RTCS

Views on the News

November 22, 2008

 

Views on the News:

Joseph Stalin advocated the following strategy “Work for more government intervention and control of the business activities of the people. In this way the American people will accept Communism without knowing it.” The Democrat game plan is now clear: to move incrementally but inexorably from capitalism (free markets) to socialism (government control of economic activity):

Saul Alinsky, Obama's political mentor, explained that a community organizer's job was to "rub raw the sores of discontent" and mount a socialist revolution. As Obama’s new chief of staff, Rahm Emanuel, said recently, "never allow a crisis to go to waste." FDR had used the crisis mood to push through an unprecedented program of reforms that progressives had been hoping to put in place for years. The people, according to Alinsky, "must feel so frustrated, so defeated, so lost, so futureless in the prevailing system that they are willing to let go of the past and chance the future" of change. Foremost on their reform agenda, as in 1993, will be health insurance. It is practically guaranteed a "healthcarization" of our financial crisis, even though health care and mortgage-backed securities have little to do with one another. "Nationalization" used to be a scare word, until the easy nationalization of the giant AIG made the nationalization of private health care suddenly seem possible. Like the frog who doesn’t realize it is being boiled until it is too late to jump out of the pot, at some point during the ongoing government takeover of Americans’ businesses and wealth, we could wake up in a new country.

 

Question: A hodgepodge collection of efforts has put us all on the hook for piles of money, and what do we have to show for it? Answer: A still-terrible market and a recession. From the outset of the crisis, the essential fallacy shared by governing influentials has been a wishful assumption that quick interventions with tons of public money would somehow restore the system to "normal" without disturbing free-market principles. A month into the Bush administration’s $700 billion bank bailout, the effort has become as fractured as the ad hoc rescues that it was supposed to replace. Unfortunately, despite some 12 financing facilities created by the Treasury and the Fed, massive interest rate cuts and various bailouts, the government has little to show for its attempts to dictate where markets should trade. Before the bailout even got under way in October, Mr. Paulson had to sideline his original strategy, to buy up banks’ bad assets, because, he soon came to realize, it was too complex and indirect to deliver the swift jolt the financial markets needed. He indicated that he would return to that strategy later, but to get the bailout started, he opted instead to directly invest $250 billion in the nation’s banks. As a result, the modest easing the bailout initially brought about in the credit markets is now being reversed over doubts about the Treasury’s stewardship of the plan. The Fed's own balance sheet has exploded from roughly $900 billion worth of debt in August to around $2 trillion as of last week, and knowledgeable sources expect that to reach $3 trillion by the end of the year. Last week Mr. Paulson disappointed investors by ditching the plan to buy up banks’ bad assets. Instead, Paulson expanded the bailout to include investing money in nonbank financial companies, like GMAC, the lending arm of General Motors, and the other carmakers’ lending units. Paulson also announced that the Treasury and the Federal Reserve were considering a plan to use taxpayer money to jump-start consumer lending via credit cards, car loans and student loans. The Detroit based automakers need big changes if they are to return to profitability and survive for the long term, while the rest of the auto industry is not suffering in such places as South Carolina and Tennessee. While a taxpayer-funded bailout would preserve the status quo and merely delay the day of reckoning, reorganization under bankruptcy would force the automakers to modernize their businesses. In particular, the Big Three are weighed down by excessive labor costs, nameplate proliferation, and inefficient dealer networks. Only in reorganization could an automaker address these problems directly by reforming labor contracts, consolidating brands, and reducing its obligations to dealers. Obama selected Governor Jennifer Granholm and former congressman David Bonior, both of Michigan, as economic advisors, apparently because they are two key architects of the worst economy in the nation. If Obama can get everything he wants bailing out the auto industry and widespread forced unionization via the misnamed Employee Free Choice Act that would abolish the secret ballot in unionization elections, this country will be plunged into Euro-socialism faster than Hillary and Bill could have dreamed with their ill-fated "Hillary Care" in 1993. Democrats view this bailout program as a backdoor through which they can manage the economy in accordance with liberal nostrums. Obama is orchestrating the leftist tri-fecta: nationalization of industry, explosive union membership growth and job-killing green initiatives in one fell swoop.

 

Hank Paulson has already doled out $290 billion of the first $350 billion in bailout money, but has not tried to fix the underlying problems and the independent oversight required by the bailout law is non-existent. The main problem with “bailouts” is that they never work unless the underlying problems are solved. Instead bailouts would interfere with the creative destruction natural to the marketplace. Businesses that are successful are the ones that have a product that buyers want, available at a price that the buyers can afford, and which keep production costs in line so that the business can turn a consistent profit over the long term - these are the three foundations of success. Eliminate one of them and the business will fail, but it may not fail immediately, but it will fail eventually. The other problem with bailouts is that they often have the net effect of transferring wealth from productive aspects of the economy to unproductive ones.  Or they may transfer wealth from future generations to the present by long-term government borrowing. Fannie Mae and Freddie Mac thrived for nearly four decades as companies that were private in name only. The bonds and mortgage-backed securities they sold to Wall Street had a unique advantage over their competitors': an unstated guarantee that the federal government would prevent defaults. So when the housing bubble burst and the companies' bets went bad, regulators promised to supply up to $200 billion to cover any losses. The one approach Mr. Paulson stubbornly refuses to consider is using bailout money to help homeowners avoid foreclosure. His reasoning, that the money is to be used to stabilize the financial system, inexplicably ignores the fact that the instability he is seeking to quell is rooted in the housing bust. An obvious question is what makes a company too big to fail and what criteria is used to allow only certain industries and certain companies in those industries to qualify for a bailout? One thing missing from the government bailout are details on fixing the underlying root causes that allowed the mortgage meltdown to happen in the first place:

Fannie Mae and Freddie Mac are due to remain in a federal conservatorship until the end of 2009. Another obvious question is when, if ever, will the federal government disinvest in the banking institutions, or will this be the beginning of a nationalization of the banking sector? Past Federal interventions in the economy were meant to be short-term, but government programs have this nasty habit of confounding their designers' intentions. Rather than untangle the government from the housing, financial, and automobile sectors, Obama looks likely to strengthen the connection. He wants to do the same to the health care and energy industries. Maybe it is time to exercise one of the checks and balances in the bailout law; the power to “disapprove of” the second half of the $700 billion in bailout cash, before more damage to our free markets are done.

 

The latest election has expanded the Democrat Congress supermajority that will continue their record of deceit and partisanship to advance an ambitious liberal, socialist agenda. During the 110th Congress, Harry Reid filed a record 137 cloture petitions, effectively abrogating the ability to debate. A number of times, Reid filed cloture on legislation the same day it was made available to Republicans; these cloture petitions occurred before some senators had an opportunity to read the legislative language. Reid has not been satisfied by simply cutting off debate. Eighteen times over the last two years, he has used a procedural stunt to prohibit Republicans from offering amendments. Democratic leadership in Congress and President-elect Barack Obama have an ambitious stimulus list, including monies for pet transportation projects, an extension of unemployment insurance, food stamps and a costly auto industry bailout. Once plans to divert $25 billion from the $700 billion financial rescue program for an auto bailout failed, Democrats turned their attention to a federal loan alternative. Democrats are enjoying a New Deal reverie wherein a Democratic president solves an economic crisis with public-works projects. Japanese passed stimulus package after stimulus package, including billions of dollars for infrastructure, to no avail. The spending failed because it went to wasteful projects favored by politicians for parochial reasons. The Japanese then also made the mistake of raising taxes in 1997 to pay for all the spending, depressing the economy again. Unfortunately infrastructure spending suffers from a basic problem: By the time money is actually spent on construction, the recession has passed, since large-scale construction projects of any type require years of planning and preparation. Unfortunately, our newly elected officials plan to follow the same failed spending strategies of the past, rather than enact reforms that can improve our nation’s economy. The biggest post election drop in history is caused by fear of Obama’s misguided economic plans, which has already christened it the “Obama Recession.”

 

Obama will do whatever it takes to ensure that he can have two terms as president to implement all his plans for transforming America into a third world socialist client state. First, the mainstream media may take minor potshots at him occasionally for circulation purposes and to convince themselves they're still journalists, but, ultimately, they will remain his all-powerful public relations team.  Second, Obama is a remarkably effective demagogue, which amounts to illusion but his singular ability, a resonant voice, and that activist media will smooth out the rough edges. The coup de grace Obama will use against rightist opposition is mostly embodied in one word: Amnesty to both grow the Hispanic voting block and ingratiate Obama to it.  This will enable him to create a powerful coalition of blacks, young voters and Hispanics that, along with the older whites he will be able to retain, will constitute an insurmountable electoral force.  It is always easier to import than rather than brainwashing new voters (which the media and academia specialize in). Obama's real views on missile defense is to obfuscate his support until it is "workable" and "proven" to set such a high standard for missile defense that anything less than a 100-percent intercept rate means the system is "unproven" or "unworkable" and not deployable. Starting before inauguration Obama is already being challenged by Russian President Medvedev to back off planned missile defense bases setting the tone for continued foreign policy challenges by other opposition governments. Obama has also demonstrated his naivete by suggesting that he'll get Osama bin Laden and worse, the president-elect stated that he'll "stamp out al Qaeda once and for all" as campaign promises that invite perception of failure if unfulfilled. There are a number of changes that Obama and his compliant Congress may implement:

The risk is that if the more dramatic and least popular of these policies are enacted early, the electorate will want to change the change, maybe even as soon as 2010, especially if the economy continues to struggle.  I wonder how many people will understand that the change Obama had promised was simply a "change… back" to the failed policies and cronies of the Clinton Administration? Already Obama’s people are buzy lowering expectations, since when the candidate is a blank slate upon which the voters can write their own expectations, their own desires, and, yes, their own fantasies can all not be achieved. It is inevitable that disappointment comes first; then comes dissatisfaction; then comes disaster. We will not have to wait much longer to judge Barack Obama on something other than his flowery words, since soon we will be able to judge him on the actual results of his words. The cover of Time magazine photoshopping Barack Obama into Franklin Roosevelt, accompanied by the appropriately reverent paen to the New Deal and a blossoming New Liberal World Order. Why not just cut to the chase and do Obama and Joe Biden as the con men Robert Redford and Paul Newman portrayed in the classic Oscar-winner The Sting?

 

The traditional conservative core principles are a paraphrase of the principles of governance applied by the first Republican President - Abraham Lincoln. No economic system has ever brought about prosperity by discouraging thrift. No society has succeeded in strengthening the weak by weakening the strong; or boosted wage earners by pulling down wage payers; or helped the poor by destroying the rich. It is impossible to keep out of trouble by spending more than you earn or to build character and courage by taking away initiative and independence. Nor has any government been able to help people permanently by doing for them what they could and should do for themselves. Governor Bobby Jindal of Louisiana said it is imperative his party offers solutions to voters, and not just be the opposition to get back on track:

·        "Number one, we have got to stop defending the kind of spending and out-of-control spending that we would never tolerate in the other side.

·        "Number two, we've got to stop defending the kinds of corruption we would rightfully criticize in the other party.

·        "Number three, we have got to be the party that offers real solutions to the problems that American voters, American families are worried about.”

·        “We don't need to abandon our conservative principles; we can't just be the 'party of no.'”

·        “We need to offer real solutions on making health care more affordable, on the economic challenges facing families, and on the international threats."

Those who are attacking Governor Sarah Palin might be reminded that the last Republican to inspire such ardor and admiration among the party faithful, Ronald Reagan, was also derided as a dim bulb. The loathing of Palin by so much of the opinion elite is driven not by contempt for her brainpower but by fear of her political potential. If Sarah Palin was a member state of the UN she would be the Israel of American politics and condemned daily by the General Assembly for transgressions both real and imagined.

 

If you are sick and tired of government and politics as usual, read my web site with its individual issue analysis and recommendations at: http://www.returntocommonsensesite.com Remember this site is updated every Saturday. Individual issue updates this week include:

 

This Week’s Best Articles:

·        Automakers Need Bankruptcy, Not Bailout” by Andrew M. Grossman dated November 14, 2008 published by The Heritage Foundation http://www.heritage.org/Research/Economy/lm33.cfm .

·        Orwell’s Children” by Bruce Walker dated November 16, 2008 published by American Thinker at http://www.americanthinker.com/2008/11/orwells_children.html .

·        ’Depression 2009: What would it look like?”” by Drake Bennett dated November 16, 2008 published by Boston Globe at http://www.boston.com/bostonglobe/ideas/articles/2008/11/16/depression_2009_what_would_it_look_like/?page=full .

·        A Rescue plan Without Taxpayer Money” by Gretchen Morgenson dated November 16, 2008 published by The New York times at http://www.nytimes.com/2008/11/16/business/16gret.html?_r=1&adxnnl=1&oref=slogin&ref=business&adxnnlx=1226930619-nHW4eVPg9Slri9C7NqgtRQ .

·        Palin’s political potential” by Jeff Jacoby dated November 16, 2008 published by Boston Globe at http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/11/16/palins_political_potential/ .

·        Something Is Wrong With The GOP” dated November 16, 2008 published by CBS News at http://www.cbsnews.com/stories/2008/11/16/ftn/main4607907.shtml .

·        Trillions down and still bailing by Bill Fleckenstein dated November 17, 2008 published by Money Central at http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/trillions-down-and-still-bailing.aspx .

·        At the HUD of the Fall” by John C. Welcher dated November 17, 2008 published by National Review Online at http://article.nationalreview.com/?q=YTM2NjU2NzdmNmI1YjI2ZGRmMDIxZWZmYTExZmY1ZDY= .

·        Congress Declares War on Taxpayers” by Brian Darling dated November 17, 2008 published by Human Events at http://www.humanevents.com/article.php?id=29509 .

·        Harry Reid’s America” by William Smith dated November 17, 2008 published by Human Events at http://www.humanevents.com/article.php?id=29513 .

·        Crisis Lets Dems Push Old Agenda” by Amity Shlaes dated November 17, 2008 published by New York Post at http://www.nypost.com/seven/11172008/postopinion/opedcolumnists/crisis_lets_dems_push_old_agendas_139106.htm .

·        The Detroit Bailout: Unsafe at Any Cost” by James L. Gattuso and Nicholas D. Loris dated November 17, 2008 published by The Heritage Foundation at http://www.heritage.org/Research/Economy/WM2133.cfm .

·        The Bailout’s Next 60 Days” dated November 17, 2008 published by New York Times at http://www.nytimes.com/2008/11/17/opinion/17mon1.html?ref=opinion .

·        Sarah Palin is the Israel of American Politics” by Aaron Goldstein dated November 17, 2008 published by Intellectual Conservative at http://www.intellectualconservative.com/2008/11/17/sarah-palin-is-the-israel-of-american-politics/ .

·        How Barack Obama Will Ensure His Victory in 2012” by Selwyn Duke dated November 17, 2008 published by Intellectual Conservative at http://www.intellectualconservative.com/2008/11/17/how-barack-obama-will-ensure-his-victory-in-2012/ .

·        3 Scenarios for the Obama Years: The Good, The Bad, The Ugly” by Randall Hoven dated November 18, 2008 published by American Thinker at http://www.americanthinker.com/2008/11/3_scenarios_for_the_obama_year.html .

·        A Brave New America” by Mark W. Hendrickson dated November 18, 2008 published by Front Page Magazine at http://www.frontpagemagazine.com/Articles/Read.aspx?GUID=76387C1D-8A30-45C6-BF95-C37F35F0449D .

·        Up in the Air” by Alan W. Dowd dated November 18, 2008 published by The Weekly Standard at http://www.weeklystandard.com/Content/Public/Articles/000/000/015/832icrhc.asp .

·        “Infrastructure Spending to Nowhere” by Rich Lowry dated November 18, 2008 published by National Review Online at http://article.nationalreview.com/?q=MTgwNmRkYzhmZDVjYzYxNDE5NGQwNjZkOGNlMDQ0M2Q= .

·        The Sting: Obama’s Old Deal” by Jeffrey Lord dated November 18, 2008 published by The American Spectator at http://www.spectator.org/archives/2008/11/18/the-sting-obamas-old-deal .

·        The Obama Fairness Doctrine” by Bethany Stotts dated November 18, 2008 published by Accuracy in Media at http://www.aim.org/aim-column/the-obama-fairness-doctrine/ .

·        Financial Reversals - Everything bad is good again” by Jacob Sullum dated November 19, 2008 published by Reason Magazine at http://www.reason.com/news/show/130142.html .

·        Take the Tax Debate to Obama” by Pete Ferrara dated November 19, 2008 published by The American Spectator at http://www.spectator.org/archives/2008/11/19/take-the-tax-debate-to-obama .

·        Expect an early Obama bailout of the Big Three” by C. Edmund Wright dated November 19, 2008 published by American Thinker at http://www.americanthinker.com/2008/11/expect_an_early_obama_bailout.html .

·        The Emerging Threat to Conservative Talk Radio” by Wes Vernon dated November 19, 2008 published by Accuracy in Media at http://www.aim.org/aim-column/the-emerging-threat-to-conservative-talk-radio/ .

·        Bailing Out of the Bailout” by Virginia Foxx dated November 19, 2008 published by Human Events at http://www.humanevents.com/article.php?id=29565 .

·        “Bad News, Bailouts and Automobiles” by Steven D. Laib dated November 19, 2008 published by Intellectual Conservative at http://www.intellectualconservative.com/2008/11/19/bad-news-bailouts-and-automobiles/ .

·        “Bullying Barack” by Peter Brookes dated November 20, 2008 published by Front Page Magazine at http://www.frontpagemagazine.com/Articles/Read.aspx?GUID=2FC15D3F-3435-4939-89D6-79FCD2095464 .

·        h” by J.D. Longstreet dated November 20, 2008 published by American Daily at http://www.americandaily.com/article/23616 .

·        As Support for Auto Aid Stalls, Efforts Shift to GOP Loan Plan” by Lori Montgomery and Kendra Marr dated November 20, 2008 published by Washington Post at http://www.washingtonpost.com/wp-dyn/content/article/2008/11/19/AR2008111903783.html?hpid=topnews .

·        Time for a Bank Holiday” by William Greider dated November 19, 2008 published by The Nation at http://www.thenation.com/doc/20081208/greider .

·        Ten Reasons Why the Auto Bailout is a Bad Idea” by Dan Weil dated November 20, 2008 published by News Max at http://www.newsmax.com/newsfront/auto_bailout/2008/11/20/153588.html .

·        Republicans to Push ‘Bold” Ideas” by Ronald Kessler dated November 20, 2008 published by News Max at http://www.newsmax.com/kessler/demint_idea/2008/11/20/153608.html .

·        Wall Street and the Rise of Obama” by Cliff Kincaid dated November 20, 2008 published by Accuracy in Media at http://www.aim.org/aim-report/wall-street-and-the-rise-of-obama/ .

·        Our Future Leaders” by Oliver North dated November 21, 2008 published by Human Events at http://www.humanevents.com/article.php?id=29588 .

·        ““A Way Out of the Wilderness” by Karl Rove dated November 24, 2008 published by Newsweek at http://www.newsweek.com/id/169173/ .

·        The Sector Formerly Known as Private” by Matthew Continetti dated December 1, 2008 published by The Weekly Standard at http://www.weeklystandard.com/Content/Public/Articles/000/000/015/846dywma.asp .

 

David Coughlin

Hawthorne, NY