Driving the Economy with Your Eyes Closed

On April 14th, Obama himself touted that there were “signs of economic progress." Now, I’m not a Nobel Prize economist or even a vaunted one. In fact, I'm a disgrace because I work in the real world as opposed to sitting in a college office running complex and unrealistic econometric models. For what it's worth, I believe we are sitting in the eye of an economic hurricane and whether the next half of the storm hits us up to the President.

Let’s dissect what has happened and what could happen. To do so, I will break down this recession into 2 phases. We are at the end of phase 1 and inching close to phase 2.

Phase 1:

At phase 1, the recession was mostly in the financial industry. Bad mortgages and increasing foreclosures caused banks to run out of money to lend businesses. This is called a problem of liquidity. The timing of the economic downturn is important. You see, phase 1 really started to impact economy in the 4th quarter. In response, companies sought to tighten their financial screws to salvage their financial statements for the year. Being that the whole year was not a bad year, the financial wizards in most companies saw an opportunity to make quick sweeping moves to pad the only quarter that looked abysmal, their last quarter. As a result, we saw large increases in unemployment, but not many companies closing their doors. The problem for companies right now is there are no more screws to turn. Companies threw all their eggs into 2008 in the hopes that the recession will subside by the end of 2009. Why wouldn’t CEOs have a bullish outlook on the future? They see that their consumers still want their products and are still buying, they are just buying less. Keep in mind, many of today’s CEO has never had to steer their company through a serious recession. In fact, if you look at the MBA programs of today and there is an overwhelming focus in managing market competition, not market collapse.

The Calm before Phase 2:

Right now we see consumer spending dropping, but not as quickly. This is being padded in part by the time of year. Many people are receiving their tax refunds. Also, this is the time of year that most companies give raises and bonuses. It’s common to see spending pick up a little in the retail business this time of year. We’ll need more than a seasonal boost to pull out of this recession.

Phase 2:

In this phase the recession seeps into the consumer market. Yes, we’ve seen consumer spending fall, but there is still a long way to go. When you loose millions of jobs in a few months, you are most certainly going to see a sudden drop in consumption. In 1929, consumer spending ground to a complete halt instantaneously. This was because most people only had access to cash. So far consumer spending has been greatly padded by credit cards. If you are paying attention to news stories, there have been a number of articles on the beginning of a consumer credit crunch.

Smartmoney.com has an article regarding the growing credit balances that card companies are seeing. According to the article, credit card balances have nearly doubled from 4% lows over the last 4 years to 7% today. It sounds small, but it is huge! With unemployment on the rise and no equity in their homes, people are turning to their credit cards to finance their spending. The problem is that credit card companies are running out of money to give to consumers. Part of the problem is that Obama and Geithner have been doing a poor job of fixing the first part of phase 1. We are starting to see a battle between companies and consumers over who will get the little cash still flowing out bank vaults. The article, incorrectly downplays the problem, but at least recognizes the storm brewing.

Phase 2 will either be triggered by an increasing unemployment rate or a persistently higher than normal unemployment rate. As I stated in phase 1, people are buying, just not as much. The trouble with current levels of unemployment is that we can sustain our current level of consumer spending for only so long. Once consumers run out of cash, spending stops. Once spending stops, companies are going to fail. Thus begins a never ending chain where companies fail and lay people off, causing further drops in consumer spending, causing more companies to close their doors and so on.

Recent polling data shows that of the people currently approving of the Obama administration, their approval is based primarily on his economic policies. This shows two things. First of all, Obama now owns what happens in the economy (He has instituted policies and he is getting credit for them). However, it also shows his downfall. Although he has most certainly taken actions regarding the economy, he has not enacted, proposed, or taken any action that would stem this recession in a meaningful way. His stimulus plan is an utter failure. In fact, I was surprised to see how quickly it could fail. The $13/week “tax cut” is on the chopping block for his budget and has done nothing to change and increase consumer spending. Infrastructure spending is turning into a nightmare. Sure there is spending on infrastructure programs, but not new programs. No, the spending is going to programs that States were going to fund in the first place, but are using government funds instead as a way to fill in their budget gaps. The green jobs investment has also been proven a failure. Vestas, the largest wind power company in the world and the sole supplier of wind blades to the US has gone out of business. Even in the face of UK subsidies, the promise of US green jobs stimulus spending, and Cap and Trade the company has decided that there is no money to be made in wind energy (read the UK Guardian Article). In the US, the same story is being played out. In fact an Ohio company who makes wind turbine bolts and was visited by Obama himself to promote his stimulus, laid off workers in February (read the article).

Where Obama’s stimulus was a poor effort to create jobs, his budget agenda is aimed at eliminating jobs. Cap and Trade will result in lost jobs from coal miners and carbon based power companies and manufacturing. The higher energy costs passed on to businesses as a result of Cap and Trade will be offset by companies in the form of unemploying labor. Arthur Laffer estimates a family of four will pay about $10k/year for Cap and Trade, further stifling spending. Likewise, Obama’s healthcare will cost thousands of jobs in healthcare. Obama’s education will create new jobs in education, but how many? Education is already saturated with consumers since all children go to school and most people go to college. The gains will be more than offset by losses from Healthcare and Cap and Trade.

Early in his Presidency Obama stated, “We can handle multiple problems at the same time.” However, the real question is, “should he tackle them at the same time?” It’s the equivalent of building 10 bridges halfway across the Grand Canyon. Sure there are now ten bridges, but we still end up jumping off the cliff at the end. The time is running out for Obama. Every policy he enacts brings us closer to a “phase 2” recession. It’s already on its way and Obama is responsible.

Read my earlier post on why Obama's stimulus plan won't work.
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Update:
I found this little nugget of a story on MSNBC. Proof that occasionally they do have interesting stories. The article talks about the problem of counting stimulus jobs. Of course, the administration can inflate the job number as much as they want, having the stimulus work is what is most important.

Is it Torture or Training?

Imagine enduring several days of muscle strain, chilled to the bone, starving from lack of food, tired beyond belief and recovering from random acts of humiliation. Would you live under such inhumane treatment? Am I describing the effects of enhanced interrogation? The answer is, NO! I’m talking about SEAL training.

That’s right! Training for the Navy SEALs is so strenuous that they have doctors on hand for hell week to ensure no one’s health is in danger. The training is meant to break down and weed out the average person and push recruits to the limit. The SEALs want only the most dedicated and those willing to push their bodies to the physical limits. Recruits are intentionally stressed with physical activity, sleep deprived, restricted food and diet, forced to physically deal with cold temperatures and humiliated and degraded the whole way through training.

Sounds a lot like another government program, doesn’t it? Yes, the enhanced interrogation methods are quite similar. Surprising that our government uses similar methods to weed out and test Special Forces as they do to interrogate terrorists? After all, these methods have been tried and true in breaking people down. However, the methods of interrogation and Special Forces training are not only similar in practice, but the same legal statute that allows the military to conduct hell week is the same one that shields former President Bush from prosecution.

Thanks to William Jacobson’s, associate professor at Cornell and author of the blog Legal Insurrection, the legal statute is listed below (Seriously Thanks! It would have taken me hours trying to navigate and find the statute in West Law. Jacobson also has a post explaining the statute)

18 U.S.C. sec. 2340 provides the definitions of what constitutes torture (emphasis mine):

As used in this chapter--

(1) “torture” means an act committed by a person acting under the color of law specifically intended to inflict severe physical or mental pain or suffering (other than pain or suffering incidental to lawful sanctions) upon another person within his custody or physical control;

(2) “severe mental pain or suffering” means the prolonged mental harm caused by or resulting from--
(A) the intentional infliction or threatened infliction of severe physical pain or suffering;
(B) the administration or application, or threatened administration or application, of mind-altering substances or other procedures calculated to disrupt profoundly the senses or the personality;
(C) the threat of imminent death; or
(D) the threat that another person will imminently be subjected to death, severe physical pain or suffering, or the administration or application of mind-altering substances or other procedures calculated to disrupt profoundly the senses or personality; and

(3) “United States” means the several States of the United States, the District of Columbia, and the commonwealths, territories, and possessions of the United States.

Now the lefties reading the statute need to read carefully. Lawyer speak is not like the same language we use everyday. They often leave a few loop holes in order to create some wiggle room. The wiggle room in this case is the word intentional. Intent is very important in this statute. This is the key between training our SEALs and torturing them. Since the administration took drastic action to prevent the infliction of severe physical pain and suffering, there is a strong argument that there was no intent.

“But, Bush was toeing the line.” The lefties will say. You would be right. The Bush administration was certainly pushing the envelope, but was also trying not to cross the legal line that was drawn out by this statute. This may be considered morally bankrupt or indecent, but not illegal in the context of the statute.

You will notice that whether or not the subjects to these methods volunteer is not part of the legal definition. If there is one thing the lefties lack in their political thought, it is consistency. If we are to determine that sleep deprivation, physical and mental fatigue, humiliation and food restrictions are torture, then we must also prosecute SEAL trainers. However, the lefties aren’t going to make the debate on legal arguments, but Hate Bushism arguments. We are a nation of laws and that means that if the laws were not broken, we do not prosecute.

In the interest of informing, the NY Times has done a great job providing easy access to the enhanced interrogation memos. Feel free to check them out!

Cap and Trade Redux

I’ve already posted on the uselessness of Cap and Trade two days ago. However, there was a debate in congress yesterday worth viewing. I’m indebted to C Thinker from Politics and Critical Thinking. The blog is featured on my list. He does an excellent job covering the debate, so I’m only going to post the videos of Gore, Gingrich and Waxman. We need Gingrich back into some form of office!

Here is Al Gore


Here is Newt


Here is the Cap and Trade bill's owner, Waxman, getting owned by Newt


Any questions?

Will Hannity be Waterboarded?

Visit msnbc.com for Breaking News, World News, and News about the Economy

In an interview with Charles Groddin on 4/22/09 Sean Hannity stated that he would be willing to be water boarded for charity. Last night, Keith Olbermann threw down the gauntlet and offered to pay $1,000 for every second Hannity was water boarded. This is leading many to ask the question, will Hannity be water boarded? The question I would raise is what’s the down side?

Hannity has the chance to prove his point on enhanced interrogation, expose the left as hypocrites, while supporting the troops all in a single act. No doubt Sean would raise serious bucks for charity from Olbermann and others if the challenge was taken. I wouldn’t be surprised if Obama or at least Rahm Emmanuel would chip in a dime or two. A stunt like this would show very serious support for our troops, many who have suffered worse from the war. As well as show support for a technique that has helped save some of their lives.

Meanwhile, Olbermann and those of his ilk would be exposed as the haters they truly are. Olbermann explicitly wants video footage of the event as a condition of the charity. The reason for this is obvious. No doubt a video of Hannity being water boarded would provide hours of enjoyment for those who would rather see and degrade a well known conservative by water boarding for charity, than to use the technique on a psychopathic killer for the purpose of saving lives.

Yes, the duplicity of the far left is never ending. As Olbermann pointed out, water boarding is serious. So tell me who's sicker? The one who offers to be water boarded for charity, or the one who wants to pay and video tape it?

Those Little Cap and Trade Assumptions Sometimes Make a Big Difference

I’ve been working through the 2007 MIT study on Cap and Trade. This study is the Holy Grail in terms of how Cap and Trade will impact the economy and global temperatures with today’s proposed legislation. My goal here is to inform on those little details that get missed when politicians start talking about the doomsday that global warming will bring. The study is long and being an economist, I hope to have a full economic rundown for you. However, the idea of Cap and Trade without respect to the “science” of Global Warming is and of itself an absurdity.

One of the first things you should know about the study are the assumptions being made. Although the study tries to take into effect as many possibilities, the success and limitation of negative environmental and economic effects requires that all nations adopt a similar carbon trading system. How much of an impact you may ask? Well, if only developed nations (US, Europe, Japan, Canada, Australia and New Zealand) follow through on enacting cap and trade, MIT estimates that we will reduce global temperatures a whopping .5 degrees Celsius over 100 years. If developing nations (India, China, Indonesia, Higher Income East Asia, Mexico, Central and South America, Middle East, Africa, and the Rest of the World) also commits, we will have reduced temperatures by 2 degrees Celsius over 100 years. These reductions are in relation to the “no cap and trade policy” case.

The study also assumes that government will redistribute the tax revenue from cap and trade back to households as a way to offset increasing cost to energy. I don’t believe I need to touch on that one. If anyone believes this will be the case, you are welcome to comment, but I will be laughing at you. Even with the redistribution, the social cost is very high.

The economic effects of the “all nations institute a similar cap and trade policy” are enormously negative for the US if it does not come true. I know this because those with government economics degrees at MIT point it out more than once. I quote! “The cost of policy in the US is greatly affected by policies in the rest of the world.” That is because Cap and Trade in and of itself is punishment to the US. Other countries can benefit in lower energy costs while the US punitively manufactures higher costs on…ourselves. This creates an incentive for countries, such as China (who has surpassed the US as the largest carbon emitter) to stay away from carbon trading, because switching to such a system requires them to punish themselves even more than the US and they would also have to forgo the reward for lower fossil fuel prices (fossil fuel prices drop significantly if the US stops using them). If only the common sense of Clinton were still around today. There’s no point in punishing ourselves for .5 degrees Celsius over 100 years if China’s not aboard. If we aren’t creating carbon, I guarantee someone else will pick up the mantle.

The study also states that it cannot account for government waste in the program. Since the government is doing two actions, taxing and spending, there inevitably will be government waste in both actions (See my post on Government Spending early in the week). Don’t worry. I’m sure John Murtha will be there to make sure enough Cap and Trade taxes are used to keep his airport open.

I’ve been working on a post on the problems for the “science” of global warming and one will be forth coming. I am having trouble finding credible information on either side of the argument so it is taking a long time. However, even without debating global warming, anyone can see the folly of Cap and Trade. Believe me, .5 degrees Celsius over 100 years lower than the no policy option is hardly worth the cost to the tax payers and the economy.
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Update:
Actually, this is old news. I am have pointed out the ineffeciveness of Cap and Trade Legislation. Now, I do not believe in man made global warming. However, James Hansen, the NASA scientist well known for his vocal defense of global warming science, also agrees with me. The UK Guardian outlines a letter Hansen sent Obama in January pleading with him not to follow the "ineffectual...approach" of Cap and Trade. Though I don't agree with all Hansen's proposed solutions, I will agree that this country needs to invest in "fourth generation nuclear plants, which use nuclear waste as fuel."

Update #2:
The Washington Post had a sobering article on the real potential, or lack thereof for solar and wind power. The Post points out the obvious, "the sun doesn't always shine and the wind doesn't always blow." They also point out the large premium that we will pay for energy when nature is not being accomodating. Also, the large subsidies and money needed to lay the infrastructure.

Obama Shouldn’t be Blamed for What Happened When He was 3 Months Old. Neither Should We.

In his response to Daniel Ortega’s excoriating remarks to Obama in front of the Summit of Americas nations at last weeks meeting, Obama curtly replied “I’m very grateful that President Ortega did not blame me for things that happened when I was 3 months old.” However, Obama left the rest of America out on the curb.

It turns out that more than half of Americans were born after Obama. According to 2007 census bureau information 100.9 million people were born in 1962 and later and 97.3 million were born 1961 and before. Since most of the population in the US was not yet born, we too should not be blamed.

I don’t blame Obama if he didn’t know the age demographics of the population. I did not know until I did the math and looked up the population of the nation. However, something must be said regarding how Obama has been going on about his “listen and lead” foreign policy. He needs to realize that the US is at least as guiltless as himself.

The most important omission in Obama’s policy (not defending America) is the most dangerous omission from his policy. This is especially true in South America, where dictators like Ortega and Chavez have maintained their oppressive governments through distraction created by blaming their country’s poor living standards on “oppression” from the North.

I’m not saying Obama needs to be defensive on the accusations being leveled, but he should at least be a voice for all the good that America has done in the world. There has been at least as much good done by America as there has been bad. He does both America dishonor in not vigorously advocating these positives as he does damage to the citizens in the countries run by Ortega and Chavez and leaves the people in these country’s hanging out to dry in more ways than one.

Obama correctly pointed out in Europe that we are a nation of “principles and ideas,” but those ideas are not welcome in the dictatorships in this world because they offer their subjects a life of independence, free of their rule. There are many in these oppressive countries that do in fact agree with our way of life. These peoples are working in their countries to bring about the freedom that we so lavishly enjoy. In ideology, they are our allies. The dictators hate us, because they hate them. In failing to herald the good in the US, he has not only left America down, he’s let the world down and made it easier for these dictators to continue their regimes.

If you don’t believe me, Chavez declared victory on Tuesday. The result, is obvious to those who oppose Chavez in Venezuela, they will get no support from the freest nation in the world. This is yet again another example of the unintended consequences of progressive thought.

When Your Spin Fails

If you haven’t noticed, I’ve been focused on government spending lately and it seems as though President Obama also felt the need to look at government spending as well. USNews.com reports that Obama plans to make several changes and cuts to executive spending that will create a savings of $100 million. The problem? Everyone saw through the spin.

In truth the cuts, although welcome by me and every other tax payer, were really a PR stunt to diminish the continuing criticism from Tea Parties and others on government spending. The idea is to create and increase the total number of media stories depicting Obama’s administration as being fiscally responsible to offset the total number of media stories about the administration’s spending.

This strategy was done once already. Immediately following the signing of Obama’s stimulus plan into law, Obama sought to offset all the spending press coverage with fiscal responsibility coverage by holding a Fiscal Responsibility Summit. The media took the bait and began reporting how Obama was going to bring back Clinton’s “spend as you go” fiscal policy.

The summit was obviously a ploy evidenced by the administration’s lack of adherence to the policy in the passage of the Omnibus Bill and Obama’s proposed budget. Today, Obama was looking to offset the continuing focus on the Tea Parties with a half-hearted attempt at fiscal responsibility.

No one’s buying Obama’s spin on this one and the result was Robert Gibbs wiggling from the media sharks in the water. You can see Robert Gibbs Squirm in the accompanying video as he tries to explain why $100 million in cuts is a huge amount, but $8 billion in spending is not.

Why Big Government Doesn't Save. They Steal!

At least 280,000 people showed up to protest big government on April 15^th. The progressive left lashed out against the movement in a knee-jerk defense of their favorite President. However, no matter how much you want to believe or hope, the truth is this: big government does not work. You can call government spending “investing” as much as you want, but it is private entrepreneurship that has made this country great and big government had nothing to do with it.

Let’s look at the example of the House’s leading spender, none other than progressive John Murtha. In a recent article the Washington Post took a closer look at one of his most favorite pet projects is the John Murtha Airport. Thanks to tax payer money, this airport is state of the art. It has top notch security (six guards) to watch the 15 people per day that use the airport. The center is truly impressive as far as size and capability including a high-tech radar that rivals international airports. That radar is unmanned. $800,000 of the stimulus was diverted to repave a backup runway.

Can you remember Obama defending the stimulus spending? Government spending is “what…stimulus is.” Sure people received jobs, but where is the sustainability? Certainly, this airport would not exist without tax payer support. What will happen if John Murtha is unable to secure continued funding or John Murtha leaves office? The money used becomes even more of a complete waste and people are laid off.

It would seem the only purpose for the airport is for the personal use of John Murtha himself, who readily uses the airport (most flights are to DC). This isn’t really anything new. There are several New York State legislators who want to connect Buffalo, Rochester, Syracuse and Albany with a high speed rail (using stimulus money). I’m all for rail (mostly for shipping though). However, no one but state politicians are going to use this as passenger travel.

Being an economist, I love to look at the world through graphs. For all you who disagree with me, here is the official economics graph that depicts government spending and government waste in a best case scenario (please excuse the “loaves” reference on the graph. It was the first picture of the graph I came across).

For those not used to reading graphs here is the explanation. Efficiency occurs when marginal social benefit and marginal social cost are furthest apart. This is denoted by the “}” section labeled TSB-TSC. This is the most efficient possibility since you are getting the highest social benefit for the lowest social cost. It also happens to be where private enterprise naturally operates. However, government never operates at this point. It operates where the TSC (total social cost) and TSB (total social benefit) lines intersect. The bubble created by the lines TSC and TSB and their intersection represents government waste for the area inside the bubble to the right of the perpendicular TSB-TSC line.

As I pointed out, this graph is a best case scenario. It has a few assumptions such as the idea that government is actually rating and enacting programs for the highest social benefit for the lowest cost. It also, assumes to some degree that the government is fiscally responsible and is not running a deficit. This can be inferred by the fact that if you are running a deficit, then there is no true incentive to ensure that total cost does not exceed total benefit. It also does not account for corruption. This means that politicians are not spending dollars on their own pet projects and are picking the issues that really do bring about the highest total benefit. So for this graph to work the John Murtha Airport scenario would need to be impossible. In 2004, I gave a presentation at the NYS Economics Association regarding the factors holding back developing nations. Out of the largest factors we found corruption was very significant.

Progressives love to argue that the rich derive their wealth from the exploitation of the working class. Though this is not true in the private market place, it does ring true between the government and free markets. Every dollar wasted in government programs is capital that could be used efficiently. John Murtha’s airport is supporting dozens of jobs that would have otherwise have been possible. However, that capital in the free market place would likely have created thousands of sustainable jobs instead. What do think would occur on an even larger scale? We are worried over 8.5% unemployment in this economic downturn. In Europe, big government has created persistent 10% unemployment rates.

So what’s the alternative? We can and should unshackle the economy and let capitalism loose. Time and time again, those with the freedom to use their capital as they seem fit have found the most efficient ways to do so. It is private entrepreneurs that brought about the industrial revolution, the automobile, electricity, and the medical wonders that have doubled our life expectancy. Our government cannot boast of these achievements and they never will.

DHS Should be More Afraid of Left Wing Attacks

The right has been up in arms over the DHS memo regarding fears of a right wing attack. The report itself admits that “(It) has no specific information that domestic rightwing terrorists are currently planning acts of violence.” With that being said, perhaps we should be focusing in on the leftwing domestic terrorists that are currently planning attacks. Let’s take a look at the FBI’s top 11 domestic terrorists.

What’s a left wing attack? Never heard of one? Well, they are out there and the FBI is trying to hunt them down. On the top 11 list, 9 of them are left wing crazies. The other 2 were Puerto Rico freedom fighters. Surprisingly, there were no feared rightwingers on the list. The groups these leftist extremists were associated with include BLF, ALF, anti war groups and communist party members. DHS has put out a leftwing memo as well, but it doesn’t seem as though they paint the leftwing groups with similar stereotypes, nor the same concern (especially in regards to recruiting veterans).

The left has many crazy left groups if not more than the rightwing groups and it would seem that these left wing groups are the one’s causing the most trouble. Janet Napolitano seems to be a little too worried about the war veterans, those opposed to gay marriage and abortion, those who support the 2nd amendment, oppose immigration amnesty, and disagree with President Obama’s administration. When is she going to put out a memo warning of the leftwing extremists who are vegans, think we should “spread the wealth around,” support cap and trade, hate George Bush, and believe that African American’s are oppressed?

Maybe I’m off base. You be the Judge.

Rightwing Extremist Report
Leftwing Extremist Report

Lefties Missed the Point of Tea Parties

While the progressives and the media would rather distract and silence the message of the Tea Parties, the truth of their message is still evident. The left can’t understand the protests. In their minds, Obama’s going to lower taxes and Obama’s going to remake the country better. In their minds, they are off the hook. Well you’d need to have your head in the sand to believe that reckless government spending is going to bring all this about.

March 20th seems like ages ago, but let’s turn back the time and highlight some of the key quotes of the AP article “Obama budget could bring $9.3 trillion in deficits.” Keep in mind that this budget does not include the stimulus, the omnibus, TARP and proposed TARP2 bill.

“In his White House run, Obama assailed the economic policies of his predecessor, but the eye-popping deficit numbers threaten to swamp his ambitious agenda of overhauling health care, exploring new energy sources and enacting scores of domestic programs.”

I made the mistake once of saying, “Obama is doing what he said he would do.” I quickly amended that statement. Obama promised us fiscal responsibility. He promised to go line by line and remove wasteful spending. He said he would not sign legislation with earmarks. He blasted Bush’s spending only to more than triple down on that spending. Spending which all Americans (right and left) agree were irresponsible.

“The dismal deficit figures, if they prove to be accurate, inevitably raise the prospect that Obama and his Democratic allies controlling Congress would have to consider raising taxes after the recession ends or else pare back his agenda.”

What? Did Susan Roesgen not hear any of this at CNN before her meltdown in front of yesterday’s Chicago Tea Party? This was reported nearly a month ago. AP points out the biggest reason why the coveted Obama Tax cut (thanks for the $13 a week, Obama) is going to end in 2 years. Interesting how $13 bucks matters to Obama now, but it didn’t over the summer when gas tax relief was proposed.

"Deficits in the, let's say, 5 percent of GDP range would lead to rising debt-to-GDP ratios that would ultimately not be sustainable," Orszag told reporters.

Deficits so big put upward pressure on interest rates as the government offers more attractive interest rates to attract borrowers.”

What do I have to say? Obama’s own budget chief said it all, the numbers aren’t sustainable. I love the investment in the future argument, but how are we to get there if spending is not sustainable?

“Obama's $3.6 trillion budget for the 2010 fiscal year beginning Oct. 1 contains ambitious programs to overhaul the U.S. health care system and initiate new "cap-and-trade" rules to combat global warming.

Both initiatives involve raising federal revenues sharply higher, but those dollars wouldn't be used to defray the burgeoning deficit and would instead help pay for Obama's health plan and implement Obama's $400 tax credit for most workers and $800 for couples.”

So the tax on the 5% has nothing to do with paying off Obama’s deficits? So who’s going to pay for it all? I know it’s hard to believe, but you cannot confiscate $9.3 trillion dollars from the rich, they don’t have it. Perhaps, trillion sounds like too small of a word, so here is what $9.3 trillion looks like, $9,300,000,000,000. Yes, I am getting $400 a year from Obama and in return he is giving me a bill for $67,971 (that’s $9.3 trillion divided by 138 million tax payers) and the progressives can’t understand why people are protesting. Who’s going to pay the bill? We all are and that means you too. Progressives! It will either be in the form of higher taxes or in the form of an economic calamity.

I’ve only covered Obama so far! I didn’t even get into Bush. I’ll leave the progressives to level the spending charges there. Even before Obama the US had the 2nd highest corporate tax rates, which are not too expensive to cut as some would say. Obama has proposed the 2nd highest capital gains taxes. The government has squandered our social security funds. I live in NY, which means I pay the highest state income taxes, the highest state sales taxes, the highest gas taxes, Patterson’s proposed the highest state energy taxes, and I live in an area that has the highest property tax rate in the country (mostly thanks to unfunded state and government programs).

I’m surprised the left’s surprised that this right wing crazy is upset. When Obama said he was going to bring back “spend as you go” and cut wasteful spending, he didn’t count on people holding him to it. I see he was right about the left giving him a pass, but there were some paying attention and those some got together in huge masses yesterday to remind him of his promises.

The Federal Reserve Myth (The Truth of the Matter is)

First let me introduce myself to all of you. My name is Brother John and I have been allowed to
post to this blog as an independent contributor. The opinions that I write on are mine alone and may not be shared by the site or its editor.

I come from the baby boomer generation and recently retired after 33 years as an Industrial firefighter for one of the largest Fortune 500 companies in the world. For almost 20 years I ran a "line of business" within the fire department. I was a direct report to the Fire Chief and to the companies Insurance Carrier. I controlled a $3 to $6 million dollar a year budget and acted in the following capacities all at the same time; I was a Capital Manager, a Non Capital Budget Manager, Project Manager, the department Capital Depreciation & Asset Manager (with control over approximately $20 Million) in department assets, and the Department Internal Inventory Auditor. Also sat on 4 corporate committees; Fire/Engineering Committee, Life Safety Alarms Committee which I chaired, Committee for Corporate Compliance of Sarbanes-Oxley and the Corporate Asset Reduction Committee. During this time frame I taught adult education for 20 years, as well as spending 10 years on the Board of Directors for a public school district (an elected position). I did this all with an Associates of Applied Sciences Degree and a lot of independent studies and research.

My goal here is not to jack myself up or to bore readers with my petigery. It is to give you the reader an idea of where I have been and to tell you 2 important rules:

The first is "NEVER BELIEVE A POLITICIAN OR THE NEWS MEDIA WITHOUT DOING YOUR OWN RESEARCH" and the second rule is "NEVER REPEAT WHAT A POLITICIAN OR THE NEWS MEDIA SAYS WITHOUT DOING YOUR OWN HOMEWORK".

Why you ask? Because they are both there to take your money without giving to you anything in return.

Anyway on with the topic at hand. I have copied this article from the website "Liberty Alert" by Bob Livington because I doubt that the Media in this country will report on it and you should know that this bill exists.

"Rep. Ron Paul is pushing a bill (H.R.1207) that calls for the comptroller general of the United States to audit the Federal Reserve. And the bill is gaining steam as more members of Congress, both Democrat and Republican, sign on".

"The bill is called the Federal Reserve Transparency Act of 2009, and it requires an audit of the Fed’s Board of Governors and the Federal Reserve Banks be completed and reported to Congress by the end of 2010".

"The Federal Reserve is a "government-established private entity" that can enter into agreements with foreign central banks and foreign governments. However, no agency has oversight over the Fed and the Government Accounting Office is prohibited from auditing or viewing any agreements. So no one, except for the Fed’s Board of Governors, truly knows what’s going on there".

"According to reports, Paul says every problem with the American economy from the Great Depression to the current crisis results from Federal Reserve policy. It’s true. The Fed’s manipulation of money has led to inflation and a devaluation of the dollar that’s robbed the American people of their wealth".

"No less an expert than former Fed Chairman Alan Greenspan agrees. In a 1966 essay entitled Gold and Economic Freedom, Greenspan wrote":

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.”

"The Constitution gives Congress the right “to coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures” in Article 1, Section 8, Paragraph 5".

"The Fed is a non-constitutional institution created in 1913. It was given a monopoly on the issue of all bank notes, and national and state banks could only issue deposits redeemable in Federal Reserve Notes or gold (gold ownership was outlawed 20 years later then reinstated in 1975). All national banks were forced to become members of the Federal Reserve".

"The U.S. Government is out of control in many respects, and the Federal Reserve is one of them. Congress’ policies of increasing spending to prop up failing businesses, fund entitlements and expand government and pay for it by having the Fed print fiat money (money no longer backed by gold) are responsible for the loss of trillions of dollars of wealth around the globe".

"This bill by Paul—now co-sponsored by 28 legislators—is a step toward fiscal responsibility. Perhaps, if it passes, the bill will show the masses the great fraud that has been perpetrated on them for the last 96 years".

"Once that is done maybe, just maybe, a loud hue and cry from the masses will ensue, our country will go back to a gold standard, and some of the madness will end."

-END-

"The truth of the matter": IS that the "Banking System" goes all the way back to Abraham Lincoln. In 1862 Lincoln was in need of funding for the North for the Civil War. He traveled to New York to sign a loan agreement with the Banks of England owned by the Rothchilds. The interest on the loans were set at 24 to 36 percent. In 1862 to 1863 Lincoln had the Congress authorize the treasury to print $400,000,000.00 in federal notes known as "Greenbacks" at no interest. The British banking communities were fuming and quick to respond by supporting the Confederacy. The London Times wrote, "If this mischievous financial policy which had its origin in North America shall become a fixture that government would furnish its own money without cost. It would pay off debts and be without debt, it would have all the money necessary to carry on its commerce. It would become prosperous without precedent in the history of the world. That country must be destroyed or it will destroy." To counter the British move. Lincoln announced his "Emancipation Proclaimation" which placed the British International Financiers into full retreat. Shortly after the end of the Civil War Lincoln intended to refinance the recontruction of the South with government issued Greenbacks when he was assassinated. John Wilkes Booth may have pulled the trigger but speculation is that he was hired by the British Banking Community who stood to lose millions in interest loans from the reconstruction contracts.

On word of Lincoln's death the leader of Germany's government, Chancellor Otto Van Bismark wrote that, "The death of Lincoln was a disaster for Christendom. There was no man in the United States great enough to wear his boots. I fear that foreign bankers with their craftiness and tortuous tricks will entirely control the exuberant riches of America and use it systematically to corrupt modern civilization. They will not hesitate to plunge the whole of Christendom into wars and chaos in order that the earth should become their inheritance."

It would appear that Von Bismark's comment came true faster than even he predicted when after Lincoln's death, the Greenbacks were taken out of circulation and Congress authorized the "National Banking Act."

Since Lincoln's death, has history repeated itself? (It may well have!!) Not ONCE NOT TWICE, BUT THREE TIMES.

In 1881, James Garfield became President and challenged the banking system. He was assassinated just four months into his presidency when he publicly commented, "Whoever controls the volume of money in any country becomes absolute master of all industry and commerce and when you realize that the entire system is very easily controlled in one way or another by a few powerful men at the top, you will not have to be told how periods of inflation and depression orginate".

In 191o there was a meeting held on Jekyll Island of the coast of Georgia that was so secret that participants took different routes to New Jersey and boarded a train with a private car, the shades drawn and identifiing themselves by only using thier first names. Thier distination was Brunswick, Georgia and a small island that was owned by the some of the rich & famous of the Banking elite as a club. The attendees were Senator Nelson Aldrich, his personal secretary Arthur Shelton, former Harvard University Profressor of Economics Dr. A. Piatt Andrew, JP Morgan & Co. partner Henry P. Division, National Bank President Frank A. Vanderlip and Paul M. Warburg of Kuhn, Loeb, and Co. The sole purpose of the meeting was to come up with a national banking system that looked and acted like a federal government institution but was privately owned and behold the Feaderal Reserve was born and sign into law in 1913 by Presient Woodrow Wilson who on his deathbed was reported as sayng, "I've unwittingly ruined my country".

During the depression FDR barrowed from the Federal Reserve to help finance his "NEW DEAL" strategies but this time the government was charged interest on the loans.

At this point you might want to ask yourself, "Why the federal government would pay interest on its own money?"

And finally I said that History may have struck three times. In 1963 President Kennedy signed an executive order #11110 which amended an executive order #10289 signed in 1951 that gave the Presedent the power to create his own money to run the country that would be debt and interest free. I remember the rubarb that surrounded this action and that the notes had aready been printed and were being stored in a vault at the US Treasury. It was but a short time later in November of 1963 that Kennedy was assassinated. Clearly his goal was to topple the Federal Reserve and the International Banking Cartel but the notes were never released and apparently the plan died with him.

Now I challenge you do your own homework and researach on the subject and let me know what conclusions you can draw.

The following sources were used to research this essay:

Jeckyll Island History by Tyler E. Bagwell

Web of Debt-The Shocking Truth About Our Money System by Ellen Brown

Abraham Lincoln's Bank War by Anton Chaitkin

Abraham Lincoln & JFK by Melvin Sickler

Jewish Capitalism and Presedent Lincoln by Paragory.com

How International Bankers Gained Control of America, From a Video Script Produced by Patrick S. J. Carmack , Directed by Bill Still, Royalty Production Company 1998

-BrotherJ-

Government Economic Policies: Ready, Fire, Aim

I’ve been railing on Obama’s and Bush’s responses to the economic crisis. Thanks to recent events, there are a few stories out there that I felt were eye raising. The links are on the side bar dated 4/13. They reminded me that I had been meaning to do a piece on who is responsible for the current crisis and who is benefiting.

I felt like doing a little finger pointing today. I used to have a job assigning blame so here are the winners, losers, the innocent and the guilty in the housing bubble.

1) Loan originators – Despite everyone’s hatred for the evil big banks and their predatory lending, most of these predatory loans were originated by someone else. Most loans these days originate with a group of companies who specialize in originating loans (think Quicken Loans), then sell them off to banks. When I worked with Citimortgage, almost all loans originated through these origination specialists. Guilty! They had no trouble lending to whomever because they were not the one receiving payments for the loans, just the origination fees paid at closing. Winner! They made a ton of money and no one seems to be concerned with how they made it.

2) Big Banks – They are one of the few that are innocent, guilty, winners, and losers all in one. Innocent Was greed involved? Yes! Are they getting bailed out? Yes! Are they mostly responsible? Yes and No. A Little Guilty! They bought these toxic assets from loan originators and bought up a lot of other banks loans that were toxic as well. The motivation was to make the company a behemoth instead of making smart business decisions. Citibank, Chase, and Wells Fargo were in a giant race to see who could hold more mortgages. The bit about predatory lending is ridiculous here (that falls on the loan originators). No, these banks were just stupid. Loser! Like hot potato, they were stuck holding the potato when the music stopped. They deserved it of course. They were acquiring loans to build their kingdoms, not to make money for their shareholders. Winner! Thanks to Bush and Obama, one does not need to live with poor decision making, they can get a bailout.

3) Borrowers with Unconventional Mortgages - Guilty! There are all kinds of interesting stories on these people. There was the heart sobbing story of the women with an $80k conventional mortgage who was tricked into a $400k refinance that she couldn’t afford. Now she’s being threatened with foreclosure. Why is no one asking where the $320k she received from the refinance went? There is an article on the side bar on how street gangs were making profits on these. Even those who are now underwater got a taste of the high life if only for a while, living in a house they could not afford. Winners! They got the house they wanted and the attention of President Obama, who is going to help them pay those evil mortgages. They are able to live in their house payment free twice as long as usual. I believe they should also be bigger winners too, because banks should be writing down the principle due on these mortgages. This may not make sense to you, but being in accounting I believe in having balance sheets reflecting what the value of an asset is. This means writing down the mortgage principles in my opinion. However, these mortgage holders should not get government help or special treatment. If they still can’t make the payments they should be kicked out.

4) People in foreclosure because they lost their jobs - Innocent They did everything right. Had the money needed and had a job. They made their payments and were responsible with their loans. Losers There’s nothing in the Obama plan for these people because they are probably not underwater. Surprisingly, it is these folks most likely to be in foreclosure according to AP (see the article on the side bar).

5) The Presidents Bush and Obama - Guilty! They have horribly assessed the situation above and made sinners and saints out of the wrong people. Obama continues to miss what needs to be done to make serious changes to avoid this occurring again. Winners! They both got to enjoy new executive power all without any of the trappings of the crisis. They even managed to reach out and rescue the wrong parties without scrutiny from the media. It’s not likely they will lose their homes or suffer in any way from the harm of this crisis. It’s nice when a President says they feel the pain of the people. It would be another thing if they actually did feel the pain of the people. Politicians 2 – Citizens 0 in this crisis.

6) The American Tax Payer - Innocent The average person played by the rules and did not get caught up in the bubble. Losers We’ve paid for all the stupidity and then some. Our retirements were hit hard and our national debt is going sky high.

Do you still feel like Obama is doing a great job here? Common sense says that when there is a problem you try and fix it. That usually includes not punishing the innocent and fixing the problem. When you make it all about the greed of the banks, you miss the big picture.

Obama’s Economic Group Think

Over the weekend I read a very enlightening article in New York Magazine (I admit it. I was in a waiting room). The article was a think piece on the three main minds in Obama’s economic think tank, namely Geithner, Summers, and Volker. The article was pretty fair in my opinion, although disturbing in it’s omission to point out the serious implications regarding the problems of these three. It may seem moot since they are already in their positions, but I wanted to give account to those whom have Obama’s ear.

I was originally going to go through each of these guys’ resume, but realized that I would only be repeating myself. Therefore, I will enlighten you on the important aspects on or missing from their truly impressive resumes. The first of which is their resumes themselves.

I’m not going to give you spin on this one. These men have impressive resumes. Volker a former FED Chief, Summers a former President of Harvard, and Geithner one of the youngest FED Chairman of New York, the most important FED location. What’s most important about their resumes is not what is in their resumes, but what is missing. Neither Geithner, Summers, nor Volker have any experience in the private sector. They all are academics, who worked for universities and government agencies since graduating college and all with a degree in government economics. Now I have a degree in economics and am quite familiar with the academia behind the study. It is one of the most fractured fields of study you can find. You’ll find those that believe in fiscal and monetary policy, those that believe in monetary policy only, those the believe in fiscal policy only, those that believe in demand side fiscal policy, those that believe in supply side fiscal policy, and those that believe in no fiscal or monetary policy. All of these schools of thought with their own Nobel Prize Laureates. You can see already the trouble in picking a winning economic model to follow. That is why it is important to understand economics from the market perspective by taking place in the market. Those on the outside can only guess, but in the end economic theory needs to be applied and you only get to understand that where the rubber meets the road. How is Geithner supposed to run the Auto Industry and the Banking Industry? At the same time no less? He has never been at the reigns of similar companies, nor does he have any understanding outside his governmental paycheck.

New York pointed out that Summer’s is almost solely Obama’s economic brain. Regardless Obama’s think tank has some serious issues with group think. Volker was a Harvard professor and so was Summers. Geithner served under Summers when Summer’s was Treasury Secretary in 1999. With all of them from the same school of thought, is it any wonder why the same idea is being trumpeted? The idea of control more and spend more, is a product of academics overconfident with their theories of economics. Think USSR here. No government controlled industry has ever proven efficient. We’ve already seen it ourselves over the last six months.

Geithner’s a completely new face, but Summers and Volker have been around. Volker may have been one of the worst FED Chiefs we’ve ever had. He’s the one that sent interest rates up to 20% to stop inflation, sending the country into a recession. It is no surprise that the government is not worried about inflation with all the spending going on. You can be sure that Volker style inflation fighting is likely in the future from this administration. Don’t worry though, Obama is not giving Volker or his vaunted economic council the time of day. It’s all on Geithner and Summers. Summers wanted to be Treasury Secretary, but was denied because of his well known ego. It was this same ego that cost him his Presidency at Harvard for his sexist comments regarding how women can’t do math.

Now Obama does not have a clue about how to run an economy. There can be no denying it. I’ve been told that Obama is great at holding sessions where he gets multiple opinions on the economy, but I’m not impressed. I’m not impressed, because the private sector is far better than Obama at creating these sessions. Any corporation in the US will have a diverse group of ideas when making decisions. Ideas from executives in law, accounting, finance, engineering, economics, law and business are all easy to find in the board rooms of your standard company. It’s no wonder why US private companies are so much better at running things then the government. The CEO of one of my own company has a music degree from Julliard and an MBA as well as 30 years of experience in the industry. Our CFO’s are accomplished CPAs. Where are these points of view in Obama’s think tank? Obama has three academics in the field of government economics. It is not only likely good ideas will be missed, it is a certainty.

Obama Facing a Mounting Rebellion That His Presidency May Never Recover

I, like others in this country, had high hopes for Obama. I didn’t vote for him and there was much I agreed with in his policies, but at least there was hope that he would get it right in the end. After all, he recognized a lot of the country’s main problems like energy independence, health care reform, and the economy. I simply did not agree with his solutions to these problems. Obama proclaimed himself to be bipartisan and open to differing and creative ways to deal with these problems. However, and I need to amend some statements I’ve made regarding Obama being a consistent politician, Obama has not followed through in regards to how he intended to achieve his goals. Although the far left has enjoyed watching Obama’s dismissing and patronizing attitude in dealing with this country’s institutions (one’s they’ve hated for decades), they have sacrificed their plans for a few months of feeling vindicated. Even now they are in denial that there is a massive revolt reaching critical mass and Obama is standing in its wake. This post would take far too long to detail and connect all the dots, so instead I’m going to cover the biggest movements.

The TARP Rebellion – I know the minute I write this first point I’m going to get responses about AIG and how every bank is cheating and stealing from the people and how Obama needs to shake these guys up and keep them in their place. Though this may certainly be true of some financial institutions, it is a very broad brush. Instead of speaking out for the majority of banks that really were and are doing the right thing during the AIG fiasco (which was bad, but severely blown out of proportion), Obama passed the buck off on many of the innocent as well. Today there are a growing number of banks starting to speak out against TARP and some of the executive abuses associated with the program.

“When we took the money, it was because only the good banks were going to get the money, the strong banks,” Korstange told CNSNews.com. “We believe that we are and we know that we are a strong bank and that’s why they came to us and asked that we take it (TARP money).

“Then public perception, quite frankly, led by some of the politicians, changed--it became bailout money and it completely changed the perception of what (the TARP program) is.”

“Once that happened, the politicians decided they could run the banks (and) that they could tell us all the things we can and cannot do,” Korstange said. “So we just said, ‘Hey, we don’t need this, we didn’t need it at the beginning, and we’ll give it back to you.’"

Sbj.net reported this in regards to Richard Davis, CEO US Bankcorp:

Last month, Davis publicly called TARP "lousy" and "just trouble" during a speech to the Thrivent Financial for Lutherans Business Leaders Forum, according to a report in the St. Paul Pioneer Press. After introducing the program as a way for banks to sustain lending and acquire troubled institutions, the rules have changed, Davis told the group.

"Now they're punishing you for having the capital," Davis reportedly said, adding that he wouldn't let U.S. Bancorp become "collateral damage in an attempt to nationalize the banks."

Today Reuters pointed to the growing voices in the banking industry:

Banks such as Goldman Sachs Group Inc, Morgan Stanley and Bank of America Corp have signaled their eagerness to pay back the money as soon as possible.

Reuters went on to describe that the Treasury is reluctant to allow these funds to be returned. Wasn’t Obama supposed to be reaching out to everyone and heal divisions? Where does Obama fit in? He wants TARP 2 if you can remember, but I’m starting to doubt whether it will come to fruition as banks are turning TARP 1 into a battlefield.

State Sovereignty – Remember how Obama was going to put strings on States receiving TARP money? The media has been ignoring the growing number of states passing resolutions affirming their state sovereignty. Media coverage is so small that I cannot say for certainty how many states have passed resolutions (there were 4 that had passed and more than 30 states with proposals on 3/27).

Ford Capitalizing on the Obama Motor Take Over – Borrowers worried about government take over have settled Ford Bond debts for 38 cents on the dollar. Theglobeandmail.com had this to say:

And Ford, unlike its Detroit rivals, has an army of senior executives, designers, engineers and marketers here, all available to talk the Ford line. Ford is trying desperately to shape its message and that message boils down to this: “I'm not with stupid.”

Obama’s power grab has investors, suppliers and even buyers nervous over continuing their stakeholder status with GM and Chrysler. If Ford capitalizes, this could mean disaster for the companies that Obama is going to infuse with tax payer dollars and will need to show a turn around lest he lose political capital on his failed power grab.

Tea Parties – Another big development is the tea party movement. There are protests occurring in over 1,800 cities planned for 4/15. What’s most important about this movement is that those joining these movements are not people who have been political activists in the past. The PEW poll showing Obama the most polarizing President in the modern age seems to be ringing true.

These are just a few of the many growing developments. I’ve left out Obama’s waning support for his budget and an increasingly aggressive foreign policy landscape, even as he looks to “heal” America’s world image. The truth is I believe much of this could have been avoided had he proven himself the negotiator and centrist he tried to portray himself, but you don’t stiffen your neck in an aggressive posture unless your willing for a fight. There truly is something to working across the isle. It’s what the people voted for, but what we got was someone focused solely on his own progressive agenda, no matter what the political cost.

And The Truth Shall Set You Free: 1 of many on conservative principles

There is no doubt that today’s American voter has no basis for making a voting decision. That is because today’s politician has no values or principles from which their policies derive, but shoot from the hip, flip-flopping from one stance to another. In the wake of politicians without substance, the American voter is forced to guess at the character of our leaders. We let the media portray candidates, whether talk radio or MSNBC. We need to return to a time where candidates explain their positions based on arguments and principles. Truth is the single most important principle that we base our political voting decisions.

I’m not talking about making sure candidates are truthful or making sure candidates follow up on campaign promises. Those are important, but what is most important is what the candidate’s belief of truth is. Does a politician believe in a truth that transcends time or a truth that changes and evolves over time? Can two people with opposing positions both cling to their own valid truths? What do you believe?

I believe in a truth that transcends. The same truth that prompted the Founders to write, “We hold these truths to be self evident” in the declaration of independence. I agree with the Founders that there are certain truths that mold successful societies and are still molding them to this day. Whenever I look at a policy, I look for an underlying truth. I test the truth to see if it can be consistently applied. If it cannot, then I look for alternatives. In this way, truth is an anchor that helps us make fair and consistent decisions.

There are many that do not agree with this position. In their point of view, truth can evolve and change from one person to another. This thought renders truth irrelevant and so beliefs become based on feelings and those feelings justify policy. Is it no wonder why so many people have no rational argument for why they support a policy? Listen to their responses. I guarantee that they will start with the words “I feel.”

Regardless of whether you’re progressive or conservative, the answer to this question should be important to you. In knowing what your representative believes allows us as voters to count on and understand the votes that will be made in the future. For example, a progressive democrat who does not ascribe to an evolving truth is not likely to vote for the social changes of the day.

Conservatives should ascribe to a transcending truth that is consistent from person to person and is not contingent on how much time elapses on this earth. So many of the policies and stances we take hinge on this idea and our very platform becomes pointless without it. I believe this is why many conservative leaders are so weak. They’ve lost touch with their beliefs on truth and as a result cannot defend the policies they are trying to advance. My advice to all conservatives, get in touch with your beliefs regarding truth.

Obama’s International Policies: Weak or Transformational?

I did a lot of web surfing this weekend to try and get perspective on Obama’s comments and policies emerging from his recent international trip. No surprise, he is being immediately applauded by the liberal left and denounced by the conservative right. Although, there are many that are going to disagree with me on this, I have a much more moderate view of Obama’s trip. I feel on both sides, Obama’s policies are being judged too quickly as a success or failure. Although I am no expert on international politics, here is my take on the unfolding Obama foreign policy.

In my opinion (take it for what it’s worth), I believe the conservative view of international policy as a chess game is much more appropriate than the liberal view of a party chalked with a few party crashers and the US as the belligerent and obnoxious drunk picking fights with those in the unpopular clicks. I see the international political canvas as a multi-party negotiation table where ultimately all parties are trying to get the best outcome for the sake of their own interests. As someone in business, I do know a lot about negotiation.

I need to explain negotiation a little more if you are to understand why US actions are not exploitation, but also why I believe we need to give Obama a break in the short run. Simply put, negotiation is a game to further your agenda and there are many different ways to play. Most are familiar with competitive negotiation, which is where two parties are pinned against each other in a win-lose match. Often, relations are strained when this type of negotiation game is played, because of the win-lose aspect and the fact that deception is often an essential element to the game. To win at competitive negotiation you need to hold a lot of strong cards. If you don’t have them, you need to be creative in establishing some. The US happens to be good at this type of negotiation, primarily because the US holds some pretty strong cards (3rd largest nation, strongest military and strongest economy in the world).

Spotlight on North Korea. You will notice that although no country is comfortable with North Korea having long range missiles, there is not unity in an international response for sanctions for North Korea. This is not because China and Russia feel the North Korea is misunderstood and they have some kind of peaceful relationship that the US could also have if they would simply stop picking on the poor country. No, by opposing sanctions that the western world wants, Russia and China get another chip in the big competitive negotiation game. North Korea also gains a chip in their defiance. By stepping up their efforts they become a bigger threat to the West.

Competitive negotiation is not the only type of negotiation game that can be played. There are also games involving compromise and collaboration (there are actually two other types as well, but there is no need to do an exhaustive explanation here). These are win-win types of negotiation. I would venture to guess, that most Americans and specifically, progressives, favor this type of negotiation. I will not disagree that this type of negotiation has merit.

So why do I feel it is too early? First of all, it is simply unwise to use the same negotiation tactics over and over again. If you use the same tactic constantly you will become predictable and since US has long favored competitive negotiation, many other countries approach US relations competitively. Second, we may be able to entice nations that have been competitive into collaborative or compromise negotiation. Bush has long been the “bad cop” when it comes to US foreign policy and there may be a benefit for Obama to play “good cop” in the short run.

I hope that this is the reasoning Obama is following. Although I believe there is opportunity, there is also great risk. If countries are not enticed into collaborative or compromise negotiation, other competitive countries will take advantage of the US. If Obama truly does believe that all problems can be solved through compromise and collaboration, then we will see much more aggression. Despite the left’s desire for the US to fade into the background, the US will always be the face of the Western World and as the face, we will continue to be a target for every aggressor aimed at weakening the Western World. It is also important to note that although it may be more desirable to be collaborative or compromising, we need to change our strategy up from time to time and that means being competitive also.

Already it seems that Obama’s strategy is not working. He was not successful in garnering support for a world stimulus or the war in Afghanistan. Most importantly, he was unable to get a response from the UN regarding North Korea. Still I believe it’s too early, but time is running out quickly. We as citizens must draw a line and hold Obama to it. I believe there are far too many people willing to give Obama a pass in his policies. At some point, no matter how nice Obama’s speeches might sound, a failing policy is a failing policy no matter how much you wish it wasn’t.