Tuesday, July 15, 2014
Compasionate Destruction: Democrats Seem Intent on Destroying US/ World Economy
Democrats Seem Intent on Destroying US/ World Economy Are This Some Kind of Political Suicide? Lex Loeb Contributor Network . Here is a little forgotten history about the United States Congress. When the Internet bubble crash came , as expected, we were reading that around two thirds of Congressmen were broke. That may be true again? Congress aspires to create a big brother for all Americans and when it comes down to real numbers, they , on average, are not the best personal financial wizards. Then comes a real crisis and the first thing the whole government does is to completely panic. Congress was absolutely no better under the Bush Administration when it created the first tarp program in spending 700 billion dollars as if an after thought. OK give them a little credit because the Administration was in lame duck mode at the time. None the less the congress was throwing money out the windows of the capital building because secretary Paulson convinced them all that the capital was sinking in water. Were they smoking dope or just snorting Marion Berry? As the original "sub prime mortgage mess" led to a limited banking crisis, congress then managed to panic the financial system with the help of the inept Bush administration in to a secondary banking crisis and yet a new panic. Once 2009 rolled under us with the swearing in of the new president the congress and the administration seem intent on helping to create a new series of panics and crises. First everyone gets to hear some encouraging words from the new president who warns that if we don't all jump in the lake at the sound of the gun we make things worse after he already said that he is concerned that this is not going to be a long arduous process. There is a point when people are scared of loosing more money that words like these are very encouraging. The psychological dimensions of a financial panic probably expect less alarming words from the President. A little false optimism might not hurt even in a time when earnings should be expected to decline and jobs should be lost. Then comes the trillion dollar first installment of what promises to be the next ten trillion dollars of stimulus programs that 'are not a game' and more than one cabinet level appointee turns out to be a master of tax avoidance. The democrats go hog wild for every pork program they can lard up the stimulus plan with and the president is trying to regain order in the court of public opinion by saying it is not a game. While this is happening the democrats are celebrating their vast national victory by going insane with their most self destructive primal urges. The governor of Illinois is attempting to sell the former state senator's office to the highest bidder, the Mayor of Portland is lusting for a 17 year old and kissing him and neither is willing to leave office without a big push from the constituents to be rid of them. That is probably just the beginning of the primal urges in the wide spread celebration. Political suicide among the politicians as a class can be spotted from light years away not just a few miles. All of this is happening as Wall Street is getting all the blame in most of the loud mouth media and even the usually quieter financial press. The role of government in raining the world with dollars at very very low interest rates for a number of years is all but forgotten. Yes printing dollars and raining them down on the earth will cause the economy to grow or at least to balloon. It was a proven fact as long ago as the 1920s when Britain stagnated and the US economy ballooned into a moderate size bubble culminating in 1929 in an earlier memorable financial panic. The history of 1929 to 1939 seems to be the way that the democrats now in charge want to lead the country again. First they start the same old nonsense of starting a trade war against productive countries that are a vital part of our own economy. That is worse destruction to the economy than just having a few big bank failures. If that is not a disaster just to see it printed as headlines world wide, then having a stimulus plan take form that is a zero sum redistribution of wealth has to be as destructive to the US and the whole world economy as letting bureaucrats take over wall street. If you are against wall street having a profit motive you are missing the point about what the place is all about. If you want to destroy wall street, you can't. It is indestructible human spirit and it either moves overseas if necessary or underground. Already a number of US industries are considering instant re-domiciling overseas where they are away from the grasp of hungry controlling infants given the power of bureaucrats over every detail of business administration. Bad enough this country once suffered wage and price controls but now the same demagogies want to give the country maximum profit limits and free prices to consumers. Most Americans intuitively know something is very wrong with that formula. It could mean the end of the USA as we know it. That might satisfy president Obama who said in a pre-election campaign speech that he did not want to change America but wants to change Americans. That is hardly a good line to win over the other 50 percent that did not vote for him and a lot of others who did not bother to vote at all in the election. Most economists know that one type of tax is just as bad as an other and it really does not matter which tax is substituted for which. The two houses of congress and the presidency never seem to have a clue about the true nature of taxes no matter how much experience they have creating new taxes. When an economy is on the brink of failure the type of stimulus most likely to work is lower taxes and not targeted taxes programs to insiders and special interests nor big spending programs. The reason why big spending programs won't help is the government does not tax itself. It taxes the private sector. If government jobs get created sure the goverment pays out money for hard work and soft work and those incomes are taxable. Unfortunately , that is the same thing as the government just paying its own workers less money because they just take back some of what they are paying out after running dollar bills off the printing press. The math is the same as government owning homes to rent. They can collect the rent like a landlord but they cannot tax it too.. The rents become tax and not rent . That is a form of revenue but it is also a business that needs to be run. Running a business of owning homes to rent costs money. That is a lot more inefficient than taxing others who own homes to rent. Why because government employees absolutely always cost more than the people they would other wise be taxing. Government may want to be in business like that . Why? Public housing ownership was a multi trillion dollar disaster when it was last tried. In today's money it might be a 20 trillion dollar disaster. When a government is left with itself to tax then you have the old model of the soviet union. Socialist utopia has not exactly panned out anywhere it has been tried.. So what if the democrats and president Obama think their mandate is for change if the change they want is national self destruction? It will also be their political suicide. The costs could be much higher. The real capitalists and their money will be out of the country faster than saying XYZ and none of them are going to bid up the value of failing equities or soon government bonds as well if government is intent on giving them no incentives to own these things. Capital will jump ship and go where the profits are. The democrats and Bernanke can flood the USA with bad money chasing all the good out and the smartest capitalists will be recreating wall street anywhere they can if not allowed to do it here. The big crisis today is still not as bad as the worst in history but it could get there with a financially illiterate congress and a president who appears to have rhetorical skills but no actual business / financial management experience. Just the whiff of a possible trade war is an economic weapon of mass destruction that surpasses even the derivate that warren buffet blamed. The devaluation of the Mexican Peso, The British Pound and the Russian Rubble are nothing compared to the administrations idiotic goal of defaulting the US dollar. The reason why is all countries have their own printing presses and as currencies float against each other in varying value ratios. We devalue first and then they devalue until parity is reached again but prices are unstable and incomprehensible. A massive intentional or unintentional US Dollar devaluation is an unacceptable event and yet somehow a lot of us are already expecting to see the worst happen just because we know it can. Congress and the president do seem intent on shaking up conventional wisdom even when it is completely wrong to do so. Evidence materializes that for every job that the Democrat's stimulus package will create will cost the country $300,000 to $500,000 and that comes from the congressional budget office statistical calculations. Who are they trying to kid? The country needs major tax cuts and tax simplification and needs to invite foreign money to domicile itself in the USA if congress really wants to get the economy moving here and as it works in the real world everywhere else in the world. The international economies are not just linked they are part of the same organism. Capital gains taxes need to be lowered to compete with the lowest of any industrialized country on earth. Income taxer cuts can give everyone a break without the special interest formulations that the democrats are banking on. The whole global warming nonsense is a lie in terms of how countries working to prevent it are pretending to do so. The US would actually be doing nothing but going back to the stone age to force ineffective untested energy alternatives on the country that are not economically feasible verses importing oil at market rates. Shutting down the coal industry and preventing local drilling are not going to give anyone in the US energy independence and with oil prices falling on world markets it actually makes absolutely no sense to have energy independence if the cost of energy is higher as a result. Cheap foreign reserves make much more sense and as it happens US oil companies are involved in that production and distribution and profit from much of it. The nonsense goes on and on and all congress and the president can tell us is we had better quickly jump into an other trillion dollar boondoggle to save the economy or we will suffer a catastrophe. The US economy has survived lots of market downturns and real estate busts with no help at all from the government prior to 1933. There is even evidence that 1929 would have corrected it self had it not been for protectionism and really idiotic spending programs that were given propaganda status. The real money will leave the country once the government flushes the system full of bad money and it will not immediately come back. It would be ashame to allow China the capital that should remain here and it would be stupid to chase good capital into politically unstable rat traps like that. China really should be a debtor nation and not a creditor nation to get to first world status of economic wealth. It really makes no sense that they would want to finance an Obama $500,000 per job stimulus plan in the US when they could just buy industrial trade goods with the money or companies like Chrysler . The Chinese will be sorry investing in a currency going to hell after the US government reneges on its debt with double digit inflation in the near future. Sure the bond yields will go up that could mean yet another bubble blow out recession, stagflation and generally more worthless dollars. The Chinese need national elections and to jump start the American economy by buying us goods and not trying to dominate us by buying our failing banks. In a open election chances are the communist party would win most of the seats in their congress just because it is more organized. They now risk loosing everything because they are not thinking far enough ahead. Why the American people want a communist style of governance from Washington dc seems absurd and fortunately the Obama honeymoon looks like it is going to turn into the kind of Government we are more used to -government strife between the parties. That could be the best protection the American people have against the demagogues. What the American people don't realize is that most of the tax breaks the government gave them over the years failed to cut the growth in the size of the us government ! Even back with Ronald Reagan, the net tax burden and government growth were exploding It continued with W. Bush and culminated in the 700 billion dollar bail out that may or may not have actually saved the banking system. Really cutting government and making it more efficient would be the kind of change that a lot of Americans would really appreciate from the new president. Unlikely they will get that sort of change. The new president and his party seem intent on transferring control and wealth of every aspect of American life to themselves and their friends even at the cost of up to $500,000 to create each and every new job. That does seem like the intent to destroy America and it ultimately looks like their own political suicide. This is the sort of policy that ends creating a new reality of imperial powers that really is not something most Americans are looking foreword to. The economic data will show that the economy will turn itself back on when it is ready and it will roar back to life when it does. There wont be a next great depression unless the democrats get their way turning health care upside down, creating a million jobs at the cost of $500,000 each , bringing us protectionism to protect obsolete industries and absolute union jobs that truly belong in places like China and India and then raising taxes to pay for that and more programs they can't wait to unveil later. Add on their plans for global warming prevention legislation and the country will be a basket case. If you think the Rich won't become richer and the poor poorer as a result of this kind of policy except for a million new government workers on the dole, at the cost of $500,000 per job just to create them, then you are ready for the economic catastrophe the president is promising us. The environmentalists don't want you to share the wealth they want you to give up things like your car and your refrigerator. People are going to start seeing reality even as the global warming trend starts to abate naturally with even more carbon dioxide in the atmosphere. Those who want serfdom should be allowed to have it but should not be able to use their vote to give it to the rest of us. .