always more noisy words at command than you. Their eloquence should be opposed by a serious and logical argument; their strength lies in vagueness; they should be brought back to the reality of facts; practical arguments destroy them. In the council, there were men possessed of much more eloquence than I was: I always defeated them by this simple argument; two and two make four.”
In America we are also suffering from a hoax; just one of a different variation. The notion that the United States, myopic in its vision, will escape the quite real recession in Europe and that there will be a decoupling of some sort is the same fantasy to be found in Cinderella and here comes the Prince to whisk you off to the castle. There is no fairy godmother coming to save us and I am afraid we are bound to labor for our wages just like everyone else. There is always variance between markets of different nations and regions but the last historical decoupling probably took place sometime before World War I and has not and will not be seen again in anyone’s lifetime. The world fought with rifles once and then tanks and now there are nuclear bombs and just get on with it because there is no way back. Recession in Europe will bring recession to China, will bring recession to America and just get it through your heads and plan accordingly.
The American jobs data on Friday shocked everyone; there was not one call from any corner that provided an accurate reflection of the result and yet what did anyone expect? Every country in Europe is in a recession except Germany and I can virtually guarantee you that Germany will be in one soon as they cannot avoid the contagion any more than America can. Germany and the United States, best of class in their own way, will be the last to suffer the slings and woes of misfortune but we will suffer from them in the end. The past monetary easing by the Fed and the ECB helped to delay it all but we are at a point now where any new easing won’t do much. This is because of our interest rates being at almost zero and where do you think we are going; citizens and institutions paying the government to hold our money? No, I don’t think so and this, coupled with plenty of liquidity now in the world so that any new injection of liquidity will provide only a very momentary buoyancy so that easing, any type of easing, will do very little to stop a decline in equities, a widening of credit spreads, a rise in Treasury prices and all of the other things that one finds in a recession which will be more severe than predicted by most and so the world, along with Europe, is meeting reality and will find it a quite unpleasant experience.
If the American experience taught us anything it should be first that ”best of class” will sink right along with the “rest of class” and that looking backward, when facing a financial decline has about the same benefit as dipping your body in the Ganges river and hoping for salvation. In a recession what was will not be and all of your attention has to be shoved forward to look at what will come and not what has come.
Percentage Increase, 1922-29
Industrial Production: +70%
Gross National Product: +40%
Per Capita Income: +30%
Output per factory man hour: +75%
Corporate Profits: +62% (1923-1929)
"Financial storm definitely passed."
-Bernard Baruch, cablegram to Winston Churchill, November 15, 1929
Greece has hit the wall and its financial engine lies in tatters. Spain has hit the wall and just not made the announcement yet. Portugal has hit the wall and will bang it again for good measure. Ireland has hit the wall and is bathing in its national self-pity. Germany is staring at the wall, declared “no Eurobonds under any circumstances” over the weekend while Monti says Eurobonds “will come” and so we are about to have a re-do of the Battle of Verdun. France is warming up to the wall and wants to spend even more to climb the damn thing. America is in self-denial that there is any wall at all. China is about to hit the wall and is adjusting its parachute.
Treasuries are the needle on the speedometer and if there is one clear indication of very serious trouble ahead you can read it there.
The fat lady is about to sing. If you don’t wish to listen then don’t show up later and say I didn’t warn you.
When the world goes into a depression ( like we're about to do ), they usually have a "nice" world war to get the economies going again....I can't see this time as any different.
Russia and China have been spending on their militaries like crazy....gearing up? I do think North Korea and Iran will start this thing off. One of the two. We've already been "warned" by the Russians ( and to a lesser degree by China ) to back off some. Do you think we'll back off? Of course not.
I agree with Karl
40+ years ago...
..when I was in HS, we did a short presentation on "cost of goods sold" and chose a soft drink as our example. We found that a 20oz drink with ice would cost a restaurant about $.10, plus a minimal of about $.05 for the cup, time and ice that was the total cost for the restaurant to sell it.
So, for a $1.00 the restaurant was making $.85 on every drink they sold.
Then, we took the beverage the other direction, in comparison to a gallon of gas. I know that a gallon of gas back then was about $1.00 a gallon, but a gallon of soda was exorbitant in comparison.
Look at the cost of coffee nowadays. What is really being looked at in this obesity issue is that the beverage companies are too fat, not the people, lol.
Would you like some oil with that crumpet?
Demographic forecasts generally take the form of predicting more of the same.
Old people have been moving to Florida for the past several years, and old people will move there for the next few years. Immigrants have been streaming in from Mexico, and they will continue to do so. You get the idea.
Most of the time these forecasts prove right. But sometimes there are inflection points, times when some trends stop and others begin. My read of recent demographic data suggest we may be at such a point right now.
These inflection points are usually not recognized at the time. For 25 years during and after World War II, there was a vast flow of blacks from the South to the big cities of the North. People assumed it would go on and on. But it stopped, abruptly, in 1965, just after passage of federal civil rights acts and at the beginning of a period of urban ghetto riots in the North. There has been no mass movement of blacks from South to North ever since, but rather a slight net move in the other direction.
Or consider the migration of millions to sunny California that started during World War II and accelerated in the postwar decades. It came to a halt in the middle 1980s, just as Southern California's President Ronald Reagan was opening the 1984 Los Angeles Olympics.
Since 1990, Americans have been moving out of California to other states in large numbers. The Golden State's population growth in the last two decades has reached the national average only because of Latin and Asian immigration.
That immigration, to California and elsewhere, is one of the two big demographic trends that has reshaped the country over the last 40 years. The other is the movement of vast numbers of people from high-tax states in the Northeast and industrial Midwest to lower-tax and more economically vibrant states elsewhere.
Both these movements have halted, at least temporarily. American mobility is near an all-time low. As in the Depression of the 1930s, people tend to stay put in hard times. You don't want to sell your house if you're underwater on your mortgage.
And immigration has plunged. The Pew Hispanic Center estimates that from 2005 to 2010, more people have moved from the United States to Mexico than the other way around. I suspect that reverse migration is still going on.
The question is whether those trends will resume when -- if? -- good times return.
My prediction is that we won't ever again see the heavy Latin immigration we saw between 1983 and 2007, which averaged 300,000 legal immigrants and perhaps as many illegals annually.
Mexican and other Latin birthrates fell more than two decades ago. And Mexico, source of 60 percent of Latin immigrants, is now a majority-middle-class country.
Asian immigration may continue, primarily from China and India, especially if we have the good sense to change our laws to let in more high-skill immigrants.
But the next big immigration source, I think, will be sub-Saharan Africa. We may end up with prominent politicians who actually were born in Kenya.
Continued domestic out-migration from high-tax states? Certainly from California, where Gov. Jerry Brown wants to raise taxes even higher. With foreign immigration down, California is likely to grow more slowly than the nation, for the first time in history, and could even start losing population.
Fortunately, governors of some other high-tax states are itching to cut taxes. The shale oil and natural gas boom has job-seekers streaming to hitherto unlikely spots like North Dakota and northeast Ohio. Great Plains cities like Omaha and Des Moines are looking pretty healthy, too.
It's not clear whether Atlanta and its smaller kin -- Charlotte, Raleigh, Nashville, Jacksonville -- will resume their robust growth. They've suffered high unemployment lately.
But Texas has been doing very well. If you draw a triangle whose points are Houston, Dallas and San Antonio, enclosing Austin, you've just drawn a map of the economic and jobs engine of North America.
Texas prospers not just because of oil and gas, but thanks to a diversified and sophisticated economy. It has attracted large numbers of both immigrants and domestic migrants for a quarter century. One in 12 Americans lives there.
America is getting to look a lot more like Texas, and that's one trend that I hope continues.
Mayor Bloomberg is a wretched human being. He’s an ultra-rich limousine liberal who wants to impose his views on ordinary people.
I’ve previously written about his statist efforts to ban bake sales, and I’ve noted with mixed feelings his proposal to tell food stamp recipients what they’re allowed to buy.
Now he wants to criminalize large sodas. Holman Jenkins writes about this silly idea in the Wall Street Journal.
Mike Bloomberg’s move to regulate the size of sodas sold in his city illustrates why it’s a good thing he is a mayor of New York and not the czar of all the Russias. American big cities tend to be one-party states to begin with, but at least their totalitarian impulses end up being merely cute because they’re so easy to evade. Under the Bloomberg plan, any cup or bottle of sugary drink larger than 16 ounces at a public venue would be verboten, beginning early next year. You’ll still be able to buy as much Coke as you want in a supermarket. Go home and pour yourself a bucketful. As Mr. Bloomberg himself was the first to note, you’ll also still be free to buy two medium drinks in place of today’s Big Gulp at ballgames, theaters, delis and other venues where the ban would be in effect.
But Mr. Jenkins doesn’t just mock Bloomberg for being a food nanny. He also makes an important point about public policy.
Here is the ultimate justification for the Bloomberg soft-drink ban, not to mention his smoking ban, his transfat ban, and his unsuccessful efforts to enact a soda tax and prohibit buying high-calorie drinks with food stamps: The taxpayer is picking up the bill. Call it the growing chattelization of the beneficiary class under government health-care programs. Bloombergism is a secular trend. Los Angeles has sought to ban new fast-food shops in neighborhoods disproportionately populated by Medicaid recipients, Utah to increase Medicaid copays for smokers, Arizona to impose a special tax on Medicaid recipients who smoke or are overweight. …So perhaps the famous “broccoli” hypothetical during the Supreme Court ObamaCare debate was not so fanciful after all. It flows naturally from the state’s fiscal responsibility for your health that it will try to regulate your behavior, even mandating vegetable consumption.
Or, to summarize, the view of politicians is that the government can tell you how to live because it is paying for your healthcare. This is Mitchell’s Law on steroids! One bad government policy leading to another awful government policy.
And it’s not just Mayor Bloomberg pushing these policies. Other politicians have similar proposals, though it’s quite likely that their main motive is to collect more tax revenue since they are focused on how to tax various “bad” foods.
But let’s try not to be overly depressed. Here’s an amusing cartoon on the topic.
I’m glad that people are mocking Mayor Bloomberg and the rest of the Food Nazis. And it’s good to see that the soft drink industry is fighting back, as seen by this Super Bowl commercial.
Maybe some day we’ll get to the point where people have to smuggle food past government agents. This may sound absurd, but it’s already happening in Norway.
SINGAPORE (AP) — A super-stealthy warship that could underpin the U.S. navy's China strategy will be able to sneak up on coastlines virtually undetected and pound targets with electromagnetic "railguns" right out of a sci-fi movie.
But at more than $3 billion a pop, critics say the new DDG-1000 destroyer sucks away funds that could be better used to bolster a thinly stretched conventional fleet. One outspoken admiral in China has scoffed that all it would take to sink the high-tech American ship is an armada of explosive-laden fishing boats.
In my opinion, they exaggerate it.. Some of the planners watched too much Startreck..
That happens when to much money meets no control..
Compliments of Raytheon
Posted: 04 Jun 2012 10:05 AM PDT
By Barry Ritholtz
Charles H. Ferguson, the director of the Oscar-winning documentary Inside Job, now explains how a predator elite took over the country.
He exposes the networks of academic, financial, and political influence, in all recent administrations, that prepared the predators path to conquest.
Over the last several decades, the United States has undergone one of the most radical social and economic transformations in its history.
Finance has become America's dominant industry, while manufacturing, even for high technology industries, has nearly disappeared.
The financial sector has become increasingly criminalized, with the widespread fraud that caused the housing bubble going completely unpunished.
Federal tax collections as a share of GDP are at their lowest level in sixty years, with the wealthy and highly profitable corporations enjoying the greatest tax reductions.
Most shockingly, the United States, so long the beacon of opportunity for the ambitious poor, has become one of the world�s most unequal and unfair societies.
Ferguson shows how from the Reagan administration forward, both major political parties have become captives of the moneyed elite.
It was the Clinton administration that dismantled the regulatory controls that protected the average citizen from avaricious financiers. It was the Bush team that destroyed the federal revenue base with its grotesquely skewed tax cuts for the rich. And it is the Obama White House that has allowed financial criminals to continue to operate unchecked, even after supposed reforms installed after the collapse of 2008.
It is no exaggeration to say that since the 1980s, much of the American (and global) financial sector has become criminalized, creating an industry culture that tolerates or even encourages systematic fraud. The behavior that caused the mortgage bubble and financial crisis was a natural outcome and continuation of this pattern, rather than some kind of economic accident.
It is important to understand that this behavior really is seriously criminal. We are not talking about neglecting some bureaucratic formality. We are talking about deliberate concealment of financial transactions that aided terrorism, nuclear weapons proliferation, and large-scale tax evasion; assisting in concealment of criminal assets and activities by others; and directly committing frauds that substantially worsened the worst financial bubbles and crises since the Depression.
None of this conduct was punished in any significant way. On November 7, 2011, the New York Times published an article (Wall Street's Repeat Violations, Despite Repeated Promises) based on its own review of major banks’ settlements of SEC lawsuits since 1996. The Times’ analysis found fifty-one cases in which major banks had settled cases involving securities fraud, after having previously been caught violating the same law, and then promising the SEC not to do so again. The Times’ list, furthermore, covered only SEC securities fraud cases; it did not include any criminal cases, private lawsuits by victims, cases filed by state attorneys general, or any cases of bribery, money laundering, tax evasion, or illegal asset concealment — all areas in which the banks have numerous and major violations. In Predator Nation, I provide detailed, well-documented accounts of behavior ranging from assisting Enron’s frauds (Citigroup, Merrill Lynch), to fraudulently exploiting the Internet bubble (most of the major investment banks), to using for-profit colleges to exploit government student loan programs (Goldman Sachs), to assisting in money laundering and tax evasion on a large scale (at least eleven banks including UBS, Barclay’s, and Lloyds), to using bribery and artificially complex derivatives to destroy the finances of a county government (JP Morgan Chase), to profiting from Bernard Madoff even while strongly suspecting him to be a fraud (JP Morgan Chase, UBS).
Total fines for all these cases combined appear to be far less than 1 percent of financial sector profits and bonuses during the same period. There have been very few prosecutions and no criminal convictions of large U.S. financial institutions or their senior executives. Where individuals not linked to major banks have committed similar offenses, they have been treated far more harshly.
Given this background, it is difficult to avoid the conclusion that the mortgage bubble and financial crisis were facilitated not only by deregulation but also by the prior twenty years’ tolerance of large scale financial crime. First, the absence of prosecution gradually led to a deeply embedded cultural acceptance of unethical and criminal behavior in finance. And second, it generated a sense of personal impunity; bankers contemplating criminal actions were no longer deterred by threat of prosecution.
And just as the last twenty years of unpunished financial crime constituted a green light for the bubble, so, too, America’s non-response to the bubble and crisis is setting the tone for financial conduct in the future.
The Obama administration has rationalized its failure to prosecute any senior financial executives (literally, not a single one) for bubble-related crimes by saying that while much of Wall Street’s behavior was unwise or unethical, it wasn’t illegal. Here is President Obama at a White House press conference on October 6, 2011:
Well, first on the issue of prosecutions on Wall Street, one of the biggest problems about the collapse of Lehmans [sic] and the subsequent financial crisis and the whole subprime lending fiasco is that a lot of that stuff wasn’t necessarily illegal, it was just immoral or inappropriate or reckless….I think part of people’s frustrations, part of my frustration, was a lot of practices that should not have been allowed weren’t necessarily against the law.
The president and senior administration officials (such as Lanny Breuer, head of the Justice Department’s Criminal Division) have portrayed themselves as frustrated and hamstrung — desirous of punishing those responsible for the crisis, but unable to do so because their conduct wasn’t illegal, and/or the federal government lacks sufficient power to sanction them. With apologies for my vulgarity, this is complete horseshit.
When the federal government is really serious about something — preventing another 9/11, or pursuing major organized crime figures — it has many tools at its disposal and often uses them. There are wiretaps and electronic eavesdropping. There are special prosecutors, task forces, and grand juries. When Patty Hearst was kidnapped by the radical Symbionese Liberation Army in 1974, the FBI assigned hundreds of agents to the case.
In organized crime investigations, the FBI and federal prosecutors often start at the bottom in order to get to the top. They use the well established technique of nailing lower-level people and then offering them a deal if they inform on and/or testify about their superiors — whereupon the FBI nails their superiors, and does the same thing to them, until climbing to the top of the tree. There is also the technique of nailing people for what can be proven against them, even if it’s not the main offense. Al Capone was never convicted of bootlegging, large scale corruption, or murder; he was convicted of tax evasion.
In this spirit, here are a few observations about the ethics, legalities, and practicalities of prosecution related to the bubble:
First, much of the bubble was directly, massively criminal.
Second, if you really wanted to get these people, you could. Maybe not all of them, but certainly many. Some bubble-related violations are very clear, with strong written evidence, as my book Predator Nation demonstrates. And if you flipped enough people, some of them would undoubtedly have interesting things to say about what their senior management knew. In fact, there are many techniques, venues, organizations, regulations, and statutes, both civil and criminal, available to investigate these people, punish them, and recover the money they took — if you really wanted to. The federal government has used almost none of them.
Third, the moral argument for punishment is very strong, providing ample justification for erring on the side of aggressive legal pursuit. Whatever portion of banking conduct during the bubble was criminal, it was certainly substantial, and there is no doubt whatsoever that it was utterly, pervasively unethical, designed to defraud in reality if not in law. Since the crisis, the people who caused it have been anything but honest or contrite. They have been evasive, dishonest, and self-justifying, returning as quickly as possible to their unerringly selfish behavior. Their behavior caused enormous damage, both human and economic; the consequences of their wrongdoing are so large as to justify almost any action that could help to prevent another such crisis by creating real deterrence. There would also be intangible but large benefits to raising the general ethical standard of a vital industry, and one whose executives often become high-level government officials.
Given this background, let’s now consider the question of criminal liability, as well as the feasibility of prosecution.
The list of prosecutable crimes committed during the bubble, the crisis, and aftermath period by financial services firms and senior executives includes: securities fraud (many forms); accounting fraud (many forms); honest services violations (mail fraud statute); bribery; perjury and making false statements to federal investigators; Sarbanes-Oxley violations (certifying accounting statements and financial controls); RICO offenses and criminal antitrust violations; Federal aid disclosure regulations (related to Federal Reserve loans); Personal conduct offenses (many forms: drugs, tax evasion, etc.).
In Predator Nation I consider each of these categories in detail, naming many names and providing many specific examples. But in considering only one category, securities fraud, we already face an embarrassment of riches.
Almost all the prospectuses and sales material on mortgage-backed securities sold from 2005 through 2007 were a compound of falsehoods. But it starts even earlier in the food chain. We also know that mortgage originators committed securities fraud when they misrepresented the characteristics of loan pools, and the nature and extent of their due diligence with regard to them, when they sold pools to securitizers (and accepted financing from them). Most or all of the securitizers (meaning nearly all the investment banks and major banking conglomerates) then committed securities fraud when they misrepresented the characteristics of the loans backing their CDOs, the characteristics of the resulting mortgage-backed securities, and the nature and results of their due diligence in the process of creating those securities. The securitizers also committed securities fraud when they made similar misrepresentations to the insurers of, and sellers of credit default swap (CDS) protection on, those securities.
The executives of both originators and securitizers then committed a separate form of securities fraud in their statements to investors and the public about their companies’ financial condition. They knew that they were engaging in a Ponzi-like fraud that would eventually need to end, and as the bubble peaked and started to collapse, they repeatedly lied about their companies’ financial condition. In some cases they also concealed other material information, such as the extent to which they, themselves, and/or other executives of their firms, were selling or hedging their own stock holdings because they knew that their firms were about to collapse.
Next, several investment banks committed securities fraud when they failed to disclose that they were selling securities that were designed to fail so that the investment banks, and/or their hedge fund clients, could profit by betting on their failure. The Hudson and Timberwolf synthetic CDOs sold by Goldman Sachs, and which were the focus of the Levin Senate subcommittee hearings, provide a very strong basis for prosecution. Goldman’s trading arm had been dragooned into finding and dumping their most dangerous assets to naive institutional investors. Important representations in the Hudson sales material–that assets were not sourced from Goldman’s own inventory — were lies, and they were material lies, since investors had learned to be wary of banks clearing out their own bad inventory. E-mail trails show that top executives closely tracked the garbage disposals and were gleeful at the unloading of the Timberwolf assets — as they should have been, for the assets were nearly worthless within months. There have been no prosecutions.
In some cases, we already have clear evidence of senior executive knowledge of and involvement in these frauds. For example, quarterly presentations to investors are nearly always made by the CEO or CFO of the firm; if lies were told in those presentations, or if material facts were omitted, the responsibility lies with senior management. In some other cases, such as Bear Stearns, we already have evidence from civil lawsuits that very senior executives were directly involved in constructing and selling securities whose prospectuses contained lies and omissions.
The list is long. In chapters three through six of Predator Nation, I survey the financial sector’s behavior during the bubble, and provide dozens of examples of major criminal behavior. Again, there have been no prosecutions.