Category Archives: Debt

Updated: ‘Don’t Bet On A Recovery’

Debt, Economy, Federal Reserve Bank, Inflation, Labor, Uncategorized

PETER SCHIFF CHALLENGES “those who fantasize about a consumer-led recovery to describe where the spending money will come from. Most consumers are tapped out, millions are unemployed, and home equity has been wiped out. The only reasonable thing for them to do is to pay down debt and sock away as much money as possible to rebuild their savings.

Beyond the question of ‘how’ the spending could be achieved, is the deeper question of ‘why’ such activity should be sought at all. Excessive spending, fueled by an insane housing bubble and catalyzed by reckless monetary and fiscal policy, was the reason that our current recession became unavoidable. Why would we want to go down that road again?

During the run up to the crash, excess spending had created economic distortions that have yet to be resolved. Too many resources, including land, labor, and capital, were devoted to servicing an unsustainable economic model in which Americans borrowed money to buy homes, products and services they really could not afford. In many cases consumer behavior was influenced by overly optimistic assumptions regarding real estate related riches.

However, now that the real estate bubble has burst, Americans are coming to terms with a more sober reality. Many have cut up their credit cards, dramatically reduced their spending, and have squirreled away as much money as they can. This change in behavior should necessitate a dramatic shift in the labor market as workers move away from jobs associated with consumer spending and toward jobs associated with real production, primarily for exportable goods.

The real problem is that monetary and fiscal policy designed to re-inflate the burst spending bubble is preventing this transition from taking place. As a result we are not creating the jobs we need to replace – the ones we have lost in mortgage servicing, home improvement, and real estate sales (which we never really needed to begin with). As these jobless remain unable to find alternative employment, our economy will continue to languish.

Some will argue that the new jobs created by government stimulus spending will provide the additional purchasing power necessary to revitalize consumer spending. There are two problems with this expectation. First, those jobs being ‘created’ by the government are outnumbered by those being destroyed by government domination of resources. Second, even if it were possible for job growth to return, having hopefully learned from their mistakes, workers will be far more frugal with their paychecks than they were in the past.”

The complete column is HERE.

Update: From the U.S. Bureau of Labor Statistics comes “THE EMPLOYMENT SITUATION — FEBRUARY 2010.” It’s not good.

Updated: ‘Conservatives’ Pine For Post Office

Affirmative Action, Debt, Free Markets, Labor, Multiculturalism, Republicans, The State

Chuckie Krauthammer hasn’t visited a United States Postal Service office lately. As a regular on Bret Baier’s Special Report, he was asked to prognosticate about the future of the USPS monopoly I described thus:

Having used the Canadian, South African and European equivalent services, I can safely say that there is no viler or more inhospitable dump than the United States Postal Service. The latter is far and away inferior to the aforementioned rival monopolies. Enviously I eye the items my mother posts from the Netherlands. Whereas mine are festooned with at least two labels per package; hers are form-free, care free, shipped with ease.

The Postal Service is in the red, for a change, “could lose a staggering $7 billion this year,” and “posted $3.8 billion in losses last year.”

The fattened Postmaster General John Potter is seeking some kind of mandate (and funding presumably … from China) to “move the Service forward.” He wants to “reinvest, redefine and reinvigorate the value of mail to business and households.”

Fighting for the USPS, its “$70 billion in unfunded liabilities, and the parasitical existence of 800,000 postal workers who live off the Federal Financing Bank (read: the taxpayer),” is Republican Sen. Susan Collins, R-Maine.

“If you cut back services, you’re going to lose customers,” she stammered, as if the USPS has “customers”; it has captives, pinned down like butterflies by grotesque “service providers.”

In the name of tradition, Chuckie Krauthammer expressed nostalgic sentiments for the postman who came no matter the weather, and recommended rehabilitating this institution.

As I said, he clearly has not frequented a post office in a while. It’s a monument to the multicultural Managerial State and is packed with sour, affirmative action hires who speak in tongues. Grandma in a remote hamlet is unlikely to get her mail delivered by a friendly old timer. Oh no, those government jobs are reserved for “minorities.”

Recommended: “Warning: Postal Worker Coming to A Clinic Near You”

Update (March 3): A reminder: this post is about conservatives supporting the continued nationalization of a service delivered magnificently and morally by the free market. I’m sorry liberty lovers feel it is unworthy of their attention.

Update II: A Sprinkling Of State Star Dust (Behold: A Commission)

Barack Obama, Business, Debt, Economy, Energy, Free Markets, Government, Internet, Liberty, Socialism, Taxation, The State

In the introduction to F.A. Hayek’s The Road to Serfdom, the late economist Milton Friedman put his finger on the backdrop to the growth of collectivism: “The argument for collectivism is simple if false; it is an immediate emotional argument. The argument for individualism is subtle and sophisticated; it is an indirect rational argument.”

Friedman best articulated why idiots don’t understand freedom.

Obama is an idiot. The guy really doesn’t comprehend how it is that he can’t create jobs. He keeps sprinkling state star dust, but nothing happens. He honestly believes that as the head of an entity that only consumes wealth and has no means of producing it, he should, nevertheless, be able to generate viable jobs. Indeed, BO’s bewildered, because his are the economics of voodoo..

If it is to expand, nuclear power should be privately financed. But, as explained, BO has a hard time with the market place, being too dim to understand its workings. So today, instead of lifting the 40-year-old restrictions on the construction of nuclear plants and leaving the rest to an industry with skin in the game, BO has decided “to back the construction of two nuclear reactors with $8.3 billion in federal loan guarantees.”

By BO logic, a wave of the wand is bound to bring into being a viable industry.

Not quite.

“We are missing a historic opportunity to expand nuclear power the right way [through private financing] and instead settling for a handful of government-subsidized reactors,” says Jack Spencer, a research fellow for nuclear energy policy at the conservative Heritage Foundation.

The same species of dimness inflicts the First Lady. When Michelle O launched her Fat-Based Initiative, the FLOTUS showed that she too is inured to the workings of the market. MO was challenged as to whether she was not interfering in the lives of Americans, to which she answered that she agreed government should not meddle. Seamlessly, she went on to explain that “We,” as in the Royal We, needed to offer parents options… and educate them, etc.

MO had drawn a complete blank; unable was she to even fathom how information would disseminated outside the purview of government.

Update I: STIM TURNS 1 TODAY. Obama understandably defends it, but so do the Keynesians—proponents of centralized banking—at the Wall Street Journal. As I wrote, “How much to hand out; who to hand it to; which handout makes the best use of taxpayer money…—that’s the depth of the ‘philosophical’ to-be-or-not-to-be among Republikeynsians.”

No premise of central banking is more honored than the idea that the system needs a lender of last resort, without whom holders of good collateral can go belly up in a liquidity panic

[Holman W. Jenkins Jr., WSJ]

Obama’s defense has far more credibility, given that he is a central planner, and the WSJ poses as pro-market:

Obama, in a White House speech, said he believed the stimulus will save or create 1.5 million jobs in 2010 after saving or creating as many as 2 million jobs thus far.
His point was to show that the stimulus, while admittedly unpopular, had the effect of keeping the U.S. economy from plunging into a second Great Depression.
‘Our work is far from over but we have rescued this economy from the worst of this crisis,’ he said.

Update II (Feb. 18): BEHOLD A COMMISSION. “Government commissions are where accountability goes to die.” It is for reason that “President Barack Obama named a bipartisan panel on Thursday to tackle exploding U.S. budget deficits and promised it broad leeway to recommend ways to put the country on a path to fiscal responsibility.”

A commission can do absolutely nothing about the debt and the deficits this president, like his predecessor, has wracked-up. What it can do is put distance between the president and the “tough decisions” the country he is bankrupting must make.

Taxes will be raised, despite Obama’s promise “during his campaign that families making less than $250,000 would not face tax increases.”

Fishy accounting, in the final analysis, will allow this smooth, slippery president to claim that he has tackled a problem Bush created and he exacerbated.

Quote: “There’s no doubt that we’re going to have to also address the long-term quandary of a government that routinely and extravagantly spends more than it takes in.”

Question: Are Americans the kind of meatheads that’ll accept BO’s version of events whereby he and his Big-Spender Government are two different entities, never the twain shall meet?