Yes, it's been a while...

My apologies for letting this go dark.

It's not that there isn't anything to say: rather, there is too much to say. Add to that a heavy work load, and my time is extremely limited.

Part of the reason for silence is my sheer and utter disgust at how the world is working right now: dishonesty and prevarication have become new art forms; most - albeit not all - couldn't see the truth if she came up to them and slapped them directly in their faces; the errors of commission are dominant and vastly outweigh simple errors of omission.

The pro-cyclical behavior of policy makers is leading to an increase in volatility everywhere, not a reduction. Keynes has been vastly misunderstood and misinterpreted and his name is now used (vainly) to justify pro-cyclical policies that make things worse, rather than better. If I weren't fairly immune to conspiracy theories - having read too many of them over the last several decades, starting with grassy knolls and Potomac River parks - I'd venture to say that the only plausible reason for many policies is that those behind them want pro-cyclical variances to increase in order to take advantage of them, going short on the downswing and long on the upswing, driving the system to destruction.

The more complex society and civilization is, the easier it is to destroy it. The more people there are living in cities (and today that is almost the definition of civilization) the greater their vulnerability to those who would disrupt the flow of food, water and energy (and waste products), be it in the name of Allah or in the pursuit of yet another billion in profits.

The inmates are running the asylum. There is no other explanation.

At some point the tragedies will come.

Greece is only a few weeks away from a private hell of their own making, and the likelihood of a long, slow, painful and completely predictable decline for many countries.

The greatest tragedy of all?



That no one listens. I won't claim to be writing this for fame (let alone fortune), but right now I'm playing the role of Cassandra on more than one front and it does not fit me well.

Betrayal, Deceit and Danger...

This spurred me to post in the middle of my forecasting season.

Read the article and think about this:

Betrayal is one of the most dangerous things to do. More often than not it backfires, creating a result exactly opposite what was intended. This applies to the personal and the political: betrayal destroys trust and removes any reason for continuing a relationship. Betraying your spouse (even without getting caught) will end a marriage; betraying a political party or a country will lead to extreme sanctions being placed against you. Betrayal is the breaking of a presumptive contract, resulting in moral and psychological conflict that cannot be easily resolved, if at all. It matters not if the contract is explicit or merely implied: the turnaround, the inversion of the relationship, is what is so damaging.

When you are betrayed you cannot count on the other to be what they represent: it makes it effectively impossible to reconcile what is said with what is actually meant. It destroys the fabric of relationships: a soldier sent to war cannot be expected to continue to fight when his political leadership betrays him; a spouse cannot believe that their husband or wife would betray them in the most intimate of relationships.

Betrayal, of course, relies on deceit to achieve its goals: the betrayer has their reasons for breaking the trust, ruining the relationship and abandoning principles for others. However, a simple change of mind is not betrayal, but rather continuing to act as if one believed in the relationship. That is why betrayal is so difficult, why it is so hard to reconcile once a betrayal is discovered.

As Brett Stephens puts it in the link above:

When the history of the rise and fall of postwar Western Europe is someday written, it will come in three volumes. Title them "Hard Facts," "Convenient Fictions" and—the volume still being written—"Fraud."

This corresponds to truths, deceits and betrayal: the convenient fictions of Mr. Stephens were deceptions, where the truth was hidden, covered up by those unwilling and unable to admit to reality. The accumulated deceptions - the web of lies that make up our modern societies - lead directly and without any chance of redemption to the the betrayal, the fraud that has led to the disillusionment of so many.

This is what is so dangerous: disillusionment. The welfare state, for whom so many have sacrificed so that almost as many could lead lives of leisured discontent, is and has always been what the Germans call a "Lebenslüge", a lie that forms the basis for living. The pay-as-you-go system of pensions is another one. These are deceits of the body politic that have endured and extended themselves such that they can't be avoided: it doesn't change the fact that without changing history (such that demographics that are needed for the functioning of the system could be brought into line) or without changing the promises made, that these systems are fundamentally untenable.

Rather than have solid, dependable social welfare institutions that we could all rely on to do what was promised, we have an increasingly rotten edifice that resembles nothing less than a Potemkin village, designed from the get-go as a fraud and lie.

The reality is that the modern welfare state cannot continue as it has. Pretending anything else is not merely in error, it is a mistake. Just as with all types of rollover schemes that depend on new entrants to maintain the system, it is starting to fail.

This is what is dangerous: disillusionment that the political process can bring change is part of what is called a pre-revolutionary society. Pre-revolutionary in the sense that there is no critical mass for a major rebellion, that a single incident cannot and will not bring massive changes.

Are we in a prer-evolutionary state? Are we facing long-term disillusionment, what the Germans call Politikverdrossenheit" or political apathy? The danger is when so many become political apathetic, no longer caring what is done by politicians because they can't believe that anything that can be done will actually make a difference, the number of people needed to instigate change shrinks. When the vast majority of citizens in a country struggle to continue to live their promised life-styles and fail to notice that politicians are running things into the ground to make even their best attempts moot, that is when things can turn from a pre-revolutionary society to one that is ripe for revolution, for fundamental change that tears away the deceits and lies and goes back to fundamental truths (before, perhaps, the cycle slowly starts up again).



The problem today with revolutions is that the alternatives have all been tested, multiple times, We know that public ownership of the means of production ends, invariably, in the dictatorship of the revolutionary elite (aka "The Party"), leaving people vastly worse off than they were otherwise. There are no real alternatives to modern capitalism if you are interested in achieving some sort of Pareto optimums for society (where the greatest amount of good happens with the least amount of bad). Revolutions, in our connected and interdependent economies and societies, can't improve on things, but only change those who can and do profit from the exploitation of man by his fellow men.

So, in the immortal words of Lenin, what is to be done?

Right now: nothing. The betrayal must out, the truth will indeed make you free. Keeping up the charade, pretending that the economic problems facing us are merely business-cycle related and not part of a great structural slump, cannot be maintained unless they are true.

Which they demonstrably are not.

The modern welfare state is unsustainable and doomed to failure, and appears to be designed to provide the inverse of the Pareto optimum: here the greatest bad occurs with the least amount of good. The modern welfare state fought a war against poverty, but poverty won. Recognizing that the poor will always be with us and that you can't legislate equality of capabilities (as opposed to legal barriers and the like) would be a first step towards facing reality. Understanding that distribution of talents and abilities is and always will be unequal, that markets always abide, despite the best attempts to deny them, would be another step towards facing reality and starting to mend the damage that the body of lies, the deception, the outright fraud committed in the name of social justice and equality, has done to society.

A revolution isn't needed since it only changes the guilty. There are so many out there who have dedicated so much time and effort to undermining modern-day capitalism: they are the deceivers, the betrayers of what really is and what really works. The danger is that things become much, much worse: that seems to be the only sensible explanation of at least some politician's policies.

This is not going to be much fun. Neither is bankruptcy or getting out of financial trouble.

Parsing the President...

Not quote sure if this deserves the notion of a fisking, but it definitely needs to be parsed...

Mr. Speaker, Mr. Vice President, Members of Congress, and fellow Americans:

Tonight we meet at an urgent time for our country.  We continue to face an economic crisis that has left millions of our neighbors jobless, and a political crisis that has made things worse.  

In other words, the recession wasn't ended by the first stimulus package: why would anyone really think, at this point, that throwing more money at the problem is going to make things better? The best I can think of is "Oops, we spent the money on making sure that our campaign contributors - finance and lawyers - didn't get hurt when their schemes backfired. Guess we gotta spend money on the riff-raff after all..."

This past week, reporters have been asking "What will this speech mean for the President?  What will it mean for Congress?  How will it affect their polls, and the next election?"

If this is the case, then reporters - outside of perhaps a few whose task actually is covering this sort of narcissistic rhetorical questioning - are idiots. But I repeat myself...

But the millions of Americans who are watching right now:  they don't care about politics.  They have real life concerns.  Many have spent months looking for work.  Others are doing their best just to scrape by – giving up nights out with the family to save on gas or make the mortgage; postponing retirement to send a kid to college. 

In other words, making economic choices because their life style is in excess of their incomes: duh. Everyone would love to have unlimited money and simply do what they feel like doing, rather than making basic budgeting choices. The surprising thing is that this is considered somehow a burden: everyone has to make economic choices about what to do with their money.
 
These men and women grew up with faith in an America where hard work and responsibility paid off.   They believed in a country where everyone gets a fair shake and does their fair share – where if you stepped up, did your job, and were loyal to your company, that loyalty would be rewarded with a decent salary and good benefits; maybe a raise once in awhile.  If you did the right thing, you could make it in America.  
 
Ahhhh. Now we see it a tad more clearly: setting up a never-existent straw man to knock down. Hard work and responsibility always pay off, but not in a life-time job. We are not Japan. The qualifiers here - "decent" and "good" - underscore this: no one gets paid what they think they should be paid, and we all want freebies in terms of benefits. But a decent salary in the eyes of the employer is not what the employee thinks he should be getting. This is the classic working-class story, and there is nothing new here at all. It's not so much that the salaries aren't decent - they are, largely - but rather that expectations have grown so immensely. If you think you can own a house, drive two cars, send your kids to college and save for retirement on a working-class salary, then either you've got a union official's job or you are living back in the 1950s and 1960s when the US had no meaningful competition, where the Big Three sold every car they could make without a problem and where property and building costs were low.

If those are the expectations driving the American dream, then everyone is going to be disappointed. We don't live in that world, and haven't for decades.

But for decades now, Americans have watched that compact erode.  They have seen the deck too often stacked against them.  And they know that Washington hasn't always put their interests first. 

Duh. Triple duh. The American Dream isn't about material things and how a common laborer can have them. Good lord, that's an extraordinarily naive idea of the American Dream, one that is heavily influenced by a rather antiquated view of the relationship between labor and capital. The American dream isn't that: the American dream is even simper than that: it is the ability for you to do whatever it is you damn well please and facing both the consequences and the benefits. Want to be a transsexual school teacher? Go ahead and give it a try: no one is going to say from the get-go that you can't do it. Want to open a family restaurant and create your own little business empire? No one is going to stop you, saying that you come from the wrong neighborhood or the wrong part of society. Want to work three jobs in order to buy a house when you don't have the qualifications to earn better money? No one stops you from those decisions. Want to home-school your kids and believe in whatever you want to? No one stops you from doing that, setting up your own church or giving your kids the education that you think they need.

Other countries have systems that do that. Other countries regiment their people in ways that you can't imagine, cutting entire swaths of society off from education, from entrepeneurship, requiring a state religion and strict obedience to their tenets. Other countries won't let you work certain jobs without going through onerous apprenticeships, regardless of how good you are at doing what you do. Other countries won't give you the chance to study because you belong to the wrong caste.

That is the American Dream. Two cars in the garage and a chicken in every pot are the consequences of that, but are in and of themselves not the American Dream.

Further, it's not something given to you: you have to go out and do it. I've got news for y'all: the deck is always stacked against you. You've got competitors and those who want your piece of the pie. It's up to you to stop them taking it and beat them at their own game. But it has to be done, not whined about.
 
The people of this country work hard to meet their responsibilities.  The question tonight is whether we'll meet ours.  The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy; whether we can restore some of the fairness and security that has defined this nation since our beginning.    

First and foremost: the dichotomy between the people and the politicians. The people work hard to meet their responsibilities, but politicians haven't met theirs. Fair enough: that's a given. But the question then arises about which politicians have been meeting their responsibilities: those that increase debt and keep doing the same damn thing when it repeatedly fails are the irresponsible ones. Those that pass bills that no one has the chance to read are the irresponsible ones, deeply so.

But stopping the political circus? This is the man, the party that created the circus. They can stop it in three shakes of a charmed quark by telling their operatives to stop the rhetoric of hate and class warfare. He and the Democrats created the political circus of passing bills without debate; he and the Democrats created the political circus of secrecy and deceit about what was in those bills; he and the Democrats created the political circus of publicly trying to humiliate and drown out the loyal opposition when they tried to talk (Michigan, here's looking at you); he and the Democrats keep political clowns in the media supported and has even elected some to office.

Fairness and security as the defining force of this nation since its beginning? Far from the truth: by demanding our freedom and independence, we chose the path of insecurity and unfairness, the insecurity and unfairness of a free people unleashed upon the world. Making fairness and security the cornerstones of what defines the US is to deny the fundamental nature of American history. Fairness in history would have meant compensating Loyalists for losing their war to remain part of Great Britain; fairness during the Civil War would have meant respecting those who supported slavery because all viewpoints are equally valid; fairness would have meant not settling the West because here were Indians there first. Security would have meant never choosing to send warships to the Barbary Pirates; security would have meant paying tribute and avoiding conflicts; security would mean acquiescing to tyrants and dictators in order to buy the peace of being a subject people. Economic security would mean protecting buggy manufacturers against the automobile; economic security would mean protectionism and losing the benefits of world trade; economic security would mean preventing new technologies from disrupting markets and processes.

It is also the path to stagnation and irrelevance.
 
Those of us here tonight can't solve all of our nation's woes.  Ultimately, our recovery will be driven not by Washington, but by our businesses and our workers.  But we can help.  We can make a difference.   There are steps we can take right now to improve people's lives. 

Oh Dear. While professing the inability to wave his magic wand and make everything better - a pony in every backyard - the insistence that the government is here to help you. Those words should inspire ridicule and rejection, as we know that they are the words that mean the government is here to buy political support and screw everything up except for its political supporters.

I am sending this Congress a plan that you should pass right away.  It's called the American Jobs Act.  There should be nothing controversial about this piece of legislation.  Everything in here is the kind of proposal that's been supported by both Democrats and Republicans – including many who sit here tonight.  And everything in this bill will be paid for.  Everything.  
 
In other words, don't bother reading this and thinking whether things could be done better. President Obama is telling you what to think, his version of reality. He is saying, in effect, that he knows better.

Oy. He's right in one way: there should be nothing controversial here. The problem is that he refuses to think that any reasonable person could be in any way opposed to what he wants to do and that we should accept this without thinking or debating it.

And of course this bill will be paid for. The taxpayers will be paying for it. He is trying to make the case that for every dollar spent, somewhere a dollar will be saved. And the reason that anyone should believe him is?

The purpose of the American Jobs Act is simple:  to put more people back to work and more money in the pockets of those who are working.  It will create more jobs for construction workers, more jobs for teachers, more jobs for veterans, and more jobs for the long-term unemployed.  It will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business.  It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and hire, there will be customers for their products and services.  You should pass this jobs plan right away.  
 
The purpose of the American Jobs Act is simple: it is to distort the US labor market to ensure that the economy is not the reason the President is not re-elected. It will create more boondoggles for his greatest contributors, financial folks and lawyers. It might create a few jobs along the way, but not because demand is up, but rather because we'll spend lots of money to get some people working.

Payroll taxes are not the reason that employers aren't hiring. The jolt to the economy is the jolt of realizing that the last blood is being drained away. Oh, and here's news for the President and his outstanding team of economic advisors: companies hire and invest not because they think it will generate customers for their products and services, but because the demand is already there and is not being satisfied.

The only reason for passing this jobs plan right away is that if you take a close look at it, you'll find that there is lots of smoke and very, very little fire.

Everyone here knows that small businesses are where most new jobs begin.  And you know that while corporate profits have come roaring back, smaller companies haven't.  So for everyone who speaks so passionately about making life easier for "job creators," this plan is for you.  
 
No, it's not. To repeat: tax cuts on the price of labor won't influence hiring, especially for small businesses. It might appear to do so in academic theories, but in the real world? It's apparent that President Obama and his select and expert team of economic adivsors know very little about small business hiring practices. Small businesses don't hire folks because they think demand might show up when they do so: they hire because they have so much business that they can't afford not to.

At least successful ones do. Those that were to behave like President Obama thinks they should be doing would, generally, simply run out money more quickly.

Pass this jobs bill, and starting tomorrow, small businesses will get a tax cut if they hire new workers or raise workers' wages.  Pass this jobs bill, and all small business owners will also see their payroll taxes cut in half next year.  If you have 50 employees making an average salary, that's an $80,000 tax cut.  And all businesses will be able to continue writing off the investments they make in 2012. 

Hmmm: in other words, pass this bill and nothing will happen. Small businesses are not going to be hiring when demand isn't there, nor are they going to raise wages when these aren't justified by the market. Pass this bill and you will improve the profits of small businesses.

Increased hiring as a result? Nope.
 
It's not just Democrats who have supported this kind of proposal.  Fifty House Republicans have proposed the same payroll tax cut that's in this plan.  You should pass it right away.  
 
Oy. Again, let's not talk about it, just give me my way right now.

Pass this jobs bill, and we can put people to work rebuilding America.  Everyone here knows that we have badly decaying roads and bridges all over this country.  Our highways are clogged with traffic.  Our skies are the most congested in the world.  
 
Of course, the fact that the EPA and the NIMBY industry stops new construction of roads and makes it impossible to expand existing roads to handle traffic isn't an issue at all.

This is inexcusable.  Building a world-class transportation system is part of what made us an economic superpower.  And now we're going to sit back and watch China build newer airports and faster railroads?  At a time when millions of unemployed construction workers could build them right here in America?  
 
Oy. Now we're in a bragging rights competition with a country that remains, largely, filled with peasants and no infrastructure? Faster railroads, Mr. President, would mean declaring eminent domain on tens of thousands of houses and businesses in the Eastern Corridor, since building high-speed rail means traveling in straight lines, not curves from community to community.

There is merit to the idea of putting construction workers back to work, I will give him that. The problem of the construction industry, however, is that the overhang in both private and commercial buildings is going to take decades to work their way out of the system: putting them to work (and let's ignore the fact that the work is different and a carpenter is going to have a hard time building roadbeds) is a good idea, but only papers over the fundamental screwing-up of the construction industry.

There are private construction companies all across America just waiting to get to work.  There's a bridge that needs repair between Ohio and Kentucky that's on one of the busiest trucking routes in North America.  A public transit project in Houston that will help clear up one of the worst areas of traffic in the country.  And there are schools throughout this country that desperately need renovating.  How can we expect our kids to do their best in places that are literally falling apart?  This is America.  Every child deserves a great school – and we can give it to them, if we act now.  

Oy. Now we get to the schools. Sure, every child deserves a great school and an outstanding education, The only problem is that the Federal Government acts against that, not for it.

The American Jobs Act will repair and modernize at least 35,000 schools.  It will put people to work right now fixing roofs and windows; installing science labs and high-speed internet in classrooms all across this country.  It will rehabilitate homes and businesses in communities hit hardest by foreclosures.  It will jumpstart thousands of transportation projects across the country.  And to make sure the money is properly spent and for good purposes, we're building on reforms we've already put in place.  No more earmarks.  No more boondoggles.  No more bridges to nowhere.  We're cutting the red tape that prevents some of these projects from getting started as quickly as possible.  And we'll set up an independent fund to attract private dollars and issue loans based on two criteria:  how badly a construction project is needed and how much good it would do for the economy.  
 
Reality check: by spending so much on teacher salaries and benefits, including retirement plans, school systems have been cutting back on fixing roofs and windows. He is proposing increased spending to solve a symptom that is the result of poor choices dictated by political pressuring and influence.

And to believe that there will be no boondoggles and earmarks is absurd in and of itself. The Democratic party lives on boondoggles and earmarks, and that is not about to change. Dream on.

This idea came from a bill written by a Texas Republican and a Massachusetts Democrat.  The idea for a big boost in construction is supported by America's largest business organization and America's largest labor organization.  It's the kind of proposal that's been supported in the past by Democrats and Republicans alike.  You should pass it right away.  
 
Again, do as I tell you. Nothing to discuss, nothing to debate, do as I say.

Pass this jobs bill, and thousands of teachers in every state will go back to work.  These are the men and women charged with preparing our children for a world where the competition has never been tougher.  But while they're adding teachers in places like South Korea, we're laying them off in droves.  It's unfair to our kids.  It undermines their future and ours.  And it has to stop.  Pass this jobs bill, and put our teachers back in the classroom where they belong.  
 
It's unfair to out kids to inflict the US educational system upon them. Education in the US is about fairness and feeling good about yourself, it's about not being ambitious, it's about sports and social activities. The reason that foreign competition is handing us our hat is that their kids are being taught intellectual skills like math and science, with an emphasis on understanding what these are good for, and delegates fairness and feeling good about yourself to the family and sports and social activities to leisure time. The emphasis in US schools is absurd for what the US labor market needs. With unions running schools, all you are doing is putting the incompetent back to "work" and inflicting more nonsense on the kids than ever before.

Pass this jobs bill, and companies will get extra tax credits if they hire America's veterans.  We ask these men and women to leave their careers, leave their families, and risk their lives to fight for our country.  The last thing they should have to do is fight for a job when they come home.  
 
I can agree with this one: however, it should never have been an issue to begin with, underscoring the basic hostility that the Democratic party has toward the military. I thought the President said, effectively, that only the stupid went into the military...

Pass this bill, and hundreds of thousands of disadvantaged young people will have the hope and dignity of a summer job next year.  And their parents, low-income Americans who desperately want to work, will have more ladders out of poverty.    
 
Play on the heartstrings of helping the poor. We have been fighting a war on poverty almost all of my life, and poverty keeps on winning.

Pass this jobs bill, and companies will get a $4,000 tax credit if they hire anyone who has spent more than six months looking for a job.  We have to do more to help the long-term unemployed in their search for work.  This jobs plan builds on a program in Georgia that several Republican leaders have highlighted, where people who collect unemployment insurance participate in temporary work as a way to build their skills while they look for a permanent job.  The plan also extends unemployment insurance for another year.  If the millions of unemployed Americans stopped getting this insurance, and stopped using that money for basic necessities, it would be a devastating blow to this economy.  Democrats and Republicans in this Chamber have supported unemployment insurance plenty of times in the past.  At this time of prolonged hardship, you should pass it again – right away.  
 
Again the obsession of passing this right away, no debate, no discussion. And creating a class of permanent unemployed doesn't mean you should keep feeding the monster: get them back to work instead. A $4k tax credit won't increase hiring: it might, at best, shift existing hiring from recently unemployed to long-term unemployed. Again, tax credits or tax cuts won't generate demand.

Pass this jobs bill, and the typical working family will get a fifteen hundred dollar tax cut next year.  Fifteen hundred dollars that would have been taken out of your paycheck will go right into your pocket.  This expands on the tax cut that Democrats and Republicans already passed for this year.  If we allow that tax cut to expire – if we refuse to act – middle-class families will get hit with a tax increase at the worst possible time.  We cannot let that happen.  I know some of you have sworn oaths to never raise any taxes on anyone for as long as you live.  Now is not the time to carve out an exception and raise middle-class taxes, which is why you should pass this bill right away.     

The mantra of "pass this bill right away" is impossible to miss.

For the first time, we see the President actually admitting that allowing a tax cut to expire means that taxes will increase. Duh for the most, but this is a point which Democrats have tried to deny for ages.
 
This is the American Jobs Act.  It will lead to new jobs for construction workers, teachers, veterans, first responders, young people and the long-term unemployed.  It will provide tax credits to companies that hire new workers, tax relief for small business owners, and tax cuts for the middle-class. And here's the other thing I want the American people to know:  the American Jobs Act will not add to the deficit.  It will be paid for.  And here's how:
 
The agreement we passed in July will cut government spending by about $1 trillion over the next ten years.  It also charges this Congress to come up with an additional $1.5 trillion in savings by Christmas.  Tonight, I'm asking you to increase that amount so that it covers the full cost of the American Jobs Act.  And a week from Monday, I'll be releasing a more ambitious deficit plan – a plan that will not only cover the cost of this jobs bill, but stabilize our debt in the long run.  
 
In other words, it will be paid for in the sense of somebody has to pay for it. What he is not saying is that the deficit plans don't actually cut the deficit, but rather only slows the growth. That is a certain and clear way to bankruptcy.

This approach is basically the one I've been advocating for months.  In addition to the trillion dollars of spending cuts I've already signed into law, it's a balanced plan that would reduce the deficit by making additional spending cuts; by making modest adjustments to health care programs like Medicare and Medicaid; and by reforming our tax code in a way that asks the wealthiest Americans and biggest corporations to pay their fair share.  What's more, the spending cuts wouldn't happen so abruptly that they'd be a drag on our economy, or prevent us from helping small business and middle-class families get back on their feet right away.   
 
Again, fairness: the wealthy and big corporations already pay the lion's share of the tax bill.

Now, I realize there are some in my party who don't think we should make any changes at all to Medicare and Medicaid, and I understand their concerns.  But here's the truth.  Millions of Americans rely on Medicare in their retirement.  And millions more will do so in the future.  They pay for this benefit during their working years.  They earn it.  But with an aging population and rising health care costs, we are spending too fast to sustain the program.  And if we don't gradually reform the system while protecting current beneficiaries, it won't be there when future retirees need it.  We have to reform Medicare to strengthen it.  

Halleluiah! Recognition of the fundamental problem of Medicare and Social Security. But in the same breath, he perpetuates the lie that you have "earned" these welfare programs by paying in. That's not been the case from day one.
 
I'm also well aware that there are many Republicans who don't believe we should raise taxes on those who are most fortunate and can
best afford it.  But here is what every American knows.  While most people in this country struggle to make ends meet, a few of the most affluent citizens and corporations enjoy tax breaks and loopholes that nobody else gets.  Right now, Warren Buffet pays a lower tax rate than his secretary – an outrage he has asked us to fix.  We need a tax code where everyone gets a fair shake, and everybody pays their fair share.  And I believe the vast majority of wealthy Americans and CEOs are willing to do just that, if it helps the economy grow and gets our fiscal house in order.    
 
Warren Buffet may pay a lower tax rate than his secretary, but that would be on his overall income, not on his salary. Fear any government that wants to create a "fair" tax rate: there is no such thing. It's like being slightly pregnant. Taxes are and always will be unfair: trying to make them fair creates unfairness in one way or another. Doomed to failure.

I'll also offer ideas to reform a corporate tax code that stands as a monument to special interest influence in Washington.  By eliminating pages of loopholes and deductions, we can lower one of the highest corporate tax rates in the world.  Our tax code shouldn't give an advantage to companies that can afford the best-connected lobbyists.  It should give an advantage to companies that invest and create jobs here in America.   
 
Believe that, and I have a bridge in New York for sale, for you a special price...

So we can reduce this deficit, pay down our debt, and pay for this jobs plan in the process.  But in order to do this, we have to decide what our priorities are.  We have to ask ourselves, "What's the best way to grow the economy and create jobs?"

Get out of trying to make markets "fair" and let the markets determine the best allocation of scarce resources. The President and his party won't like the results, but then again, the President and his party don't much like markets to begin with.
 
Should we keep tax loopholes for oil companies?  Or should we use that money to give small business owners a tax credit when they hire new workers?  Because we can't afford to do both.  Should we keep tax breaks for millionaires and billionaires?  Or should we put teachers back to work so our kids can graduate ready for college and good jobs?  Right now, we can't afford to do both.  

Oh. My. Goodness. Recognition of limited resources and the need to make economic, rather than political decisions?
 
This isn't political grandstanding.  This isn't class warfare.  This is simple math.  These are real choices that we have to make.  And I'm pretty sure I know what most Americans would choose.  It's not even close.  And it's time for us to do what's right for our future.      
A tad late to realize that the Cold Equations apply to everyone.
 
The American Jobs Act answers the urgent need to create jobs right away.  But we can't stop there.  As I've argued since I ran for this office, we have to look beyond the immediate crisis and start building an economy that lasts into the future – an economy that creates good, middle-class jobs that pay well and offer security.  We now live in a world where technology has made it possible for companies to take their business anywhere.  If we want them to start here and stay here and hire here, we have to be able to out-build, out-educate, and out-innovate every other country on Earth.   
 
Oy. Here is where things start to go downhill quickly. We have always lived in a world where companies can take their business anywhere: globalization is nothing new (even at the time of Christ there was trade and the movement of production elsewhere).

This task, of making America more competitive for the long haul, is a job for all of us.  For government and for private companies.  For states and for local communities – and for every American citizen.  All of us will have to up our game.  All of us will have to change the way we do business.  
 
Oh dear. We're from the government and we're here to help you. Fathers, hide your daughters; mothers, hide your sons.

My administration can and will take some steps to improve our competitiveness on our own.  For example, if you're a small business owner who has a contract with the federal government, we're going to make sure you get paid a lot faster than you do now.  We're also planning to cut away the red tape that prevents too many rapidly-growing start-up companies from raising capital and going public.  And to help responsible homeowners, we're going to work with Federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4% -- a step that can put more than $2,000 a year in a family's pocket, and give a lift to an economy still burdened by the drop in housing prices.  
 
In other words, we promise not to screw you over so badly and we promise to continue to screw around with the housing market. That worked so well over the last 40 years that we want to fix all the problems we created by meddling in the market by meddling further in the market. This time, it's different...oy!

Other steps will require Congressional action.  Today you passed reform that will speed up the outdated patent process, so that entrepreneurs can turn a new idea into a new business as quickly as possible. That's the kind of action we need.  Now it's time to clear the way for a series of trade agreements that would make it easier for American companies to sell their products in Panama, Colombia, and South Korea – while also helping the workers whose jobs have been affected by global competition.  If Americans can buy Kias and Hyundais, I want to see folks in South Korea driving Fords and Chevys and Chryslers.  I want to see more products sold around the world stamped with three proud words: "Made in America."  
 
Earth to Obama and Government Motors: build products that people actually want. That is the greatest problem with products "Made in America".

And on all of our efforts to strengthen competitiveness, we need to look for ways to work side-by-side with America's businesses.  That's why I've brought together a Jobs Council of leaders from different industries who are developing a wide range of new ideas to help companies grow and create jobs.  
 
A committee is going to help here? Seriously? I think we see the community organizer background of the President clearly here.

Already, we've mobilized business leaders to train 10,000 American engineers a year, by providing company internships and training.  Other businesses are covering tuition for workers who learn new skills at community colleges.  And we're going to make sure the next generation of manufacturing takes root not in China or Europe, but right here, in the United States of America.  If we provide the right incentives and support – and if we make sure our trading partners play by the rules – we can be the ones to build everything from fuel-efficient cars to advanced biofuels to semiconductors that are sold all over the world.  That's how America can be number one again.  That's how America will be number one again.      
 
Wishful thinking. Now if we all think positive thoughts, everything will be fine...

Now, I realize that some of you have a different theory on how to grow the economy.  Some of you sincerely believe that the only solution to our economic challenges is to simply cut most government spending and eliminate most government regulations.  
 
Yep. First realistic thing said, recognizing reality.

Well, I agree that we can't afford wasteful spending, and I will continue to work with Congress to get rid of it.  And I agree that there are some rules and regulations that put an unnecessary burden on businesses at a time when they can least afford it.  That's why I ordered a review of all government regulations.  So far, we've identified over 500 reforms, which will save billions of dollars over the next few years.  We should have no more regulation than the health, safety, and security of the American people require.  Every rule should meet that common sense test. 

Some? Hah! How about making regulations have an expiration date that ensure that nonsense isn't perpetuated?
 
But what we can't do – what I won't do – is let this economic crisis be used as an excuse to wipe out the basic protections that Americans have counted on for decades.  I reject the idea that we need to ask people to choose between their jobs and their safety.  I reject the argument that says for the economy to grow, we have to roll back protections that ban hidden fees by credit card companies, or rules that keep our kids from being exposed to mercury, or laws that prevent the health insurance industry from shortchanging patients.  I reject the idea that we have to strip away collective bargaining rights to compete in a global economy.  We shouldn't be in a race to the bottom, where we try to offer the cheapest labor and the worst pollution standards.  America should be in a race to the top.  And I believe that's a race we can win.   
 
Straw man.

In fact, this larger notion that the only thing we can do to restore prosperity is just dismantle government, refund everyone's money, let everyone write their own rules, and tell everyone they're on their own – that's not who we are.  That's not the story of America.    
 
Well, it would have been a decent start. But first after we disenfranchise those who drove subprimes and CDOs.

Yes, we are rugged individualists.  Yes, we are strong and self-reliant.  And it has been the drive and initiative of our workers and entrepreneurs that has made this economy the engine and envy of the world.

Ummmmm, yes. Your point being?
 
But there has always been another thread running throughout our history – a belief that we are all connected; and that there are some things we can only do together, as a nation.
 
Ummmmm, yes. Your point being?

We all remember Abraham Lincoln as the leader who saved our Union.  But in the middle of a Civil War, he was also a leader who looked to the future – a Republican president who mobilized government to build the transcontinental railroad; launch the National Academy of Sciences; and set up the first land grant colleges.  And leaders of both parties have followed the example he set.  
 
Ummmmm, yes. Your point being?

Ask yourselves – where would we be right now if the people who sat here before us decided not to build our highways and our bridges; our dams and our airports?  What would this country be like if we had chosen not to spend money on public high schools, or research universities, or community colleges?  Millions of returning heroes, including my grandfather, had the opportunity to go to school because of the GI Bill.  Where would we be if they hadn't had that chance?  
 
Ummmmm, yes. Your point being?

How many jobs would it have cost us if past Congresses decided not to support the basic research that led to the Internet and the computer chip?  What kind of country would this be if this Chamber had voted down Social Security or Medicare just because it violated some rigid idea about what government could or could not do?  How many Americans would have suffered as a result? 

Ummmmm, yes. Your point being?

No single individual built America on their own.  We built it together.  We have been, and always will be, one nation, under God, indivisible, with liberty and justice for all; a nation with responsibilities to ourselves and with responsibilities to one another.   Members of Congress, it is time for us to meet our responsibilities. 

Ummmmm, yes. Your point being?
 
Every proposal I've laid out tonight is the kind that's been supported by Democrats and Republicans in the past.  Every proposal I've laid out tonight will be paid for.  And every proposal is designed to meet the urgent needs of our people and our communities.  
 
That's according to President Obama. I dare say that there's other viewpoints on that, but as we've seen, let's pass this now before there is discussion...

I know there's been a lot of skepticism about whether the politics of the moment will allow us to pass this jobs plan – or any jobs plan.  Already, we're seeing the same old press releases and tweets flying back and forth.  Already, the media has proclaimed that it's impossible to bridge our differences.  And maybe some of you have decided that those differences are so great that we can only resolve them at the ballot box.   
 
Well, it is the place to do that.

But know this:  the next election is fourteen months away.  And the people who sent us here – the people who hired us to work for them – they don't have the luxury of waiting fourteen months.  Some of them are living week to week; paycheck to paycheck; even day to day.  They need help, and they need it now. 

In other words, President Obama is setting the time table. This needs to be passed today so that he has a chance of being re-elected...
 
I don't pretend that this plan will solve all our problems.  It shouldn't be, nor will it be, the last plan of action we propose.  What's guided us from the start of this crisis hasn't been the search for a silver bullet.  It's been a commitment to stay at it – to be persistent – to keep trying every new idea that works, and listen to every good proposal, no matter which party comes up with it. 

As if that were the case: the President actively dis-listens to anyone not within his limited circle of advisors.
 
Regardless of the arguments we've had in the past, regardless of the arguments we'll have in the future, this plan is the right thing to do right now.  You should pass it.  And I intend to take that message to every corner of this country.  I also ask every American who agrees to lift your voice and tell the people who are gathered here tonight that you want action now.  Tell Washington that doing nothing is not an option.  Remind us that if we act as one nation, and one people, we have it within our power to meet this challenge.
 
In other words, let's not talk about how irresponsible the President and his party has been. Do as I tell you, and if you don't, I will tell everyone what a spoil-sport you are being.

President Kennedy once said, "Our problems are man-made – therefore they can be solved by man.  And man can be as big as he wants."

Leaving those who created the problem in charge of the problem is nonsense.
 
These are difficult years for our country.  But we are Americans.  We are tougher than the times that we live in, and we are bigger than our politics have been.  So let's meet the moment.  Let's get to work, and show the world once again why the United States of America remains the greatest nation on Earth.  Thank you, God bless you, and may God bless the United States of America.


Oy. This is a speech that bordered on bullying, of talking down to the Republicans, a fine speech for a neighborhood organizer.

But as a speech to the people of the United States, to the Congress? A speech designed to generate support and cross bridges?

The only bridges here are those falling apart and desperately in need of repair. The President seems intent on burning them by bullying and threatening, rather than real agreement and working towards making things better.



There is no real plan here. Markets are not being freed and deregulated. Instead, in the name of fairness and security, they are kept under control. That means when the markets finally break free of these constraints, the effect will be vastly worse than the effects of an unconstrained market.

I've had enough of this now.

Inability to learn...

...is a sign of severe aging. When you can't learn something new, it usually means that you've reached a point in your life where you've given up, in one way or another, on looking towards a future that includes change.

This and this reminds me of why I cannot be a Democrat. Anyone who can seriously believe that it is the government's job to force banks to make loans to those who cannot afford them shows an inability to learn, at least from past mistakes.

From the first link:

A government department is again intimidating banks into lending to minority borrowers at below-market rates, all in the name of combating "discrimination." Welcome to the next housing mess.

The 1990s may have brought us supercharged politicized lending, but Eric Holder's Department of Justice is taking the game to an entirely new level, and then some. The weapon is a "fair lending" unit created in early 2010, led by special counsel Eric Halperin and overseen by Civil Rights Division head Thomas Perez.

To make a long story short, Perez et alia are using their ability to bring lawsuits on the public dime to force banks to make loans according to political criteria, rather than financial criteria.

Good lord, that's what got us into this in the first case: here we have an absolute blindness to financial and economic reality in the pursuit of a political chimera - economic justice - that has essentially already bankrupted the housing sector.

These people are dangerous. You can ignore economics for a certain amount of time if you have deep pockets, but at some point or another, the markets will toss you out on your ear after taking all of your money. The only thing that happens when you force the banks to behave as if finances and economics didn't matter is that the banks fail.

I mean, how stupid can you be? If this is the calibre of lawyers that are running the country...ye gods. One of the best arguments ever for passing a constitutional amendment forbidding lawyers from holding public office (it's actually not such a bad idea, as conflict of interests are rife: lawyers-turned-politicians get laws passed that profit politicians-turned lawyers...).

The second link underscores how fundamentally clueless Democrats are. Seriously clueless, clueless in the sense that they apparently can't think things through to their logical conclusions (or, probably more accurately, they have been thinking things through, to the logical conclusion that they can create opportunities for crony capitalism and corruption).

Here the recommendation is for the resurrection of the Fannie Mae/Freddie Mac model for infrastructure investments, because those institutions worked out so well (actually they did for the Democrats, enriching the party faithful, including Barney Frank's boyfriend, while committing fraud upon the US taxpayers):

The new bank would be a government-sponsored enterprise, or GSE, whether or not anyone admits it. The bank would have an implicit subsidy for its debt because it is backed by the government. And the debt it issued would be "off-budget," which means it wouldn't show up in annual outlays. When she first proposed the concept in 2008, Connecticut Democrat Rosa DeLauro explicitly described the bank as a "public private partnership like Fannie Mae."

Such an outfit will inevitably be politicized, as similar examples have been all over the world. Japan's postal bank has been used for decades to finance public works. Japan's roads and bridges are grand but its economy has grown little in 20 years. Agribanks, regional development banks, Brazil's BNDES national bank have all become vehicles for the political allocation of credit.

Ms. DeLauro's bill admits as much, stating that the bank must take into account the "economic, environmental, social benefits and costs" of the projects seeking financial assistance. Among the considerations: responsible employment practices, use of renewable energy, reduction in carbon emissions, poverty and inequality reduction, training for low-income workers and public health benefits.

Right, Like that's going to work.

The inability to learn from past mistakes is a sign of deteriorating mental ability. Of course, that is assuming that both of these approaches is not the deliberate attempt to create institutions capable of committing, for political and personal gain, immense damages to the US economy.

Aren't we screwed enough already? I cannot, seriously, fathom why anyone can trust the Democratic Party, at this point in time, to behave like responsible adults. This is the party of the crony deals completed in back rooms, backed up with extortionate demands from "public prosecutors" whose sole job is to make it impossible for anyone to escape the fleecing.

This is not the America I grew up in. It is not the America that is the shining city on the hill. This is the America of race politics, of the Chicago machine, of deep corruption and vampire policies that aim only to bleed the productive dry while laughing their way to the bank. Like all corrupt societies, it is dysfunctional and can only end up in one way: chaos and collapse. It's just a question of time...

Keynes...

...is going to be the ruin of us all.

Seriously: in today's Handelsblatt (the article isn't currently online, but it's in German anyway), the lead article is about how the "economic elite" in the US is calling, apparently in a Keynesian unisono voice, for additional spending: the hundreds of billions spent weren't enough.

Ye gods.

Apparently these folks still believe that throwing money at problems is all you really need to do: it is, after all, a classic Washington solution to any problem that shows up (which does explain part of the reason the budget looks like it does).

Here's a question that has, as of yet, not been answered: At what point does a Keynesian economist say that his set of dogmatic tools fails to work and that an economy must go through a very painful period of austerity - paying off the bills, as it were, after decades of Keynesian excess - in order to restore order to the country?

I fear the answer is that a Keynesian economist will admit the failure of the system about the same time that a Marxist will admit that the Marxist system failed as well.



In other words, never.

Ye gods. The way things are going, the economy and the country will be sacrificed in order to meet the belief structure of a long-dead economist. Keynes was right:

"The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist."

How ironic can it be that the defunct economist that Keynes here speaks of is ... Keynes himself?

Another quote:

"The difficulty lies not so much in developing new ideas as in escaping from old ones."

That economists of the calibre of Stiglitz call today for increasing government spending underscores how bankrupt Keynes' thought has become.

Ye gods.

Should Anyone Be Surprised?

Just read this.

Does this surprise anyone? Scratch the surface of any government-mandated ecological pie-in-the-sky program and you will get the usual: graft, incompetence and, apparently in this case, sheer stupidity.

The government gives ethanol producers lots of money to produce the stuff using new technologies, it turns out that these don't work, then the government mandates the usage of non-existent products and fines companies for failing to use what the suppliers can't supply them with.

Ye gods.

Wonder what the track record of other government-funded ecological-wonder-programs that are based on untried technologies and wishful thinking are like.

I doubt that they are much different.

Oh, and as an aside: the way things look right now, the EPA will mandate buying massive amounts of ethanol from Brazil, rather than changing its targets, spending the money originally mandated for domestic production - which can't be generated - on foreign suppliers, subsidizing them to increase their market share, making it more difficult - you guessed it - for domestic production to ever get up to speed.

Gotta love the unintended consequences here...but should anyone, really, be surprised?

An Interesting Twist...

Recent events have made it partially clear what is wrong in Great Britain:

"England is a nation of shopkeepers."

While generally attributed to Napoleon I, it is based on what Adam Smith wrote:

"To found a great empire for the sole purpose of raising up a people of customers may at first sight appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers; but extremely fit for a nation whose government is influenced by shopkeepers."  — Adam Smith, The Wealth of Nations, Glasgow edition, 1976), Book IV, section vii. c.

Napoleon's quote is more to the point.

Back then, however, Napoleon was wrong: Great Britain, though with a much smaller population (half that of France in the day), had a superior manufacturing base and the "nation of shopkeepers" trounced the French. The same view was held by many Germans before WW2, belittling the ability of the UK to field a modern army. They were also wrong.

Today?

Goodness. Read this to understand that, if anything, Great Britain today is indeed a nation of shopkeepers, unable to assert itself in the face of what amounts to an assault on the core structure of any society.

It's an interesting twist: a general judgement of foreigners (Smith, after all, was Scottish) about the English turns out, after generations of being proved time and time again to be wrong, to be right.

Let's just hope for the case of the residents of the UK that it doesn't take generations to claw back their rights to not be intimidated by yobs and prove all those foreigners wrong. That would be the true tragedy.

Bumpy Ride, Oh My...

We're in for a bumpy ride.

As long as governments continue to do things half-way, the longer it's going to take to run the speculators down into the ground.

A speculative bubble bursts when it becomes apparent that the only way to make money in the bubble is to have already left it. If you're still in it, you're screwed.

While I dislike the man intently, George Soros had something intelligent to say today in the Handelsblatt. I'm not going to link, but the gist of the story was that the core countries of the EMU will probably have to lose their AAA rating in order to save the periphery: the leverage that these countries will have to take on in order to bail out the welfare systems and failed government finances of many European countries - if not most - will mean, much like the US, that their pristine ratings are in jeopardy.

Which they are because of the political decision to support those countries come hell or high water, or both.

Now, speculators have a place in the world of finance. They are the ones who are willing to take great risks for great rewards.

Today, speculators who are desperately scrambling to get any sort of return of the kind that was barely adequate yesteryear are chasing mirages of high returns that are, under sober circumstances, more than outweighed by the risks involved: even the high-risk, high-return platitude of the past is under question. What we are seeing is the destructive phase of Schumpeter's creative destruction, a frenzy of self-destructive and Pyrrhic victories that is eating away at the soul of modern finance.

This is not an end game, the End of Days. It is, however, a major crisis, one that will see landscapes consumed by fire and floods, with "too big to fail" failing. It is a crisis of confidence, it is a crisis of fidelity, it is a crisis of trust. Wide-spread fraud, aided and abetted by politicians and by those who were charged with keeping an eye on things, must come out and be thoroughly cleansed from the system before trust can be established again.