This is something I commented on at the Washington Post today in response to Obama's address last night:
To have an annual deficit of $1 Trill is the equivalent of asking 10M people to save $100K in order to pay it back. Run this out for 9 years, from 2010 to 2019, and it's essentially 90M people who will in the future have to save that amount to payoff the debt. And, this does not cut into the debt already incurred that we (future generations) also have to payback. You can run combinations of the numbers however you want. But the stark fact is that to have budget deficits in that range is the most reckless, irresponsible policy, possibly in the history of this country.
You can say whatever you want about W. I am no defender of him. But these are Obama's policies. These are his proposals. I have a hard time believing W or even Clinton would have proposed even a fraction of anything on this scale. Bush's deficits were not in the trillions. Nor did he propose anything approaching this scale. If I have to explain why energy, healthcare, and education - all managed out of the central government apparently - will not grow the economy to make up for a deficit of this magnitude, than the argument is already lost. If the sheer lack of logic of these connections and cause and effect is not self-evident than it's already too late and this country deserves its fate.
I should have clarified that Obama's debt is actually NEW. The existing total national debt is around $11 Trill. That's already huge and has been accumulated over many decades. Of course it won't take Obama that long to up the ante and almost double it in just his first term, heck first two months. That's change you can believe in. But, as we all know, we've got do it NOW! We had to TARP, NOW!, we have to have stimulus NOW!, or the world will collapse.
The underlying problem is that our society is unwilling to undergo any pain whatsoever. The remedies for the situation are painful and there is no short-term solution. Things have to fail. But people simply aren't accustomed to bad news or harsh realities. Maybe they've never been and nobody ever likes unpleasant facts or a a pink slip or whatever. It sucks. But what we're getting ourselves into will probably suck worse. But hey, let the good times roll and suspend logic as we embrace change we can believe in. Ideally, the object of our hope should be substantive. Instead we have Obama.
Wednesday, March 25, 2009
Monday, February 23, 2009
A Front Row Seat
I can’t help but think that we all have the unique, maybe I’ll say “privilege” of watching a uniquely unqualified president learn on the job. This might be ok if the stakes weren’t so significant. Or if the consequences and grave we’re digging wasn’t so far ranging and deep.
The markets went down to a record low. Oh, but the market’s emotional, who cares what the market does day-to-day? -- says one talking head on a show I was watching. Who cares? Obama gives a good speech. Wall Street deserves a beating. Those greedy leeches brought this on themselves. Didn’t they?
Today Obama warned governors that he will “call them out” if they waste any of the billions coming their way. He did the same to mayors last week. He called them out too. Hey, how about that. It’s quite a scene. It’s quite a show. The people love it. It’s got villains, big stakes, and a sheriff to clean up the town mess. We can only wait to see if the show ends on a high note, the way we Americans love our shows to end.
Tomorrow night Mr. Obama is going to call for renewed vigilance to cut the deficit in half. On the other hand, he’s also rumored to propose expanding universal government run healthcare in tomorrow;s speech. He just signed a bill for $787B. Oh, and that’s a start. We probably need more money for GM and Chrysler. Oh, and TARP and the banks. Don’t forget that. And he’s giving another $15B to states for Medicaid. I can't wait to see government squeeze the savings and generate efficiencies the likes of which the private market could only imagine. Yep, healthcare will be expensive. But medical technology is here to stay now that Obama's here so never fear. It'll work.
I love words. Yes, words are good. Words can be arranged and rearranged in different order. They can play on emotion and make you feel good if they’re delivered eloquently. If the pitch is good and intonations work than words can do wonders.
Maybe words will one day reflect some sort of realistic assessment of what’s happening followed by a realistic prescription to move forward. Words can be powerful things. Words can be dangerous things. With Obama, I suspect words are thrown on the wall with the intent of seeing what sticks. I think he likes the feedback and I think he likes to be liked. The problem with a man who sees himself in that way is that this type of man is not generally who you want in the midst of a crisis. He's just wrong. Well we can only wait and see. You might want to save your money in these rainiest of days.
The markets went down to a record low. Oh, but the market’s emotional, who cares what the market does day-to-day? -- says one talking head on a show I was watching. Who cares? Obama gives a good speech. Wall Street deserves a beating. Those greedy leeches brought this on themselves. Didn’t they?
Today Obama warned governors that he will “call them out” if they waste any of the billions coming their way. He did the same to mayors last week. He called them out too. Hey, how about that. It’s quite a scene. It’s quite a show. The people love it. It’s got villains, big stakes, and a sheriff to clean up the town mess. We can only wait to see if the show ends on a high note, the way we Americans love our shows to end.
Tomorrow night Mr. Obama is going to call for renewed vigilance to cut the deficit in half. On the other hand, he’s also rumored to propose expanding universal government run healthcare in tomorrow;s speech. He just signed a bill for $787B. Oh, and that’s a start. We probably need more money for GM and Chrysler. Oh, and TARP and the banks. Don’t forget that. And he’s giving another $15B to states for Medicaid. I can't wait to see government squeeze the savings and generate efficiencies the likes of which the private market could only imagine. Yep, healthcare will be expensive. But medical technology is here to stay now that Obama's here so never fear. It'll work.
I love words. Yes, words are good. Words can be arranged and rearranged in different order. They can play on emotion and make you feel good if they’re delivered eloquently. If the pitch is good and intonations work than words can do wonders.
Maybe words will one day reflect some sort of realistic assessment of what’s happening followed by a realistic prescription to move forward. Words can be powerful things. Words can be dangerous things. With Obama, I suspect words are thrown on the wall with the intent of seeing what sticks. I think he likes the feedback and I think he likes to be liked. The problem with a man who sees himself in that way is that this type of man is not generally who you want in the midst of a crisis. He's just wrong. Well we can only wait and see. You might want to save your money in these rainiest of days.
Tuesday, February 10, 2009
An Ode to ‘Failed Theories’
Last night El Presidente Obama gave a speech in which he referenced the “failed theories” that we have tried in the last 8 years. I wasn’t sure exactly what he was referring to. He does allude to de-regulation as the cause of much evil. But it seems he’s getting at something bigger when he says that.
So what are these failed theories? He ridiculed those who advocate that we do nothing. Our president seems to like setting up strawman arguments. I had to wonder if he was talking about capitalism, free market economics, and limited government ideas. I think that’s what he’s getting at. He said that right now government is the only entity that can fill in the void at this time.
This is horrifying to me on many levels. The free market works because it is dependent on the millions of actions, priorities, and decisions made by individuals. People choose how they invest, spend, save, or work based on a number of factors. They tend to consider price, preferences, and make decisions how to allocate their scarce resources in their short-term and their long-term horizons. Some people work to make as much money as possible, others prefer fulfillment over money, some spend on the ballet, others on classic cars, stamps, or whatever else.
The free market simply gives people more leeway and a broader range of options than in a regulated or government directed economy.
What government planners tend to do is rely on microeconomic theories about behavior to try and incentivize people to engage in activities that the planners prefer. For example, a cigarette tax is intended to discourage smoking by making it relatively more expensive. Or, tax deductions on mortgage interest is intended to incentivize people to buy homes by making it relatively more cheap than would be the case if it were not deductible. If you have $10K in interest paid to the mortgage lender, you can write off the marginal tax you would have paid on that amount, which saves you anywhere from $1,000 to almost $4,000 depending on what you earn. If it there were not a mortage tax deduction you could argue that home prices would go down because people may bid a home to a degree anticipating that deduction.
The problem with government-planned economics is that it assumes the planners can make better value judgments about what people should do with their resources than people. But people should decided what they want to do with their resources based on how they value their time, prices/wages, preferences, etc.
Market economics is thought to have started with Adam Smith. But this is not the case. What Smith did was to formalize these ideas, analyze, and state them in his classic “Wealth of Nations”. He most clearly articulated how a market economy worked. That was his great achievement. But he did not invent it because a form of a free market existed in different societies for many centuries. It is how people relate in a society in which goods and services of all sorts are exchanged. It's level of freedom differs in different times and places. Smith explained why the freer the better. This still holds to be true.
There are times when a market fails to varying degrees. This often happens for a variety of reasons. In the current environment it happened to large extent because of housing. Home prices were bid up, there was an easy money policy, which kept interest rates low and allowed for a lower monthly home payment, and there were mortgage related securities with questionable valuations. In this case, government – both the Federal Reserve and the Fannie Mae and Mac – intervened incorrectly. Planners planned wrong and incentivized behavior that would ordinarily not have been encouraged.
So now we want to add more government because of the record of “failed theories.” This is an error in both the diagnosis and the recommendation. America is in for a decade-wide depression directly attributable to the specific policies that have been advocated starting in September of 2008 and accelerating at this moment. This nation has a decision to make. I am not encouraged by where we’re going.
So what are these failed theories? He ridiculed those who advocate that we do nothing. Our president seems to like setting up strawman arguments. I had to wonder if he was talking about capitalism, free market economics, and limited government ideas. I think that’s what he’s getting at. He said that right now government is the only entity that can fill in the void at this time.
This is horrifying to me on many levels. The free market works because it is dependent on the millions of actions, priorities, and decisions made by individuals. People choose how they invest, spend, save, or work based on a number of factors. They tend to consider price, preferences, and make decisions how to allocate their scarce resources in their short-term and their long-term horizons. Some people work to make as much money as possible, others prefer fulfillment over money, some spend on the ballet, others on classic cars, stamps, or whatever else.
The free market simply gives people more leeway and a broader range of options than in a regulated or government directed economy.
What government planners tend to do is rely on microeconomic theories about behavior to try and incentivize people to engage in activities that the planners prefer. For example, a cigarette tax is intended to discourage smoking by making it relatively more expensive. Or, tax deductions on mortgage interest is intended to incentivize people to buy homes by making it relatively more cheap than would be the case if it were not deductible. If you have $10K in interest paid to the mortgage lender, you can write off the marginal tax you would have paid on that amount, which saves you anywhere from $1,000 to almost $4,000 depending on what you earn. If it there were not a mortage tax deduction you could argue that home prices would go down because people may bid a home to a degree anticipating that deduction.
The problem with government-planned economics is that it assumes the planners can make better value judgments about what people should do with their resources than people. But people should decided what they want to do with their resources based on how they value their time, prices/wages, preferences, etc.
Market economics is thought to have started with Adam Smith. But this is not the case. What Smith did was to formalize these ideas, analyze, and state them in his classic “Wealth of Nations”. He most clearly articulated how a market economy worked. That was his great achievement. But he did not invent it because a form of a free market existed in different societies for many centuries. It is how people relate in a society in which goods and services of all sorts are exchanged. It's level of freedom differs in different times and places. Smith explained why the freer the better. This still holds to be true.
There are times when a market fails to varying degrees. This often happens for a variety of reasons. In the current environment it happened to large extent because of housing. Home prices were bid up, there was an easy money policy, which kept interest rates low and allowed for a lower monthly home payment, and there were mortgage related securities with questionable valuations. In this case, government – both the Federal Reserve and the Fannie Mae and Mac – intervened incorrectly. Planners planned wrong and incentivized behavior that would ordinarily not have been encouraged.
So now we want to add more government because of the record of “failed theories.” This is an error in both the diagnosis and the recommendation. America is in for a decade-wide depression directly attributable to the specific policies that have been advocated starting in September of 2008 and accelerating at this moment. This nation has a decision to make. I am not encouraged by where we’re going.
Friday, February 6, 2009
TARP and "Stimulus" Nonsense
Below are my random thoughts on our future economic depression and the coming catastrophe...
-------------
There are many generalities and often a distinction between the "model" and the "real world" on these issues. It's actually not shocking in the model why this happened. Many people, including myself, predicted this. I said it in about the Summer of 2004 and by late 2006 I was convinced of it. I'm shocked it lasted as long as it did. You had a combo of easy money policies, and an asset bubble in the housing market.
What Obama's plan is doing now is turning a recession into a major depression. We're heading for a triple crown of double digit unemployment, inflation, and interest rates at this point. That doesn't need to happen. They're choosing to making it happen and we have to do it NOW! by the way. Who needs to patiently analyze a bill of this magitude when it absolutely has to be done NOW!
You have to let the banks fail, let prices adjust downward, allow for unemployment to run it's course, radically change and simplify the whole tax code to make it more transparent. This would actually increase taxes on the wealthy but improve information. Part of what's happening with unemployment is that companies are over-reacting. Worker productivity numbers increased sharply today indicating there is an underlying demand for labor and that jobs still have to get done. Let industry consolidate where there's overcapacity (banks, autos, retail, luxury goods, etc.). Let prices adjust.
On the other hand, the U.S. selling T-Bonds over the open market will require them to increase interest rates to attract that investment. China and other foreign countries, who already own massive amounts of these things, have indicated they are not standing by ready to snatch up the now $900B. To attract investors you have to raise interest rates. This crowds out private investment and entrepreneurial activity. Plus, OPEC is expected to raise oil prices. So these two things will not help. The best shot is for unemployment to go back to normal, of the three. But Obama's government "grab a shovel" thing ain't gonna work. Plus, the tax cuts are aimed at consumers to prop up demand. This typically lasts a quarter. I didn't like the Bush tax giveaways. I don't like this.
As I mentioned, I've been saying this since 2004. This is mainly Greenspan's fault to be honest. It has nothing to do with "failed theories" as Obama likes to muse on about. I think what's coming is Obama's fault. What he's doing now. That's on him. Like I said, it's bad but it doesn't need to be as bad as I suspect it will now be. It's going from really bad to really, really depressiony-bad.
Nationalizing banks is fraught with all kinds of problems. You either do that entirely or you don't do it at all. You can't nationalize some and not others. It also punishes those banks that aren't failing. Nationalizing all banks is not an option even if you wanted to do it.
There are specific financial industry regulations that should be pushed such as moving bundled real estate cocktails onto an open market and having better oversight of mortgage brokers and sub-prime lenders. There should be higher standards on who gets a home loan based on some realistic ability to pay it back. If you want better regulation, than regulate that. Should or would home prices have gone up that high in a normal situation?
And of course letting things fail is a solution. It happens all the time. What's the alternative: hand out orange vests and shovels? Would you consider that a "real plan"?
Entrepreneurs may see great published interest rates but if the banks won't lend or offer a line of credit it doesn't matter what the rate is. Plus, expectations matter as much as interest rates when you're embarking on a new venture. And shareholders have been taking it on the chin for awhile now given that the value of stock holdings has gone down as much as it has.
I can't promise utopia. It's inherently not my M.O. At some point people suffer, including me with my investments. Of course it sucks. But does Obama, and you people, really think that's going to be avoided by the TARP I, $900B and growing stimulus, and inevitable TARP II and maybe TARP III to come?
There is no clear dichotomy. Punishing banks ends up punishing people. The "American Banking System" is not failing wholesale. Certain banks are failing and should fail and be consolidated and others are doing OK. I suppose that nationalizing banks is a multi-trillion dollar option. It's not one that I've heard as a serious idea though other than as a sort of nuclear option. Nobody is really comfortable with that. Nor should they be. I don't know that "hundreds of millions" of people are going to run on the bank.
What if Bank of America did fail? Do you think that all it's $2.7T in assets will simply vanish into thin air? Be erased from the earth like that meteor threatened to do in Armageddon?
What would happen is that another bank would sift through the mess for the profitable divisions or lines of business with the company. Banks do more than mortgages you know? And some people are still paying their mortgages believe it or not. But even within the loss leaders, like say the mortgage loans so in the news, the acquiring bank would end up having to acquire the distressed properties and sell it off. Or, this is a place, where the government could specifically help, if you're disposed to doing it, is to help minimize the loss to that side of the business. Yes, there would be a relative net loss.
Houses are real assets with a real underlying value. There not just paper figments. Yes, there was/is a problem with the derivatives you and the market you mention. That certainly should have been/be regulated and open. That's a place for oversight. But even if there are 10M foreclosures over the next year and banks have to eat $100K per foreclosure because of a nasty Loan to value ratio per foreclosed home, you still wouldn't require the amounts that are wily-nily being thrown at this. But rather than help on a case-by-case basis with banks, the government gives banks a blank check via TARP.
The running total for money unaccounted for is $78B. It will grow. The $1Trill number from the 10M homes x $100K per home doesn't account for the profits on the other 53 of 54 homes where the mortgage is paid. That is ok for the time being and shows up to counteract the losses thought not enough.
Oh but it's not whether government is too big or too small. No, no, no. Its effectiveness is what matters. The plan was and still is idiotic to begin with. They still don't talk about alocating money to specific cases. Instead, they talk about either expanding TARP or the GOP clowns are talking up fixed 4% rates. These people don't think and it's your money too that's going down the toilet. "If you're not enraged you're not paying attention" - bumper sticker
By the way, I've grossly over-estimated the 10M homes and the $100K per home. I think the actual number of 2008 foreclosed homes was a little less than $3M, and I don't know the exact per home LTV ratio but I doubt the average equity to loan ratio is that drastic. I was making a point about the ludicrisosity of the $1Trill and other figures these soon to be effective government type geniuses, including Mr. Paulson, throw at these things. Both parties deserve to be abolished for this.
-------------
There are many generalities and often a distinction between the "model" and the "real world" on these issues. It's actually not shocking in the model why this happened. Many people, including myself, predicted this. I said it in about the Summer of 2004 and by late 2006 I was convinced of it. I'm shocked it lasted as long as it did. You had a combo of easy money policies, and an asset bubble in the housing market.
What Obama's plan is doing now is turning a recession into a major depression. We're heading for a triple crown of double digit unemployment, inflation, and interest rates at this point. That doesn't need to happen. They're choosing to making it happen and we have to do it NOW! by the way. Who needs to patiently analyze a bill of this magitude when it absolutely has to be done NOW!
You have to let the banks fail, let prices adjust downward, allow for unemployment to run it's course, radically change and simplify the whole tax code to make it more transparent. This would actually increase taxes on the wealthy but improve information. Part of what's happening with unemployment is that companies are over-reacting. Worker productivity numbers increased sharply today indicating there is an underlying demand for labor and that jobs still have to get done. Let industry consolidate where there's overcapacity (banks, autos, retail, luxury goods, etc.). Let prices adjust.
On the other hand, the U.S. selling T-Bonds over the open market will require them to increase interest rates to attract that investment. China and other foreign countries, who already own massive amounts of these things, have indicated they are not standing by ready to snatch up the now $900B. To attract investors you have to raise interest rates. This crowds out private investment and entrepreneurial activity. Plus, OPEC is expected to raise oil prices. So these two things will not help. The best shot is for unemployment to go back to normal, of the three. But Obama's government "grab a shovel" thing ain't gonna work. Plus, the tax cuts are aimed at consumers to prop up demand. This typically lasts a quarter. I didn't like the Bush tax giveaways. I don't like this.
As I mentioned, I've been saying this since 2004. This is mainly Greenspan's fault to be honest. It has nothing to do with "failed theories" as Obama likes to muse on about. I think what's coming is Obama's fault. What he's doing now. That's on him. Like I said, it's bad but it doesn't need to be as bad as I suspect it will now be. It's going from really bad to really, really depressiony-bad.
Nationalizing banks is fraught with all kinds of problems. You either do that entirely or you don't do it at all. You can't nationalize some and not others. It also punishes those banks that aren't failing. Nationalizing all banks is not an option even if you wanted to do it.
There are specific financial industry regulations that should be pushed such as moving bundled real estate cocktails onto an open market and having better oversight of mortgage brokers and sub-prime lenders. There should be higher standards on who gets a home loan based on some realistic ability to pay it back. If you want better regulation, than regulate that. Should or would home prices have gone up that high in a normal situation?
And of course letting things fail is a solution. It happens all the time. What's the alternative: hand out orange vests and shovels? Would you consider that a "real plan"?
Entrepreneurs may see great published interest rates but if the banks won't lend or offer a line of credit it doesn't matter what the rate is. Plus, expectations matter as much as interest rates when you're embarking on a new venture. And shareholders have been taking it on the chin for awhile now given that the value of stock holdings has gone down as much as it has.
I can't promise utopia. It's inherently not my M.O. At some point people suffer, including me with my investments. Of course it sucks. But does Obama, and you people, really think that's going to be avoided by the TARP I, $900B and growing stimulus, and inevitable TARP II and maybe TARP III to come?
There is no clear dichotomy. Punishing banks ends up punishing people. The "American Banking System" is not failing wholesale. Certain banks are failing and should fail and be consolidated and others are doing OK. I suppose that nationalizing banks is a multi-trillion dollar option. It's not one that I've heard as a serious idea though other than as a sort of nuclear option. Nobody is really comfortable with that. Nor should they be. I don't know that "hundreds of millions" of people are going to run on the bank.
What if Bank of America did fail? Do you think that all it's $2.7T in assets will simply vanish into thin air? Be erased from the earth like that meteor threatened to do in Armageddon?
What would happen is that another bank would sift through the mess for the profitable divisions or lines of business with the company. Banks do more than mortgages you know? And some people are still paying their mortgages believe it or not. But even within the loss leaders, like say the mortgage loans so in the news, the acquiring bank would end up having to acquire the distressed properties and sell it off. Or, this is a place, where the government could specifically help, if you're disposed to doing it, is to help minimize the loss to that side of the business. Yes, there would be a relative net loss.
Houses are real assets with a real underlying value. There not just paper figments. Yes, there was/is a problem with the derivatives you and the market you mention. That certainly should have been/be regulated and open. That's a place for oversight. But even if there are 10M foreclosures over the next year and banks have to eat $100K per foreclosure because of a nasty Loan to value ratio per foreclosed home, you still wouldn't require the amounts that are wily-nily being thrown at this. But rather than help on a case-by-case basis with banks, the government gives banks a blank check via TARP.
The running total for money unaccounted for is $78B. It will grow. The $1Trill number from the 10M homes x $100K per home doesn't account for the profits on the other 53 of 54 homes where the mortgage is paid. That is ok for the time being and shows up to counteract the losses thought not enough.
Oh but it's not whether government is too big or too small. No, no, no. Its effectiveness is what matters. The plan was and still is idiotic to begin with. They still don't talk about alocating money to specific cases. Instead, they talk about either expanding TARP or the GOP clowns are talking up fixed 4% rates. These people don't think and it's your money too that's going down the toilet. "If you're not enraged you're not paying attention" - bumper sticker
By the way, I've grossly over-estimated the 10M homes and the $100K per home. I think the actual number of 2008 foreclosed homes was a little less than $3M, and I don't know the exact per home LTV ratio but I doubt the average equity to loan ratio is that drastic. I was making a point about the ludicrisosity of the $1Trill and other figures these soon to be effective government type geniuses, including Mr. Paulson, throw at these things. Both parties deserve to be abolished for this.
Friday, January 23, 2009
The Coming Depression: Oh, the Horror!
The more I look at Obama’s plan and this $825 billion dollar “stimulus” the more I feel like Col Kurtz in the movie Apocalypse Now when he muttered “the horror, the horror”. I predict that by the time they pass this bill, expected in mid-February, it will be greater than $1 Trillion dollars. I also predict that this number will be increased and we will have a second round come this Summer when it is realized this first round plus last Fall's bailout is not stopping the hemorrhaging. And why should it? It's the wrong medicine.
The catalyst of today’s scare was an article I read on the WSJ that touched on the question: Who pays for the debt? Who, specifically, buys the T-bills that even enable us to go into debt in the first place? The usual suspects were mentioned including the Chinese, Japan, and the Saudis.
When foreign nation governments and foreign individual investors buy T-bills they do so because they view it as a safe investment. However, there may, and I stress may, come a point where they no longer view it that way. The assumption America makes is that foreign money streaming in to buy Treasury’s at rates that are historically low is simply a given.
But, at some point, T-Bills mature and have to be paid in full. At some point, foreign investors may require a higher yield and higher interest rates for investing in American securities. Like any investment, investors seek the highest possible return. If foreigners do these things they may withdraw their money, they may require higher interest rates to lend to America’s debt.
At the end of the day, this is a potentially nightmare scenario. This could negatively impact the dollar of the value, increase inflation, make it harder for America to borrow, and actually make American securities almost like Junk bonds. The other option is that America could simply fire up the printing presses and simply print more money. This, however, serves to fuel inflation and lessen the value of American securities and their attractiveness because investors are primarily concerned with the real rate of return, which is the interest rate minus the inflation rate. If that is negative, investors tend to send their money elsewhere.
I used to think these alarmist scenarios were not possible. Sort of like a Y2K or man lives in the woods because of the coming nuclear holocaust or something like that. But I don’t consider the scenario laid out above to be that far-fetched anymore. Especially if pork policies like what we see now are pursued. These policies are not simulative. They are pork, pure and simple. They are intended to grow the economy from the “bottoms up” rather than through stimulating investment, which is needed to create sustainable jobs. The money we are indebting ourselves with now will dissipate as it goes through the economy. It is not akin to teaching a man to fish it is more akin to simply giving him fish and nothing more.
Unless the people America elected rethink what they’re doing and become more deliberate and careful, we are seriously headed for a major depression.
The catalyst of today’s scare was an article I read on the WSJ that touched on the question: Who pays for the debt? Who, specifically, buys the T-bills that even enable us to go into debt in the first place? The usual suspects were mentioned including the Chinese, Japan, and the Saudis.
When foreign nation governments and foreign individual investors buy T-bills they do so because they view it as a safe investment. However, there may, and I stress may, come a point where they no longer view it that way. The assumption America makes is that foreign money streaming in to buy Treasury’s at rates that are historically low is simply a given.
But, at some point, T-Bills mature and have to be paid in full. At some point, foreign investors may require a higher yield and higher interest rates for investing in American securities. Like any investment, investors seek the highest possible return. If foreigners do these things they may withdraw their money, they may require higher interest rates to lend to America’s debt.
At the end of the day, this is a potentially nightmare scenario. This could negatively impact the dollar of the value, increase inflation, make it harder for America to borrow, and actually make American securities almost like Junk bonds. The other option is that America could simply fire up the printing presses and simply print more money. This, however, serves to fuel inflation and lessen the value of American securities and their attractiveness because investors are primarily concerned with the real rate of return, which is the interest rate minus the inflation rate. If that is negative, investors tend to send their money elsewhere.
I used to think these alarmist scenarios were not possible. Sort of like a Y2K or man lives in the woods because of the coming nuclear holocaust or something like that. But I don’t consider the scenario laid out above to be that far-fetched anymore. Especially if pork policies like what we see now are pursued. These policies are not simulative. They are pork, pure and simple. They are intended to grow the economy from the “bottoms up” rather than through stimulating investment, which is needed to create sustainable jobs. The money we are indebting ourselves with now will dissipate as it goes through the economy. It is not akin to teaching a man to fish it is more akin to simply giving him fish and nothing more.
Unless the people America elected rethink what they’re doing and become more deliberate and careful, we are seriously headed for a major depression.
Wednesday, January 21, 2009
My Worst Nightmare
An article today by former Clinton advisor Dick Morris more accurately captures my worst fears about Obama than anything I could have put together. I hope it's not going to be this bad but I actually believe it will. I suspect we will see 12% to 15% unemployment rates and inflation in double digits by Summer 2010. I am not as hopeful as Morris is that Obama will get blamed. I tend to believe that Obama, like Roosevelt, will get away with his failures under the guise of his perceived care for the forgotten little man.
Let this be an early warning for posterity sake. I see nothing in Obama's current policies that could lead me to any other conclusions about the future. The only hope I have is that I do actually see some normalcy in a few of his advisors. Notwithstanding, I believe this is essentially what we have to look forward to...
http://thehill.com/dick-morris/the-obama-presidency--here-comes-socialism-2009-01-20.html
The Obama presidency: Here comes socialism
By Dick Morris
Posted: 01/20/09 06:12 PM [ET]
2009-2010 will rank with 1913-14, 1933-36, 1964-65 and 1981-82 as years that will permanently change our government, politics and lives. Just as the stars were aligned for Wilson, Roosevelt, Johnson and Reagan, they are aligned for Obama. Simply put, we enter his administration as free-enterprise, market-dominated, laissez-faire America. We will shortly become like Germany, France, the United Kingdom, or Sweden — a socialist democracy in which the government dominates the economy, determines private-sector priorities and offers a vastly expanded range of services to many more people at much higher taxes.
Obama will accomplish his agenda of “reform” under the rubric of “recovery.” Using the electoral mandate bestowed on a Democratic Congress by restless voters and the economic power given his administration by terrified Americans, he will change our country fundamentally in the name of lifting the depression. His stimulus packages won’t do much to shorten the downturn — although they will make it less painful — but they will do a great deal to change our nation.
In implementing his agenda, Barack Obama will emulate the example of Franklin D. Roosevelt. (Not the liberal mythology of the New Deal, but the actuality of what it accomplished.) When FDR took office, he was enormously successful in averting a total collapse of the banking system and the economy. But his New Deal measures only succeeded in lowering the unemployment rate from 23 percent in 1933, when he took office, to 13 percent in the summer of 1937. It never went lower. And his policies of over-regulation generated such business uncertainty that they triggered a second-term recession. Unemployment in 1938 rose to 17 percent and, in 1940, on the verge of the war-driven recovery, stood at 15 percent. (These data and the real story of Hoover’s and Roosevelt’s missteps, uncolored by ideology, are available in The Forgotten Man by Amity Shlaes, copyright 2007.)
But in the name of a largely unsuccessful effort to end the Depression, Roosevelt passed crucial and permanent reforms that have dominated our lives ever since, including Social Security, the creation of the Securities and Exchange Commission, unionization under the Wagner Act, the federal minimum wage and a host of other fundamental changes.
Obama’s record will be similar, although less wise and more destructive. He will begin by passing every program for which liberals have lusted for decades, from alternative-energy sources to school renovations, infrastructure repairs and technology enhancements. These are all good programs, but they normally would be stretched out for years. But freed of any constraint on the deficit — indeed, empowered by a mandate to raise it as high as possible — Obama will do them all rather quickly.
But it is not his spending that will transform our political system, it is his tax and welfare policies. In the name of short-term stimulus, he will give every American family (who makes less than $200,000) a welfare check of $1,000 euphemistically called a refundable tax credit. And he will so sharply cut taxes on the middle class and the poor that the number of Americans who pay no federal income tax will rise from the current one-third of all households to more than half. In the process, he will create a permanent electoral majority that does not pay taxes, but counts on ever-expanding welfare checks from the government. The dependency on the dole, formerly limited in pre-Clinton days to 14 million women and children on Aid to Families with Dependent Children, will now grow to a clear majority of the American population.
Will he raise taxes? Why should he? With a congressional mandate to run the deficit up as high as need be, there is no reason to raise taxes now and risk aggravating the depression. Instead, Obama will follow the opposite of the Reagan strategy. Reagan cut taxes and increased the deficit so that liberals could not increase spending. Obama will raise spending and increase the deficit so that conservatives cannot cut taxes. And, when the economy is restored, he will raise taxes with impunity, since the only people who will have to pay them would be rich Republicans.
In the name of stabilizing the banking system, Obama will nationalize it. Using Troubled Asset Relief Program funds to write generous checks to needy financial institutions, his administration will demand preferred stock in exchange. Preferred stock gets dividends before common stockholders do. With the massive debt these companies will owe to the government, they will only be able to afford dividends for preferred stockholders — the government, not private investors. So who will buy common stock? And the government will demand that its bills be paid before any profits that might materialize are reinvested in the financial institution, so how will the value of the stocks ever grow? Devoid of private investors, these institutions will fall ever more under government control.
Obama will begin the process by limiting executive compensation. Then he will urge restructuring and lowering of home mortgages in danger of default (as the feds have already done with Citibank).
Then will come guidance on the loans to make and government instructions on the types of enterprises to favor. God grant that some Blagojevich type is not in charge of the program, using his power to line his pockets. The United States will find itself with an economic system comparable to that of Japan, where the all-powerful bureaucracy at MITI (Ministry of International Trade and Industry) manages the economy, often making mistakes like giving mainframe computers priority over the development of laptops.
But it is the healthcare system that will experience the most dramatic and traumatic of changes. The current debate between erecting a Medicare-like governmental single payer or channeling coverage through private insurance misses the essential point. Without a lot more doctors, nurses, clinics, equipment and hospital beds, health resources will be strained to the breaking point. The people and equipment that now serve 250 million Americans and largely neglect all but the emergency needs of the other 50 million will now have to serve everyone. And, as government imposes ever more Draconian price controls and income limits on doctors, the supply of practitioners and equipment will decline as the demand escalates. Price increases will be out of the question, so the government will impose healthcare rationing, denying the older and sicker among us the care they need and even barring them from paying for it themselves. (Rationing based on income and price will be seen as immoral.)
And Obama will move to change permanently the partisan balance in America. He will move quickly to legalize all those who have been in America for five years, albeit illegally, and to smooth their paths to citizenship and voting. He will weaken border controls in an attempt to hike the Latino vote as high as he can in order to make red states like Texas into blue states like California. By the time he is finished, Latinos and African-Americans will cast a combined 30 percent of the vote. If they go by top-heavy margins for the Democrats, as they did in 2008, it will assure Democratic domination (until they move up the economic ladder and become good Republicans).
And he will enact the check-off card system for determining labor union representation, repealing the secret ballot in union elections. The result will be to raise the proportion of the labor force in unions up to the high teens from the current level of about 12 percent.
Finally, he will use the expansive powers of the Federal Communications Commission to impose “local” control and ownership of radio stations and to impose the “fairness doctrine” on talk radio. The effect will be to drive talk radio to the Internet, fundamentally change its economics, and retard its growth for years hence.
But none of these changes will cure the depression. It will end when the private sector works through the high debt levels that triggered the collapse in the first place. And, then, the large stimulus package deficits will likely lead to rapid inflation, probably necessitating a second recession to cure it.
So Obama’s name will be mud by 2012 and probably by 2010 as well. And the Republican Party will make big gains and regain much of its lost power.
But it will be too late to reverse the socialism of much of the economy, the demographic change in the electorate, the rationing of healthcare by the government, the surge of unionization and the crippling of talk radio.
Let this be an early warning for posterity sake. I see nothing in Obama's current policies that could lead me to any other conclusions about the future. The only hope I have is that I do actually see some normalcy in a few of his advisors. Notwithstanding, I believe this is essentially what we have to look forward to...
http://thehill.com/dick-morris/the-obama-presidency--here-comes-socialism-2009-01-20.html
The Obama presidency: Here comes socialism
By Dick Morris
Posted: 01/20/09 06:12 PM [ET]
2009-2010 will rank with 1913-14, 1933-36, 1964-65 and 1981-82 as years that will permanently change our government, politics and lives. Just as the stars were aligned for Wilson, Roosevelt, Johnson and Reagan, they are aligned for Obama. Simply put, we enter his administration as free-enterprise, market-dominated, laissez-faire America. We will shortly become like Germany, France, the United Kingdom, or Sweden — a socialist democracy in which the government dominates the economy, determines private-sector priorities and offers a vastly expanded range of services to many more people at much higher taxes.
Obama will accomplish his agenda of “reform” under the rubric of “recovery.” Using the electoral mandate bestowed on a Democratic Congress by restless voters and the economic power given his administration by terrified Americans, he will change our country fundamentally in the name of lifting the depression. His stimulus packages won’t do much to shorten the downturn — although they will make it less painful — but they will do a great deal to change our nation.
In implementing his agenda, Barack Obama will emulate the example of Franklin D. Roosevelt. (Not the liberal mythology of the New Deal, but the actuality of what it accomplished.) When FDR took office, he was enormously successful in averting a total collapse of the banking system and the economy. But his New Deal measures only succeeded in lowering the unemployment rate from 23 percent in 1933, when he took office, to 13 percent in the summer of 1937. It never went lower. And his policies of over-regulation generated such business uncertainty that they triggered a second-term recession. Unemployment in 1938 rose to 17 percent and, in 1940, on the verge of the war-driven recovery, stood at 15 percent. (These data and the real story of Hoover’s and Roosevelt’s missteps, uncolored by ideology, are available in The Forgotten Man by Amity Shlaes, copyright 2007.)
But in the name of a largely unsuccessful effort to end the Depression, Roosevelt passed crucial and permanent reforms that have dominated our lives ever since, including Social Security, the creation of the Securities and Exchange Commission, unionization under the Wagner Act, the federal minimum wage and a host of other fundamental changes.
Obama’s record will be similar, although less wise and more destructive. He will begin by passing every program for which liberals have lusted for decades, from alternative-energy sources to school renovations, infrastructure repairs and technology enhancements. These are all good programs, but they normally would be stretched out for years. But freed of any constraint on the deficit — indeed, empowered by a mandate to raise it as high as possible — Obama will do them all rather quickly.
But it is not his spending that will transform our political system, it is his tax and welfare policies. In the name of short-term stimulus, he will give every American family (who makes less than $200,000) a welfare check of $1,000 euphemistically called a refundable tax credit. And he will so sharply cut taxes on the middle class and the poor that the number of Americans who pay no federal income tax will rise from the current one-third of all households to more than half. In the process, he will create a permanent electoral majority that does not pay taxes, but counts on ever-expanding welfare checks from the government. The dependency on the dole, formerly limited in pre-Clinton days to 14 million women and children on Aid to Families with Dependent Children, will now grow to a clear majority of the American population.
Will he raise taxes? Why should he? With a congressional mandate to run the deficit up as high as need be, there is no reason to raise taxes now and risk aggravating the depression. Instead, Obama will follow the opposite of the Reagan strategy. Reagan cut taxes and increased the deficit so that liberals could not increase spending. Obama will raise spending and increase the deficit so that conservatives cannot cut taxes. And, when the economy is restored, he will raise taxes with impunity, since the only people who will have to pay them would be rich Republicans.
In the name of stabilizing the banking system, Obama will nationalize it. Using Troubled Asset Relief Program funds to write generous checks to needy financial institutions, his administration will demand preferred stock in exchange. Preferred stock gets dividends before common stockholders do. With the massive debt these companies will owe to the government, they will only be able to afford dividends for preferred stockholders — the government, not private investors. So who will buy common stock? And the government will demand that its bills be paid before any profits that might materialize are reinvested in the financial institution, so how will the value of the stocks ever grow? Devoid of private investors, these institutions will fall ever more under government control.
Obama will begin the process by limiting executive compensation. Then he will urge restructuring and lowering of home mortgages in danger of default (as the feds have already done with Citibank).
Then will come guidance on the loans to make and government instructions on the types of enterprises to favor. God grant that some Blagojevich type is not in charge of the program, using his power to line his pockets. The United States will find itself with an economic system comparable to that of Japan, where the all-powerful bureaucracy at MITI (Ministry of International Trade and Industry) manages the economy, often making mistakes like giving mainframe computers priority over the development of laptops.
But it is the healthcare system that will experience the most dramatic and traumatic of changes. The current debate between erecting a Medicare-like governmental single payer or channeling coverage through private insurance misses the essential point. Without a lot more doctors, nurses, clinics, equipment and hospital beds, health resources will be strained to the breaking point. The people and equipment that now serve 250 million Americans and largely neglect all but the emergency needs of the other 50 million will now have to serve everyone. And, as government imposes ever more Draconian price controls and income limits on doctors, the supply of practitioners and equipment will decline as the demand escalates. Price increases will be out of the question, so the government will impose healthcare rationing, denying the older and sicker among us the care they need and even barring them from paying for it themselves. (Rationing based on income and price will be seen as immoral.)
And Obama will move to change permanently the partisan balance in America. He will move quickly to legalize all those who have been in America for five years, albeit illegally, and to smooth their paths to citizenship and voting. He will weaken border controls in an attempt to hike the Latino vote as high as he can in order to make red states like Texas into blue states like California. By the time he is finished, Latinos and African-Americans will cast a combined 30 percent of the vote. If they go by top-heavy margins for the Democrats, as they did in 2008, it will assure Democratic domination (until they move up the economic ladder and become good Republicans).
And he will enact the check-off card system for determining labor union representation, repealing the secret ballot in union elections. The result will be to raise the proportion of the labor force in unions up to the high teens from the current level of about 12 percent.
Finally, he will use the expansive powers of the Federal Communications Commission to impose “local” control and ownership of radio stations and to impose the “fairness doctrine” on talk radio. The effect will be to drive talk radio to the Internet, fundamentally change its economics, and retard its growth for years hence.
But none of these changes will cure the depression. It will end when the private sector works through the high debt levels that triggered the collapse in the first place. And, then, the large stimulus package deficits will likely lead to rapid inflation, probably necessitating a second recession to cure it.
So Obama’s name will be mud by 2012 and probably by 2010 as well. And the Republican Party will make big gains and regain much of its lost power.
But it will be too late to reverse the socialism of much of the economy, the demographic change in the electorate, the rationing of healthcare by the government, the surge of unionization and the crippling of talk radio.
Thursday, December 11, 2008
Obama's Popular. Can We Rid Ourselves of Affirmative Action Now?
An article today in the Wall Street Journal discussed a recent poll that almost 75% of Americans feel positive about President Obama.
This would seem to put a fly in the ointment for those who still cling to the notion that America is inherently a racist country. There will always be a residue of racism in the human heart but the notion that racism is systemic in America and cannot be overcome as part of the body politic should be put to rest. Obama’s election has clearly demonstrated that racism in America is no longer systemic to the degree it may have when these policies were born. American blacks no longer need to maintain a “twoness” as W.E.B. Dubois called it where blacks had to act one way with whites and another way with blacks.
It has always seemed to me during my lifetime (b.1972) that America is more concerned with merit. Americans are very happy to support anybody, regardless of color, who does the job well. We respect and admire people who achieve their goals in life. Of course the “everybody gets a trophy” liberal mentality goes against this. But the idea that everyone should win because the loser’s feelings may get hurt is ridiculed by most Americans.
Conservatives should support affirmative action only if it is based on a non-color, means-based income threshold. It should not be the color of your skin that gives preferential treatment. On the other hand, if you are poor but talented you deserve an opportunity. It is a fact that there are bright pupils in poor school districts, for example, who suffer. There is no way to argue that students in underperforming schools have the same opportunities as students in more affluent school districts or those whose parents can afford good private schools. We all suffer when flowers like these can’t blossom. Certainly we can advocate a policy that gives potentially excellent students the opportunity they need to excel.
Perpetuating affirmative action flies in the face of what America is about and Obama’s election is just one more piece of an already long running trail of evidence that should mark the final end of a preferential racial policy. Affirmative action does more harm than good and actually perpetuates stereotypes at this point. Conservatives have a winning issue if they advocate means rather than race as a just way to advance the future of affirmative action.
This would seem to put a fly in the ointment for those who still cling to the notion that America is inherently a racist country. There will always be a residue of racism in the human heart but the notion that racism is systemic in America and cannot be overcome as part of the body politic should be put to rest. Obama’s election has clearly demonstrated that racism in America is no longer systemic to the degree it may have when these policies were born. American blacks no longer need to maintain a “twoness” as W.E.B. Dubois called it where blacks had to act one way with whites and another way with blacks.
It has always seemed to me during my lifetime (b.1972) that America is more concerned with merit. Americans are very happy to support anybody, regardless of color, who does the job well. We respect and admire people who achieve their goals in life. Of course the “everybody gets a trophy” liberal mentality goes against this. But the idea that everyone should win because the loser’s feelings may get hurt is ridiculed by most Americans.
Conservatives should support affirmative action only if it is based on a non-color, means-based income threshold. It should not be the color of your skin that gives preferential treatment. On the other hand, if you are poor but talented you deserve an opportunity. It is a fact that there are bright pupils in poor school districts, for example, who suffer. There is no way to argue that students in underperforming schools have the same opportunities as students in more affluent school districts or those whose parents can afford good private schools. We all suffer when flowers like these can’t blossom. Certainly we can advocate a policy that gives potentially excellent students the opportunity they need to excel.
Perpetuating affirmative action flies in the face of what America is about and Obama’s election is just one more piece of an already long running trail of evidence that should mark the final end of a preferential racial policy. Affirmative action does more harm than good and actually perpetuates stereotypes at this point. Conservatives have a winning issue if they advocate means rather than race as a just way to advance the future of affirmative action.
Tuesday, December 9, 2008
Ethics in Illinois
While the term "Ethics in Illinois" seems a bit of an oxymoron, I am still be-Elmer-fuddled by what Illinois' governor is reported to have done. For more info about specifics go to www.drudgereport.com. Apparently Governor Rod wanted to essentially offer Obama's vacant Senate seat to the highest bidder.
Even for Chicago politics, this one's a dandy. He joins New York's governor as having to resign over the past year for something so ridiculous. I'd pursue the "what were these guys thinking?" track if it were worth pursuing. But there's really no way to figure this stuff out and answer that question when these types of reports come out. All I can do is paraphrase the SNL skits and ask "REALLY?"
It does make me think that Conservatives have an opportunity to reclaim the mantle of good, ethical government. Democrat money machines are quite an ugly thing when you look up close at them. And we have some ugly Dems in the House. Conservatives should be for open, transparent government. Unfortunately, folks like Ted Stevens, Duke Cunningham, and Larry Craig have mucked ethics up in recent years.
However, in the future Conservatives need to have the strength to take the high road on ethics and accept consequences if need be. If it means voting out members who have even a whiff of scandal and losing a seat, so be it. In the long run, big city Dem politicos seem to get away with this sort of stuff. Conservatives need to stay away from it because they don't have a lock-step, "we've stopped thinking because we are all progressives" urban base. This can help restore the trust we've lost with our spending sprees and our own corruption during 12 years of GOP congressional rule. Behaving ethical, rather than just spending the next two years throwing darts, would be one small way for us to get out of the wilderness.
Even for Chicago politics, this one's a dandy. He joins New York's governor as having to resign over the past year for something so ridiculous. I'd pursue the "what were these guys thinking?" track if it were worth pursuing. But there's really no way to figure this stuff out and answer that question when these types of reports come out. All I can do is paraphrase the SNL skits and ask "REALLY?"
It does make me think that Conservatives have an opportunity to reclaim the mantle of good, ethical government. Democrat money machines are quite an ugly thing when you look up close at them. And we have some ugly Dems in the House. Conservatives should be for open, transparent government. Unfortunately, folks like Ted Stevens, Duke Cunningham, and Larry Craig have mucked ethics up in recent years.
However, in the future Conservatives need to have the strength to take the high road on ethics and accept consequences if need be. If it means voting out members who have even a whiff of scandal and losing a seat, so be it. In the long run, big city Dem politicos seem to get away with this sort of stuff. Conservatives need to stay away from it because they don't have a lock-step, "we've stopped thinking because we are all progressives" urban base. This can help restore the trust we've lost with our spending sprees and our own corruption during 12 years of GOP congressional rule. Behaving ethical, rather than just spending the next two years throwing darts, would be one small way for us to get out of the wilderness.
Monday, December 8, 2008
Obama Smokes! String'm Up
This recent article about Obama's on-again, off-again smoking habit struck me as yet another example of misplaced liberal, politically correct moral outrage.
http://news.yahoo.com/s/nm/20081207/pl_nm/us_usa_obama_smoking_3
This is truly ridiculous. I am not a cigarette smoker. I love smoking cigars and I'll confess I don't understand the appeal of cigarettes. I never got into the whole cool factor about it in High School.
The article cites stats about how cigarettes cost billions in health care costs and cause one in five deaths. Shall we do away with old age, McDonalds, desserts, fat food in general, and driving cars? They are probably the leading contrubutor to the other four in five deaths.
This sort of moral crusade is what I've always hated about the whole PC movement. It seems PC moral outrage is over things that aren't all that moral. When this happens eventually the outrage loses its effectiveness and we become numb to moral outrage in general. I mean cigarette smoking! When will we move beyond these stupid type of pseudo-moral crusades?
http://news.yahoo.com/s/nm/20081207/pl_nm/us_usa_obama_smoking_3
This is truly ridiculous. I am not a cigarette smoker. I love smoking cigars and I'll confess I don't understand the appeal of cigarettes. I never got into the whole cool factor about it in High School.
The article cites stats about how cigarettes cost billions in health care costs and cause one in five deaths. Shall we do away with old age, McDonalds, desserts, fat food in general, and driving cars? They are probably the leading contrubutor to the other four in five deaths.
This sort of moral crusade is what I've always hated about the whole PC movement. It seems PC moral outrage is over things that aren't all that moral. When this happens eventually the outrage loses its effectiveness and we become numb to moral outrage in general. I mean cigarette smoking! When will we move beyond these stupid type of pseudo-moral crusades?
Thursday, December 4, 2008
Ladies and Gentlemen: Give it up for Israel and Iran
The Drudge Report, one of my favorite sources of quick news, links to an article in the Jerusalem Post stating that Israel is preparing options for an Iran strike.
http://www.jpost.com/servlet/Satellite?cid=1227702421218&pagename=JPost%2FJPArticle%2FShowFull
My hunch is that Israel has probably already war-gamed different “Bomb-Bomb-Bomb Iran” scenarios to exhaustion by now. At this point, America seems to have a wait and see attitude with respect to Iran going nuclear. “La-Da-Da-Da Life goes on” and “time keeps on ticking”, to paraphrase the Beatles and Pink Floyd. But, to paraphrase the Rolling Stones, “time is not on our side”.
Waiting for Iran to get full-scale nuclear capabilities will irreversibly change the world as we know it. This is probably the most serious, though understated, international issue of our time.
The most obvious ramification of Iran going nuclear is that it will trigger like-mindedness among its neighbors. There will be an arms race where every country in that region will rush to acquire the same capability. For many obvious reasons a nuclear armed middle east is dire for everybody. Nuclear weapons aren’t intended for in-house enjoyment. They travel well across borders. Even, maybe over an ocean that separates them from us.
Did I mention that you have irrational clerical nuts in charge of Iran? The leader of Iran holds to a Shiite Muslim interpretation in which the Mahdi, a hidden prophet who walks among us in an occult state, is envisioned to return. Iran's leader, Mr. A, sees himself as an instrument of Allah’s Will in helping him along. As mayor of Tehran, it is said that the Mr. A had the streets of Tehran redone and beautified so that the Mahdi would walk on nice terrain for the glorious occasion. I wish this was a Stargate or Star Trek Next Gen episode I was describing. But unfortunately it’s not. People take this business quite seriously.
Because of what’s happening in Iran, I am very sympathetic to Israel. They are not in an easy position and nor are we. The case of Iran and Israel illustrates the complexity of our world and the fact that there are not easy or good options available.
On the one hand, I suppose we could support Israel and have them go in and try to destroy the sites. The problem with this is that the sites aren’t hanging out in the open. It’s not precisely known where they are, and even so, they are underground or hard to access because there are many spread throughout the country. In addition, Iran is about 4x the size of Iraq. It’s a big country and it’s got a lot of people. They are reasonably up-to-date on their stock weapons technology. Not on a par with America or Israel. But they’re not slinging stones from sticks either. They could effectively retaliate. There is a bit of a myth that Israel is invincible militarily. It makes sense for the myth to be perpetuated. But while they're strong per capita, the myth is still a myth and they are not invincible.
On the other hand, because of what’s happening in Iran, if we don’t do anything and hold back Israel we all but ensure a nuclear Iran and live with the consequences that follow.
Sometimes a nation and an individual feels they need to act. This is especially true for men. To sit back and watch events transpire appears to be unmanly. The old adage is that doing something is better than nothing, especially when the world is falling apart. We celebrate heroes of the past who had courage and took action and skewer those around them who urged caution in the face of danger.
I tend to think that with Iran we need to avoid trying to be heroes. We probably need to be cautious and wait and see what happens. I have not definitively made up in my mind about “doing nothing” because it goes against every instinct I have and my personal nature. I am not a person who sits on his hands nor am I a passive acceptor of the status quo. This personality trait has served me well but it has also resulted in me making some poor decisions over time.
But this may be a time when America should wait and see what God Himself is allowing to happen. I am not alluding to dispensational theology here, but God may have plans for that place that we can do nothing about. God’s Will may actually be for us to do nothing rather than to do something.
http://www.jpost.com/servlet/Satellite?cid=1227702421218&pagename=JPost%2FJPArticle%2FShowFull
My hunch is that Israel has probably already war-gamed different “Bomb-Bomb-Bomb Iran” scenarios to exhaustion by now. At this point, America seems to have a wait and see attitude with respect to Iran going nuclear. “La-Da-Da-Da Life goes on” and “time keeps on ticking”, to paraphrase the Beatles and Pink Floyd. But, to paraphrase the Rolling Stones, “time is not on our side”.
Waiting for Iran to get full-scale nuclear capabilities will irreversibly change the world as we know it. This is probably the most serious, though understated, international issue of our time.
The most obvious ramification of Iran going nuclear is that it will trigger like-mindedness among its neighbors. There will be an arms race where every country in that region will rush to acquire the same capability. For many obvious reasons a nuclear armed middle east is dire for everybody. Nuclear weapons aren’t intended for in-house enjoyment. They travel well across borders. Even, maybe over an ocean that separates them from us.
Did I mention that you have irrational clerical nuts in charge of Iran? The leader of Iran holds to a Shiite Muslim interpretation in which the Mahdi, a hidden prophet who walks among us in an occult state, is envisioned to return. Iran's leader, Mr. A, sees himself as an instrument of Allah’s Will in helping him along. As mayor of Tehran, it is said that the Mr. A had the streets of Tehran redone and beautified so that the Mahdi would walk on nice terrain for the glorious occasion. I wish this was a Stargate or Star Trek Next Gen episode I was describing. But unfortunately it’s not. People take this business quite seriously.
Because of what’s happening in Iran, I am very sympathetic to Israel. They are not in an easy position and nor are we. The case of Iran and Israel illustrates the complexity of our world and the fact that there are not easy or good options available.
On the one hand, I suppose we could support Israel and have them go in and try to destroy the sites. The problem with this is that the sites aren’t hanging out in the open. It’s not precisely known where they are, and even so, they are underground or hard to access because there are many spread throughout the country. In addition, Iran is about 4x the size of Iraq. It’s a big country and it’s got a lot of people. They are reasonably up-to-date on their stock weapons technology. Not on a par with America or Israel. But they’re not slinging stones from sticks either. They could effectively retaliate. There is a bit of a myth that Israel is invincible militarily. It makes sense for the myth to be perpetuated. But while they're strong per capita, the myth is still a myth and they are not invincible.
On the other hand, because of what’s happening in Iran, if we don’t do anything and hold back Israel we all but ensure a nuclear Iran and live with the consequences that follow.
Sometimes a nation and an individual feels they need to act. This is especially true for men. To sit back and watch events transpire appears to be unmanly. The old adage is that doing something is better than nothing, especially when the world is falling apart. We celebrate heroes of the past who had courage and took action and skewer those around them who urged caution in the face of danger.
I tend to think that with Iran we need to avoid trying to be heroes. We probably need to be cautious and wait and see what happens. I have not definitively made up in my mind about “doing nothing” because it goes against every instinct I have and my personal nature. I am not a person who sits on his hands nor am I a passive acceptor of the status quo. This personality trait has served me well but it has also resulted in me making some poor decisions over time.
But this may be a time when America should wait and see what God Himself is allowing to happen. I am not alluding to dispensational theology here, but God may have plans for that place that we can do nothing about. God’s Will may actually be for us to do nothing rather than to do something.
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