who's your nanny?

GM to Begin Paying Back Loans from US Government

GM will begin paying back the $6.7 billion loan it received from the Federal Government by the end of 2009 and could pay of the loan entirely in 2011. The company plans to accomplish this despite a $1.3 billion third-quarter loss. This article reports

Under the plan to pay back the $6.7 billion, the Detroit automaker will make quarterly payments of $1 billion to the U.S. government and $200 million to the Canadian government beginning in late 2009. GM would be on track to pay off the $6.7 billion U.S. debt and a $1.4 billion debt to Canada by the middle of 2011, well ahead of a mid-2015 deadline to repay the two governments.

The person said GM was in a position to make the payments ahead of schedule because the company performed better than expected during the bankruptcy and the company's sales and overall performance since then have been modestly better than expected.

The automaker will draw on about $13 billion that remains deposited in escrow by the government to help make the payments. (emphasis added)

So let me get this straight? GM will pay back part of its $6.7 billion loan from the government by drawing on about $13 billion ($16.4 billion according to this article) which was given to it by the same government which lent the company $6.7 billion?

GM Chairman Ed Whitacre said last week that GM was committed to repaying its government loans.

"Can GM pay back its loans? You bet," Whitacre said during an address at Texas Lutheran University in Seguin, Texas. "I can't tell you when, but it won't be very long."

Well, duh! If my mortgage company simply gave me $500,000 in escrow as a gift, I would have no problems paying off my $150,000 mortgage, either.

This point has not been lost on all congressmen: "What is the logic in repaying government loans with taxpayer dollars?" asked Brooke Buchanan, a spokeswoman for Republican Sen. John McCain.

But at least one person sees a method for this madness:

Brad Coulter, director of O'Keefe and Associates, a financial consulting firm near Detroit, said using government money to pay off the government debt is partly a public relations move. But it also indicates rising confidence at GM, which may feel it won't need all the contingency money, he said.

Who am I to question such an irrefutable assertion by Mr. Coulter? I am but a lowly loser libertarian writing from his one-bedroom condo who was invited by Trevor as a guest blogger. I simply do not have the pedigree as a director of financial consulting firm.

Nevertheless, I do wonder how giving GM $13 billion ($16.4 billion according to this article) as a contingency in case car sales do not pick up to assist in paying off a $6.7 billion loan designed to aid GM which is foundering due to mismanagement and falling car sales is supposed to be a good PR move. I also don't understand how giving GM $13 billion ($16.4 billion according to this article) as a contingency in case car sales do not pick to assist in paying off a $6.7 billion loan designed to aid GM which is foundering due to mismanagement and falling car sales is supposed to indicate rising confidence at GM. If private investors really thought that GM were making a comeback, wouldn't they come to the rescue and bailout GM themselves? If the management at GM really thought that the company was on the verge of making a comeback, wouldn't the company ask for private investment which does not have government restrictions?

But what do I know? I waste my time reading useless books on economic theory like What Has Government Done to Our Money, The Mystery of Banking, Economics in One Lesson, Meltdown, The Case Against the Fed, The Politically Incorrect Guide to Capitalism, and Economic Science and the Austrian Method. These books have compelled me to purchase Man, Economy, and State, Human Action, The Theory of Money and Credit, Socialism. I waste even more time reading articles on Mises.org like Anatomy of a State, The Politics of Obedience-The Discourse on Voluntary Servitude and Our Enemy, the State to gain some insight into political theory. Clearly I am wasting my time with all of these books because one does not have to know sound economic theory or understand politics to become a director of a financial consulting firm.

The Public Option and Education

As I continue to battle the economic ignorance infecting the health care debate, I offer this essay by Randall Holcombe at the Beacon:

In President Obama’s address on health care reform to Congress last night (September 9) he argued for a public option to private health insurance as an alternative, to compete with private insurers and give them an incentive to be responsive to their customers.

Some critics have argued that with the advantages of government backing and the taxes the president is advocating on private suppliers, the public option would crowd out private insurers and most people would end up on the government’s plan.  President Obama responded to this criticism by noting that despite the existence of public universities in every state private universities remain an option.  Interesting analogy!

Looking at higher education enrollment, 75% of students are in public colleges and universities and 25% are in private.  The census bureau reports that about half of 18-22 year olds are enrolled in higher education, so if we include those outside the system, the private sector covers only about 12.5% of that age group.

For Those Not Completely Brainwashed by the State

Trevor's recent post drew the attention of one disgruntled commenter who clearly does not understand economics at all. When Trevor and I write pithy rebuttals of Obama's and Bush's economic policies, we rely upon a foundation of economic thought which we do not always discuss explicitly. Nevertheless, there are still people who lack economic reasoning yet feel empowered to make comments concerning economic policy. As Murray Rothbard wrote:

It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a "dismal science", but that it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.

I seriously doubt that someone this ignorant of economic theory and boastful about it would be open to the economic logic of Mises or Rothbard or Hayek. But for those not completely brainwashed by the State, here are some articles which use rigorous economic logic to demonstrate why Obamacare (or HillaryCare or BushCare or ReaganCare, etc.) will only make our health care system worse (unless you're an insurance company like BlueCrossBlueShield which benefits from the reduction in competition).

Why Obamacare Can't Work: The Calculation Argument-Gabriel E. Vidal

A Four-Step Healthcare Solution-Hans-Hermann Hoppe

Socialized Healthcare Is Not Cheaper Than Free Market Healthcare-Mark R. Crovelli

Socialized Healthcare vs. The Laws of Economics-Thomas DiLorenzo

Health Care Through Central Planning: A Helpful Analogy-Karen Kwiatkowski

National Socialist Fascist Communist Healthcare-Bill Huff

Healthcare Is a Good, Not a Right-Ron Paul

My Canadian Healthcare Horror Stories A Message for Americans-Cathy LeBoeuf-Schouten

Why Computers Work and Health Care Doesn't-Bill Walker

The Health Plan's Devilish Principles-Murray Rothbard

This is a good start. For those who want a solid introduction to economic thinking, I recommend Henry Hazlitt's Economics in One Lesson. For those who wish to be challenged immediately and dive into the reasons why socialism cannot work, I recommend Socialism by Ludwig von Mises. And if our dear angry commenter finds this post discourteous, I would recommend that he read all of these articles, Hazlitt's book and Mises' book, and refute them.

This Is a Libertarian Economist?

Libertarian economist Tyler Cowen asks the question Were the bailouts a good idea? His answer is Yes, in fact they were:

Without the bailouts we would have had many more failed banks, very strong deflationary pressures, a stronger seize-up in credit markets than what we had, and a climate of sheer political and economic panic, leading to greater pressures for bad state interventions than what we now see.  Milton Friedman understood all this quite well, which is why argued bailouts would have been a good idea in the 1929-1931 period. 

But wait...there's more. To those libertarian economists who like to see both what is seen and what is not seen, he outlines the following possible chain of events:

Maybe you think that the bailouts will have disastrous long-run consequences.  And maybe they will, I worry about this too.  But if anyone should know that modern politics can only stand so much short-run panic, it is libertarians and fans of Bryan Caplan's book.  If we had not done the bailouts we did, we would, within a few months' or weeks' time have received a much worse and costlier bailout run by Congress and Nancy Pelosi.  How does that sound?

By calling this potential bailout by Congress and Nancy Pelosi "worse and costlier", Cowen tacitly admits that the current bailouts are bad and costly. But nevermind this subtle admission. Let us utter those magic words, "All things considered, the financial bailouts were a good idea." Therefore, without the bailouts "we would have had many more failed banks, very strong deflationary pressures, a stronger seize-up in credit markets than what we had, and a climate of sheer political and economic panic, leading to greater pressures for bad state interventions than what we now see." But based on this reasoning, does this not mean that the "much worse and costlier" bailouts would saved even more banks, counteracted deflationary pressures more strongly, loosened credit markets even more, lead to economic and political serenity and reduced the pressure for worse state interventions than we now seee? So why object to the possible costlier bailouts? Based on this reasoning a "worse and costlier bailout" sounds like good idea this time around.

A View from the Abyss

As Trevor pointed out, we're going down, down, down, down but probably even faster than forecasted. Take Obama's health care plan, for instance. The plan is estimated to cost $1.5 trillion over ten years. As we all know, governments tend to underestimate the true costs of their expenditures. As Robert Higgs points out:

The federal government's health programs also turned out to be fiscal time bombs. Between 1970 and 1994, in constant (1987) dollars, Medicare outlays increased from $16.4 billion to $109.3 billion; the federal portion of Medicaid from $7.7 billion to $63.5 billion. Like the old-age pensions, these programs achieved rates of growth that could not be sustained indefinitely.

This means that Medicare grew by a factor of approximately seven and Medicaid grew by a factor of approximately eight over this 24 year period. Using these factors as lower and upper bounds and applying them to the estimated $1.5 trillion, we get a lower bound of an upper bound of $10.5 trillion and an upper bound of $12 trillion over 24 years.

Statisticians and mathematicians will find much to criticize in my quick and dirty estimates, but I do this just to make a point. Our government cannot forecast the costs of anything health-related (well, anything at all) accurately. The costs are always exponentially more than forecasted. So when the White House forecasts a $9 trillion deficit over the next ten years, about $1 billion of which is supposed to fund health care, it's probably a good idea to scope out other countries to immigrate. Or at least stock up on guns and gold.

Local 'Cash for Clunkers' Ignorance

I dropped off my Tundra at the Toyota dealership this morning to have a broken plastic clamp replaced along the side of the driver's seat. One of the employees gave me a ride to my office and in the course of small talk mentioned they'd been working until midnight or 1 a.m. some nights just to keep pace with people turning in their cars as part of the "Cash for Clunkers" program.

The employee, no doubt coached by management, was preoccupied with how much this program will "help the economy." However, despite this display of ignorance -- you can't stimulate an economy by stealing one person's spending money and giving it to someone else to spend -- he did note something rather interesting: customers are beginning to have a hard time finding replacement parts for their cars because these "clunkers" are simply being crushed and disposed of once they're turned in.

In other words, the federal government is artificially increasing the scarcity of used cars and car parts, thereby driving up prices, instead of allowing the market to determine when their usefulness has expired. As usual, folks on the lower end of the economic spectrum disproportionately bear the burden of this program as the quantity of affordable used cars decreases.

In what is nothing more than a wealth transfer from taxpayers to the car manufacturers, the "Cash for Clunkers" program is a huge success in the eyes of the corporatist state and its connected beneficiaries. The poor, on the other hand? Well, they'll just have to be satisfied listening to mouthpieces for the state tell them how much the government cares about them.

Socialism Robs Everyone

Despite repeated campaign pledges by Our Holy Savior Barack the Beneficent (peace be upon him) that the so-called middle class wouldn't see their taxes increase "one single dime" under his reign, administration officials nevertheless refuse to rule out significant tax hikes to pay for all of the president's wefare programs, universal health care chief among them.

Though I'm the first to admit I never believe anything that comes out of the mouths of politicians, it looks like Obama was honest on this one. You just had to take him literally. Our taxes won't increase "one single dime"; they'll increase thousands of dimes.

Whether you find yourself in the upper or lower eschelon of income earners, everyone suffers under centralized government control of their lives. The costs of socio-fascist policies are not merely measured in dollars and cents, but in quality of living as well.

It's not going to mean much to poor single mothers that they won't have to write personal checks for their kids' doctor visits (they don't need to even today) when treatable bronchitis turns into deadly pneumonia because wait lists prevented on-demand service.

Ron Paul Pwns Ben Bernake

Shit Outta Luck

Seriously, people, what did you think the "stimulus" money was going to be used for?

WASHINGTON -- The feds are spending tens of millions of stimulus dollars to repair and build toilets across the nation, in an outflow of taxpayer funds that critics have branded "potty pork."

From humble sylvan outhouses to "historic" restrooms, cash from the $787 billion stimulus is going to spruce up or completely replace aging toilets, government releases show.

In New Mexico alone, the feds are spending $2.8 million for toilets in national forests.

Every day the government hoodwinks taxpayers into thinking the money it steals from us is going to be used for our benefit, yet people still act surprised when it's used to further enrich the state and privileged corporations.

Spending these handouts on toilets isn't the problem; confiscating private property from productive citizens in the first place -- and actually thinking the government could put it to better use than its rightful owners could -- is.

I figured this called for a little fun with PowerPoint:

A Question for Non-Radicals

Even if you believe the state is a "necessary evil"; even if you believe there is merit to electoral politics; and even if you consider yourself a Democrat ... do you honestly believe douchebags like this, who probably don't even balance their own checkbooks, should really be allowed to influence economic policy?

Not So Beautiful America

Pat Buchanan has a great article today explaining why the socialist American state is headed for collapse under the weight of tyrannical taxation and central planning.

As far as this observer is concerned, it can't come fast enough.

Marylanders Pledge to Pay More for Food

I suppose it's only appropriate during a government-induced depression that politicians would push programs increasing our costs of living. In particular, the Southern Maryland Agricultural Development Commission is "challenging" consumers to pass up the standard human practice of seeking out the best values in exchange for the opportunity to pay higher prices. Per a Baynet.com report:

What if you could make one simple change every day for a week that would have a positive impact on your health, your local economy and the health of the planet? Join the thousands across Maryland who will take the Buy Local Challenge by pledging to eat at least one item from a local farm every day during Buy Local Week from July 18 to 24. You’ll enjoy food that’s fresh and nutritious while you support local farmers.

The Buy Local Challenge will celebrate its third anniversary in 2009. It was designed to highlight the environmental, health and economic benefits farms provide. Participants are encouraged to shop at farms, farm stands, farmers’ markets and grocers that offer locally grown food and wine, and dine at restaurants that include local farm food and wine in their menus.

For now we'll set aside the fact that this is an opinion piece masquerading as news, what with the mindless, undocumented implication that buying corn from a roadside stand instead of a chain grocery store could in any way account for a meaningful increase in "the health of the planet." (To hell, apparently, with all us lowly people who would suffer needlessly with the elimination of those evil superstores that provide better selections at lower prices.)

I certainly sympathize with local farmers who find it harder and harder to compete with state- and federally-subsidized plantations owned by politically-connected millionaires. And I'm not implying there's no value to shopping on the side of the road -- I do it all the time. I'm simply pointing out that shopping locally for the sake of shopping locally -- as an end in itself, and at the behest of politicians, of all people, who are the ones running local farms out of business in the first place -- is not the answer. Eliminating farm subsidies so all producers are allowed to compete on a level playing field is.

But, of course, that wouldn't be the American way. These days it seems most of us prefer programs lavishing tax monies upon the favored minority-of-the-month or good ol' boy to actually working for anything.

I probably need to have my head examined for even thinking about opening a restaurant nowadays, not only in this economy but also amid so much local and state heavy-handedness forcing business owners to spend at least as much time complying with regulations as they do generating wealth. But that's actually where I'm at these days, as I'm working on a business plan to peddle chili, hot dogs, and cheesesteaks.

However, I wouldn't expect people to come to my place simply out of concern for some politically-manufactured end; I'd hope they'd show up because that's where they'd find the best meals at the cheapest prices. And if they couldn't, I certainly wouldn't be able to blame them for putting their scarce resources to alternate uses.

Obama Man Can!

Great song from Canadian comedian Greg Morton. Best part is at the 1:47 mark.

Thanks to G.A. Plauche.

Weekend Roundup

I apologize for being out of blogging commission for the better part of the weekend. I was preoccupied in just about equal parts by a pre-4th of July party and a trip to the emergency room, but it seemed that no matter where I was, I couldn't escape the fact that our society is driven by sheer ignorance and stupidity.

On Saturday I went to my friends' party along the Patuxent River, in the middle of which my buddy Randy set up a barge with about $10,000 worth of real fireworks that he ignited around 9:00 p.m. Interestingly, I waited an entire year to witness this show because Randy's collection was confiscated by Maryland police during last year's party because he didn't have a government permit to discharge fireworks.

Well, not one to suffer fools, Randy decided to beat these guys at their own game and obtain a license several months ago to become a certified pyro in the People's Republik of Maryland. I know that I for one felt a whole lot safer knowing Randy was forced to jump through any number of bureaucratic hoops just to put on a show for his friends and family. In fact, I hear that when you whip out your almighty fireworks permit the wind stops blowing and fire stops burning!

Interestingly, one of the fire marshals told Randy that although this year's display was in full compliance with the government's rules and regulations, his display last July was actually configured in a safer manner. But I just don't believe it given that he was operating outside the purview of our masters last year. Everyone knows you're not safe until the state says you are.

Then there was Sunday. My son had had a low-grade fever for a couple days, but yesterday his temperature spiked to almost 103 early in the afternoon. Sadly, my wife and I know of two young families who've lost children two or younger in the past year due to sudden illness, so considering my son appeared to be lethargic we figured we'd leave nothing to chance and just take him to the emergency room.

But of course, as soon as you get to the ER you realize you're still rolling the dice. We waited for more than two and a half hours before we were even seen, and I'm sure most people have had a similar experience. All I kept thinking was that when Barack the Beneficent's health care "reforms" are pushed through, wait times will only increase. To make matters worse, I had to listen to a Fareed Zakaria interview on CNN with Paul Krugman and John Taylor on the community tv that seemed to go on for infinity.

Because I was trying to avoid gouging my eyes out with my thumbs I really don't remember any specifics, save for Krugman assuring us that he's the smartest man in the universe and a later segment in which some brain-dead chick argued that further regulating health care would actually account for increased competition and lower costs. It's virtually impossible to find data suggesting this has ever happened, yet the vast majority of Americans will swallow this garbage hook, line, and sinker.

To top everything off, I had to listen to a bunch of reporters on the BET Awards red carpet droning on about the death of Michael Jackson. One guy literally repeated himself about three times following commercial breaks when he said he never thought he'd see the day Jackson died. Riveting journalism there. And some 20-something actress from Benjamin Button actually said the world's most notorious plastic man made the greatest strides for blacks in history. Hey, I'm not saying Jackson wasn't influential, but I guess this girl's too young to remember Jackie Robinson or MLK.

Of course, this was nothing compared to one lady from Idaho (I think) who said Jackson really "touched me." Let's just say I wasn't the only one in the waiting room who laughed at that one.

More Cuts, More Freedom

One significant benefit of economic crises is that they usually force bloated states to cut their budgets and subsequently become more efficient (well, efficient for monopolies, anyway).

In California, Guv-nuh Ah-nuld is faced with the prospect of cutting billions from proposed spending plans in order to balance the budget.

Slammed by an epic housing bust and massive job losses, California faces a $24 billion budget deficit and could run out of cash by late July if Gov. Arnold Schwarzenegger and the Legislature cannot reach a budget deal.

To balance the budget, the governor has proposed closing more than 200 state parks, releasing prisoners early, selling state property, laying off state workers and cutting health care.

Under the governor's plan, K-12 schools and community colleges would lose $5.3 billion over the coming year - on top of billions of dollars in recent reductions and payment delays.

The state would spend $7,806 per K-12 student in 2009-10, almost 10 percent less than two years ago, according to the Legislative Analyst's Office.

These cuts would only result in more economic and political freedom for California residents. Closing state parks and selling off property is a great way to repudiate debt immediately. Eliminating state programs has the dual benefit of saving taxpayers money in both the short- and long-term -- everyday maintenance costs disappear along with the state workers who would otherwise draw government-funded health and pension benefits. And many of the prisoners likely to qualify for early release would no doubt be those who have committed nonviolent "crimes" and who never should have been locked up in the first place.

Of course, you can never cut state spending without the teachers unions wailing the loudest and hardest. But despite complaints from school officials who argue that less funding will "shortchange" students and result in lower acedemic proficiency, laying off teachers, increasing class sizes, and cutting funding for educational fads will force the state to economize, which could allow it to become more productive if it took a few lessons from the private sector.

Generally, schools will weed out teachers beginning with those who don't have tenure, which is a formula for retaining many who are unmotivated and unproductive. However, if the governor instructed the districts to make these decisions based on merit (I know, fat chance), it would allow the state to weed out the worst teachers and keep only the best.

After all, this apparently is indicative of what California schools have been churning out so far:

"I think we won't be able to learn as much [if budgets are cut]," said freshman Andrew Taylor, 15. "They should put more money into schools. If you take money away from schools, you're going to end up with more people going to jail."

Seriously, folks, I'm pretty sure the only direction the state can go is up.

Another Example of Conservative Fecklessness

Sen. Tom Coburn (R-Okla.) released a report critizing the Holy One's stimulus plans. In the beginning of the report, Coburn writes

There was no question that the nation’s economic condition demanded bold action. Nor is there any question that the massive amount of stimulus spending so far has created some new jobs. Yet, as recent statistics have shown, the jobs that may have been created or saved from the stimulus are not offsetting the millions of jobs that our economy is still hemorrhaging. In my estimation, Congress chose the wrong approach to stimulating the economy by spending money we don’t have on things we don’t need. Real stimulus includes lowering the tax and regulatory burden on hardworking families and businesses, which creates good jobs for the long term. (emphasis added)

The fact that he says "Real stimulus includes" is his way of saying "some spending is necessary." But if lowering tax and regulatory burdens creates good jobs for the long term (and it does), why does the government need to spend any money at all? Why not make a principled economic argument that spending is not necessary to combat the recession and in fact makes things worse? Spending money during a recession in hopes of stimulating the economy is like, to paraphrase Robert Higgs, taking water out of the deep end of the pool and pouring it into the shallow end with the expectation that the water level will rise.

Coburn continues

For example, what kinds of jobs are being created? Are these permanent jobs or seasonal and temporary jobs that will soon be gone when the project is completed? What are the merits of projects being funded with stimulus dollars? Will these projects make real improvements in the lives of taxpayers and communities or are they simply pet projects of politicians and lobbyists that never got off the ground because they are a low priority? Are some stimulus projects actually making matters worse for ordinary Americans?

All government jobs are temporary in the sense that none become self-sufficient. All government jobs depend on taxation and inflation because they don't produce goods and services which are traded on the free market. This does not mean that there would be no market demand for some of these goods and services. People would still demand roads, schools, and arbitration services. But the State prohibts or hampers competition in these areas. It forces people to use its arbitration and justice services and its roads. It makes private schooling expensive because families have to pay for both the private schooling out-of-pocket and public schooling out of taxes. But since these services are not traded on the free market, the only way to fund them is through the coercive power of the State, i.e., taxation and inflation.

Moreover, some of these goods and services would not even exist because there is no viable market for them. The only way such goods and services can continue to exist is through the coercive power of the State. They could not survive on their own.

Coburn then says in the introduction

By offering 100 examples of questionable stimulus projects, worth $5.5 billion, this report does not attempt to prove that the stimulus is not working. Rather, the intent is to educate taxpayers, policymakers and the media on lessons that can be learned from some of the early missteps and prevent other questionable projects from moving forward. (emphasis in original)

So now we see the real purpose. Coburn is not happy with the projects the Obama adminstration is spending money on. In his mind they are waste. The Obama administration responded to Coburn's critique with a point-by-point rebuttal, but for our purposes, this doesn't matter. By accepting the premise that some government spending is necessary to stimulate the economy, Coburn has already given away the principled high-ground. The debate is now about which projects should get the money which is pure politics which will continue in perpetuity.

If conservatives really want restore prosperity to the US, they must diabuse themselves of their belief that the State should intervene in a free market for any reason. A free market must be free from coercion in order to be free; any intervention by the State will produce unintended results which will lead to more interventions which will lead to more untended results, etc. This will middle-of-the-road policy will lead to socialism. As long as conservatives accept the premise that the State, i.e., a territorial monopolist of ultimate decision making, should play any role in the market, they will always traveling on the road to serfdom.

Richard Ebeling on Our Collectivist Economy

Now That GM Is Officially Bankrupt

Any chance we can stop pretending the federal government can "bail out" insolvent companies?

Forget for now about the vastly immoral nature of robbing innocent citizens either directly or through inflation to carry out these sorts of scams; it should be abundantly clear that they do not and cannot work.

Hundreds of billions have already been flushed down the toilet by corrupt politicians in order to prop up their high-rolling elbow-rubbers under the guise that we "can't afford" to let bloated companies fail. What we can't afford to do is let ourselves trust anything these statist hacks tell us, much less allow them to pilfer our belongings so they can retain their fat cat status at our expense.

Enjoy Your Graduation Party

Now the fun really begins.

They Don't Call It a Correction for Nothing

Maryland Gov. Martin [Owe']Malley complains that entire programs will need to be eliminated as part of his effort to cut $200 million from the state budget as revenues continue to come up short of expectations.

"I've encouraged agency heads to eliminate whole programs in this latest round of cost containment," O'Malley (D) said on Monday after a news conference in Rockville, where he announced the creation of Maryland Biotechnology Centers in Rockville and Baltimore.

Am I the only one who sees the irony in announcing cutbacks during a conference announcing the creation of even more state facilities?

What we need to do after eliminating whole programs is to get rid of these agency heads too, right up to and including the office of the governor. Certainly I'm not the only one who remembers O'Malley spending over a billion dollars he didn't have almost the minute he took office.

G(overnment)M(otors): The Face of the Corporate Welfare State (For Now)

It would be impossible not to laugh at the Obama administration's supposed attempt to manufacture a symbiotic relationship between itself and General Motors if the economic repercussions for the majority of Americans weren't so grave.

GM needs the federal government and the federal government needs GM, or so the story goes. The flailing auto manufacturer presumably is content to accept federal handouts in the attempt stave off bankruptcy; Obama is happy to hand out taxpayer dough if that means taking credit for saving or creating American jobs. It all sounds so nice, but both history and basic economics tell us that artificially subsidizing corporate losses doesn’t magically create profits.

And of course, it doesn't help matters when you're not allowed to cut dead weight and take realistic measures to generate those profits either.

GM, which has already made its deal with the devil by cashing federal welfare checks just to keep the lights on in plants that haven't closed yet, is now facing heavy criticism from the usual mob bosses union leaders and politicians over reports that the company plans to increase the number of vehicles it imports from overseas in an attempt to cut costs.

The gall of some business leaders to conduct their affairs as if they can't just steal money from people at gunpoint.

The United Auto Workers charged last week that the Detroit automaker intends to almost double over the next five years the number of vehicles it imports to the U.S. from Mexico, South Korea, China and Japan.

"GM should not be taking taxpayers' money simply to finance the outsourcing of jobs to other countries," Alan Reuther, the union's Washington lobbyist, wrote in a letter to U.S. lawmakers.

Of course, Reuther should've stopped at "GM should not be taking taxpayers' money," but then he wouldn’t be a union lobbyist, would he?

The tragic irony of this entire fiasco is that in attempting to get its financial affairs in order by accepting federal bailout money, GM has prostrated itself before the Obama administration and effectively surrendered its management authority to bureaucrats tasked simply with "protecting jobs," thereby eliminating the ability to make cuts in the one area responsible for significant losses: labor (and the related union benefits rivaled only by federal government employees).

Unlike true symbiotic relationships in nature, where two seemingly incompatible species interact to their mutual benefit, GM stands only to lose in this arrangement, and lose big. While the company reportedly faces a June 1 deadline to cut costs, it's helpful to remember that these requirements are being made by federal officials who retain the authority to micromanage how these supposed cuts will be made.

As I have written before, these bailout measures are hardly intended to help GM recover financially; they are a ploy by the president to nationalize one of the largest American manufacturing industries so he can turn it into a staging ground for the launch of his tyrannical green agenda.

It remains to be seen whether Barack Obama will rebrand GM as Government Motors -- that just might be too brazen even for the American public -- but I wouldn't be at all surprised to see His Holiness introduce the first national car. Say, the "Obamobile" has a nice ring to it.

The Purpose of Government

Writes Thomas DiLorenzo

The purpose of government is for those who run it to plunder those who do not. Throughout history, governments have used violence, intimidation, coercion, and mass murder to enforce this system. But governments' first line of "defense" is always a blizzard of lies — about its own alleged benevolence, altruism, heroism, and greatness, along with equally big lies about the "evils" of the civil society, especially the free market.

Read the whole thing.

A Farewell to American Capitalism

From a Russian of all people. Stanislav Mishin sounds like a man who reads LewRockwell.com regularly. His diagnosis and prognosis of our situation is quite accurate:

It must be said, that like the breaking of a great dam, the American decent into Marxism is happening with breath taking speed, against the back drop of a passive, hapless sheeple, excuse me dear reader, I meant people.

True, the situation has been well prepared on and off for the past century, especially the past twenty years. The initial testing grounds was conducted upon our Holy Russia and a bloody test it was. But we Russians would not just roll over and give up our freedoms and our souls, no matter how much money Wall Street poured into the fists of the Marxists.

Those lessons were taken and used to properly prepare the American populace for the surrender of their freedoms and souls, to the whims of their elites and betters.

First, the population was dumbed down through a politicized and substandard education system based on pop culture, rather then the classics. Americans know more about their favorite TV dramas then the drama in DC that directly affects their lives. They care more for their "right" to choke down a McDonalds burger or a BurgerKing burger than for their constitutional rights. Then they turn around and lecture us about our rights and about our "democracy". Pride blind the foolish.

Then their faith in God was destroyed, until their churches, all tens of thousands of different "branches and denominations" were for the most part little more then Sunday circuses and their televangelists and top protestant mega preachers were more then happy to sell out their souls and flocks to be on the "winning" side of one pseudo Marxist politician or another. Their flocks may complain, but when explained that they would be on the "winning" side, their flocks were ever so quick to reject Christ in hopes for earthly power. Even our Holy Orthodox churches are scandalously liberalized in America.

The final collapse has come with the election of Barack Obama. His speed in the past three months has been truly impressive. His spending and money printing has been a record setting, not just in America's short history but in the world. If this keeps up for more then another year, and there is no sign that it will not, America at best will resemble the Wiemar Republic and at worst Zimbabwe.

Walter Block comments "You know we're in big trouble when Pravda berates us for destroying capitalism in this country..."

Understanding the Boom and Bust

Today Tom Woods does us a favor by offering an outstanding lay explanation of Austrian business cycle theory for anyone interested in understanding our current economic predicament.

And by the way, if you're looking to put your own resources to their most productive uses, one great way to do this would be to invest a mere $21 in Woods's new bestseller, Meltdown.

It Keeps Growing and Growing and Growing...

The unemployment rate, that is, which at the moment stands at almost 9 percent.

But, say, how 'bout we keep on printing and printing and printing and bailing and bailing and bailing with fiat paper that will only continue to be worth less and less and less!

As Gerald Celente explained in a brilliant article yesterday, the feds are attempting to "fix" a problem using the very same methods they applied while creating it in the first place -- by encouraging "unchecked over-consumption and over-development made possible by the availability of cheap money and easy credit."

Instead of pushing criminal bailouts, overextended companies need to be allowed to either recover or fail on their own; credit markets must be allowed to dry up; Americans, many of whom have already seen retirement accounts cut in half, should be encouraged to save and pay off debt, not accumulate ever more.

As the erudite Lew Rockwell is fond of saying, they don't call it a correction for nothing.

What's Wrong with the U.S.?

Writes Mark Thorton:

The answer to the question--what is wrong with us?--is actually simple and straightforward. We are collectively stupid and brainwashed. We have been taught and conditioned that government can solve our everyday problems at no cost so the more the merrier.

As Nathan said to David, "You are the man!"

The Empire Strikes Constantly

Banks are busted. Unemployment continues to rise across the country. American families are digging in for a decade of depression.

But the Pentagon's war machine just keeps growing and growing.

I'll Take My Totalitarianism in Green, Please

Don't look now, but Barack Obama's horrific "green agenda" is beginning to hit its stride, and the table has been set with the nationalization of the American auto industry. After installing a task force to micromanage the daily operations at General Motors and forcing out Chairman and CEO Rick Wagoner, the U.S. government is now poised to assume majority ownership of GM.

As LewRockwell.com columnist Karen De Coster remarked yesterday, "controlling this company will allow the feds to ram their socialist-totalitarian, green agenda down all of our throats," and she is absolutely right. After all, if your goal is to regulate the behavior of virtually everyone in the country in one fell swoop, there's no better way to do so than to exert authoritarian control over something we all do every day: drive.

In his quest to alienate global trading partners from South America and the Middle East, Obama will start small by increasing fuel economy standards. If you think your little plastic cars are ugly and unsafe now, just give Our Holy Savior some time. As he states in black and white in his energy and environment agenda, the president will offer tax credits to encourage Americans to purchase the one million "plug-in hybrid cars" he wants to get on the road by 2015. (Personally, I think this number is incredibly low. Once the totalitarian state assumes outright control over the production of who knows how many American-made automobiles, gas tanks might be as hard to find as steel bumpers in another five years.)

Incidentally, I noticed just last night one of the less conspicuous ways the state is exerting its bias against "gas-guzzlers." I was up in Arlington, Virginia at the Hard Times Cafe for a DC101 Chili Cookoff meeting and was told to park in a free lot under the Department of Human Services building. The parking spaces were definitely big enough to accommodate anyone driving a Barbiemobile, but things got a little dicey as I tried to wedge my Toyota Tundra between a support beam and the car next to me. The joy (and by joy I mean evil) of public property is that the government can literally crowd out anyone who doesn't conform to its demands.

But automobile mandates may not be the worst of Obama's plans. He also wants to implement a putrid cap-and-trade program that would ostensibly reduce 80 percent of greenhouse gas emissions by 2050, a move that the Environmental Protection Agency has forecast would cost the economy $2.9 trillion and ultimately reduce GDP by 6.9 percent -- a figure comparable with the economic meltdown of 1929 and 1930. But heck, maybe that's not such a bad price to pay for directives that are predicted to reduce the average global temperature by a whopping 0.10 to 0.20 degrees Celsius.

Worse still is Obama's promise to "create millions of new green jobs." As if it isn't bad enough to rob taxpayers blind in order to implement even more make-work programs so the government can hire millions more employees who can't be fired, we don't even know what these job might entail. However, given that the president has already begun pushing his "national civilian security force," which he promises will be as strong as the U.S. army, does it require an overactive imagination to believe that these new "green jobs" will be accompanied by a "Green Stasi" comprising individuals whose sole purpose will be to regulate our every move and enforce tyrannical environmental mandates?

There's a name for Obama's plans for state-controlled capitalism. It's called fascism. And it's all beginning with the government's assumption of control over what has been one of the world's largest and most influential manufacturers.

Only you and I can control how it ends.

Blame Global Warming Hysteria for the Housing Bubble

It's not as far-fetched as you might think, writes Steve Greenhut.

Invest in Gold

Writes a friend:

Lost my wedding ring heading over to Tiki Bar Friday. Went to Rick's Jewelers where we bought it, for an identical replacement. My $300 ring bought in 2005 is now $800.

The Real Fear of the State

The Holy One has realized that there is a real threat to the State. During his first Cabinet meeting of his administration, he said

"We also have a deficit — a confidence gap — when it comes to the American people," [President Obama] told reporters. "And we've got to earn their trust." (Emphasis added).

To earn this trust the Holy One ordered his Cabinet to find ways to trim spending by $100 million. This is like saying we're going to drain a pool using a teaspoon and bucket. However, the Holy One, being one of the best manipulators of human emotion I have seen as president, immediately stated

"None of these things alone are going to make a difference. But cumulatively, they make an extraordinary difference because they start setting a tone ... $100 million there, $100 million here — pretty soon, even here in Washington, it adds up to real money."

The Holy One starts small and lowers the expectations of the people and then gives them false hope so that they will easily submit to their own destruction. If I had no moral scruples, I would applaud such wiliness. 

But the my point is that the Holy One has exposed the Achilles' Heel of the State for all to see. ThisCabinet meeting came shortly after the "Tea Party" demonstrations across the country. As Trevor and other commenters have pointed out, the Tea Parties were really ruses for big government conservatives to kvetch about losing power. Nevertheless, the weight of heavy taxation can compel many citizens uncommitted in their political ideology to seek relief and such seekers may find LewRockwell.com or Mises.org or Karen DeCoster or this blog among other radical and libertarian blogs. They may read Our Enemy, the State or The Criminality of the State or On the Impossibility of Limited Government or The Song That Is Irresistible: How the State Leads People to Their Own Destruction or The Income Tax: The Root of All Evil or The Discourse on Voluntary Servitude. They may become convinced through such writings that taxation is robbery; that the government(s) they live under are dishonest, insane, and intolerable; and they may begin to sow seeds of discontent within the populace which could lead to an intellectual revolution in which a majority withdraws its consent. No violence is necessary. If suddenly the majority no longer obeys the dictates of the State, our rulers will become noisy gongs whose boisterous cacophonies will quickly fade into a serene hush.

Grow Up, America

So says Gerald Celente in an interview regarding the American fascist State:

We are telling people, just as the doctor would tell a patient, “Look, there are ways out of it but first we have to recognize what the disease is. And then we are going to have to be very inventive about trying to attack it in a number of different ways. We could go through complementary medicine, we could go through traditional… we could even go through a combination of things.” But you respect what the doctor is saying, and you don’t call him a gloom-and-doomer. It is a childish response that people have that want to believe that they have a new leader, and that the new leader would lead them down the yellow brick road of happiness. Rather than understanding that there is nobody behind the curtain. It’s the Wizard of Oz. They’d better grow up; nobody is going to save them.

A Fellow K.O.O.K. Speaks

Gary D. Barnett, fellow K.O.O.K., comments on the recent DHS report. He connects the dots of the actions of our government and does not like the completed picture. He writes in part

All the federal government’s offensive and defensive mechanisms are being put in place while the lowly sheep await the slaughter. More economic tensions with more unemployment along with over-zealous police thugs bent on revenue creation; what will be the straw that breaks the proverbial camel’s back? What will it take before civil unrest is not just discussed on talk shows, but is evident in the streets of America? How much unrest will be tolerated by the now fully armed military-type police before they become physical?

I honestly don't think most Americans will believe that their own government will kill them until they have been shot by one of their protectors. For most Americans, the State is their god and they simply can't imagine that their god who claims to be their protector will harm them. They have been deceived on a massive scale in part because the democratic process blurs the line between rulers and ruled. Clearly there are rulers and ruled, but because the people meet their potential masters who tell them sweet lies to get their votes, they then think that these cretins have the public welfare in mind. They can't imagine that the people running for office might be murderous psychopaths. 

USAToday recently carried a story about the real story behind the Columbine massacre. The piece includes a chilling comment by Dave Cullen who recently wrote a new book on Columbine:

[Eric] Harris, who conceived the attacks, was more than just troubled. He was, psychologists now say, a cold-blooded, predatory psychopath — a smart, charming liar with "a preposterously grand superiority complex, a revulsion for authority and an excruciating need for control," Cullen writes.

If these psychologists' assessment of Eric Harris is true, then an 18 year-old high school student fooled all of the adults who were concerned with his well-being including his own parents. Do you really think that our democratic process can winnow out such people? Our democracy is a competition among liars, demagogues and potential murderers to crown the best liar, demagogue and potential murderer. The advantage goes to smart, evil people, e.g., psychopaths.

I don't want people to think that I wish for a violent end to this empire. I wish for no such thing and pray that such does not happen. As I have written many times in this space, the empire can end peacefully if a majority of people view the State as illegitimate and withdraw their consent. And indeed I could very well be wrong about the majority of the people. Ideology can change instantaneously and the majority could suddenly say, "Our government is evil." Michael Gaddy wrote to Lew Rockwell with an encouraging sign in this direction:

I am receiving an increasing number of responses from military personnel who tell me many in the military are beginning to awaken to the coming chaos, and are voicing their support for the citizens as opposed to the state. Perhaps having Obama rather than the previous office holder - who had a direct line to God - is indeed beginning to awaken some folks out there.

So there are pockets of hope. But I think the best advice is to hope for the best and prepare for the worse.

Ron Paul Rips the President's Spending Plan

Insanity Rules the Day

You really can't make up headlines like these: "Financial Crisis 'Far From Over,' Panel Says: Govt. May Spend More than $4 Trillion but Economy Faces 'Prolonged Weakness,' Oversight Panel Reports"

My emphasis.

Why, pray tell, do you think we're facing at least a decade of depression "prolonged weakness" when the government insists on spending money it doesn't have? Can inflating the currency, thereby destroying the value of the dollar, actually strengthen the dollar?

Clearly drugs are illegal everywhere but Capitol Hill.

Einstein once said insanity was doing the same thing over and over and expecting different results. This sentiment applies aptly to the current economic mess, but I think we should simplify a bit: Insanity is believing the government is capable of solving problems.

SNL "Parodies" the President

Via Peter Klein at the Independent Institute Blog:

From the opening sketch of last weekend’s Saturday Night Live:

My administration intends to do to every industry in this country, exactly what we are doing to the automakers. Every company will be vetted for fiscal soundness. Those judged best able to compete in the global economy will be offered a governmental subsidy. The others will be asked to cease operations at once. Hopefully, they will do so voluntarily, if not, they will be shut down by force.

Dishonest, Insane, and Intolerable

The brazen hypocrisy of the State never ceases to amaze me. The Federal Government is cracking down on mortgage scams. Apparently there is a a group of "criminal actors" who are taking advantage of borrowers in danger of foreclosure by charging them upront fees of $1,000 to $3,000 for help with loan modifications. In a statement which defines chutzpah, Timothy Geithner said,

"These predatory scams callously rob Americans of their savings and potentially their homes...We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar."

This from the same government that has been robbing the American public's savings through taxation and inflation. Statements from government officials such as this remind me of Lysander Spooner's charaterization of the State as a highwayman. But, argues Spooner, the State is actually worse than a plain criminal:

"The fact is that the government, like a highwayman, says to a man: ‘Your money, or your life. And many, if not most, taxes are paid under the compulsion of that threat. The government does not, indeed, waylay a man in a lonely place, spring upon him from the roadside, and, holding a pistol to his head, proceed to rifle his pockets. But the robbery is none the less a robbery on that account; and it is far more dastardly and shameful. The highwayman takes solely upon himself the responsibility, danger, and crime of his own act. He does not pretend that he has any rightful claim to your money, or that he intends to use it for your own benefit. He does not pretend to be anything but a robber. He has not acquired impudence enough to profess to be merely a ‘protector,’ and that he takes men's money against their will, merely to enable him to ‘protect’ those infatuated travellers, who feel perfectly able to protect themselves, or do not appreciate his peculiar system of protection. He is too sensible a man to make such professions as these. Furthermore, having taken your money, he leaves you, as you wish him to do. He does not persist in following you on the road, against your will; assuming to be your rightful ‘sovereign,’ on account of the ‘protection’ he affords you. He does not keep ‘protecting’ you, by commanding you to bow down and serve him; by requiring you to do this, and forbidding you to do that; by robbing you of more money as often as he finds it for his interest or pleasure to do so; and by branding you as a rebel, a traitor, and an enemy to your country, and shooting you down without mercy, if you dispute his authority, or resist his demands. He is too much of a gentleman to be guilty of such impostures, and insults, and villanies as these. In short, he does not, in addition to robbing you, attempt to make you either his dupe or his slave.”

In Italy, They Called It Fascism

Unelected bureaucrat Timmy Geithner says the Obama adminstration will "do what's necessary" to fix the banking industry, even if that means using government force to oust private banksters.

“If in the future, banks need exceptional assistance in order to get through this, then we will make sure that assistance comes,” while ensuring taxpayers are protected, Geithner said yesterday in an interview on the CBS “Face the Nation” program. “Where that requires a change in management and the board, then we will do that.”

America, are you honestly going to sit idly by as your government completely co-opts private industry and eradicates what's left of the economic model that's produced what little prosperity you're left with today?

Laughably, Obama called the recent G20 summit "historic" because it resulted in world leaders calling for "tougher oversight of hedge funds, executive pay, credit-rating firms and derivatives trading."

Newsflash for the American Mussolini: There is nothing "historic" nor appealing about fascism, no matter how often you lecture the American public or leaders of corporations who find themselves in the positions they do today in large part due to already-stringent federal regulations and coercive public-private "partnerships."

I'll defer in closing to Vin Suprynowicz, who writes in response to Obama's decision to commandeer the auto industry:

It appears the president and his men have entirely lost track of – if they ever really grasped – the fact that in America, major industries are not run by the government, and for good reason.

This “new” system – in which private capitalists technically maintain title to their enterprises, but really operate under close, monopoly government supervision – was tried in Italy starting in the 1920s (where Mussolini’s system was called “Fascism”), and in Germany starting in the 1930s (where they called the plan “National Socialism.”)

This is not “name-calling.” These terms describe a certain type of state-run economic system, to which the Obama administration – in office a mere 60 days – is now embarked with a vengeance on converting this nation.

It’s a version of central planning, and it can’t work. No one bureaucrat can know what everything should cost, which technological innovations will succeed, and what consumers will buy.

Gerald Celente On Civil Unrest in the US

(Thanks to the LRC blog for the link)

Maritime Corrections

Via Karen De Coster, people who can no longer afford boats purchased during the boom are now resorting to ditching or sinking them.

I've heard of this occurring to a certain extent here in Maryland on the Patuxent River, though nothing I would consider palpable. However, this story takes me back to when my wife and I bought a 17-foot Boston Whaler in 2005.

Though the government has done its best to prevent us from using our boat because of its evil emissions regulations, we were nevertheless quite aware that the costs of pleasure boating are hardly limited to the boat loan itself. However, I know at least a couple people who made sure they got all the boat the lender would let them qualify for, only to resort to keeping it on the trailer once gas hit four bucks a gallon in the middle of the summer.

I still can't help smirking when I think that a total of 12 gallons of gas will fill both of my portable tanks to the brim.

Greener Grass

It's important in life to reach out, to strive for greater achievements, to go for that greener grass that is on the other side of the fence. But one must also be careful. Sometimes you can reach too far.

   

But when you find yourself over-extended and you're stuck in a situation that you can't get out of, there is one thing you should always remember:

 

Your government is here to help.

(Thanks to Paul C.)

What 'Free Market?'

I'd hardly consider Paul Jacob a radical libertarian, but he's spot on today in discussing what's not to blame for our current economic debacle: the free market. Amid rampant finger-pointing by pundits and politicos, the author of the Common Sense newsletter makes a very astute observation about the American economy:

We haven’t had a free market. We live in a heavily regulated, subsidized, coddled-and-attacked, over-taxed society. If the current debacle proves any system unfeasible, then the one proven wrong is the one we have. It’s the mixed economy that has proven to have worse than mixed results.

Too bad common sense is just about the most uncommmon thing around.

China Should Go for the Gold

To China's credit, its central banksters have suggested replacing the U.S. dollar with a new international currency. To its detriment, however, it argues that this currency should still be controlled by the IMF.

No fiat currency is stable in the hands of statist opportunists with the desire to inflate and therefore destroy it, whether it be the dollar, the yen, or the yuan.

While China's economy has become freer in recent years as its leaders increasingly embrace capitalism, Chinese officials will no doubt be rebuked out of hand by American critics on account of the country's well-known political oppression. While clear-thinking Americans might wonder how, in fact, this differs from how government officials here at home view citizens who fail to worship completely at the alter of the state, it would be wise to remember that the ticket to achieving political freedom is economic freedom.

China can jail nonviolent dissidents and censor YouTube all it likes, but this behavior would ultimately cease to exist if it actually embraced the one item of exchange suitable for use as a global currency: gold.

Economic freedom is the cornerstone of political freedom. If you prevent the state from trading in fiat currency and literally creating money out of thin air, thus allowing corrupt tyrants to legally confiscate private property and wealth, you automatically prevent them from engaging in the very act from which all political power is derived.

The American Mugabe

Because the Zimbabwean economic model has led to unparalleled prosperity, His Highness apparently figures counterfeiting another trillion will help pull America out of depression.

The Obama administration's latest attempt to tackle the banking crisis and get loans flowing to families and businesses will create a new government entity, the Public-Private Investment Program, to help purchase as much as $1 trillion in toxic assets on banks' books.

Hey Barack, if the destruction of the dollar was the answer to our problems, we would've solved them long ago.

If you're interested in the sane approach, here's Ron Paul in an interview with Glenn Beck earlier today (be sure to click on part two after the first segment expires).

Channeling Anger

In Crisis and Leviathan, Robert Higgs describes how the Federal government got away with implementing a draft during World War I. Leviathan understood that if it sent soldiers to the homes of citizens and dragged men off to war, there would be outrage. Instead the War Department assigned the lowest level of administration of the to local civilian boards rather than military personal. Writes Prof. Higgs, "Grass-roots administration had enormous utility in focusing effective moral pressure on those selected for induction." These boards were corrupted by local prejudices; Southern boards, for instance, discriminated against blacks and "the obligation of service fell disproportionately on the powerless and the poor."

But these boards served a nefarious fundamental purpose. Provost Marshall General Enoch H. Crowder, who headed the draft, described the purpose as

buffers between the individual citizen and the Federal Government, and thus they attracted and diverted, like local grounding wires in an electric coil, such resentment or discontent as might have proved a serious obstacle to war measures, had it been focused on the central authorities. Its diversion and grounding at 5000 local points dissipated its force, and enabled the central war machine to function smoothly without disturbance that might have been caused by the concentrated total of dissatisfaction.

I thought of that passage in the book after I read these comments by Obama the Blessed and Merciful in The New York Times:

I don’t want to quell anger. I think people are right to be angry. I’m angry,” Mr. Obama said, his voice reaching a peak seven days after learning of the bonuses given to employees of the American International Group. “What I want to do, though, is channel our anger in a constructive way.”

As I pointed out, the President played a direct role in this embarrassment. So far the State has done a good job dissipating the force of resentment and anger. People have blamed the "free-market", greed, lack of regulation, lack of oversight, and corrupt businessmen. The few people I have spoken with personally about AIG and the financial mess in general all believe that the "free market" failed. I have read similar evaluations in mainstream media and some blog forums on reactions to the crisis. Not only do these scapegoats divert attention away from the sole cause of our misery, the State, it has the remarkable side effect of channeling this anger into a generator of favorable public opinion for the State and its interventions. People are not only more tolerant of additional State intervention, they demand it. Such demands only empower the State even more and lead to more misery.

Prof. Higgs evaluates the Provost's comments as follows:

Such frank public admission of Machiavellianism is rare in American history. Clearly the top governmental officials where unmoved by the 'concentrated total of dissatisfaction.' Their ruling imperative was to feed the war machine whether or not people objected to being fed into it.

I believe that you can apply this analysis to anything the State does. The State exists only to serve itself. Any action it takes is designed is to aggrandize itself and accomplish its goals. Just as the governmental officials in 1917 desired to feed the people into its war machine regardless of the human cost, our rulers today desire to feed us to this Financial Frankenstein without regard to the pernicious effects on our economy or our lives.

What Depression?

New York governor David Paterson, who couldn't tell you something he wouldn't tax if you asked him, is living proof that while the common folk tighten their belts and face unemployment during Great Depression II, it's business as usual for the state, whose tax-eating parasites continue to starve their hosts in order to remain fat and happy.

Your Government at Work

Iowa Sen. Charles Grassley's office is in spin mode today after Grassley suggested that AIG executives who are responsible for the collapse of the insurance giant should either resign or commit suicide.

"I suggest, you know, obviously, maybe they ought to be removed," Grassley said. "But I would suggest the first thing that would make me feel a little bit better toward them if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide.

"And in the case of the Japanese, they usually commit suicide before they make any apology."

No word yet on how Sen. Grassley plans to punish himself for ignoring his constituents and consenting to the Great American Ripoff used to insulate corporate execs from of the consequences of poor decision-making.

Abolish the Federal Reserve

Mises University scholar and economist Robert Murphy believes the government should get out of the money industry entirely. However, if we must have a central bank, "it makes a lot of sense to put in place rigid restrictions on it," he writes today in defense of the gold standard as he debunks the argument that gold-based monetary systems are "overly restrictive" and "volatile."

In countering the claim that gold currency is unstable, Murphy asks rhetorically:

So you tell me: looking at the graph below of the Consumer Price Index, when was the value of the dollar stable and predictable, and when was it really volatile? In which environment could businesses and investors confidently make long-term decisions? Remember that FDR took away private citizens' right to redeem dollars for gold in 1933, and then Nixon finally removed even the ability of central banks to do so in 1971.

   

People who oppose the gold standard have no particular aversion to gold or any other precious metal per se. They are statists, so what they really oppose is the imposition of any standards whatsoever that would at least inhibit central planners from retaining control over the value of our property and, by extension, control over our lives.

Though it's hard to argue with pictures, many people will look at the graph above and still try to convince you that the answer to the current economic crisis is to enable the government to carry on with the same policies that created it -- that is to say, printing paper money backed by nothing more than the thin air out of which it appeared. But this really ought to come as little surprise, for the same types of people will insist that crime can be reduced by increasing government gun restrictions, which tend to encourage crimes in the first place.

Of course, Murphy's article needs no additional endorsement or explanation from the likes of me. He nailed it from the very beginning when he said, "To criticize a monetary system based on gold as 'rigid' only makes sense if you believe that printing green pieces of paper makes a country richer."

Obama and Geithner: "Let's Destroy the World Economy"

They did not quite phrase their comments this way, but if they con the rest of the world's governments into adopting similar profligate spending packages, they will put the world on the express lane to chaos. Fortunately, some world governments are resisting:

"The U.S. challenge highlighted a rift with European nations who are balking at U.S. calls for more stimulus spending, arguing they do not want to pile up huge levels of debt. Some European critics have charged that the U.S. demand for increased stimulus spending was an effort to divert a European call for a major overhaul of regulations governing the financial system to curb the types of excesses in the U.S. that spawned the crisis."

While I applaud these governments for resisting the "Spend everyone else's money to solve a problem we created" mentality, I always find it interesting that so many people believe that deregulation of the financial system contributed to this mess. The financial system is the the most heavily regulated industry in the US and probably the world. We can't even choose our own money for transactions. Moreover, these regulations are written by bankers and former Wall Street executives. Why on earth would any rational person then believe that the purpose of these regulations is to protect the citizens from greedy executives when said regulations have been drafted by greedy executives?

In order to allow the world to spend more money, we need to be able to steal resources from the productive citizens of several countries at the same time. Geithner has a plan:

"Geithner said the U.S. will seek approval to expand a $50 billion fund the IMF maintains to support countries in trouble to as much as $500 billion. The IMF needs much greater resources to be able to provide emergency loans to countries during the current crisis, he said."

Yes, let's give more money to foreign governments to allocate resources. Surely this will lead to higher productivity and economic growth because governments always pick the most efficient firms to produce goods and services and never, ever base such decisions on politics.

What we are witnessing is the failure of middle-of-the-road policy on a worldwide scale so accurately described by Ludwig von Mises. Government interventions lead to unintended consequences which then lead to more government interventions to fix those unintended consequences which then lead to more unintended consequences which then lead to more government interventions until we become a socialist economy. This is not true communism where the government officially owns all property; there are still private "owners" who have title to their property. But the government has so regulated the owners as to how they may dispose of their property, that the government owns it.

Governments all over the globe have been incessantly intervening in the voluntary exchange of goods and services and created the very chaos to which they present themselves as the solution. This administration's plans to have all the governments of the world join forces with the US to spend and inflate will only speed up the rate at which the world economy disintegrates.

Greenspan Doesn't Understand the Credit Crisis

Via Karen De Coster, I've come across this article today in the WSJ by Alan Greenspan, who insists the Fed isn't responsible for the housing bubble (and subsequent bust).

There are at least two broad and competing explanations of the origins of this crisis. The first is that the "easy money" policies of the Federal Reserve produced the U.S. housing bubble that is at the core of today's financial mess.

The second, and far more credible, explanation agrees that it was indeed lower interest rates that spawned the speculative euphoria. ...

I certainly wouldn't want to contradict King Alan, but does Greenspan really not realize that the Fed's "easy money" policies led directly to lower interest rates? When you want to find people to absorb all the new credit, you generally need to entice them with low interest rates.

The more stuff I read from people like Greenspan and Krugman, the more I realize their strategy is to say things that are so utterly absurd that it leaves us too dumbfounded to even respond.

It's like we're living in the Twilight Zone. But then again, I was no Fed chairman, so what do I know?