For some time now I've thought, if I could write like anyone, who would it be? My answer is some kind of cross between John Steinbeck and Charles Krauthammer. Steinbeck has the clarity, beauty, and sometimes just the pure poetry that I enjoy. But Krauthammer writes intellectually brilliant articles that can sum up very large ideas using very small spaces. And I like that combination. Big ideas, clearly and beautifully made, in small spaces. Nice.
So when I read articles like this one, I have to smile. There are reasons, very good reasons, people like Krauthammer have their positions.
For anyone interested, the article skewers Barack Obama's political agenda, by calling it “The Great Non Sequitur.” I would just call it an old fashioned bait and switch. In case you like Obama, or if you're just not interested in reading the story, I can sum it up pretty quickly.
He tells his readership that Obama says the causes of our economic crises are “...importing too much oil and not finding new sources of energy... not reforming health care... and tolerating too many bad schools.” But Krauthammer rightfully points out that Obama's politically-motivated slight of mouth wasn't even noticed. He points out that the real causes of our economic crises are a credit bubble collapse, a housing market collapse (especially Fannie Mae and Freddie Mac, pushed into ever more risky loans, by the government), “a systemic failure of the banking industry,” Alan Greenspan's “easy money” federal reserve, and debt instruments that economists and financiers with Ph D's can't understand. Ultimately, the whole article comes down to a single quote from Chief of Staff Rahm Emanuel: “You never want a serious crisis to go to waste.”
I love that kind of clarity. It makes me want to jump for joy. They're big ideas, clearly and beautifully crafted, all in a very small space. Nice.
Saturday, March 28, 2009
Friday, March 27, 2009
The Hidden Costs Of Opening A Business
For years the Apple computer company has used the ad slogan “Think Different.” But they were in for a strange bit of irony when they tried to open one of their super modern-looking stores on Wisconsin avenue in Georgetown, Washington, D.C.. The architectural review board (a.k.a., presentation police) made them redesign their plans four times, in an attempt to fit the new store into “...the fabric of Wisconsin Avenue,” according to board member David Cox. Since the area is considered historic, “The Board” heavily regulates changes to the overall appearance of the town.
Well, with the presentation of the fifth and final set of drawings, Apple finally had a design that pleased most of the members of the board, and all of the plans were approved. As of this writing, the store is probably in its “finish out” stages, with inventory on the way, and new employees wringing their hands at the prospects of good work within a solid company during an economic
downturn. Good for them.
But the board has missed a couple of minor points here and there.
Small businesses employ over eighty percent of the US population. Small start-ups, or even well-established small businesses couldn't afford the cost of five different building designs, just to please the looks police. And let us not even touch on the price of the property itself ($13 mil in 2007).
So several years, and millions of dollars, and who knows how many other profitable small businesses, have been sacrificed, so “The Board” doesn't get its “historic district” sensibilities offended. How pathetic. Yes, it's pretty now. But someone had to change the landscape years ago to make it that way. And it can be equally pretty in the future – maybe more so. Who's to say, if we're never allowed the changes. Someone needs to tell “The Board” that change is good – not bad. Change is progress, and that this peculiar brand of stagnation in the name of preservation is costly.
Ultimately these review boards are nothing more than a hidden tax, in the form of a load of bureaucratic red tape, for any new business that would like to move into an area. Essentially, the only companies that can afford the decent real estate and the biggest changes are the largest companies with the deepest pockets – and the best political connections. The smaller and less connected companies then get pushed out into “business districts,” (the business equivalent of housing projects) which pushes up their costs for doing business, and drives down their visibility, making it even more difficult to start and/or run a small company. Mom and pop be damned; you eighty percent, be damned; “The Board” wants nothing less than multi-nationals. What's worse is they actually think they're doing the city and the people living in it some good.
If only they could learn to think for themselves, they might change their expensive ways, or at the very least, come up with their own slogan. Something like: Think Different – Just Like Us.
Well, with the presentation of the fifth and final set of drawings, Apple finally had a design that pleased most of the members of the board, and all of the plans were approved. As of this writing, the store is probably in its “finish out” stages, with inventory on the way, and new employees wringing their hands at the prospects of good work within a solid company during an economic
downturn. Good for them.
But the board has missed a couple of minor points here and there.
Small businesses employ over eighty percent of the US population. Small start-ups, or even well-established small businesses couldn't afford the cost of five different building designs, just to please the looks police. And let us not even touch on the price of the property itself ($13 mil in 2007).
So several years, and millions of dollars, and who knows how many other profitable small businesses, have been sacrificed, so “The Board” doesn't get its “historic district” sensibilities offended. How pathetic. Yes, it's pretty now. But someone had to change the landscape years ago to make it that way. And it can be equally pretty in the future – maybe more so. Who's to say, if we're never allowed the changes. Someone needs to tell “The Board” that change is good – not bad. Change is progress, and that this peculiar brand of stagnation in the name of preservation is costly.
Ultimately these review boards are nothing more than a hidden tax, in the form of a load of bureaucratic red tape, for any new business that would like to move into an area. Essentially, the only companies that can afford the decent real estate and the biggest changes are the largest companies with the deepest pockets – and the best political connections. The smaller and less connected companies then get pushed out into “business districts,” (the business equivalent of housing projects) which pushes up their costs for doing business, and drives down their visibility, making it even more difficult to start and/or run a small company. Mom and pop be damned; you eighty percent, be damned; “The Board” wants nothing less than multi-nationals. What's worse is they actually think they're doing the city and the people living in it some good.
If only they could learn to think for themselves, they might change their expensive ways, or at the very least, come up with their own slogan. Something like: Think Different – Just Like Us.
Thursday, March 26, 2009
La Cucarachaaaaaagh!
Remember this the next time you think you have a bug problem.
Normally in this blog I write about economics, government policies, political economy and the like. Pretty droll stuff for most people. Occasionally I'll write about my dog, or some other random subject that pops into my head – usually existential. But unless you actually know me, that kind of info is even less interesting.
Normally in this blog I write about economics, government policies, political economy and the like. Pretty droll stuff for most people. Occasionally I'll write about my dog, or some other random subject that pops into my head – usually existential. But unless you actually know me, that kind of info is even less interesting.
But I'm also used to looking for snakes, lizards and other little creepy crawlies pretty much out of habit. I like them for some born-into-me reason. So when something catches my eye, it's likely a crawly. So yesterday morning while walking Lucas, I noticed something out of the ordinary. I found the granddaddy of all the creepies I've ever found. And, believe me, I've found a ton of them. My first thought was: “that's positively Jurassic.”
Holy, cucarachotas, Batman! That's the biggest cockroach I've ever seen. I don't know what genus this monster belongs to, but I've never seen anything like it. I've been here in southern Mexico for almost four years, and it's the first of its kind that I've come across. I was absolutely amazed at its size. If the ordinary cockroach can be compared to a Volkswagen beetle, then this roach is a semi tractor trailer with two trailers. Huge. Just huge.
Anyway, I wanted to put up some photos, because I've already told some people about it, and they didn't seem to believe me. But here's the proof. If you look hard enough around here, you can find these little beasties. I'm still amazed. (And, no, I didn't have the heart to kill it and start my own bug collection. I've only seen one in four years, so I'm assuming their population numbers are fairly small. It seems a shame to take the life of such a rare animal.) By the way, these photos are actual size.
Sunday, March 22, 2009
New Phrases Deserve Clear Understanding
Here's a question for the day. What is a "toxic asset"?
It occurred to me not long ago that the words “toxic asset” didn't seem to properly describe our government taking on so much bad debt. You cannot have an asset that costs you money. That's a liability. Nor can a liability be considered poisonous if it's earning money for its owner. So I paged through my dictionary for some clarity.
Toxic: adj. 1. of, pertaining to, affected with, or caused by a poison: a toxic condition. 2. acting as or having the effect of a poison; poisonous: a toxic drug.
Asset: n. 1. a useful and desirable thing or quality. 2. a single item of ownership having exchange value. 3. assets a. the total resources of a person or business, as cash, notes and accounts receivable, securities, goodwill, or real estate (as opposed to liabilities). b. the items detailed on a balance sheet, esp. in relation to liabilities and capital. c. all property available for the payment of debts, esp. of a bankrupt firm or person. d. property of a deceased that can be used to pay debts or legacies. 4. Slang. An undercover or secret agent; spy.
Oxymoron: n. pl. mora. A figure of speech that uses seeming contradictions, as “cruel kindness” or “to make haste slowly.”
From Randomhouse Webster's Dictionary, 1991.
I think the terminology that we should be hearing is "toxic liability."
It occurred to me not long ago that the words “toxic asset” didn't seem to properly describe our government taking on so much bad debt. You cannot have an asset that costs you money. That's a liability. Nor can a liability be considered poisonous if it's earning money for its owner. So I paged through my dictionary for some clarity.
Toxic: adj. 1. of, pertaining to, affected with, or caused by a poison: a toxic condition. 2. acting as or having the effect of a poison; poisonous: a toxic drug.
Asset: n. 1. a useful and desirable thing or quality. 2. a single item of ownership having exchange value. 3. assets a. the total resources of a person or business, as cash, notes and accounts receivable, securities, goodwill, or real estate (as opposed to liabilities). b. the items detailed on a balance sheet, esp. in relation to liabilities and capital. c. all property available for the payment of debts, esp. of a bankrupt firm or person. d. property of a deceased that can be used to pay debts or legacies. 4. Slang. An undercover or secret agent; spy.
Oxymoron: n. pl. mora. A figure of speech that uses seeming contradictions, as “cruel kindness” or “to make haste slowly.”
From Randomhouse Webster's Dictionary, 1991.
I think the terminology that we should be hearing is "toxic liability."
Just Call Me Barack Cynical
When I read this rather glowbama article from yahoo news, the cynic in me came out in full force. I had a nasty, little response to everything the President was saying and promising. Here are a few excerpts:
Yahoo news: “In general, his demeanor and message were more upbeat than in recent days when public fury over executive bonuses dominated Congress. 'We will come out on the other side stronger and a more prosperous nation,' he said, acknowledging the nation's economic crisis. 'That I can guarantee you. I can't tell you how long it will take, what obstacles we'll face along the way, but I promise you this: There will be brighter days ahead.'”
My response: Really? You can “guarantee” us that much? Mr. President, exactly whose crystal ball do you have, and where can I get one? I know the job of President takes confidence, but I didn't realize you also had to be a soothsayer. His particular brand of overconfidence is his biggest weakness. Statements like those will come back to haunt that man to a degree that even he isn't prepared for.
Yahoo news: “He told Americans not to expect 'something for nothing' from their government. Improvements to the economy and medical care will take time, he said.”
My response: Really? “Something for nothing”? Isn't that exactly what The Federal Reserve is doing with our money? Printing it? Creating it out of thin air? How much “nothing” has The Fed promised to print? Three trillion? Please. This isn't The Wizard of Oz; and we're not children. We're all smart enough to understand that there IS a man behind the curtain. We're not on the yellow brick road, Mr. President, and Ben Bernanke isn't the great and powerful Oz.
Yahoo news: "Nothing is free," the president said. Responding to a woman's complaint about cuts in jobs and salaries for California teachers...”
My response: But wasn't that the agenda, isn't that the agenda, of “universal health care”? His agenda is coverage for everyone, regardless of ability to pay. So, in other words, he campaigned, at least in part, on “free” health care. “Nothing” is free? Mr. President, say what you mean, and mean what you say. I think what he really means to say is, nothing is free... for the American taxpayer.
Yahoo news: “...Obama urged people not to ask the federal and state governments to cut taxes and improve services at the same time. 'At some point you've got to make some choices,' he said.”
My response: Right. Everyone should “make some choices,” sacrifices, in other words, except the local, state and federal governments. We shouldn't expect THEM to make tough choices, just the people who are already suffering; the loyal, hard working people who are paying their taxes. What choices do they have the ABILITY to make?
Yahoo news: "We are not always going to be right," he said. "And I don't want everybody disappointed if we make a mistake here or there."
My response: “...here or there”? How many “earmarks” were in the “stimulus” package? 9000? Can you say “disappointed by government,” boys and girls? I can. I've been disappointed eight thousand more times in one bill from the Obama administration, than I was in four years of Bush's time in office. I didn't agree with that man on many things. But this “stimulus” package has more cronyism and pork than a mafia-run slaughterhouse. They've treated the stimulus package not as an opportunity to make genuine strides in an economic downturn, but rather as an opportunity to get their back burner pet projects paid in full. The ridiculousness that is bound to come to light in this bill will drive down the president's popularity numbers in a hurry if this kind of spending continues.
So, this time at least, my cynicism seems to be justified. I picked apart this story like I pick apart lots of wire news stories. But this time around, I decided to blog about it, rather than just kvetch about it.
Yahoo news: “In general, his demeanor and message were more upbeat than in recent days when public fury over executive bonuses dominated Congress. 'We will come out on the other side stronger and a more prosperous nation,' he said, acknowledging the nation's economic crisis. 'That I can guarantee you. I can't tell you how long it will take, what obstacles we'll face along the way, but I promise you this: There will be brighter days ahead.'”
My response: Really? You can “guarantee” us that much? Mr. President, exactly whose crystal ball do you have, and where can I get one? I know the job of President takes confidence, but I didn't realize you also had to be a soothsayer. His particular brand of overconfidence is his biggest weakness. Statements like those will come back to haunt that man to a degree that even he isn't prepared for.
Yahoo news: “He told Americans not to expect 'something for nothing' from their government. Improvements to the economy and medical care will take time, he said.”
My response: Really? “Something for nothing”? Isn't that exactly what The Federal Reserve is doing with our money? Printing it? Creating it out of thin air? How much “nothing” has The Fed promised to print? Three trillion? Please. This isn't The Wizard of Oz; and we're not children. We're all smart enough to understand that there IS a man behind the curtain. We're not on the yellow brick road, Mr. President, and Ben Bernanke isn't the great and powerful Oz.
Yahoo news: "Nothing is free," the president said. Responding to a woman's complaint about cuts in jobs and salaries for California teachers...”
My response: But wasn't that the agenda, isn't that the agenda, of “universal health care”? His agenda is coverage for everyone, regardless of ability to pay. So, in other words, he campaigned, at least in part, on “free” health care. “Nothing” is free? Mr. President, say what you mean, and mean what you say. I think what he really means to say is, nothing is free... for the American taxpayer.
Yahoo news: “...Obama urged people not to ask the federal and state governments to cut taxes and improve services at the same time. 'At some point you've got to make some choices,' he said.”
My response: Right. Everyone should “make some choices,” sacrifices, in other words, except the local, state and federal governments. We shouldn't expect THEM to make tough choices, just the people who are already suffering; the loyal, hard working people who are paying their taxes. What choices do they have the ABILITY to make?
Yahoo news: "We are not always going to be right," he said. "And I don't want everybody disappointed if we make a mistake here or there."
My response: “...here or there”? How many “earmarks” were in the “stimulus” package? 9000? Can you say “disappointed by government,” boys and girls? I can. I've been disappointed eight thousand more times in one bill from the Obama administration, than I was in four years of Bush's time in office. I didn't agree with that man on many things. But this “stimulus” package has more cronyism and pork than a mafia-run slaughterhouse. They've treated the stimulus package not as an opportunity to make genuine strides in an economic downturn, but rather as an opportunity to get their back burner pet projects paid in full. The ridiculousness that is bound to come to light in this bill will drive down the president's popularity numbers in a hurry if this kind of spending continues.
So, this time at least, my cynicism seems to be justified. I picked apart this story like I pick apart lots of wire news stories. But this time around, I decided to blog about it, rather than just kvetch about it.
Thursday, March 12, 2009
Ed Barnett, Hero, Takes First Shot Over Parasites' Taxes Bow
In a verbatim transcript I've just received from an online newsletter, the very first rumblings of what I've been expecting to see, or should I say waiting and wanting to see, for some time now, have been made perfectly public. A letter sent to the IRS from Ed Barnett of Wichita Falls, Texas, articulates very well what I think many Americans feel about our tax system and ultimately the true nature of our (or, dare I say, any) government. Ed wrote:
"Dear IRS,
I'm sorry to inform you that I'm not going to be able to pay the taxes owed on April 15th, but all is not lost. I paid these taxes:
Accounts receivable tax, building permit tax, CDL tax, corporate income tax, dog license tax, federal income tax, unemployment tax, gas tax, hunting license tax, fishing license tax, waterfowl stamp tax, inheritance tax, inventory tax, liquor tax, luxury tax, Medicare tax, city tax, school and county property tax up to 33% the last four years. Real estate tax, Social Security tax, road use tax, toll road tax, state and city sales tax, recreational vehicle tax, sales franchise tax, state unemployment tax, federal excise tax, telephone tax, telephone federal state and local surcharge tax, telephone minimum usage surcharge tax, telephone state and local tax, utility tax, vehicle tax, registration tax, capital gains tax, lease severance tax, oil and gas assessment tax, Colorado property tax, Texas, Colorado, Wyoming, Oklahoma, Mexico sales tax and many more I can't recall and I've run out of space and money.
When you do not receive my check April 15th, just know that it was an honest mistake. Please treat me the same way you've treated Congressman Charlie Rangel, Chris Dodd, Barney Frank, ex-congressman Tom Daschle and, of course, your boss, Timothy Geithner. No penalties, no interest.
PS, I'll make at least a partial payment as soon as I get my stimulus check.
Ed Barnett, Wichita Falls.”
Bravo, Ed. Bravo. Bravo. YOU are the true, original spirit of the first Americans to set foot on this land. They don't control you. You control them. They answer to you.
Every day, I more firmly believe that this administration is going to tighten its own noose to the point of no return, and that taxes revolts are just one early symptom of a much bigger and growing problem. That problem, in my humble opinion, is the distance between who we say we are, and who we actually are and what we really stand for. Whether they will admit it or not, all Americans are fiscal conservatives.
These kinds of letters truly please me. And I'm glad he's from Texas.
"Dear IRS,
I'm sorry to inform you that I'm not going to be able to pay the taxes owed on April 15th, but all is not lost. I paid these taxes:
Accounts receivable tax, building permit tax, CDL tax, corporate income tax, dog license tax, federal income tax, unemployment tax, gas tax, hunting license tax, fishing license tax, waterfowl stamp tax, inheritance tax, inventory tax, liquor tax, luxury tax, Medicare tax, city tax, school and county property tax up to 33% the last four years. Real estate tax, Social Security tax, road use tax, toll road tax, state and city sales tax, recreational vehicle tax, sales franchise tax, state unemployment tax, federal excise tax, telephone tax, telephone federal state and local surcharge tax, telephone minimum usage surcharge tax, telephone state and local tax, utility tax, vehicle tax, registration tax, capital gains tax, lease severance tax, oil and gas assessment tax, Colorado property tax, Texas, Colorado, Wyoming, Oklahoma, Mexico sales tax and many more I can't recall and I've run out of space and money.
When you do not receive my check April 15th, just know that it was an honest mistake. Please treat me the same way you've treated Congressman Charlie Rangel, Chris Dodd, Barney Frank, ex-congressman Tom Daschle and, of course, your boss, Timothy Geithner. No penalties, no interest.
PS, I'll make at least a partial payment as soon as I get my stimulus check.
Ed Barnett, Wichita Falls.”
Bravo, Ed. Bravo. Bravo. YOU are the true, original spirit of the first Americans to set foot on this land. They don't control you. You control them. They answer to you.
Every day, I more firmly believe that this administration is going to tighten its own noose to the point of no return, and that taxes revolts are just one early symptom of a much bigger and growing problem. That problem, in my humble opinion, is the distance between who we say we are, and who we actually are and what we really stand for. Whether they will admit it or not, all Americans are fiscal conservatives.
These kinds of letters truly please me. And I'm glad he's from Texas.
Thursday, February 26, 2009
El gobierno De Islandia Comete Atrocidades Con Su Economía
Recientemente recibimos la noticia del colapso de la economía de Islandia, y la caída posterior de su gobierno. He leído artículos de más de un comentarista que describen dichos eventos como el legendario “canario en la mina.” O sea acontecimientos que todavía no se hacen presentes en otros gobiernos alrededor del mundo pero que por ahí va la cosa. Estoy totalmente de acuerdo. Es un diagnóstico excelente. Islandia es un ejemplo claro de lo que otros gobiernos deben evitar en esta época de problemas de crédito, planes de rescates financieros, y reveses económicos en general. En resumen, los gobiernos deben alejarse del sector privado, y dejar tranquila la economía de la gente.Para aclarar lo que ocurrió en Islandia voy a hacer uso de una línea de tiempo de lo que sucedió exactamente en las últimas dos décadas y cómo los islandeses se metieron en este desastre financiero.
Línea de tiempo
2001 Bancos de Islandia se expanden rápidamente tras la desregulación de su mercado financiero doméstico.
2007 El Producto Interno Bruto de Islandia crece a €8.5 mil millones, o $10.8 miles de millones.
1990's – 2008: El gasto del gobierno en programas públicos rebasa el 42 por ciento del PIB ($4.53 mil millones).
Abril, 2008: El sector privado de la banca ha acumulado más del 80 por ciento de la deuda externa.
Septiembre 15, 2008: Lehman Brothers busca protección en Chapter 11 contra sus acreedores.
Septiembre, 2008: La divisa de Islandia, la Króna, pierde más de 35 por ciento de su valor contra el Euro.
--- La inflación pasa del 14 por ciento.
--- Las tasas de interés suben a un 15.5 por ciento para detener la inflación.
--- Las autoridades de Islandia solicitan un préstamo por $2 mil millones de dólares al Fondo Monetario Internacional.
--- Las autoridades de Islandia piden un préstamo de $4 mil millones a cuatro de sus vecinos escandinavos.
Septiembre 29, El gobierno de Islandia nacionaliza al banco Glitnir Bank, con una participación de un 75 por ciento en la moribunda empresa.
--- Las acciones de Glitnir Bank caen estrepitosamente.
--- La Króna empieza a perder valor.
Octubre, Los tres bancos principales en Islandia son investigados y se les encontraron pasivos doce veces mayores al Producto Interno Bruto de Islandia.
Octubre 6, El gobierno de Islandia vincula la Króna al mismo valor que el Euro.
Octubre 7, el Banco Central de Islandia anuncia un valor de divisa para la Króna, a sabiendas que no tiene suficientes fondos para entrar a los mercados internacionales de divisas.
--- La Króna de devalúa estrepitosamente.
--- El banco Landsbanki Bank es nacionalizado.
--- El gobierno de Islandia acuerda otorgar a Kaupthing Bank un préstamo de €500 millones, equivalente a la mitad del PIB de Islandia. Entre los programas de gasto público y el nuevo préstamo, la cantidad total que el gobierno debe ahora constituye un 92 por ciento del PIB del país. Si los pasivos de los dos bancos recientemente nacionalizados se incluyen en el total de la deuda, el gobierno debe ahora 715% de su PIB.
Oct. 8, En programas de televisión británicos se discuten la solvencia económica de Kaupthing Bank. Las autoridades embargan los activos extranjeros de Kaupthing Bank y los transfieren al banco holandés ING.
Islandia entra en pánico sobre su moneda y culpa al Primer Ministro Británico Gordon Brown, y del embargo de los activos del banco Kaupthing Bank.
El Banco Central abandona su intento de vincular la Króna al Euro. Es el período más breve de vinculación en la historia – ocho horas.
Octubre 9, El banco Kaupthing Bank es nacionalizado. Es el banco más grande de Islandia. La deuda del gobierno asciende ahora al 1,315% de su PIB.
La compra-venta de la Króna se viene abajo.
Octubre 10, El Banco Central de Islandia pone restricciones a la compra de divisas extranjeras dentro de su territorio.
Octubre 15, se llevan a cabo subastas temporales de divisas para facilitar el comercio internacional. A mediados de Octubre, las reservas de divisas internacionales de Islandia bajan $289 millones de dólares.
En Noviembre, 2008, la tasa de intercambio real baja a su nivel más bajo en treinta años.
El 3 de Diciembre, la última subasta de divisa extranjera se lleva a cabo.
El 26 de Enero del 2009, el gobierno de Islandia se colapsa.
Este escenario completo se dio como si fuera una escena en cámara lenta de una película de terror. Las autoridades cometieron error tras error en sus intentos por contener lo que no se podía detener.
En este drama, hubo abundancia de errores
Primero, el gobierno de Islandia gastó la increíble cantidad de un 42 por ciento del PIB de su economía, y se los gastó principalmente en infraestructura. Si bien es cierto que tal cantidad de gasto resultará en buenos caminos, puentes y edificios públicos (si es que se lo gastan de manera eficiente), ultimadamente le deja muy poco espacio al gobierno para maniobrar en caso de que salgan imprevistos en su economía. Tras otorgar más de un 40 por ciento de lo que ganan, la gente de Islandia van a sentir más que un piquetito si sus impuestos suben, o su moneda se devalúa repentinamente – o ambos casos. En todo caso, no dejaron espacio en sus cálculos en caso de emergencias.
Segundo, el Banco Central de Islandia, para colmo de males, le dio paridad de uno a uno al valor de su divisa, la Króna, con una divisa externa, el Euro, mientras se encontraba justo en medio de una crisis de divisas. Al principio, esto parecía razonable. El Euro ya se ha establecido, se intercambia y es estable. Pero hacer pruebas debe dejarse para tiempos de prosperidad. Contrario a lo que se piensa comúnmente, en la economía no hay que tomar medidas desesperadas. Cuando la situación se vuelve desesperante, hay que regresar con renovados bríos a la conservación fiscal. Los tiempos de desesperación nos exigen tomar medidas que funcionen sin falta. Para empeorar las cosas, el gobierno entró de lleno al mercado internacional de divisas a sabiendas que no tenía reservas adecuadas en su banco central. Aquí podemos ver una reacción de desesperación. Es claro que el gobierno no tenía respuestas.
Tercero, en el peor de los casos, el gobierno de Islandia nacionalizó los tres bancos privados más grandes del país, a pesar de que era bien sabido que los bancos tenían en su haber pasivos equivalentes a doce veces el PIB de Islandia. Esto es una estupidez ostensiblemente. Si, tú, como individuo, ves que el dinero que tienes se te está devaluando rápidamente; ves que tu situación económica está precaria, y ves que ya debes más de lo que puedes pagar o calcular, lo último que necesitas o quieres es endeudarte más. No es diferente a nivel gobierno. Mezcla todos estos eventos, y el gobierno de Islandia parece que perdió a todos sus líderes de un jalón. Más bien esas autoridades se volvieron los Tres Chiflados. Pero el argumento contra estas acciones va mucho más allá que solamente el ser conservador fiscalmente hablando. Esta historia tiene una moraleja, y es extraordinariamente importante.
Bienvenido a Islandia - Esclavo
Los gobiernos transfieren deudas privadas al público en general todo el tiempo. Estamos haciendo lo mismo aquí en Estados Unidos. Nuestros bancos, nuestras empresas de fondos mutuos, nuestras armadoras automotrices, nuestros bancos hipotecarios, etc. – están chupándose dólares de los contribuyentes a una velocidad espeluznante, y el público está furioso. Y con justa razón. Aunque la mayoría de la gente, me imagino, no llegan a digerir de lleno el por qué este tipo de escenario es tan ofensivo, hay una muy buena razón para enojarse. Tú, el contribuyente, te has convertido en la bestia de carga de los fracasos de otros. Son irresponsables, desorganizados y fracasan pero resultan ganadores al final. Tú eres responsable, conservador y pierdes.
Esto significa que el gobierno ha decidido que tú, como persona responsable, no tienes nada que decidir a la hora de aplicar tu esfuerzo productivo. Tus derechos a tu propio esfuerzo son menos importantes que la percepción de bienestar de otro. Cuando un ser humano no tiene derecho a decidir cómo se va a usar su esfuerzo, se le puede describir como un esclavo. Y la esclavitud, de cualquier tipo, es una aberración. Pero ésta no se detiene allí.
El escenario de esclavitud creada por el gobierno se realiza bajo la consigna de que se están creando empleos, se está previniendo el desastre, y realizan estas actividades de confiscación de tus ingresos “por el bien del pueblo.” No hay nada que esté más lejos de la verdad (si estás en desacuerdo, lee de nuevo la línea de tiempo arriba mencionada). Simplemente están disfrazando el crecimiento de la burocracia y el parasitismo mientras hablan al mismo tiempo del bien que hacen por intervenir en la economía. Te confiscan tu salario, y luego intentan públicamente de justificar sus actos. Lo que es triste es que hay mucha gente inocente en el mundo que todavía les cree.
El bien común no existe – a la fuerza
Lo irónico del asunto es que cuando Islandia o cualquier otro gobierno en circunstancias similares procuran el dinero de la gente, suceden tres cosas invariablemente. Primero, se le pide dinero a los miembros más productivos de la sociedad. Segundo, esos millones se les otorgan a quienes han fallado -- para prevenir su fracaso. Tercero, se crea una burocracia para confiscar y distribuir ese dinero. Finalmente, y más importante, si no hubiera habido intervención en primer lugar, ninguna de estas circunstancias se hubieran presentado.
O sea, no habría necesidad de producir esclavos económicos. Así que bajo pretexto de mejorar las vidas del electorado, han tenido éxito en empeorarles la vida. Le han aumentado la carga que los individuos, que no tuvieron nada que ver con los bancos de Islandia, y ahora resulta que son quienes le deben pagar al gobierno.
Así es cómo Islandia ha creado sus propios problemas. Antes de que los bancos fueran nacionalizados, las deudas enormes que había en los bancos Glitnir, Landsbanki y Kaupthing eran enteramente privadas. Los contribuyentes no le debían nada a los bancos por su rápido crecimiento y su falta de responsabilidad fiscal. El recurso que los clientes de los bancos antes de su nacionalización era la confiscación, lo cual Inglaterra realizó, y demandas legales. Pero todo eso cambia cuando los bancos reciben recursos públicos. Lo que de una manera hubiera sido una corrección normal, aunque dolorosa, del mercado libre, que se limitaba a una industria solamente, ahora se ha convertido en una aflicción nacional que se llega a sentir por la población entera. El argumento a favor de la intervención se centra en que la gente “necesita” a los bancos y el crédito que otorgan, y los trabajos que se perderían en la industria cuando se deja quebrar a esas empresas. Y todo esto es verdad. Sin embargo...
Si un banco en Islandia hubiera fallado, hubiera ahora dos bancos más solventes para recoger las piezas del que fracasó. Si dos fracasan, entonces habría uno bien librado, y más solvente para brindar los productos y servicios al país. Y en caso de que los tres se vinieran abajo, los bancos del extranjero brindarían el crédito necesario. El argumento de ser el “banquero de último recurso” no tiene sentido, puesto que Islandia tiene un banco – El Banco Central de Islandia. Siempre y cuando todas las deudas privadas se mantengan lejos de la ciudadanía, un banco central puede imprimir dinero, manipular tasas de interés, o hacer uso de todas las actividades para que el país entero no sienta el dolor del sector bancario. En una economía de libre mercado que sea de verdad libre para responder a las necesidades de sus clientes, los malos tiempos pasan rápidamente. Donde haya dinero que ganar, HABRA personas que satisfagan las necesidades. Pero esto no sucede en un mercado ultra-regulado. Esos mercados se llevan más tiempo en recuperarse por las restricciones arbitrarias del mercado.
Fue de esta manera que las fuerzas todopoderosas del gobierno de Islandia se convirtieron en un animal extraordinariamente egocéntrico. Se creyeron que eran más listos que el mercado libre. Y el “engreimiento fatal” del que el economista ganador del Nóbel Frederick Von Hayek escribiera hace años se ha consolidado una vez más. Ninguna autoridad de gobierno tiene suficiente información a la mano para manipular con éxito una economía completa. La mejor medida es dejarlo solo. Entre menos regules a una población, mayores son las oportunidades que tienen para que construyan su propia prosperidad.
El gobierno, en este ejemplo, ha sido el problema en vez de la solución. Desafortunadamente para la población de Estados Unidos, la administración actual parece compartir las ideas de los líderes de Islandia – es decir piensan que si logramos manipular la economía lo suficiente, si hacemos un trabajo justo a la hora de redistribuir, entonces podemos controlar a la economía. Así que echa un vistazo.
Si ves a algún canario batallando por respirar, agarra tus dólares, cámbialos por oro, y vete hacia donde viene la luz, antes de que te quedes atorado en la entrada de la mina.
Línea de tiempo
2001 Bancos de Islandia se expanden rápidamente tras la desregulación de su mercado financiero doméstico.
2007 El Producto Interno Bruto de Islandia crece a €8.5 mil millones, o $10.8 miles de millones.
1990's – 2008: El gasto del gobierno en programas públicos rebasa el 42 por ciento del PIB ($4.53 mil millones).
Abril, 2008: El sector privado de la banca ha acumulado más del 80 por ciento de la deuda externa.
Septiembre 15, 2008: Lehman Brothers busca protección en Chapter 11 contra sus acreedores.
Septiembre, 2008: La divisa de Islandia, la Króna, pierde más de 35 por ciento de su valor contra el Euro.
--- La inflación pasa del 14 por ciento.
--- Las tasas de interés suben a un 15.5 por ciento para detener la inflación.
--- Las autoridades de Islandia solicitan un préstamo por $2 mil millones de dólares al Fondo Monetario Internacional.
--- Las autoridades de Islandia piden un préstamo de $4 mil millones a cuatro de sus vecinos escandinavos.
Septiembre 29, El gobierno de Islandia nacionaliza al banco Glitnir Bank, con una participación de un 75 por ciento en la moribunda empresa.
--- Las acciones de Glitnir Bank caen estrepitosamente.
--- La Króna empieza a perder valor.
Octubre, Los tres bancos principales en Islandia son investigados y se les encontraron pasivos doce veces mayores al Producto Interno Bruto de Islandia.
Octubre 6, El gobierno de Islandia vincula la Króna al mismo valor que el Euro.
Octubre 7, el Banco Central de Islandia anuncia un valor de divisa para la Króna, a sabiendas que no tiene suficientes fondos para entrar a los mercados internacionales de divisas.
--- La Króna de devalúa estrepitosamente.
--- El banco Landsbanki Bank es nacionalizado.
--- El gobierno de Islandia acuerda otorgar a Kaupthing Bank un préstamo de €500 millones, equivalente a la mitad del PIB de Islandia. Entre los programas de gasto público y el nuevo préstamo, la cantidad total que el gobierno debe ahora constituye un 92 por ciento del PIB del país. Si los pasivos de los dos bancos recientemente nacionalizados se incluyen en el total de la deuda, el gobierno debe ahora 715% de su PIB.
Oct. 8, En programas de televisión británicos se discuten la solvencia económica de Kaupthing Bank. Las autoridades embargan los activos extranjeros de Kaupthing Bank y los transfieren al banco holandés ING.
Islandia entra en pánico sobre su moneda y culpa al Primer Ministro Británico Gordon Brown, y del embargo de los activos del banco Kaupthing Bank.
El Banco Central abandona su intento de vincular la Króna al Euro. Es el período más breve de vinculación en la historia – ocho horas.
Octubre 9, El banco Kaupthing Bank es nacionalizado. Es el banco más grande de Islandia. La deuda del gobierno asciende ahora al 1,315% de su PIB.
La compra-venta de la Króna se viene abajo.
Octubre 10, El Banco Central de Islandia pone restricciones a la compra de divisas extranjeras dentro de su territorio.
Octubre 15, se llevan a cabo subastas temporales de divisas para facilitar el comercio internacional. A mediados de Octubre, las reservas de divisas internacionales de Islandia bajan $289 millones de dólares.
En Noviembre, 2008, la tasa de intercambio real baja a su nivel más bajo en treinta años.
El 3 de Diciembre, la última subasta de divisa extranjera se lleva a cabo.
El 26 de Enero del 2009, el gobierno de Islandia se colapsa.
Este escenario completo se dio como si fuera una escena en cámara lenta de una película de terror. Las autoridades cometieron error tras error en sus intentos por contener lo que no se podía detener.
En este drama, hubo abundancia de errores
Primero, el gobierno de Islandia gastó la increíble cantidad de un 42 por ciento del PIB de su economía, y se los gastó principalmente en infraestructura. Si bien es cierto que tal cantidad de gasto resultará en buenos caminos, puentes y edificios públicos (si es que se lo gastan de manera eficiente), ultimadamente le deja muy poco espacio al gobierno para maniobrar en caso de que salgan imprevistos en su economía. Tras otorgar más de un 40 por ciento de lo que ganan, la gente de Islandia van a sentir más que un piquetito si sus impuestos suben, o su moneda se devalúa repentinamente – o ambos casos. En todo caso, no dejaron espacio en sus cálculos en caso de emergencias.
Segundo, el Banco Central de Islandia, para colmo de males, le dio paridad de uno a uno al valor de su divisa, la Króna, con una divisa externa, el Euro, mientras se encontraba justo en medio de una crisis de divisas. Al principio, esto parecía razonable. El Euro ya se ha establecido, se intercambia y es estable. Pero hacer pruebas debe dejarse para tiempos de prosperidad. Contrario a lo que se piensa comúnmente, en la economía no hay que tomar medidas desesperadas. Cuando la situación se vuelve desesperante, hay que regresar con renovados bríos a la conservación fiscal. Los tiempos de desesperación nos exigen tomar medidas que funcionen sin falta. Para empeorar las cosas, el gobierno entró de lleno al mercado internacional de divisas a sabiendas que no tenía reservas adecuadas en su banco central. Aquí podemos ver una reacción de desesperación. Es claro que el gobierno no tenía respuestas.
Tercero, en el peor de los casos, el gobierno de Islandia nacionalizó los tres bancos privados más grandes del país, a pesar de que era bien sabido que los bancos tenían en su haber pasivos equivalentes a doce veces el PIB de Islandia. Esto es una estupidez ostensiblemente. Si, tú, como individuo, ves que el dinero que tienes se te está devaluando rápidamente; ves que tu situación económica está precaria, y ves que ya debes más de lo que puedes pagar o calcular, lo último que necesitas o quieres es endeudarte más. No es diferente a nivel gobierno. Mezcla todos estos eventos, y el gobierno de Islandia parece que perdió a todos sus líderes de un jalón. Más bien esas autoridades se volvieron los Tres Chiflados. Pero el argumento contra estas acciones va mucho más allá que solamente el ser conservador fiscalmente hablando. Esta historia tiene una moraleja, y es extraordinariamente importante.
Bienvenido a Islandia - Esclavo
Los gobiernos transfieren deudas privadas al público en general todo el tiempo. Estamos haciendo lo mismo aquí en Estados Unidos. Nuestros bancos, nuestras empresas de fondos mutuos, nuestras armadoras automotrices, nuestros bancos hipotecarios, etc. – están chupándose dólares de los contribuyentes a una velocidad espeluznante, y el público está furioso. Y con justa razón. Aunque la mayoría de la gente, me imagino, no llegan a digerir de lleno el por qué este tipo de escenario es tan ofensivo, hay una muy buena razón para enojarse. Tú, el contribuyente, te has convertido en la bestia de carga de los fracasos de otros. Son irresponsables, desorganizados y fracasan pero resultan ganadores al final. Tú eres responsable, conservador y pierdes.
Esto significa que el gobierno ha decidido que tú, como persona responsable, no tienes nada que decidir a la hora de aplicar tu esfuerzo productivo. Tus derechos a tu propio esfuerzo son menos importantes que la percepción de bienestar de otro. Cuando un ser humano no tiene derecho a decidir cómo se va a usar su esfuerzo, se le puede describir como un esclavo. Y la esclavitud, de cualquier tipo, es una aberración. Pero ésta no se detiene allí.
El escenario de esclavitud creada por el gobierno se realiza bajo la consigna de que se están creando empleos, se está previniendo el desastre, y realizan estas actividades de confiscación de tus ingresos “por el bien del pueblo.” No hay nada que esté más lejos de la verdad (si estás en desacuerdo, lee de nuevo la línea de tiempo arriba mencionada). Simplemente están disfrazando el crecimiento de la burocracia y el parasitismo mientras hablan al mismo tiempo del bien que hacen por intervenir en la economía. Te confiscan tu salario, y luego intentan públicamente de justificar sus actos. Lo que es triste es que hay mucha gente inocente en el mundo que todavía les cree.
El bien común no existe – a la fuerza
Lo irónico del asunto es que cuando Islandia o cualquier otro gobierno en circunstancias similares procuran el dinero de la gente, suceden tres cosas invariablemente. Primero, se le pide dinero a los miembros más productivos de la sociedad. Segundo, esos millones se les otorgan a quienes han fallado -- para prevenir su fracaso. Tercero, se crea una burocracia para confiscar y distribuir ese dinero. Finalmente, y más importante, si no hubiera habido intervención en primer lugar, ninguna de estas circunstancias se hubieran presentado.
O sea, no habría necesidad de producir esclavos económicos. Así que bajo pretexto de mejorar las vidas del electorado, han tenido éxito en empeorarles la vida. Le han aumentado la carga que los individuos, que no tuvieron nada que ver con los bancos de Islandia, y ahora resulta que son quienes le deben pagar al gobierno.
Así es cómo Islandia ha creado sus propios problemas. Antes de que los bancos fueran nacionalizados, las deudas enormes que había en los bancos Glitnir, Landsbanki y Kaupthing eran enteramente privadas. Los contribuyentes no le debían nada a los bancos por su rápido crecimiento y su falta de responsabilidad fiscal. El recurso que los clientes de los bancos antes de su nacionalización era la confiscación, lo cual Inglaterra realizó, y demandas legales. Pero todo eso cambia cuando los bancos reciben recursos públicos. Lo que de una manera hubiera sido una corrección normal, aunque dolorosa, del mercado libre, que se limitaba a una industria solamente, ahora se ha convertido en una aflicción nacional que se llega a sentir por la población entera. El argumento a favor de la intervención se centra en que la gente “necesita” a los bancos y el crédito que otorgan, y los trabajos que se perderían en la industria cuando se deja quebrar a esas empresas. Y todo esto es verdad. Sin embargo...
Si un banco en Islandia hubiera fallado, hubiera ahora dos bancos más solventes para recoger las piezas del que fracasó. Si dos fracasan, entonces habría uno bien librado, y más solvente para brindar los productos y servicios al país. Y en caso de que los tres se vinieran abajo, los bancos del extranjero brindarían el crédito necesario. El argumento de ser el “banquero de último recurso” no tiene sentido, puesto que Islandia tiene un banco – El Banco Central de Islandia. Siempre y cuando todas las deudas privadas se mantengan lejos de la ciudadanía, un banco central puede imprimir dinero, manipular tasas de interés, o hacer uso de todas las actividades para que el país entero no sienta el dolor del sector bancario. En una economía de libre mercado que sea de verdad libre para responder a las necesidades de sus clientes, los malos tiempos pasan rápidamente. Donde haya dinero que ganar, HABRA personas que satisfagan las necesidades. Pero esto no sucede en un mercado ultra-regulado. Esos mercados se llevan más tiempo en recuperarse por las restricciones arbitrarias del mercado.
Fue de esta manera que las fuerzas todopoderosas del gobierno de Islandia se convirtieron en un animal extraordinariamente egocéntrico. Se creyeron que eran más listos que el mercado libre. Y el “engreimiento fatal” del que el economista ganador del Nóbel Frederick Von Hayek escribiera hace años se ha consolidado una vez más. Ninguna autoridad de gobierno tiene suficiente información a la mano para manipular con éxito una economía completa. La mejor medida es dejarlo solo. Entre menos regules a una población, mayores son las oportunidades que tienen para que construyan su propia prosperidad.
El gobierno, en este ejemplo, ha sido el problema en vez de la solución. Desafortunadamente para la población de Estados Unidos, la administración actual parece compartir las ideas de los líderes de Islandia – es decir piensan que si logramos manipular la economía lo suficiente, si hacemos un trabajo justo a la hora de redistribuir, entonces podemos controlar a la economía. Así que echa un vistazo.
Si ves a algún canario batallando por respirar, agarra tus dólares, cámbialos por oro, y vete hacia donde viene la luz, antes de que te quedes atorado en la entrada de la mina.
Thursday, February 19, 2009
Unmeasurable Job Growth
I've just visited Gregory Mankiw's blog again (If you don't, you should. It's one of the top 100 blogs listed by Technorati.com), and I'm very happy to see that in his post “Create or Save” he has clearly explained how politicized and convoluted the language surrounding the stimulus program has become. What he touches on is something I noticed just after Barack Obama was elected. He started using slightly different language when describing what his “stimulus” package would do.
(Incidentally, Mankiw is also using quotes to describe the “stimulus” program. For anyone not paying attention, I need to point out, this is a very telling sign of how this typically objective economist feels about the program.)
Obama began using the words “save jobs.” My observation was “how will we know?” How, exactly, do you measure “jobs saved”? Well, you can't. And people like Greg Mankiw most of all know how important that little piece of word smithing could become. He calls the language “an act of political genius.”
But I've always considered intelligence overrated. It's given us communism, fascism, Nazism, eugenics, political correctness, closed scientific and medical minds, centralized banking and a number of other serious social, intellectual and financial problems. A recent one was called Enron. AKA “the smartest people in the room.” More recently, though, it's produced artificially created billionaire Bernie Madoff. So much for intelligence. If honesty and open mindedness are to be considered the hallmarks of more average intelligence, I'll take average over the more insidious genius, or “political genius,” anytime.
Alright, digression over. I'm just pleased to see that someone else is impressed with how politically “savvy” Obama and his advisors are – already – and that someone else knows there is no proper metric that will give us anything close to measurable when deciding how many jobs have been “saved” - and wants to direct some attention toward it.
He also has a quick post called “Talking Down The Economy” that points out how Obama has been “fear mongering” regarding the economy.
And another post talks about “The End Of Welfare Reform As We Know It.” This is a strange thing for the democrats to focus on, especially since it was such a successful reform program for their democratic predecessor, Bill Clinton. What's most interesting, is that this “End” is hidden, in of all things, the “stimulus” bill.
(Incidentally, Mankiw is also using quotes to describe the “stimulus” program. For anyone not paying attention, I need to point out, this is a very telling sign of how this typically objective economist feels about the program.)
Obama began using the words “save jobs.” My observation was “how will we know?” How, exactly, do you measure “jobs saved”? Well, you can't. And people like Greg Mankiw most of all know how important that little piece of word smithing could become. He calls the language “an act of political genius.”
But I've always considered intelligence overrated. It's given us communism, fascism, Nazism, eugenics, political correctness, closed scientific and medical minds, centralized banking and a number of other serious social, intellectual and financial problems. A recent one was called Enron. AKA “the smartest people in the room.” More recently, though, it's produced artificially created billionaire Bernie Madoff. So much for intelligence. If honesty and open mindedness are to be considered the hallmarks of more average intelligence, I'll take average over the more insidious genius, or “political genius,” anytime.
Alright, digression over. I'm just pleased to see that someone else is impressed with how politically “savvy” Obama and his advisors are – already – and that someone else knows there is no proper metric that will give us anything close to measurable when deciding how many jobs have been “saved” - and wants to direct some attention toward it.
He also has a quick post called “Talking Down The Economy” that points out how Obama has been “fear mongering” regarding the economy.
And another post talks about “The End Of Welfare Reform As We Know It.” This is a strange thing for the democrats to focus on, especially since it was such a successful reform program for their democratic predecessor, Bill Clinton. What's most interesting, is that this “End” is hidden, in of all things, the “stimulus” bill.
Tuesday, February 17, 2009
Bailouts And Stimulus Programs Are Undemocratic
In a representative democracy you get what you vote for, or supposedly so. It's a fundamental tenet of democracy. Throw the switch; punch the paper; and your voting voice has been heard. You get what you, or rather, what the majority wants. But with bailouts and stimulus programs, that isn't the case.
When a company that supplies the buying public with the products and/or services that the public wants suddenly finds itself struggling for profitability, it, in essence, has received the votes of the majority. And in a free market, that company has only two options. Either it can change, and begin to provide the products that the majority wants; or it can be liquidated. Liquidation is simply the sale of the company, or parts of it, to other companies that have remained competitive. And if the company doesn't change enough, it will eventually go bankrupt, which is the same as a longer, slower, more painful liquidation.
But bailouts, “stimulus” programs, toxic asset reallocation programs, and all of their politically correct sounding cousins, are actually failures of the democratic process as it is applied to our economy. Our politicians, actually all of us, believe that the will of the people deserves to be heard through the power of the voting booth. Democracy is its own reward, because every single person of voting age in the country has a say in what direction they want the country to take. But for some reason, many of us conveniently overlook our hard earned dollars – our day-to-day livelihood – our wallets.
When you make a purchase, you are essentially “voting” for a particular product and/or service. When you go to the grocery store, you do this probably two or three hundred times – possibly a thousand times. You make one very specific selection for a product, not all by itself or with one or two other products, but in comparison to and over a number of others. And you do this for every selection you make. This same process goes on and on in every aspect of your life. The clothing store; the gas station; the hobby shop; the hardware store, etc. Thousands upon thousands of conscious and semi-conscious decisions are made with our hard earned dollars and what we desire most for ourselves. And all of our countrymen do the same.
So, arguably, which has the greater effect? Your day-to-day purchases, using your own money, which you have rightfully earned, or your once per four years chad production process? Voting for a politician, or group of politicians, gives the country a general direction. But when you vote, every day, with your own dollars, you give the entire economy a specific destination. You're telling not just the manufacturer of the product you purchase to “make more of this,” but you are also sending every other manufacturer the same signal – “do this.” The overall effect of our purchases gives us a far more concrete understanding of the desires of the people than the hopes we parlay from our votes for particular candidates. Best of all, we get to make such votes every day.
We tell certain auto manufacturers “make less of this,” and certain financial services suppliers “don't do that.” And as I mentioned, it's with our hard earned money. It's our most telling desire for a specific destination. People don't speak with their mouths; they speak with their wallets.
Interestingly, however, our general directioners often disagree with us. Despite having told myriad U.S. companies that we don't want what they have to offer, every day, our elected officials have chosen to bail them out with... the money we earn and have intentionally kept from them. This is akin to economic anti free will. It's the very antithesis of a free market, and the opposite of our stated desires for a specific destination in our economy.
The most pressing issue, though, is this: your dollar votes count more than your, or their, policy votes. First, because you have earned your money through your own time, energy and sweat. Your life. And second, because the American public plays a much greater role in the day-to-day activities of the economy than the government. They are not making the actual purchases. You are. In short, the economy doesn't belong to them; it belongs to you. They simply don't have the right to overrule your every day votes, no matter how many jobs they say they will "create" or "save."
If a laissez-faire economic system can be compared to our democratic political system, on the one hand our leadership would tell us they need to “control, control, control” the economy. But in our political system, the same leadership would tell us, all votes need to be counted. Why the disconnect? And which system gives us the more concrete ideas about what the people want?
So bailouts and stimulus programs, though they might make us feel a bit better and more secure, are the opposite of the principles our country was founded upon. They are undemocratic. And they deny what the people have stated they want as a specific economic destination for the country.
When a company that supplies the buying public with the products and/or services that the public wants suddenly finds itself struggling for profitability, it, in essence, has received the votes of the majority. And in a free market, that company has only two options. Either it can change, and begin to provide the products that the majority wants; or it can be liquidated. Liquidation is simply the sale of the company, or parts of it, to other companies that have remained competitive. And if the company doesn't change enough, it will eventually go bankrupt, which is the same as a longer, slower, more painful liquidation.
But bailouts, “stimulus” programs, toxic asset reallocation programs, and all of their politically correct sounding cousins, are actually failures of the democratic process as it is applied to our economy. Our politicians, actually all of us, believe that the will of the people deserves to be heard through the power of the voting booth. Democracy is its own reward, because every single person of voting age in the country has a say in what direction they want the country to take. But for some reason, many of us conveniently overlook our hard earned dollars – our day-to-day livelihood – our wallets.
When you make a purchase, you are essentially “voting” for a particular product and/or service. When you go to the grocery store, you do this probably two or three hundred times – possibly a thousand times. You make one very specific selection for a product, not all by itself or with one or two other products, but in comparison to and over a number of others. And you do this for every selection you make. This same process goes on and on in every aspect of your life. The clothing store; the gas station; the hobby shop; the hardware store, etc. Thousands upon thousands of conscious and semi-conscious decisions are made with our hard earned dollars and what we desire most for ourselves. And all of our countrymen do the same.
So, arguably, which has the greater effect? Your day-to-day purchases, using your own money, which you have rightfully earned, or your once per four years chad production process? Voting for a politician, or group of politicians, gives the country a general direction. But when you vote, every day, with your own dollars, you give the entire economy a specific destination. You're telling not just the manufacturer of the product you purchase to “make more of this,” but you are also sending every other manufacturer the same signal – “do this.” The overall effect of our purchases gives us a far more concrete understanding of the desires of the people than the hopes we parlay from our votes for particular candidates. Best of all, we get to make such votes every day.
We tell certain auto manufacturers “make less of this,” and certain financial services suppliers “don't do that.” And as I mentioned, it's with our hard earned money. It's our most telling desire for a specific destination. People don't speak with their mouths; they speak with their wallets.
Interestingly, however, our general directioners often disagree with us. Despite having told myriad U.S. companies that we don't want what they have to offer, every day, our elected officials have chosen to bail them out with... the money we earn and have intentionally kept from them. This is akin to economic anti free will. It's the very antithesis of a free market, and the opposite of our stated desires for a specific destination in our economy.
The most pressing issue, though, is this: your dollar votes count more than your, or their, policy votes. First, because you have earned your money through your own time, energy and sweat. Your life. And second, because the American public plays a much greater role in the day-to-day activities of the economy than the government. They are not making the actual purchases. You are. In short, the economy doesn't belong to them; it belongs to you. They simply don't have the right to overrule your every day votes, no matter how many jobs they say they will "create" or "save."
If a laissez-faire economic system can be compared to our democratic political system, on the one hand our leadership would tell us they need to “control, control, control” the economy. But in our political system, the same leadership would tell us, all votes need to be counted. Why the disconnect? And which system gives us the more concrete ideas about what the people want?
So bailouts and stimulus programs, though they might make us feel a bit better and more secure, are the opposite of the principles our country was founded upon. They are undemocratic. And they deny what the people have stated they want as a specific economic destination for the country.
Monday, February 16, 2009
A Funny Stimulus “Package” Metaphor
I've been listening to the critics of the stimulus program quite a lot lately, and I've noticed one metaphor that keeps creeping into the description of what the stimulus program is doing in its bare essence. The metaphor being used most is “the government takes money out of your left pocket, and puts it into your right pocket,” or vice versa. But I've been writing about this, and “spending multipliers,” and “tax multipliers,” etc, for some time, and I've come to realize that the metaphor isn't quite complete. It's missing that little something that makes it just a length or two or six more memorable. Or if you're someone like me, more memorable still.
The government can't take money out of your left pocket, and place it into your right pocket, without creating a bureaucracy in the middle to make sure it's all in position. Sooo, exactly, what does that make them? The dic%$ in the middle! We get our pockets ransacked, while they give us the shaft.
Hey, let's play a game of “right pocket, left pocket, who's the dic% in the middle?”
Thanks, dic%$, now stop stroking me, and get your hands, uh, multipliers out of my pockets.
This “stimulus package” might make us feel good because we're “doing something;” but we'll be lucky if we get to see a tiny, little stimulus-induced bump in our, um, economy at all.
Biggest and best "stimulating" regards,
Your left fu#*ing pocket
The government can't take money out of your left pocket, and place it into your right pocket, without creating a bureaucracy in the middle to make sure it's all in position. Sooo, exactly, what does that make them? The dic%$ in the middle! We get our pockets ransacked, while they give us the shaft.
Hey, let's play a game of “right pocket, left pocket, who's the dic% in the middle?”
Thanks, dic%$, now stop stroking me, and get your hands, uh, multipliers out of my pockets.
This “stimulus package” might make us feel good because we're “doing something;” but we'll be lucky if we get to see a tiny, little stimulus-induced bump in our, um, economy at all.
Biggest and best "stimulating" regards,
Your left fu#*ing pocket
Wednesday, February 11, 2009
A Lost Decade For The Democrats
As we enter 2009 in tumult and worry, it occurred to me that we are all lucky enough to bear witness to either something horrible, or something fantastic – depending on your political point of view. We are seeing the birth of the most painful “stimulus” package ever conceived. We get to watch as a new President, carrying the hopes and dreams of millions, sinks or swims with one of the largest political gambles any President has ever had the displeasure to make. And possibly, just possibly, we are watching a new kind of lost decade – one that the democrats are arrogantly marching right into.
The stimulus package is a new kind of beast. It hasn't been tried on this scale in the United States. And by most estimates, the 800+ billion dollars that will go into the economy shortly is only the first installment of what appears to be a new kind of pay-as-you-go plan. As I write this, I've received word that between the Senate, The Federal Reserve and The Treasury, a mind boggling 3 trillion dollars will be poured into the economy in an attempt to “prime the pump” of our struggling financial situation. It's all been pieced together with minds toward expanding government, especially pork spending and government bureaucracy.
Our leadership is under the impression that by pursuing more of what caused our problems, on a larger and broader scale, our problems – namely, government intervention in the economy and massive credit bubbles - will naturally go away. So far, however, not a single politician or economist has made a clearly logical case as to how “stimulating” more government, or a larger credit binge, could be successful pursuits in correcting the problems caused by earlier intervention and credit binges. It makes me think of a good analogy. Can you cure obesity by using forced feeding as your remedy? If you're overweight, the correct action is to reverse course, not gobble down more in the hope you will get skinny again.
But what our good President, shouldering arguably the second largest economic burden in history is doing, is walking head-long into the easy-breezy whisperings of the Keynesians. These are the people who still believe that multi-trillion dollar, multi-national economies can be controlled with the flick of a few tiny switches. They are the people I refer to as “today's keepers of tomorrow's mistakes.” They refuse to take their heads out of their economic sand traps and take a good, solid look at reality. And that, I believe, will be their downfall. The new President is in a rather impossible situation. If he and his democrat followers succeed, they will have passed on a legacy to future generations that will most surely be detested. They will have crated at least two generations that will feel they are slaves to the mistakes of their forefathers. And if they fail, they will take today's economy down with them; and other economies, in other parts of the world, are sure to follow. The spending street they are running madly down right now ends in a solid concrete wall. The only difference is how long it takes the democrats to get there. Either this year, or several years hence. Either way, the dems are going to lose a great deal of political clout. As the song goes, “the road to hell is paved with good intentions.”
But there are people like me, watching from the sidelines, who spend nights in front of the television squirming and twisting with extraordinary discomfort. We think the government has become absurd. We think the economy has become absurd. And most of all, we can't believe how single-minded and ignorant our politicians have become. More intervention is not the answer. More economic freedom is what we need now more than ever. Regulation and intervention is the way to stifle economies, not resuscitate them.
So the arrogance and impossibility the dems find themselves stuck in right now makes people like myself squirm and smile. I know that one way or another, the democrats are tying their own nooses. The cure for what ails us cannot be the same as its cause. And that leaves me with only one course of action as a possibility – the return of conservatism.
But being a Libertarian, what I want to see most is the return not of Republican small government, but instead, the return of what government truly should be – responsible only for the things that individuals cannot possibly provide for themselves. The foundation of law, and its enforcement; disaster response; roads, highways and bridges; fire protection; national and international intelligence and defence, and a few other things come to mind. But those are debatable. At any rate, the present economic fiasco leads me to believe that only conservatism can be in our immediate future. I even think that the democrats could suffer a “lost decade” of their own, Japanese-style.
So I would like to say to President Obama: Mr. President, you are making the largest economic mistake in American history. Please stop now. It's going to cost you and your party dearly.
If you don't, I would like to say that the Libertarians are coming. THE LIBERTARIANS ARE COMING!
The stimulus package is a new kind of beast. It hasn't been tried on this scale in the United States. And by most estimates, the 800+ billion dollars that will go into the economy shortly is only the first installment of what appears to be a new kind of pay-as-you-go plan. As I write this, I've received word that between the Senate, The Federal Reserve and The Treasury, a mind boggling 3 trillion dollars will be poured into the economy in an attempt to “prime the pump” of our struggling financial situation. It's all been pieced together with minds toward expanding government, especially pork spending and government bureaucracy.
Our leadership is under the impression that by pursuing more of what caused our problems, on a larger and broader scale, our problems – namely, government intervention in the economy and massive credit bubbles - will naturally go away. So far, however, not a single politician or economist has made a clearly logical case as to how “stimulating” more government, or a larger credit binge, could be successful pursuits in correcting the problems caused by earlier intervention and credit binges. It makes me think of a good analogy. Can you cure obesity by using forced feeding as your remedy? If you're overweight, the correct action is to reverse course, not gobble down more in the hope you will get skinny again.
But what our good President, shouldering arguably the second largest economic burden in history is doing, is walking head-long into the easy-breezy whisperings of the Keynesians. These are the people who still believe that multi-trillion dollar, multi-national economies can be controlled with the flick of a few tiny switches. They are the people I refer to as “today's keepers of tomorrow's mistakes.” They refuse to take their heads out of their economic sand traps and take a good, solid look at reality. And that, I believe, will be their downfall. The new President is in a rather impossible situation. If he and his democrat followers succeed, they will have passed on a legacy to future generations that will most surely be detested. They will have crated at least two generations that will feel they are slaves to the mistakes of their forefathers. And if they fail, they will take today's economy down with them; and other economies, in other parts of the world, are sure to follow. The spending street they are running madly down right now ends in a solid concrete wall. The only difference is how long it takes the democrats to get there. Either this year, or several years hence. Either way, the dems are going to lose a great deal of political clout. As the song goes, “the road to hell is paved with good intentions.”
But there are people like me, watching from the sidelines, who spend nights in front of the television squirming and twisting with extraordinary discomfort. We think the government has become absurd. We think the economy has become absurd. And most of all, we can't believe how single-minded and ignorant our politicians have become. More intervention is not the answer. More economic freedom is what we need now more than ever. Regulation and intervention is the way to stifle economies, not resuscitate them.
So the arrogance and impossibility the dems find themselves stuck in right now makes people like myself squirm and smile. I know that one way or another, the democrats are tying their own nooses. The cure for what ails us cannot be the same as its cause. And that leaves me with only one course of action as a possibility – the return of conservatism.
But being a Libertarian, what I want to see most is the return not of Republican small government, but instead, the return of what government truly should be – responsible only for the things that individuals cannot possibly provide for themselves. The foundation of law, and its enforcement; disaster response; roads, highways and bridges; fire protection; national and international intelligence and defence, and a few other things come to mind. But those are debatable. At any rate, the present economic fiasco leads me to believe that only conservatism can be in our immediate future. I even think that the democrats could suffer a “lost decade” of their own, Japanese-style.
So I would like to say to President Obama: Mr. President, you are making the largest economic mistake in American history. Please stop now. It's going to cost you and your party dearly.
If you don't, I would like to say that the Libertarians are coming. THE LIBERTARIANS ARE COMING!
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