Archive for category National Character

July Hayek Dinner: State of the Economy

Our thanks to Tom Cargill for the excellent presentation last evening and to Jerry O’Driscoll for arranging the meeting in my absence.

Jerry opened with a snapshot on employment trends from selected countries since 2008. The US is at the bottom of the pile and trending down!

Tom picked it up from there with a quick look back on the first decade of this century focusing on four remarkable points: 1. US homeland is vulnerable to attack since 911; the first since the war of 1812. 2. Critics of the market are strong despite the increase in standard of living in the last quarter century. 3. Failures of the welfare state notwithstanding, the US is moving toward socialism. And, 4. the political force toward socialism can be traced to our current great recession.

Technically, the recession is still in full force. The question is what kind of recovery will come, weak flat “U” or “J,” or a double dip.  Ten key points are apparent:

  • the US has not seen more economic, financial, and political distress since the Great Depression.
  • our recession was not caused by market failure but mainly by government failure, both monetary with low rates too long and fiscally with housing policies of Fannie-Freddie.
  • yet, the public hypnotized by Obama rhetoric believes market failure was the cause.
  • admittedly, the $700 billion financial bailout was necessary to prevent a liquidity crisis.
  • but the five “stimulus” packages ignored history and had a negative effect, negative Keynesian multiplier, on the GDP. Wasteful spending directed to leftist programs.
  • while we now see some GDP growth, the private sector is not creating jobs and budget pressures will force a decline in public sector employment.
  • the private market is not creating jobs due to the great uncertainty of the rules of the game; we are going to state directed allocation of resources not market directed allocation.
  • Adam Smith calls man an economic animal, “truck, barter, and exchange” but the uncertainty of the rules creates inefficiencies that lower growth potential.
  • the economic game becomes even more uncertain because of the greater role of government; what happens to the chess game if it is announced in the middle of the game that there will be a rule change; Obama is regularly announcing rule changes to come!
  • QED, the most likely “recovery” is a flat “J” over the next several years with a chance of a double dip.

Tom now thinks the chance of a double dip is 50/50, an increase from his earlier thinking. Potential economic shocks which will push toward a double dip are: the dramatic increase in taxes next year, and the questionable stability of the European Union. The current divergence in fiscal policy between the overspending US and the rapid austerity in Europe may well be a third negative shock. Tom concluded saying that only a change in the US congress and administration will offer hope of a solid recovery.

We thank Beth Powers and her crew for her comments and patriotic efforts with LibertyInAmerica.org. Please consider a donation to help continue the fine bus treck.

John Dunn provided a positive report on Yucca mountain efforts, see NV4CFE.org.

Finally, our thanks to Mike Herring for treating the group to dinner and drinks, this an an inducement to make contributions to Sharron Angle’s campaign to retire Dirty Harry.

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Paul Ryan: Fork in Road

You can’t say it any better than Paul Ryan.

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Unprotected Against Jihad

Hussein Obama’s counterterrorism tzar, John Brennan trivializes the danger of Islam according to Andy McCarthy in today’s NRO post, An Islam of Their Very Own. The article is a must read with only two conclusions possible: Obama is stupid or naive or he is converting the U.S. to sharia, that is Islamic law. In essence, become Muslim or die, so ruled Mohamed after his militant successes.

“Brennan admonished that we must not “describe our enemy as ‘jihadists.’” Why not? “Because jihad is a holy struggle, a legitimate tenet of Islam.” Right again. There is no gainsaying that jihad is deemed to be a divine injunction in Islam. If one regards all forms of Islam as “legitimate,” then jihad, too, must be legitimate. Yet “legitimate” is a slippery concept. It could mean that something is good. Or it could just mean that something is authentic — something that really exists, for good or ill.

“Islam falls into the latter category. It exists. In many of its iterations — not just al-Qaeda’s ideology but Islamist ideology, which is quite mainstream — Islam means the West existential harm. This is why we are supportive of reformist Muslims, however pessimistic some of us may be about their prospects. The point, though, is that Islam is not going away. It is part of the hand we are dealt, like it or not. We don’t need to trash-talk it gratuitously, but neither should we pretend that it is an asset on our security ledger. It’s not.

“Alas, the Hope administration doesn’t see it that way. For Brennan, as for Obama, Islam is immovably in the first category: “legitimate” as in “good” — end of discussion. To sculpt this alternative reality, two things are required. First, we must ignore Islam’s many troublesome elements — e.g., its supremacism, inequality, intolerance, denial of freedom of conscience, endorsement of violence, etc. Second, to the extent that the resulting atrocities can’t be ignored, we must pretend that what ails the Islamic world is our fault, not Islam’s.”

Andy’s point echos the points made during Herman Pirchner’s presentation and discussion at our last Reno Hayek dinner, namely that radical Islam and its Jihad is closer to the Koran than any reformist/secular branch of that “religion.” I put that in quotes to denote that it is more than just our concept of “religion;” it is government, society and religion in the sense that Mohamed imposed upon his conquests.

Here’s my empirical observation: not many, if any, Moslems have condemned the Jihads, the terror, the 911 carnage, the call to exterminate Israel.

These people are backward, immoral, intolerant, and violent. They advocate or tolerate “supremacism, inequality, intolerance, denial of freedom of conscience, endorsement of violence, etc.” For them, the end justifies the means, no matter how distorted either end or means in reality are. They blow themselves up in hopes of “virgins in heaven.” Pity those few virgins in number! But, that is the level of their intelligence.

Hussein Obama apparently ignores “man caused disasters.” Islam is good because he wishes it so. This is contrary to the reality that we witness every day. Islam is bad.

“Our political leaders can continue to trivialize jihad as if it were some benign struggle to brush after every meal. They can continue to ignore the core tenets that make sharia antithetical to a free, self-determining society. But they can’t do that and do the only job we need them to do: protect our lives and our liberties.” Andy McCarthy’s article is a must read.

Hussein Obama is hell-bent-for-leather to “hope and change” the United States into an Islamic nation under Sharia law. Be very fearful for our nation.

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Gabriella Stands Up For Immigration Sanity In Arizona

A beautiful naturalized US citizen stands up for Arizona’s immigration law.

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Super Power to Super Wimp

How weak can we be? Charles Krauthhammer answers the question in today’s NRO post, The Fruits of Weakness. The Iran-Brazil-Turkey nuclear deal is a ruse. Iran retains more than enough enriched uranium to make the nuclear bomb and continues accelerated enrichment. Even the French say the deal will help Iran continue its nuclear program. The joint hands up photo is the collective finger to the weak Hussein Omama.

“That picture — a defiant, triumphant “take that” to Uncle Sam — is a crushing verdict on the Obama foreign policy. It demonstrates how rising powers, traditional American allies, having watched thisadministration in action, have decided that there’s no cost to lining up with America’s enemies and no profit in lining up with a U.S. president given to apologies and appeasement.”

Iran Obama overtures and appeasements rejected, Obama acquiescence to Russia’s reformation of its USSR sphere of influence, Obama appeasement of Syria even as it tightens its grip on Lebanon, are all examples of our weakness, our desire to withdraw and disarm.

“This is not just an America in decline. This is an America in retreat — accepting, ratifying, and declaring its decline, and inviting rising powers to fill the vacuum.”

“Given Obama’s policies and principles, Turkey and Brazil are acting rationally. Why not give cover to Ahmadinejad and his nuclear ambitions? As the U.S. retreats in the face of Iran, China, Russia, and Venezuela, why not hedge your bets? There’s nothing to fear from Obama and everything to gain by ingratiating yourself with America’s rising adversaries. After all, they actually believe in helping one’s friends and punishing one’s enemies.”

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U.S. Foreign Policy: Provocative Weakness

Our kudos and thanks go out to Herman Pirchner, Jr. President of the American Foreign Policy Council in Washington DC for an excellent presentation and discussion last evening on America’s foreign policy. Herman took us around the world with using radical islam as the unifying link. It was truly enlightening and very sobering to hear his observations. Among them:

  • Russia is extending its “sphere of influence” toward former satellites to counter radical islam and re-assert itself by keeping the U.S. off balance in the Iran, Iraq and Afghanistan. In some respects our interest are aligned like controlling radical islam, and in others they are opposed like reforming the white USSR.
  • China is due for a generational change that leaves a big question-mark. Unlike the current leadership which grew amid the turmoil of the cultural revolution, the next generation is being raised in relative wealth and security and being educated in the best universities around the world. It thus understands world values. China is the only major nation without a significant islamic population.
  • Europe will have a majority islamic population within two generations. Already there are community pockets of society governed by Shia law. There is a distinct possibility that Europe will break apart financially.
  • Israel is gravely at risk since the U.S. has permitted Iran to go nuclear. The odds are against its survival.
  • Arab world nations fear Persian hegemony and will thus arm themselves with nuclear weapons.

U.S. foreign policy under Hussein Obama has been one of being nice rather than right. We have given up numerous positions without getting anything in return. We have shown ourselves to be weak, frustrating our allies and emboldening our enemies. We are inviting trouble in both aspects.

The doctrine of “provocative weakness” enunciated by Fritz Kraemer in the Nixon years is that the only effective foreign policy was one backed by the realistic threat of using military force to achieve its goals; the failure to use this realistic threat was a provocative invitation to our enemies to use aggression against us.  This variation of Teddy Roosevelt’s “speak softly and carry a big stick” is antithetical to Hussein Obama’s administration. Obama is disarming and withdrawing from defensive alliances. He relies on bowing, scraping, apologizing and addressing dictators like Chavez as “mi amigo.” Here’s a picture to refresh memories:

Yes, provocative weakness is Obama’s order of the day!

One chilling observation brought up during the discussion was that the radical islamic version of Islam was more true to the Koran than the secular, passivists’ version. In either version the goal is to conquer non-believers and convert them either peacefully by out populating them or violently with the sword as Mohamed did from Medina. So we will see more September 11ths. Obama has invited them.

Again we wish to thank Herman Pirchner for the excellent presentation and discussion.

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Primary Cause of Inflation

I’ve been on vacation this past week and enjoyed some interesting discussions during that time. One on inflation: it occurs strictly speaking from excessive demand or inadequate supply, push-pull inflation. With one of our friends graduating from Notre Dame this weekend it struck me that inflation in education is excessive, that is way out of line with general inflation.

Gordon Wadsworth’s article, Sky Rocketing College Costs, presents this data which is about a year old but conveys the messarg well:

Another area of significant above average inflation is medical care. John Commins post, Costs of Medical Care Outstrips Inflation, pegs hospital service inflation in the last 12 months at 8.6% almost quadruple the 2.3% increase in the overall CPI. Physicians services was up 3.2% and prescription drugs up 4.9% for comparable periods.

I submit that the major reason for the off the chart inflation in each of these areas is the government involvement in each. There is not a true market in either. If there were price increases would be more in line with general inflation.

The leftist progressives from Dewey on have mandated public education which has evolved to public employee unions, outrageous non-market compensation, and an uneducated public.

The leftist progressives from Roosevelt on have pushed socialized medicine subsidized with tax policy and  out of control Medicare/Medicaid bureaucracies. Obamacare is the final nail in this coffin.

How have we allowed ourselves to get to this inflated entitlement oriented society? While I’m hesitant to use comments from foreign nationals, this one by Peter Lakatos from Hungary to Mark Toomey sadly seems to get to the heart of the matter:

“The danger to America is not Barack Obama but a citizenry capable of entrusting a man like him with the Presidency. It will be far easier to limit and undo the follies of an Obama presidency than to restore the necessary common sense and good judgment to a depraved electorate willing to have such a man for their president.”

“The problem is much deeper and far more serious than Mr. Obama, who is a mere symptom of what ails America . Blaming the prince of the fools should not blind anyone to the vast confederacy of fools that made him their prince. The Republic can survive a Barack Obama, who is, after all, merely a fool. It is less likely to survive a multitude of fools such as those who made him their president.”

Now back to education. For all its inflated costs how good is it? Would it be better if government were completely out of it? Would our society have more common sense? And, would that society be foolish enough to elect another Obama?

For the sake of our grandchildren’s future we need to get the monster government on a starvation diet and get it out of our lives!

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If Greece is Europe’s Achilles Heel…and Europe Falls….

I’ve seen items from John Muldin and George Friedman this week analyzing the Greek debt/deficit debacle. Greece is one of the PIIGS of Club Med, the European nations who cannot afford their welfare systems. Greece cannot borrow to fund its largess; its credit rating is junk according to S&P. It is seeking European and IMF bailout aid, the amount of which is dependent on uncovering the accounting tricks it has heretofore used. Normally the IMF would use devaluation as one tool but that is not possible here because of the Euro. Greece will fail.

Sovereign debt problems are forecast for Spain and Portugal also,  as they have suffered downgrades. Causes of their problems are similar but the significance is greater as the Spanish economy along with Italy which may follow soon is simply too big for Germany to bail out. Fiscal contagion is a serious problem.

So, let a few PIIGS fail, so what? Problem here is with the European banks. They hold the PIIGS bonds. Without regard to those underwater assets, the European banks were already in trouble since they did not clean up their bad real estate related assets. Think the Japanese banks of the 1990s. Friedman says the even at the peak of the U.S. subprime crisis European banks were in worse shape. How much worse shape now with the PIIGS crisis?

A Euro devaluation? A break-up of the European Union? At least, a significant period of de-stability for a major consumer in the world economy and a significant producer in that economy. Germany will survive in better shape than the rest. The PIIGS are likely to exist outside a re-formed European Union.

Add the fact that the U.S. is not the consumer that it once was. Thankfully, it is de-leveraging more, saving more, and consuming less. It hopes to expand its exports but who will pay the desired price? China? The rest of Asia? Thus the world economy will really be upside-down with a lot of areas trying to be producers but none trying to be consumers!

But the real concern is that the U.S. is a budding Greece bubble waiting to pop. In ten short years 93 cents of every dollar of government revenue will go to pay entitlements and interest on the debt. Obama has put us on the path to become a Europe on steroids just when Europe is exploding! Before Obama took office our entitlements thanks to Roosevelt, Johnson and Bush were on an unsustainable path. Rather than correct this Obama added another major entitlement, Obamacare, which will bankrupt our nation.

Several questions present themselves in this scenario: What of defense? Iran, North Korea, Russia and China are all real and potential problems. We spend so much on butter that we con’t afford guns. What of our assets and businesses? In a declining economy how will be work, live and invest? And, from a personal survival standpoint if the economy declines toward the subsistance level, is it guns and gold to survive? I know my farming skills aren’t all that good!

But there is hope if we recognize that big government must be drastically cut, public employee pensions and compensation reduced to the level of private compensation, entitlements including social security, medicare and medicaid cut in half, and Obamacare repealed and replaced by consumer-based, non-tax advantaged health care. We have a very short window in which to accomplish this dramatic turnaround. Let’s educate the voters and elect people who will get the job done.

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“I am Ann Frank”

This, one of the powerful ending lines in Jeffrey Lord’s American Spectator article, Jon Stewart Flunks His Spartacus Test, in which Stewart’s position on Comedy Central’s censorship of South Park’s episode on Islamic fanatics is slammed. Lord sets the courage test in terms of Kubrick’s Spartacus, the iconic film of the Greek gladiator at Capua and his courage to the last. With that in mind he fast forwards to United Airlines Flight 93 on 911 where ordinary Americans were confronted with their Spartacus moment and proudly passed the test earning our tribute or what the ancient Greeks would call arete, courageously living up to their full potential, excellence.

Faster forward to today and the edgy, over-the-top, iconoclastic South Park created by Trey Parker and Matt Stone who decided to take on Islamic Fascists but gently by disguising the Prophet Mohammed as a bear. A web site called “Revolution Muslim” warned the creators that they would end up like Theo Van Gogh, the Dutch film maker killed by Islamic terrorists after he made a film on the treatment of Muslim women. This fatwa put the fear of Allah into Comedy Central which promptly bleeped a 35 second speech warning of “fear and intimidation.”

Now to Jon Stewart, darling of the leftists, brave defender of Democrats, epitome of all moral good. Jon gets his chance to stand up for Free Speech. Jon get his “Spartacus test.” What say, this paragon of leftist virtue, when confronted with intimidation based censorship by Comedy Central?

“It’s their right,” he said of Comedy Central in a verbal shrug of indifference. “We all serve at their pleasure.” In other words, they sign the checks!

The problem is that these Islamic terrorists want to bury us. “American and Western culture — the good, the bad and the ugly of it over a few thousand centuries, from Plato to Parker and Shakespeare to Stone — can thrive only in an atmosphere of intellectual freedom. That freedom, as has been made abundantly clear since 9/11, is under full scale assault.”

“The right answer is never to pretend that if you somehow were transported back in time, say to a house in Amsterdam in August of 1944 and the German Grüne Polizei were pounding at your door, you could get away with saying: “Hi. Fox News can %$#@@ themselves. You guys sign the checks. Seig Heil. Ann Frank is upstairs, third door to the right, the room behind the bookcase.”

“The right answer would be, the right answer is always: I am Ann Frank.”

The clever, liberal leftist, Jon Stewart gets an F on his Spartacus test. For all practical purposes, his Obama Hussein idol with his fawning Mideast diplomacy has also flunked the Spartacus test. A great article by Jeff Lord.

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Deficit Addiction or Entitlement Addiction?

Gerald Seib has an excellent column in today’s WSJ, Hi. My Name is America, and I’m a Deficit Addict; it stirs up even more interesting reader commentary. Basically he takes the kick off of Obama’s National Commission on Fiscal Responsibility and Reform and the Peter G. Peterson all star economic conference tomorrow as an opportunity to get serious about our fiscal problems. He suggests talk is not enough, and no real reform action will be taken in an election year, but he does posit a beginning.

Both parties should confess the addiction and their contributions to the problem, Medicare and Medicare Part D included. Then both parties must acknowledge that the tax system has to be changed. “The Tax Foundation says the levies paid by the top 1% of taxpayers now exceed those paid by all of those in the bottom 95%. And the Tax Policy Institute says almost half of all filers will pay no 2009 income taxes at all, because of various exclusions and credits—up, by some estimates, from a quarter in 1990.”

Next, “Americans have to change how they think about retirement. When the economy recovers and costs for recession-related bailouts, stimulus spending and unemployment benefits are resolved, we’ll still be left unable to really afford our Social Security, Medicare and long-term-care commitments. When the easier stuff is done, this is the hard reality, requiring a new and nonpoliticized national discussion.”

So while the new commission’s co-chairmen avow that “nothing is off the table,” it’s a good bet that politics will trump good intentions. Taxes yes, entitlement cuts no.

What we do not hear from our politicians is the immorality of the theft of our children’s future. Do the entitlement recipients really understand this? If they are forced to understand it, would they still want to continue that theft? No one has asked that question which is really the heart of the matter.

To compound the sin against our children and grandchildren we leave the unsustainable entitlements in place offering a false sense of retirement security. Has any leader started to educate the younger generation that there will be no Social Security and no Medicare? They will be bankrupt long before the younger generation retires.

So I would add a major education program to Jerry Seib’s suggestions: the commission should focus seniors on the seriousness of the theft from their children and grandchildren and should focus the children on the lack of future retirement security so they can provide for themselves. If both are done well, my bet is that tough reform will be undertaken, the economy will strengthen, and our children will have a brighter future simply because it will become more independent and self-reliant.

I recommend Seib’s article and the extensive reader commentary which is accessed by clicking the comment tab above the text. There are some good suggestions and debates therein which is in itself encouraging.

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