Archive for Politics

You Make The Call: Obey and Stimulus

Irresponsible, Foolish, and An Excuse For The Same Old Politics And Pork? Or Bold and Decisive Action? You make the call!

Leaving out the earmarks does mean Congress will have less control over how the money is spent. But, Obey says, “So what? This is an emergency. We’ve got to simply find a way to get this done as fast as possible and as well as possible, and that’s what we’re doing.”

via Earmark-Free Stimulus Bill Lacks Spending Direction : NPR.

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February 7, 2009 · Filed under Politics, meddling

Bad Medicine

There’s a great article on the Fed, the history of easy money, and the likely consequences in the Saturday WSJ.

Highlights:

Barely nudging Mr. Madoff out of the top of the news was the Federal Reserve’s announcement last Tuesday that it intends to debase its own paper money. The year just ending has been a time of confusion as much as it has been of loss. But here, at least, was the bright beam of clarity. Specifically, the Fed pledged to print dollars in unlimited volume and to trim its funds rate, if necessary, all the way to zero. Nor would it rest on its laurels even at an interest rate low enough to drive the creditor class back to work. It would, on the contrary, “continue to consider ways of using its balance sheet to further support credit markets and economic activity.”

and

One market, only, registered a protest. The Fed’s declaration of inflationary intent knocked the dollar for a loop against gold and foreign currencies. In many different languages and from many time zones came the question, “Tell me, again, now that the dollar yields so little, why do we own it?”

Great question. Maybe we can help Ben out with a few potential answers for our friends who are (barely) propping up the US economy:

  • We’re #1!
  • “If you don’t, the terrorists win”?
  • USA! USA! USA!
  • It’s good for you. Like spinach.
  • You might be losing money, but you’ll make it up in volume.

In our American reader’s case… “Because you have to”? No, we don’t have to. We may be paid in dollars, but a variety of non-dollar or contra-dollar alternatives exist. We’ll look into them over the coming weeks.

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December 20, 2008 · Filed under Politics, dollar, inflation, meddling

Debtor Nation

The WSJ hits the Bush/Obama bailout mentality hard in their editorial “Barack Obama-san.” Politics aside, it’s a sobering review of what has happened to the Japansese economy after real estate and stock market bubbles burst and the government responded with multiple bailouts.

Here’s the chart that compares Japansese and US government debt as percentages of their respective GDPs:

This is a troubling reminder. Not a road to go down, right?

But we’ve already gone down that road. And I’m not talking about AIG or TARP.

You see, this editorial focuses on government debt. But the total national debt that includes individuals and businesses has already bloated!

A recent Morgan Stanley presentation highlights the spike of total debt in the US (on slide 6). Since the turn of the century alone, it has spiked from roughly 250% to 300% of GDP!

The lesson to be learned is more than the ineffectivity of public stimulus, which the WSJ rightly highlights. It is that, regardless of the source or destination of largess, its tantilizing short term benefits are dwarfed by its subtle, long term poison.

Just like binge eating, the pounds remain after the pleasure, and make it that much harder to cut back in the future.

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December 17, 2008 · Filed under Politics, Uncategorized, euro, foolishness, gold, investments, meddling, oil, quotes, rivals, rules