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In 2003 Rep. Stephen Buyer (Rep., Indiana) founded the Frontier Foundation that reportedly existed to attract donor dollars for education scholarships that were never offered to any student. Congressman Buyer also claimed that he doesn't recall where he got the original capital of $25.000 that he used to establish this group, according to Sharyl Attkisson of CBS news (Can A Donation Buy Legislation?). The supposed non-profit organization shared office space with Buyer's political campaign office. Apparently, his campaign manager handled operation of the Frontier Foundation. The dirt discovered about Buyer, the Frontier Foundation, and top donors got a lot more interesting. The televised report is more detailed about the controversial favors that Buyer was doing as a lawmaker to the lobbyists that donated to the Frontier Foundation.
Apparently, the Frontier Foundation was created to attract lobbyists and donor dollars to Stephen Buyer in exchange for political favors on Capital Hill.
This reminds me of a report that I read years ago in a late 1990's issue of Mother Jones Magazine, titled Co-op Congress. Members of both political parties were exposed for introducing, endorsing and voting on bills from which they profited in various ways.
Some things never change...
Rome's patron senators used to sit outside with giant pots to encourage the public to drop coins in them. The object was for people to rent a Roman senator's ears where they could tell the patron senator what they needed, or wanted. If they paid enough money then they had a better chance of their cause being introduced to the senate.
Plutocracy lives on in modern-day governments. Today, we Americans stand a much better chance of our issues being introduced to the House and Senate and supported by either, or both parties if we pay the politicians and each party enough money to buy their support.
When my grandmother seemed about 100 years old (though in reality she was only a young thing about the age I am now) she would turn to the obituary columns of the morning newspaper first. In the charming way know-it-all teenagers have I would scold her, suggesting that she was being morbid, and that she should be reading the news first, find out what was going on in the world, take an interest in political events, worry about the environment. But she unaccountably ignored my opinion and kept turning to the part of the paper where paragraphs were edged in black. And every so often she would exclaim "oh, so and so's mother has died" or "oh, so and so has died and they were only 62". It was a very practical interest. Her husband had already died, and she was at an age where the parents of friends, and the friends themselves, were starting to die off (in those days with a somewhat lower life expectancy than now), and she needed to know in order to grieve, express sympathy, offer help, attend funerals. She had also lived through two world wars, in one of which a husband and four brothers had served, in another where she had a son and son in law involved. And she was now in a time where her grandson and other people's grandsons had Vietnam looming as either an actual or a theoretical danger.
So an interest in death was a practical matter, information she needed to have to function in her society. But I suspect, looking back from a vantage point of someone about the same age she was then, that there was also a psychological aspect. She was at an age, as am I now, where your own body starts to give you echoes of mortality, near or far. In seeing the black-rimmed announcements of those who had died you were failing to see the ones of those who were still alive. And by implication, if your circle of friends were all still ok, then your family was still ok, still safe and secure, and so were you yourself. But the interest and the reassurance was at a very personal level. She had little interest in the deaths of strangers, why would she? And since all of her friends were behaving in the same way, for the same reasons, the newspaper was providing an obituary page as a service for those searches. Occasionally a death would emerge on the front page, but it would either be of someone important, like a prime minister, or involve some particular tragic circumstance.
This remained the pattern of media representation of death for many years, but in just the last few years a major change has come over the role of death in commercial television news. A typical bulletin now has the first third devoted to death. There will be car accidents, house fires, industrial accidents, people falling down cliffs, murders, drownings, plane crashes, disease, "bashings", sharks, home invasions. Bodies or body parts will be found, corpses will be recognisable or unrecognisable. People will have long "battles" with cancer, or die unexpectedly. The cameras will be there while the police search for bodies, find bodies, and load bodies into ambulances. They will be there when the grieving family chokes back tears to mourn their child or mother, will be in the church where children break down in reading eulogies, will get close ups of teary faces of pall bearers and widows, will be present later at memorial services, will follow up with images of the victim's family in situations where court cases deal with cause of death. We can't be far away from cameras in ambulances, emergency operating theatres, at autopsies, in morgues. In fact the first two are already beginning to happen.
Now this is not a service to viewers in the way the obituary pages are, this is a wallowing in the grief of strangers for the sake of entertainment. The programmers are betting on public necrophilia, that viewers will absorb all the death they are offered, will get, perhaps, some kind of thrill that they are still alive while someone else has died horribly. Will love sticky-beaking at other people's grief. Will love being scared silly by all the disasters that could befall them but haven't yet. Will picture themselves in the position of grieving widow, their children as orphans, their body racked with cancer, their home invaded, their brother stabbed in the street, their car engulfed in a ball of flame, and be glad that it wasn't them.
Programmers have no concern, it seems, for the invasions of privacy, the cheapening of emotion, the deadening of sensibility, the distortion of public policy, that all this exploitation of death involves. They see it as part of modern tv programming, on a par with reality shows that deliberately humiliate and damage contestants, "factually based" series for the glorification of gangsters, television programs in which the level of violence and sheer nastiness continues to escalate. Life it seems, is once again as cheap as it was to the Romans, watching murder and mayhem in the arena; or to the Elizabethans watching public floggings, burnings, hangings, and eviscerations.
Is that really how we want our society to develop? Or should the television front page go back to informing people about the issues that matter?
All David Horton's writing is on The Watermelon Blog.
Once she has reached the Equator, she will head southeast towards the South American west coast. But first, she has to cross the Equator and her team predicts that it will be on, or about, the 18th of November 2009.
As with any vessel dependent on the wind, she has had some great days with speeds reaching 10-12 knors, and bad days, where she was stuck at only 1 or 2 knots. But, according to her blog and her family, she is holding strong, and loving every moment of her adventure.
She still keeps in contact with her family and friends daily via radio and internet, so that is undoubtedly helping to keep her on an even keel. But still, being so far from home with only a radio and a computer to talk to people must be a bit tough on her.
Or, maybe not. Most teenagers her age(16) mainly use cellphones and computers to chat with friends and family anyway. So she's probably feeling right at home.
All joking aside, this young woman will go far, I believe. Already circling the globe in a sailing yacht? If she's able to pull this off, she may be in for great things. She will have already proven herself to her family, friends, country, and to the world as a whole. After this, everything will be open to her. She will only have to apply herself as she is doing now, and she will do great things.
Until next time...
-Wil
Marc Mutty - the picture to the left - reported to the Police Department in Yarmouth that his campaign headquarters recieved a threat via phone message Monday morning. One woman left a message: "You will be dead. Maybe not today, not tomorrow. But soon you'll be dead." And that was just one such call.
Another in Augusta - Maine's capitol city - was left with Michael Heath, former leader of the Christian Civic League of Maine and its successor the Maine Family Policy Council. Someone who wasn't even in the campaign against Gay Marriage here in Maine. It was targeted simply for the organizations he once lead, the fact that he was a Christian, and was involved in three previous campaigns against Gay Marriage, and probably because of his religious convictions.
Marc Mutty said that they had received threats before, but not as direct as this one was.
It should be noted, however, that not all Gay Marriage supporters are like the examples above. In the article it says that there have were also civil, and peaceful, protests infront of the Roman Catholic Cathedral of Portland - who's bishop urged his church members to vote against Gay Marriage.
Too bad all protests couldn't have been like the one above. Calling and threatening someone based on their opposition/support of a particular referendum just isn't right. There is no justification to threatening to kill someone because their religious convictions are different.
The idea that someone would do this is disturbing. I'm no Christian, not by a long shot. Honestly, I think it's done more harm that good throughout human history, but everyone has the right to believe as they wish here. To pray to whichever God or Goddess they wish. Or, as in my case, not to pray to a God or Goddess.
To threaten someone just because your side didn't win this time around doesn't help your cause any, it just helps the otherside who can just point to your dumbass phone-call/threat as an example of why not to allow equal under Maine's Marriage Laws. Not to forget that threatening an opponent of a referendum you support/oppose is just assinine.
Grow to hell up people. Gay Marriage Supporters lost this time. Get over it already and lets work towards passage next time. These antics just hurt the Cause.
Until next time...
-Wil
Rupert Cornwell: Why can't the US learn to love its government?
Out of America: Suspicion of rulers dates to the founding of the nation – and even Obama is unlikely to change that
What is it about Americans and government? The tea-party crowd were back in town the other day – more than 5,000 of them, gathered on the West Lawn of the Capitol to rail against the historic healthcare reform bill that the House of Representatives is expected to pass this weekend.The passions the measure has generated among its Republican opponents have been remarkable. One Republican Congresswoman has declared that health reform was a greater threat to America than Osama bin Laden and global terrorism, while John Boehner, the party's leader in the House, urged the protesters to join Republicans in "defending our freedom".
A neutral observer would not know whether to laugh
or cry at this so-called "Super Bowl of Freedom", featuring inter alia
a giant banner describing the proposals as "National Socialist
Healthcare, Dachau, Germany, 1945". Yes, the tea-party movement,
currently touring the country, contains more than its share of cranks
and nutters. But the fringes, too, can express political truths. This
particular truth is that Americans just can't bring themselves to love
government.
When President Barack Obama came to power, the stage seemed set for government activism unmatched in decades. The parallels with the early 1930s were palpable. Talk of a second Great Depression was everywhere, economists were urging a "new New Deal", Franklin Roosevelt was suddenly back in fashion. Nine months on, however, the urgency seems to have vanished. And why this cooling of reformist ardour? True, the economy has improved (though not by much, as evidenced by the news that unemployment last month rose to 10.2 per cent, the highest level in a quarter of a century.) The huge deficits being run up by Washington are also legitimate cause for concern. A more important reason though is America's ancestral suspicion of government.
The governors' elections in New Jersey and Virginia last week, in which Mr Obama's Democrats were soundly defeated, were largely local affairs. But in so far as they sent a message to the party that controls the White House and both chambers of Congress, the message was plain: slow down, the voters said, don't force change down the people's throats. With a young and charismatic President who won power by promising change, it's easy to forget that the US is a conservative country. Mr Obama triumphed in 2008 not by harnessing a vast tide of liberalism, but by persuading the wavering centre that he was a better bet than another four years of discredited Republican policies. In Virginia and New Jersey, exit polls showed, the centrists (moderates, independents, call them what you will) changed their minds and decided to put on the brakes.
A fascinating Gallup survey last month found that despite the Democrats' victories in 2006 and 2008, fully 40 per cent of Americans, more than ever, describe themselves as conservative, while 36 per cent call themselves moderates. Only 20 per cent are avowed liberals. It's not a question of government having failed the country. It's just that Americans aren't comfortable with the beast when its role, as now, threatens to expand – even when the deficiencies of the unfettered free market have never been more glaring.
Mr Obama secured his record-breaking $787bn stimulus package last February, albeit with virtually no Republican support. But that might be it. Yes, the House will probably pass a version of healthcare reform, but the measure could yet founder in the Senate, where party discipline is weaker, and a 60 per cent majority is required to pass anything of significance. If it does fail, it will basically be for fear that the reform amounts to a "government takeover of healthcare". The most contentious part of the bill is the "public option" – whereby a publicly financed scheme would be set up to provide some competition to rapacious private insurers. But that option now hardly dares speak its name. Leading Democrats prefer to speak of a "consumer option".
And health care is but one of three massive public policy issues on the table, beside a green energy programme to combat climate change, and regulation of the financial markets, aimed at preventing a repeat of last year's crisis. But there's no guarantee any of them will get through. For Europeans, all three would be no-brainers: assured health coverage for all (or rather almost all), steps to reduce both pollution and imports of costly foreign oil, and curbs on the excesses of Wall Street. Not so in the US – because each implies a substantial increase in the role of government.
And it has been ever thus. Suspicion of government is as old as the Republic. The movement that turned up on Capitol Hill again last week takes its name, of course, from the Boston Tea Party of 1773. Americans like to see their War of Independence as a revolution against government – back then the far-away government in London that taxed the colonies without allowing them representation – and the habit has never died.
These days, one thing unites every presidential candidate: a readiness to denounce the federal government in Washington and all its works. That the candidate in question might have made a long and comfortable career in that den of corruption and iniquity makes not a scrap of difference. Usually – as now – the sentiment works to the advantage of Republicans, but not always. Sometimes, the beneficiary can be a genuine outsider like the eccentric Texan businessman Ross Perot, who in 1992 came closer to winning the White House than any independent in 80 years. Sometimes it takes on the hyperbolic aspect of the tea-party crowd, and last summer's raucous town-hall protests against health reform. And on occasion it spills over into tragedy, into the raw hatred of Timothy McVeigh, who blew up the federal government building in Oklahoma City in 1995, killing 168 people.
No one is more aware of how distrust of government is part of America's collective political DNA than Mr Obama. Whether he can tame it is another matter.
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Thoughts from the Frontline Weekly Newsletter The Glide Path Option
by John Mauldin November 6, 2009 |
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The present contains all possible futures. But not all futures are good ones. Some can be quite cruel. The one we actually get is dictated by the choices we make. For the last few months I have been addressing the choices in front of us, economically speaking. Today I am going to summarize them, and maybe we can look for some signposts that will tell us which path we're headed down. For those who are new readers and who would like a more in-depth analysis, you can go to the archives at www.2000wave.com and search for terms I am writing about. And I will start out by briefly touching on today's ugly unemployment numbers, with data you did not get in the mainstream media. But first, let me welcome the readers of EQUITIES Magazine to this letter. The publisher is sending the letter to you directly. This letter is free, and all you have to do to continue receiving it is type in your email address at www.2000wave.com. Likewise, I have arranged for my regular readers to get a free subscription to EQUITIES Magazine, if you would like. You can go to www.equitiesmagazine.com. For those who don't know, I write a brief monthly column for them. The Ugly Unemployment NumbersThe headlines said unemployment, as measured by the "establishment survey," was down by 190,000; and even though that was slightly worse than forecast, market bulls were cheered by the fact that the number was not as bad as last month's. It is an improvement that we are not falling as fast. Well, maybe. What I did not see in many of the stories I read was that the number of unemployed actually soared by 558,000, to 15.7 million, as measured by the household survey. The establishment survey polls larger businesses; the household survey actually calls individual households. Let's look at the real number in the establishment survey. If you don't seasonally adjust the number, the actual change in unemployment for October was 641,000, or about 450,000 more than the seasonally adjusted number. And the Bureau of Labor Statistics added 86,000 jobs that they simply guess were created through the so-called birth-death ratio. Interestingly, the birth-death ratio number is not seasonally adjusted, so it is just added to the unemployment number. http://www.bls.gov/web/cesbd.htm The total (U-6) employment rate is at a record high of 17.5% (this includes those who are part-time for economic reasons). There are now over 10.5 million people who have lost their jobs since the beginning of the downturn. My favorite slicer and dicer of data, Greg Weldon (www.weldononline.com), offers up an even more horrific number. As I have noted before, if you have not looked for work in the last four weeks, the BLS does not count you as unemployed. Quoting Greg: "Moreover, when we combine the monthly change in the number of Unemployed, with the number Not in the Labor Force, we might consider the result to be a proxy for the actual 'change' in the underlying labor market situation ... in which case, October's figure of 817,000 represents the fourth LARGEST yet, behind last month's (September's) second largest figure of 1,021,000 ... for a two-month combined figure of 1.838 million, in newly Unemployed, or no longer 'in' the Labor Force ... "... the second LARGEST two-month total EVER posted, barely trailing the December-08/January-09 total 1.955 million. "Bottom line ... basis this measure AND the 'Total Unemployment Rate,' we could conclude that not only is there NO 'improvement' in the labor market, but moreover, that it continues to DETERIORATE, intently." There are plenty more implications in the data, but let's turn to the topic of the day. The Present Contains All Possible FuturesLike teenagers, we as a US polity have made a number of bad choices over the past decade. We allowed banks to overleverage and, in the case of AIG (and others), sell what were essentially naked call options of credit default swaps, based on their firm balance sheets, far in excess of their net worth; and that put our entire financial system at risk. We gave mortgages to people who could not pay them, and did so in such large amounts that we again brought down the entire world financial system to the point that only with staggering amounts of taxpayer money was it brought back from the brink of Armageddon. We assumed that home prices were not in a bubble but were a permanent fixture of ever-rising value, and we borrowed against our homes to finance what seemed like the perfect lifestyle. We did not regulate the mortgage markets. We ran large and growing government deficits. We did not save enough. We allowed rating agencies to degrade their ratings to a point where they no longer meant anything. The list is much longer, but you get the idea. Now, we are faced with a continuing crisis and the aftermath of multiple bubbles bursting. We are left with a massive government deficit and growing public debt, record unemployment, and consumers who are desperately trying to repair their balance sheets. If present trends are left unchecked, we will need to find $15 trillion in the next ten years, just to pay for US government debt, let alone state, county, and city debt. And perhaps some loans for business will be needed? Where can all this money come from? The answer is that it can't be found. Long before we get to 2019 there will be an upheaval in the market, forcing what could be unpleasant changes. We are left with no good choices, only bad ones. We have created a situation that is going to cause a lot of pain. It is not a question of pain or no pain, it is just when and how we decide (or are forced) to take it. There are no easy paths, but some bad choices are less bad than others. So, let's review some of the choices we can make. (Again, I am being very general here. You can go to the archives for more specifics. This is a summary letter.) Argentinian DiseaseOne way to deal with the deficit is to do what Argentina and other countries have done: simply print the money needed to cover the deficits. Of course, that eventually means hyperinflation and the collapse of the currency and all debt. There are writers who think this is an inevitable outcome. How else, they ask, can we deal with the debt? Where is the political willpower? One large hedge-fund manager in Brazil humorously remarked that Argentina is a binomial country. When faced with two choices (hence binomial) they always made the bad choice. Could it happen here? Hyperinflation is not an economic event; it is a political choice. I think last Tuesday's election is a sign that the voter population is beginning to pay attention to the need for something more than talk of change. There is growing discomfort with the size of the deficits. Further, the Fed would have to cooperate in order for there to be hyperinflation, and I think there is only a very slight (as in almost zero) chance of that happening. Could Congress change the rules and take over the Fed? Anything's possible, but I seriously doubt there is any appetite in saner Democratic circles for such a thing to happen. I think the chances of hyperinflation in the US are quite low. It would be the worst of all possible bad choices. The Austrian SolutionHere I refer to the Austrian school of economic theory, based on the work of Ludwig von Mises and Friedrich Hayek, et al. There are those in the Austrian camp who argue the need to do away with the Fed, return to the gold standard, allow the banks that are now deemed too big to fail to go ahead and fail, along with any businesses that are also mismanaged (such as GM and Chrysler), and leave the high ground to new and more properly run. In their model, government spending is slashed to the bone, as are (in most cases) taxes. The advantage is that, in theory, you get all your pain at once and then can begin to recover from what would be a very bad and deep recession. The bad news is that you risk getting 30% unemployment and another depression that could take a very long time to climb out of. Now, let me say that I have GREATLY simplified their argument. If you want to learn more you can go to www.mises.org. It is an excellent web site for all things Austrian. While I am not Austrian, I have spent a lot of time reading the literature and have certain sympathies for this view. That being said, this also has almost no chance of being implemented. In Congress, only my friend Ron Paul is its advocate. Most Austrian followers are Libertarian by nature, and that is just not a political reality for the coming decade. The Eastern European SolutionAs it turned out, Niall Ferguson (last week I wrote about his brilliant book, The Ascent of Money) was in Dallas last night, and I was graciously invited to hear him. He gave a great speech and signed books, and then we went to a local bar and proceeded to solve the world's problems over Scotch (Niall) and tequila (me), and went farther into the night than we originally intended. He's a very fun and knowledgeable guy. As we were talking about possible paths, he brought one to mind that I hadn't thought of. He reminded me of the period after the fall of the Berlin Wall, as the nations of Eastern Europe broke from the former Soviet Union. They started with very weak economies and simply overhauled their entire governments and economies in a rather short period of time, though not in lockstep with one another. Privatization, lowered taxes, etc. were the order of the day. We here in the US are always talking about the need for reform. We need to reform health care or education or energy. In Eastern Europe they did not reform in the sense that we use the word. In many cases they simply started from scratch and built new systems. They had the advantage that there was general agreement that things did not work the way they had been, so there was more room for change. Today in the US there are large constituencies that resist change. We only get to tinker around the edges, when real structural change is needed. Sadly, we agreed that here there is not much chance of major change. We can't even get the obvious changes needed in the financial regulatory world. Sidebar: I am outraged at the paltry proposed financial "reforms." Rahm Emanuel said that no crisis should be allowed to go to waste. The Obama administration is wasting this one. How can we allow banks to be too big to fail? Where is the reinstatement of Glass-Steagall? If we are going to allow large banks to exist, then their leverage must be reduced to the point where their failure would not risk the system and require taxpayer dollars. I don't care if that makes them less profitable. They are making those large profits because they have taxpayers implicitly behind them, and I get no dividend payments from them, the last time I checked. Where is Fannie and Freddie reform (and their breakup)? No mention of an exchange for credit default swaps? (And yes, I know that such an exchange would reduce the number of swaps and the profitability of them. That is the point. They are dangerous if allowed to become too big a market.) This bill reads as if bank lobbyists wrote it. Where is the populist outrage? We have let the fox set up the rules for running the hen house. Shame on us all if we allow this to happen. Japanese DiseaseI have written a lot over the past year about the problems facing Japan. Their population is shrinking, as is their work force. They are running massive fiscal deficits and have done so for almost 20 years. Government debt-to-GDP is now up to 178% and projected to rise to over 200% within a few years. They started their "lost decades" with a savings rate of almost 16%, and are now down to 2% as their aging population spends its savings in retirement. They have had no new job creation for 20 years, and nominal GDP is where it was 17 years ago. As bad as our problems are here in the US, their bubble was far more massive. Values of commercial property fell 87%! Their stock market is still down 70%. They had twice as much bank leverage to GDP as the US. (Think about how bad off we would be if bank lending was twice as large and had even worse defaults and capital shortfalls!) And yet, they Muddle Through. Productivity has kept their standard of living reasonable. Up until recently their exports were strong. The trading floors of the world are littered with the bodies of traders who have shorted Japanese government debt in the belief that it simply must implode. While I believe that it eventually will, if they stay on the path they are on, Japan is a very clear demonstration that things that don't make sense can go on longer than we think. Richard Koo (chief economist of Nomura Securities, in Tokyo) argues passionately that Japan had a balance-sheet recession, and that the only way for Japan to fight it was to run massive deficits. Banks were not lending and businesses were not borrowing, as both groups were trying to repair their balance sheets, which were savaged by the bursting of the bubble. It is said that at one time the value of the land on which the Emperor's Palace sits in Tokyo was worth more than all of California. Clearly this was a bubble that puts our housing bubble to shame. So, I understand the point that there are differences between Japan and the US . But there are also similarities. We too have had a balance sheet recession, although here it was mostly individuals and financial institutions that have had to retrench and repair their balance sheets. Japan elected to run large deficits and raise taxes. As I wrote in the October 16th letter (http://www.2000wave.com/article.asp?id=mwo101609), "Savings equal Investments: GDP (Gross Domestic Product) is defined as Consumption (C) plus Investment (I) plus Government Spending (G) plus [Exports (E) minus Imports (I)] or: GDP = C + I + G + (E-I) I don't want to go on at length again, but basically, the literature I quoted suggests that government stimulus and deficits have no long-run positive effect on GDP. In fact, the work done by Christina Romer, Obama's chairman of the Council of Economic Advisors, shows that tax cuts have a three-times-greater positive effect on GDP, and tax increases have the same level of negative effect. In the equation above, if you increase government spending it will have a positive effect in the short run on GDP, but not in the long run. In essence, the increase in "G" must be made up by savings from consumers and businesses and foreigners. But "G" does not enhance overall productivity. Government spending may be necessary but it is not especially productive. You increase productivity when private businesses invest and create jobs and products. But if government soaks up the investment capital, there is less for private business. And that is Japanese disease. You run large deficits, sucking the air out of the room, and you raise taxes, taking the money from productive businesses and reducing the ability of consumers to save. Then you go for 20 years with little or no economic or job growth. This is the path we currently seem to be on. The Japanese experience says that it could last a lot longer than people think before we hit the wall; because if savings rise in the US, and if banks, instead of lending, put that money on deposit with the Fed, as they are now doing (in order to repair their balance sheets), the US could run large deficits for longer than most observers currently believe. We will need 15-18 million new jobs in the next five years, just to get back to where we were only a few years ago. Without the creation of whole new industries, that is not going to happen. Nearly 20% of Americans are not paying anywhere close to the amount of taxes they paid a few years ago, and at least ten million are now collecting some kind of unemployment benefits or welfare. Choosing large deficits does not reduce the amount of pain we will experience, it just seemingly reduces it in the short term and creates the potential for a serious economic upheaval when the bond market finally decides to opt for higher rates. This path is a bad choice, but sadly, in reality it is one we could take. The Glide Path OptionA glide path is the final path followed by an aircraft as it is landing. We need to establish a glide path to sustainable deficits (could we dream of surpluses?). That is because at some point there will be recognition, either proactively or forced upon us by the bond market, that large deficits are unsustainable in the long term. If Congress and the president decided to lay out a real (and credible) plan to reduce the deficit over time, say 5-6 years, to where it was less than nominal GDP, the bond market would (I think) behave. Reducing deficits by $150 billion a year through a combination of cuts in growth and spending would get us there in five years. The problem is that there is real pain associated with this option. Remember that equation above. Absent a growing private sector, if you reduce "G" (government spending) you also reduce GDP in the short run. You have to take some pain today in order to do that. But you avoid worse pain down the road: a bubble of massive federal debt that has to be serviced will be very painful when it blows up, as all bubbles do. The Glide Path Option means that structural unemployment is going to be higher than we like (which is actually the case with all the options). And the large tax increases that come with this option will by their very nature be a drag on growth (and cause a double-dip recession in 2011). We can debate tax increases all we want, but I sadly think we will soon have a VAT tax. There are no good options. I just hope that we cut corporate taxes enough when we do create a VAT, that it will make our corporations more competitive, which will be a boost for jobs. That's pretty much it. This is not a problem we can grow ourselves out of in the next few years. We have simply dug ourselves into a huge hole. This is not a normal recession. There is not a "V" ending to this recession. We are going to have deal with the pain. It will be the pain of reduced returns on traditional stock market investments, a lower dollar, low returns on bonds, European-like unemployment, lower corporate profits over the long term, and a very slow-growth environment. But if we choose this path, we will get through it in the fullness of time. And of course, then we will eventually have to deal with the $70 trillion in our off-balance-sheet liabilities in Medicare and Social Security and pensions. Sigh. But that's for another time. Philadelphia, Orlando, and PhoenixI really am more optimistic than this letter makes me seem. But if you ignore reality, then you have no chance to figure out how to make the best of your situation. It is the efforts of hundreds of millions of individuals trying to make their own lot a little better than will get us back to a robust economy. Monday I fly to Philadelphia and then the next day to Orlando for two speeches, and then the following week a quick trip to Phoenix, then home to start to plan for Thanksgiving. I will be in New York the first weekend of December (the 4th) for Festivus, a great fundraiser for kids sponsored by Todd Harrison and the team at Minyanville (http://www.rpfoundation.org/), Interestingly, they hold it every year at a "Texas" barbecue joint. Look me up if you are there. Tiffani has been out the last two days of this week. She is due in seven weeks or less, and her hips are expanding. The pain is too much right now for her to walk up the stairs to the office, so she is working from home. The doctor says this is the one time that her pain is not a sign of something bad. She is being a trooper and not taking any pain meds. It has been 30 years since I was around a pregnant lady for more than a few hours, and it does bring back some memories. Watching her grow and change has brought back the sense of awe over how our bodies are designed. Ryan and Tiffani have decided on the name Lively for my first granddaughter, to add to the two new grandsons this year. From zero to three grandkids in just six months! Kind of makes me dizzy. I really enjoyed my time in South America. Rio is quite beautiful and I want to go back and spend some time. Have a great week. There will be enough good friends and family that I know I will. And tomorrow night I finally get to go to a Dallas Mavericks game. We may have a real team this year. Your always optimistic at the beginning of the season analyst, John MauldinJohn@FrontLineThoughts.com Copyright 2009 John Mauldin. All Rights Reserved Note: The generic Accredited Investor E-letters are not an offering for any investment. It represents only the opinions of John Mauldin and Millennium Wave Investments. It is intended solely for accredited investors who have registered with Millennium Wave Investments and Altegris Investments at www.accreditedinvestor.ws or directly related websites and have been so registered for no less than 30 days. The Accredited Investor E-Letter is provided on a confidential basis, and subscribers to the Accredited Investor E-Letter are not to send this letter to anyone other than their professional investment counselors. Investors should discuss any investment with their personal investment counsel. John Mauldin is the President of Millennium Wave Advisors, LLC (MWA), which is an investment advisory firm registered with multiple states. 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Dennis Kucinich blasted the voting congressional majority that voted for a bill that they did not bother to read. That bill was intended to officially declare that when war crimes are committed, they didn't really happen. The purpose of the bill was intended to protect certain war criminals.
Any one that attempts to protect one group of war criminals may as well protect them all.
"Today we journey from Operation Cast Lead to Operation Cast Doubt. Almost as serious as committing war crimes is covering up war crimes, pretending that war crimes were never committed and did not exist.
Because behind every such deception is the nullification of humanity, the destruction of human dignity, the annihilation of the human spirit, the triumph of Orwellian thinking, the eternal prison of the dark heart of the totalitarian." - Dennis Kucinich:
Video and transcript of Kucinich's response are on the same page here.
US productivity soars as jobless benefit claims lowest since January
- From: Dow Jones Newswires
- November 06, 2009
US productivity, or output per hours worked, surged in the third quarter to hit its highest level in six years as the world's largest economy emerged from its worst downturn in decades.
Meantime, the number of US workers filing new claims for jobless benefits fell by more than expected last week to its lowest level since the start of the year, data from the Labour Department showed.
Non-farm business labour productivity rose by an annual rate of 9.5 per cent in the July-to-September period as the economy recovered and employers saved money by slashing staff. Economists surveyed by Dow Jones Newswires had predicted a 7.0 per cent increase in third-quarter productivity.
A rise in productivity is ultimately good for companies, workers and the economy. More productive companies have greater profits, which allow them to pay higher wages. That also allows the economy to grow faster without generating inflation.
But during a difficult time for the economy, a short-term productivity rise can be a sign that companies slash workers faster that they cut output. In other words, stretching existing workers means hiring fewer new ones.
Still, economic recoveries have in the past generally followed a consistent pattern: first productivity grows, then employment rises, and finally wages increase.
Over the past few weeks, economic data have continued to show that the worst recession since the Great Depression appears to be winding down, with clear improvements in manufacturing and the housing sector.
Gross domestic product, a broad measure of economic activity, rose by an annualised 3.5 per cent in the third quarter as the US government's massive stimulus plan boosted consumer spending.
"Message to the Fed: subdued inflation trends it is," said Jonathan Basile, economist at Credit Suisse, in comments on the two latest economic reports.
In its declaration that interest rates would remain near zero for "an extended period," the Federal Reserve yesterday included new qualifiers explaining the conditions that would justify keeping rates low: "low rates of resource utilisation, subdued inflation trends, and stable inflation expectations."
The Fed voted to maintain the target federal-funds rate for interbank lending at a record-low range of zero to 0.25 per cent to bolster the fragile economic recovery.
Productivity is defined as output per hours worked. It rose 6.9 per cent in the second quarter of the year, revised up from a previously estimated increase of 6.6 per cent.
A key gauge of inflationary pressures within the productivity report plunged. Unit labour costs fell 5.2 per cent last quarter at an annual rate. Economists had expected a 4.5 per cent decline.
"Modest unit labour costs indicate that there are few short-term worries about inflation," said Steven Wood, chief economist at Insight Economics.
Big productivity gains are common at the end of a recession or beginning of a recovery. But the increases come at the expense of jobs.
The US employment report for October, out tomorrow (AEDT), is expected to show that the jobless rate stayed close to a 26-year high of 9.8 per cent in September.
In a separate report, the Labour Department said new claims for jobless benefits decreased by 20,000 to 512,000 in the week ended October 31. That is the lowest level since January 3. The previous week's level was revised to 532,000.
Economists surveyed by Dow Jones Newswires had expected a decrease of only 5000 claims.
The four-week moving average of new claims, which aims to smooth volatility in the data, fell by 3000 to 523,750 from the previous week's revised figure of 526,750. That is the lowest level since January 10.
Initial claims still remain at a fairly high level, suggesting the job market has a long recovery ahead.
But some economists still see positive signs in the recent decreases in the four-week-moving average, and the latest 20,000 decrease in initial claims also may suggest an improvement in labour conditions.
Recently, a family member of mine became an Alex Jones and 911 Truth devotee. Ok, so it may not have been recently and it may have been building over time but it was only recently that I became aware of just how far from reality he has slipped. He may worry some people but for me, he and his lovely wife are an endless source of amusement!
I was made aware of his new found status as conspiracy theorist/anti-government extremist when a mutual high school friend asked me if my dear cousin had flipped. Apparently, he was posting an endless stream of "evil government" and "evil rich people" videos from the Alex Jones website. I was curious about the videos so popped over to "Prison Planet" to see what the fuss was about. Oh boy was I in for a treat!
I had seen the Truther sites before but Alex Jones was just a font of entertainment! Apparently, the swine flu was created to kill people so the rich could sit back and gather up all the resources (not sure who will be left to produce the goods to maintain the rich lifestyle.) Everybody will be tracked via microchip every moment of every day. We are week away from martial law (in fact some states are already living under it). the New World Order is out to destroy us all!
Now how do they prove this at Prison Planet? Well, they take some carefully framed video clips and put them to an ominous soundtrack. These videos actually make Michael Moore look like an honest, upstanding documentarian!
THEN...you get "expert" testimony in the form of people and youTube videos. For instance if you want to prove it was thermite that was used to purposefully take down the World Trade Center, you show a youtube video of guys playing with it on a car. They don't even have to show the science and math behind their "evidence" (it would take 18 thousand TONS of powdered thermite and a miracle burn that sent it horizontally), they just need that one video. For those people that like the space laser theory for the WTC, a materials engineer that specializes in dental materials seems to be PERFECT **rolling eyes**. The "experts" and "evidence" gain credibility just by being on the net and on Alex Jones' site!
Personally, I might be interested in one of their "theories" if they were to show their films ETHICALLY by presenting the whole story or with credible evidence/testimony/experts. However, the proof they offer is more flimsy than a World Daily News piece on "Bat Boy" or "Big Foot".
Now, I did find one area of the site that I enjoyed THOUROUGHLY - the discussion boards. It only takes a single comment ("Can you show me proof?") for the teeming masses to turn into a rabid mob foaming at the mouth. It was like throwing a piece of meat into a pit of starving animals.
Just a lesson people, if you do believe in this stuff - don't foam at the mouth if people ask you to prove your theories. It makes you look insane. If you think you have a valid conspiracy, discuss it logically - using your own words, not Alex Jones. Show the proof. Show the evidence. If somebody questions the credibility of your evidence, explain why you think the source does have credibilty. Otherwise, you sound like a member of the Jones' Cult (Jim or Alex, both are scary).
My neighbour DoctorD recently had a thoughtful post on where conservatism was heading in the U.S. He also linked to the following article on the Becker-Posner blog on the same theme, which I thought said it all very well.
May 10, 2009
Is the Conservative Movement Losing Steam? Posner
I sense intellectual deterioration of the once-vital conservative movement in the United States. As I shall explain, this may be a testament to its success.
Until the late 1960s (when I was in my late twenties), I was barely conscious of the existence of a conservative movement. It was obscure and marginal, symbolized by figures like Barry Goldwater (slaughtered by Lyndon Johnson in the 1964 presidential election), Ayn Rand, Russell Kirk, and William Buckley--figures who had no appeal for me. More powerful conservative thinkers, such as Milton Friedman and Friedrich Hayek, and other distinguished conservative economists, such as George Stigler, were on the scene, but were not well known outside the economics profession.
The domestic disorder of the late 1960s, the excesses of Johnson's "Great Society," significant advances in the economics of antitrust and regulation, the "stagflation" of the 1970s, and the belief (which turned out to be mistaken) that the Soviet Union was winning the Cold War--all these developments stimulated the growth of a varied and vibrant conservative movement, which finally achieved electoral success with the election of Ronald Reagan in 1981. The movement included the free-market economics associated with the "Chicago School" (and therefore deregulation, privatization, monetarism, low taxes, and a rejection of Keynesian macroeconomics), "neoconservatism" in the sense of a strong military and a rejection of liberal internationalism, and cultural conservatism, involving respect for traditional values, resistance to feminism and affirmative action, and a tough line on crime.
The end of the Cold War, the collapse of the Soviet Union, the surge of prosperity worldwide that marked the global triumph of capitalism, the essentially conservative policies, especially in economics, of the Clinton administration, and finally the election and early years of the Bush Administration, marked the apogee of the conservative movement. But there were signs that it had not only already peaked, but was beginning to decline. Leading conservative intellectual figures grew old and died (Friedman, Hayek, Jeanne Kirkpatrick, Buckley, etc.) and others as they aged became silent or less active (such as Robert Bork, Irving Kristol, and Gertrude Himmelfarb), and their successors lacked equivalent public prominence, as conservatism grew strident and populist.
By the end of the Clinton administration, I was content to celebrate the triumph of conservatism as I understood it, and had no desire for other than incremental changes in the economic and social structure of the United States. I saw no need for the estate tax to be abolished, marginal personal-income tax rates further reduced, the government shrunk, pragmatism in constitutional law jettisoned in favor of "originalism," the rights of gun owners enlarged, our military posture strengthened, the rise of homosexual rights resisted, or the role of religion in the public sphere expanded. All these became causes embraced by the new conservatism that crested with the reelection of Bush in 2004.
My theme is the intellectual decline of conservatism, and it is notable that the policies of the new conservatism are powered largely by emotion and religion and have for the most part weak intellectual groundings. That the policies are weak in conception, have largely failed in execution, and are political flops is therefore unsurprising. The major blows to conservatism, culminating in the election and programs of Obama, have been fourfold: the failure of military force to achieve U.S. foreign policy objectives; the inanity of trying to substitute will for intellect, as in the denial of global warming, the use of religious criteria in the selection of public officials, the neglect of management and expertise in government; a continued preoccupation with abortion; and fiscal incontinence in the form of massive budget deficits, the Medicare drug plan, excessive foreign borrowing, and asset-price inflation.
By the fall of 2008, the face of the Republican Party had become Sarah Palin and Joe the Plumber. Conservative intellectuals had no party.
And then came the financial crash last September and the ensuing depression. These unanticipated and shocking events have exposed significant analytical weaknesses in core beliefs of conservative economists concerning the business cycle and the macroeconomy generally. Friedmanite monetarism and the efficient-market theory of finance have taken some sharp hits, and there is renewed respect for the macroeconomic thought of John Maynard Kenyes, a conservatives' bête noire.
There are signs and portents of liberal excess in the policies and plans of the new administration. There will thus be plenty of targets for informed conservative critique. At this writing, however, the conservative movement is at its lowest ebb since 1964. But with this cardinal difference: the movement has so far succeeded in shifting the center of American politics and social thought that it can rest, for at least a little while, on its laurels.

