Archive for the ‘Economics’ Category

The Fiscal Cliff

Saturday, December 29th, 2012

As we all wait to either go over the fiscal cliff or get some last minute deal to half way avert it, I would like to go back to my posting on 40 years of Roe v. Wade and impending judgment.  My own view is that this game of chicken over the fiscal cliff is far more dangerous than most people imagine owing to the underlying weakness of the national and world economy.  Here is how I think things will play out.

First, it is obvious to me that President Obama is focused on the political aspect of the cliff, i.e., how he can use it to destroy Republican power so he will have a freer hand to enact his desired radical change for this country.  I don’t think he is particularly concerned about the economic consequences since he believes he can successfully blame those consequences on the Republicans.  He will only sign off on a deal if he gets tax increases on “the rich” with no increases on the middle class, and if the spending reductions are mostly phony or mostly on the military.

Since he is focused on the political, and the political winds favor him today, he will likely succeed.  But that doesn’t mean the economic consequences are not real.  If he wins politically and brags about his win, and then the economy really tanks, this may come back to bite him big time.  Here is an article suggesting the world financial system is on far shakier grounds than we think, and that Obama’s failure to deal with it could damage the Democratic Party brand for a generation.

Second, I look at the complete disarray and dispiritedness of the Republican Party and conservatives in general.  It has revealed a deep split between the establishment people and the movement people.  We all saw this with Boehner’s failed attempt to pass a tax increase on those with incomes above a million dollars a year and his removal of some movement conservatives from key committees.  We heard Newt Gingrich, someone we would have expected to stand strong, throw in the towel on gay marriage.  (It made me think of the words of Jesus at the Last Supper, “This very night you will all fall away.”)

Putting these two thought together, I expect Obama to have a time of political victories and economic disasters while his opposition is divided and in disarray.  To us, this will seem like the worst of times, but it may in fact be the preparing the round for future victory for the following reasons:

  1. The policies of the Democrats will eventually be revealed as disastrous to even the most ill-informed voter.
  2. Leadership of the Republican Party and conservatism in general may shift from the failed compromising establishment to more principled movement conservatives.

This second item of leadership change must also occur in the Church.  The Church has had a parallel problem to that of the Republican Party in having leadership that more interested in public relations than fidelity to Christ.  You should really think about what pastor you are supporting and where you are giving God’s money.

So in the immortal words of Jeremiah Wright, “America’s chickens are coming home to roost.”  The economic consequences of our profligate ways are about to hit hard.  This will discredit the whole ruling establishment and prepare people for truly radical change, either for good or for bad.  What is needed is leadership for the good to be ready.

What does being ready mean?  Here are some specifics.

  1. Above all else, guard your hearts.  Don’t look at what man is doing; look at what God is doing.  Look for where God is moving and raising up men to lead in these times.  Identify them and support them.  I recommend CBR and FRC.
  2. Get your own act together, financially and in terms of relationships.  We will need each other.
  3. Be prepared to sacrifice and help each other in the hard times.
  4. Save money and store food.


     

Forty Years

Saturday, September 15th, 2012

I am finding myself having some difficulty getting into this election.  I do think electing Romney and defeating Obama and the Democrats is important, and I am putting my money where my mouth is.  You can do the same.  But the fact that at nearly 50% of my fellow citizens are sold on the Democrat’s national suicide agenda is pretty depressing. Even if we eke out a 51% win, will it be enough to change our trajectory?  Add to that the contrast between the Democrats’ full throated screaming support for industrial scale child killing and the destruction of the institution of marriage, and the Republicans’ tepid “let’s talk about the economy instead” defense of life and marriage, and I’m left feeling a little like Jeremiah.

And speaking of the economy, I also can’t help thinking we are headed for an economic catastrophe beyond our imagining.  Putting the two together makes it hard to avoid the conclusion that we are already consigned to judgment.

First, the looming economic disaster:  Last Friday rating agency Eagan-Jones downgraded US Treasury bonds from AA to AA-, two notches down from our historic AAA.  Moody’s and S&P put Treasuries on credit watch.  Fed chairman Ben Bernanke said he would print money until the cows come home.  The European Central Bank said it would start Euro printing to cover government debt too.  Family income and the percentage of men in the workforce are dropping more during our so-called recovery than they did during the recession.  So the world and national economies are, let us say, weak.

Now consider the “fiscal cliff.”  Unable to reach a deal last year for raising the debt ceiling, Congress passed a law creating large automatic cuts in both military and social spending to take effect in January 2013.  Congress and the administration are also unable to reach an agreement on extending the Bush tax cuts, so they will expire in January.  That this simultaneous tax increase and spending cut in January will plunge the economy into deep recession is widely agreed.  No one seems likely to blink, and the election in November will not change this.  Question:  What will Bernanke do in response to a sharp recession?  Answer:  It’s not like he has two tricks.  He will print even more money.

Now consider this hammer blow, this economic shock hitting the fragile world economy I have described.  What could possibly go wrong?  The thing I worry about is the world “going off the dollar” as the basis of international trade because of fears that it will be inflated away.  What will that do?  Two things:  First, our price for all imports (think oil) will go up since we have to convert our Bernie Bucks to something else first.  Second, everyone else will have to decide what to use instead of dollars.  Euros aren’t much better, so I see all international transactions being slowed as traders try to figure out what to use for money.  The volume of international trade would fall sharply, impacting all of the already hurting domestic economies.  A world-wide depression of 1930s magnitude seems entirely plausible.

Such large depressions are the breeding ground for political upheaval and war.  The point is this could happen suddenly and it could start in January no matter who wins in November.

That gets me to the subject of “forty years.”  The number forty is associated with testing or judgment, most notably the forty years of Israel wandering in the wilderness and Jesus’ forty days in the wilderness fasting and being tempted.  Jesus was crucified in 30 AD.  Jesus predicted judgment on Jerusalem for “not knowing the day of their visitation.”  He said no stone of the Temple would be left on another, and that all of these things would come on this generation.  A biblical generation is usually taken to be forty years.  Forty years following the crucifixion, in 70 AD, Jerusalem fell to Titus of Rome in a terrible siege.  The Temple was burned, and Roman soldiers pried all the stones apart to get at the melted gold. 

On January 22, 2013 it will be forty years since the U.S. Supreme Court “legalized” abortion in its infamous Roe vs. Wade decision.  While there have been praiseworthy attempts to reverse this atrocity by a small number of people, most Americans of all ranks have accepted it and ignored the warnings of our own Jeremiahs.  We will not be able to ignore our own equivalent of Titus and the Roman army.

What is to be done?

I am just sharing my thoughts here, and not claiming it as a prophecy.  But it has struck me as a burden to share this with you.  I would also like to share my thoughts on what the God-fearing can do:

  1. Pray.  Pray on your own, with your family, and with your Church.  Cry out to God for His hand of mercy.
  2. Vote and give money to support righteousness in this election.
  3. There is a special opportunity to support what I consider to be the most effective pro-life organization and have your contribution matched.  I am on their board and can vouch for both their integrity and effectiveness.
  4. Prepare.  Pay down debt, save money, secure your job by being the best employee you can be.  Repair and maintain relationships in your life because we will need each other.  Beyond that, personally, I’m looking at food storage options.

The Green Religion

Sunday, July 10th, 2011

From a movement concerned with halting the wholesale dumping of pollutants into the air and water to one determined to depopulate the earth, the modern environmental movement has had a spectacular ride.  Its latest triumph was the destruction by flooding of the North Dakota town of Minot.  A system of six dams along the mighty Missouri River was built earlier this century to control the flooding quite successfully.  Many farming communities and homes grew up along the river.  So too, did the environmental movement, which became convinced that dams were an inherent evil, the footprint of man on sacred Mother Earth, and that where they could not be removed altogether they should be operated so as to simulate the natural flow.  Such was the case this year to the detriment of the people living in Minot as explained in this article.

This is reminiscent of the case in 2007 where environmentalists convinced a federal judge to cut off water supplies to the San Joaquin Valley in California, supposedly to save the Delta Smelt, an endangered small fish.  The cutoff devastated farms, pushed unemployment in the valley over 40%, and raised food prices for everyone.  Now it turns out the action did nothing to save the smelt.  Its decline was due to other factors.  The same story appears in the case of the famous Spotted Owl, where shutting down the logging industry in the Pacific Northwest has had no effect on the owl’s decline.  But it has been successful in destroying the timber industry and the lives of many rural American communities, and isn’t that the point?

In the west, we have periodic forest fires that destroy enormous swaths of forest and not a few human dwellings.  These usually follow years of environmental obstruction of dead wood removal by logging companies.  Most recently we almost lost the community of Lake Arrowhead because environmentalists would not permit the removal of dead and dying trees infested with the bark beetle.

And don’t get me started about “wetlands.”  The Constitution gives the federal government authority over the “navigable waters” of the United States.  The EPA claims that any piece of land that has been, is now, or ever might be wet is part of these “navigable waters,” since the water may or may not drain into tributaries of these rivers.  As such, they claim absolute, unquestionable arbitrary say over any activity on any piece of land.  Just ask the Sacketts.

Let’s assume Global Warming is true and cutting CO2 is the priority environmentalists say it is.  The problem is that the program they demand, windmills, solar power, electric cars for a handful of rich people, mercury laden curly cue light bulbs for the rest of us, won’t make a dent in total CO2 emissions.  The one thing that might do the job, nuclear power, they oppose more than coal plants.

What is behind this “we must destroy the world to save it” madness of the environmental crowd?  The answer lies in the name it is often called by its critics, the “Green Religion.”

Romans 1:21-23 describes the first steps in man turning away from God.  Man does not turn away from God to nothing.  He substitutes the worship of images “made to look like mortal man and birds and animals and reptiles.”  In other words, as verse 25 says, “They exchanged the truth of God for a lie, and worshipped and served created things rather than the Creator” that is, Nature Worship.  Modern environmentalism is far more than a proper concern for “creation care.”  It is a substitution of the worship of Nature for the worship of God.

God’s creation in the Garden of Eden was not complete without man, whom He ordained to “tend and keep it” and whom He charged to “be fruitful and multiply, fill the earth and subdue it.”  Man brings glory to God by his faithful stewardship of the earth, which includes its intelligent use for the benefit of man.

Recommended Article

Wednesday, June 1st, 2011

Here is an article I recommend on megatrend drivers of European and American politics.

The Budget, Shale Gas, and Persecution

Monday, April 11th, 2011

Congressman Paul Ryan’s Path to Prosperity budget proposal has been released.  It is one of the first serious proposals as to what we would have to do if we were serious about ending America’s debt crisis.  Hint: it’s more than a $38 billion one time cut.  He proposes changing Medicare to a privatized insurance system with capped government subsidies, and turning Medicaid into a block grant to states.  He does not touch Social Security.

 

The most important under-reported story of the last few years is the emergence of Shale Gas as an energy source for America.  We have always known shale formations far underground held enormous amounts of natural gas, but recovering it was uneconomic.  Recently, Texas entrepreneurs have figured out how to tap it, resulting in an increase in our natural gas reserve of perhaps five fold.  Cheap and plentiful natural gas may color our future for a century.  It may also impact Europe by providing the West with its own gas supplies, reducing their dependence on Russia.

It also will likely delay a nuclear renaissance in America by making the easy to build and run gas plants cheaper than any nuke.  Gas plants already produce electricity cheaper than coal owing to the high capital cost of coal plants.

Environmentalists, having killed off nuclear and coal are in a panic as to how to shut down this source of energy and speed the economic demise of that Great Satan, America.

Christian persecution hit a new spike in China where Beijing cracked down on the unofficial Church.  Over there, Christians are not afraid to stand up for their faith.  This is in contrast with the American Church which seems concerned mostly with making the enemies of Christ like them, and which never speaks up on behalf of their suffering brothers in China or Moslem lands, or even the handful of American Christians willing to confront evil at home.  Witness the cases of Michael Marcavage in Philadelphia or Pastor Hoye in Oakland .

An amusing (if it wasn’t so depressing) commentary on the shallow people pleasing American Church is found on the Youtube video Sunday Morning.

Wisconsin

Monday, February 28th, 2011

Some people think Governor Walker is doing the right thing in reigning in unionized state workers pay, benefits, and ability to collectively bargain.  Others think he is going too far.  When I look at it I think he’s doing les than 10% of what’s needed.

Few people realize how dire America’s financial straits are.  The main problem is the concept of entitlement.  The government passes a law giving certain people certain amounts of money off in the future.  Military and government worker pensions, Social Security, Medicare, Medicade, ObamaCare; these are just the largest ones.  People feel entitled to these benefits.  After all, it’s the law.  Besides, we paid into the system, so we deserve it.  The only problem is there is not near enough money to pay for it.  The entitlement system turns out to be a scam perpetrated by politicians, many long dead, to buy votes.  And by voters who, like Bernie Madoff’s victims, chose to believe that something too good to be true was true anyway.

To put it in human terms, say you make $100,000 a year.  Every year you are spending $150,000. and your credit card has a $400,000 balance getting $50,000 worse each year.  In addition, you have a series of outstanding debts with balloon payments coming due over the next few decades.  The present worth of these debts (the amount you should have set aside now to cover them) is $4 million.  You actually have nothing set aside.

Here is a comprehensive look at the problem with a prescription for fixing it.  It is a painful prescription involving a lot of hard work and sacrifice for a long time.

An alternate solution to the problem is to just let the government go broke.  If no soldier, sailor, office clerk or tax man was getting paid, the government would just go out of business to be replaced by some other government or governments after a period of social disorder of unknown magnitude.  We see this all the time in other countries.  You know, the places we call “hell holes.”

Of course financial collapse merely follows moral collapse which follows spiritual collapse.  These are topics on which I rant ad nauseum.   Rough times are ahead of us one way or the other.  To survive the financial and political storms to come we must each resolve to strengthen our moral and spiritual resources, including ties of family and friendship.

And canned goods.  And ammunition.

A tale of Two Dogmas

Thursday, December 30th, 2010

Energy consumption defines our present standard of living.  The average American today has the energy equivalent of ninety slaves working for him.  Half of the world lives on a small fraction of this, and they want to catch up.

Split that energy consumption roughly in half.  Half goes to transportation and is essentially petroleum.  Commerce itself runs on diesels and gas turbines for all practical purposes.  The other half is for electricity and industrial processes.  This is powered by coal, natural gas, hydro-electric, and nuclear, with so-called renewables (wind and solar) bringing up the rear.  Keep this picture in mind when you see artful pictures of an idyllic future of happy citizens riding bicycles under windmills with rolling green hills in the background.

Decisions concerning the energy future of the world are some of the most important decisions being made in our time.  Unfortunately, they are being made by people whose minds are the prisoners of two dogmas.

The first dogma is that of Anthropogenic Global Warming (AGW).  This dogma holds that (a) world climate is warming significantly, (b) this is due to human activity, principally CO2 emissions from burning hydrocarbon, and (c) the consequences of this warming will be so bad that it is worth serious economic disruption to avoid.  All of these points are debatable, and I do not personally pretend to know where the truth lies.  I do think there is reason to question whether continued high levels of CO2 emission is a wise course for mankind.  I also think the economic disruptions needed to achieve the needed reductions if the AGW people are right would themselves be cataclysmic and would likely lead to political upheaval and war.  That many of the AGW proponents have a not-so-hidden agenda to ride AGW fears to establish some kind of global tyranny is, in my opinion, also true.  (But however evil their motives may be, this tells us nothing about the truth or falsity of AGW theory.)   My final observation is that their proposed solution of windmills, solar cells, and conservation, even if fully implemented, would at best slow and not prevent the arrival of the future of their fears.

This brings me to the second dogma that controls our decision makers’ minds, absolute and unshakeable opposition to nuclear power.  This opposition is based on things like Chernobyl and TMI, and features endless recital of problems with nuclear power as if the alternatives were problem free.  It often sounds like people opposing the Goodyear Blimp because of the Hindenburg disaster.  Emerging nuclear technology, especially in what are called Generation IV nuclear plants, promise practical solutions waste disposal, proliferation, and accidents, while promising reasonably priced power for a growing world for the next thousand years, all with no CO2.  The so-called “traveling wave” reactor design is especially interesting and has attracted impressive private backing.

In my opinion, many of the people pushing the AGW dogma oppose nuclear for no other reason than that they won their political spurs shutting down the nuclear industry in the 1980s.  They cannot admit they were wrong then and still argue they are the only people who know anything now.

With the EPA and now FERC asserting unconstitutional powers to crush the economy with their ill-conceived AGW rules (which will only move carbon emitters from America to China) I fear we are in for a rough time.

 Note:  Here is a page of excerpts from my book EMPIRE to give you a taste of what’s in it.


 

Deficit Reduction

Monday, October 25th, 2010

This Wall Street Journal article talks about tax breaks like mortgage interest and the dependent deduction that the President’s National Commission on Fiscal Responsibility and Reform, also know as the Deficit Commission is likely to recommend eliminating when they give their report after the election.  The article indicates that the bipartisan commision plans to recommend tax increases like this coupled with spending reductions in the areas of defense and what is called “discretionary” expenditures.  Entitlements like Social Security and Medicare are off the table, even though any reasonable analysis shows that the explosive growth of entitlement spending is the whole problem.

One recent article in National Review calculated that even if we could somehow reduce our annual federal deficit of one trillion dollars to zero, and keep it there, we would still be short about $130 trillion to pay for all of these “off-budget” entitlements.  That is, we would need nine times all of the income of all of the people in the US sitting in a CD paying 6% right now just ot pay the projected entitlements over the next 40 years.  Instead we have zero.

The Commission is seeking consensus, which is normally a good thing.  But a suicide pact also represents a consensus, and any plan to raise taxes, cut legitimate expenses, and keep paying unpayable illegitimate expenses is a national suicide pact.

First, any tax increases will probably not bring in any more revenue since they will also be a drag on economic activity.  This is especially true with the economy teetering on the brink the way it is now.

Second, things like defense, the administration of justice, and the operation of essential services are legitimate functions of government.  Income transfer from one group of citizens to another is not a legitimate function of government.  Nonetheless, vast portions of our population have grown dependent on these income transfers and a dramatic cutoff of their support would no doubt cause unacceptable social and political upheaval like we are seeing in France right now.  What is needed is a rational unwinding of the entitlement system over a generation.

Third, what is neglected in the commission’s plan and in most discussions of this nature is economic growth.  Since this problem will manifest itself over the next 40 years, the difference between a 2% growth rate and a 4% growth rate would be enormous.

So here is my plan;

  1. Freeze discretionary spending at 2008 levels for ten years.
  2. Put entitlement spending on budget.  Stop pretending Social Security and Medicare are insurance plans when they are actually welfare.  Make all Social Security and Medicare taxes part of the income tax and put the employer’s share on the employee.  You could require employers to add the employment taxes they are paying now to the employees’ paychecks.  Then all of the people who tink they aren’t paying any income tax would suddenly realize that they are.
  3. Revamp the tax code in a revenue neutral way to be pro-growth.  The tax code should reward good economic behavior and punish bad economic behavior.  For example, the mortgage interest deduction and taxes on interest and dividens from saving and investment could both be eliminated over a period of, say, 20 years.  This would change us from a nation of debtors to a nation of savers and would give us the high growth rate needed.
  4. Have the Federal Reserve stop trying to stimulate and cool the economy by targeting interest rates, and have them just keep the dollar stable with respect to gold or a basket of commodities.  A stable dollar would also fuel growth.

What do you think?

P.S.   See my election recommendations and links to voter information here.  Buy my book Empire here.  Subscribe to this blog for automatic notification of postings and to post your own comments!