Archive for January, 2009

A Real Answer to the Financial Crisis

Sunday, January 25th, 2009

Dear Readers,

Now that our government has squandered half a trillion dollars bailing out the corrupt. And having taken on 7-60 trillion dollars in liability, (who knows the real figure). We are no closer to solving the Financial Crisis than we were last September.

Our wise government is now considering spending another few trillion dollars on a “stimulus” package. That money will be thrown down the rabbit hole along with the money our government has already tossed down there. Even Keynesian economists are saying that the money won’t be used for two years. Thus the “stimulus” won’t happen for two or more years. The fallacy of Keynesian economics notwithstanding.

Every commentator that I have heard says that the bill is loaded with pork. Do we really believe that a pork picnic is what we need to stimulate the economy? What are our leaders thinking?

They are using this financial meltdown, (one that they created), to seize control of the economy. As they flummox and blunder they will say the problem is that they need more control. That control will then lead to a lowering rate of growth. The Elite’s power will be greatly expanded… If anyone thinks the Elite will ever willingly cede that power back after our “crisis” is over also believes that Tim Geithner made an “honest” mistake on his taxes. By the way… to you folks who believe that… call me about a good deal on the Tappan zee bridge…

The only thing the government can do to actually stimulate the economy is to cut taxes. The effect is immediate. Won’t contribute to hyper growth later leading to a more violent cycle of upturns and downturns. And will bring real growth.

By real growth I mean long term sustainable growth in GDP. Not fictional growth that appears by government spending. When government “creates” a job, say counting the points on Maple leaves, the job is paid at the expense of the taxpayer. You and I are the Taxpayer, we have less money to spend on what the government sees as non essentials, like food, clothing, housing, etc… Every year the “created” job must be funded through taxation. The job never pays for itself like a private sector job does. It simply exists at the cost to you and I. What is not seen is the spending you or I would do with that money.

The best way to fix the financial crisis is to let the chips fall. Let Bear Sterns collapse. Let the Wall Street Elite lay in the bed they have made. You and I don’t want to sleep in it. But, the government is tucking us in right now.

Have the government, through the FED or other suitable agency, by new loans. Then the functional rest of the economy can continue to buzz along. The cost in the near term wouldn’t exceed a trillion dollars. As the financial sector shakes off it’s troubles it will take over from the government the funding of our economy through loans. Meanwhile the government, (you and I), will have good M2 and M3 money. We will get our money back with interest. The investments will grow and when they mature the government, (you and I), will not take a bath so the Financial Elites don’t have to.

The last pill the Elite should, But will not, take is a thorough investigation into the failure of our government regulators in not stemming this hemorrhage before it got to this level. They have failed in the case of Madoff, (is he in jail yet), and the derivatives market to name a few. The government is up to it’s eyeballs in the mess. But they keep pointing their fingers everywhere else.

Hey, guys, when you point the finger at someone else… three fingers are pointing back at you…

Ingenious Financial Products

Sunday, January 18th, 2009

Dear Friends,

It seems to me that one of the biggest factors in visiting this financial melt down upon us, is the widespread use of ingenious financial products, as a means of gaming the system.

An example of ingenious means to game the system is short selling. (Essentially betting that a company or money will loose value in a given time). The problem is that when you bet that a company or currency will loose value is that it is relatively easy to drive down the value of a company or currency. It is easier to salt the fields then to plant a crop. Especially for a person who wields extreme power. Historically people who have power have not had to live up to the standards that a regular person like you and I have to. So with no appreciable threat the powerful can short sell a currency or stock. Then using lies, rumors, innuendos of corruption, and other underhanded means to drive down the value. When the value is driven lower the trader then makes a huge profit. Of course the people of the nation, or employees and shareholders, are damaged.

Derivatives are another example. The market in derivatives has gotten so out of control that in 2007 it was 10x the total of WORLD GDP! Ten Times! That is so absurd, that in a reasonable world, people would be going to jail. And I don’t mean some country club I mean Folsom Prison. By the way, is Madoff in jail yet?

The Stock market and other such markets should be a good place for the average person to place his or her money. We invest with the assumption that the system is fair. When the system is not fair we loose and the corrupt win. The markets get out of balance by the average investor loosing even in an up market. This state of affairs cannot sustain itself. Boom bust cycles are largely a result. Can you remember AIG? We are on the hook for that one and many more. How are we supposed to come up with 10x WORLD GDP to bail out these corrupt S.O.B.s!?

The government is totally to blame in this Banking and Financial fiasco. To argue the most regulated industry went bust due to a lack of regulation is laughable. That is like the witch doctor saying to the patient that he must ingest MORE lead, he just hasn’t ingested enough yet. Yea enough to kill us! Lets have an independent council look into the Congress’s failure and the failure of every other governmental entity.

The SEC has been asleep at the wheel. They must not, in the future, let people use ingenious means to make money in the stock and mercantile markets. It is imperative that the SEC start doing it’s job and clean up the markets! We don’t need regulation we need common sense at the SEC.

This would be a department of the Numa. Keep the regulators honest. Punish people who don’t pay their taxes and would make us. Hold government’s feet to the fire. A dozen or so prosecutors with access to every phone conversation, every email, 24-7 surveillance of any governmental agency that is involved with the financial markets. They would be busy for awhile prosecuting government officials, but, the Elite would get the point pretty fast.

Real Economic Stimulus!

Tuesday, January 13th, 2009

Dear Friends,

It seems to me that if the government really wanted to stimulate the economy, (not just seize control and establish a command and control economy), they would declare a total tax holiday… for a month.

Wow, can you imagine the stimulus to the economy? It would be huge! Think about getting every dollar you earn in your paycheck for a month. No income tax no FICA tax, no sales tax, no duty fees. No matter what you do with the money it will help the economy. Not temporarily like government make work. (Perhaps we can pay someone to count the tips on oak leaves this time).

Money that is used to pay off debt will reduce the debt load of the American citizen. That would free up money for the banks to lend if they choose. The incentive will be to lend it however not horde it. Due to the other effects of a month long total tax holiday.

Money that is saved will give the banks more liquidity. That will further increase the availability of money to lend. (Perhaps causing a glut of money to lend).

Money that is used to buy goods and services will stimulate production. That will in turn stimulate the need for workers. With capital now available business would think about expanding. Especially if they are flush with extra money they didn’t have to pay the government. They will be inclined to invest rather then pay dividends. Investment would generate more demand for goods and services. Dividends would give people more money to pay off debt, invest, or spend.

Last time the government came out with a “New Deal” a recession turned into a decade long recession. Today we are being sold a “New Way.” But from my perspective it looks a lot like the “New Deal.”

I wonder… if some “economists” think the New Deal was so effective, then why did, it take the Second World War, and 500,000 American boys deaths, as well as tens of millions of boys in other counties deaths, to get us out of it?

Year of the Numa

Sunday, January 11th, 2009

Dear Friends,

Happy new year! I have decided that this year will be the year of the Numa. We here at the International Capitalist Party will use this year (2009) to inculcate our vision of the Numa. I will write and continue to seek input from our readers.

As you know the Numa is the International Capitalist Party’s concept to force the Elite to follow the laws they pass. That is all. We recognize that people are reticent to enforce rules on themselves. We all are the same in this way. We tend to justify our own infractions and condemn the infractions of others. Hsun Ching said that “the congenital nature of man is evil.” In that we all seek our own good above the good of others.

When the Elite are allowed to engage in this behavior, the average Joe has no incentive to obey the laws himself. Why would you follow the laws when you see those put over you do not? When our “superiors” flaunt the law… Don’t pay income taxes on income earned, take bribes, sell Senate seats, trade post office vouchers for cash, sex with underage aides, have rubber checkbooks, asking for political donations from an official office, the list of corrupt acts done and not punished would fill libraries. How can we expect people to follow laws that the Elite who pass them have so little regard?

If we forced the Elite to follow their own laws there would be encouragement for the public to follow those laws too. If our “superiors” are following the law we will follow the law. Crime will be reduced. But that is not the only effect of forcing the Elite to follow their own laws.

A great inducement to tyranny lies in allowing the Elite to be above the law. They have no incentive to keep legislation sane. Why should they? If they know they personally will not ever suffer from poor legislation but they can be personally benefited by it they will pass it unanimously. (Unless there are political points to be made in a minority outcry). Holding the Elite to every law they pass on us keeps our liberty safe.

Simply put, as we have said in the home page of the International Capitalist Party, the Numa would solve the principal agent dilemma as it pertains to government. When we can trust the government we can rest our minds, if we cannot trust our government we are in great peril. Everyone knows this in their heart. The one way to tell if people trust their government is how confrontational is the political process?

So monitor the Elite like they want to monitor us. It is more efficient and will take less bureaucracy. If legislators had video cameras in their offices they would be less prone to misbehave. If you think it unfair to video monitor the Elite? Look above the cashier at McDonalds, he or she is being monitored. The job of the legislator is at least as important. We are the boss, when it comes to the legislator, we have a right to be able to look over their shoulders now and then. If we don’t like what we see, then…

Thursday, January 8th, 2009

Dear Friends,

Well I have been talking about it for awhile now and I thought it might be time to roll out an initial stab at a constitutional amendment adding the Numa (fourth branch) to any constitution. Input from legal experts would be helpful to cleanse the prose of redundancies and sharpen it.

The Numa

The Numa amendment to the Constitution would read;

The Numa is to have the power to enforce all laws on members of the Executive, Legislative and Judicial branches of government. All laws that the Legislative branch pass will be enforced on the entire government by the Numa. The Numa would be the police and the prosecutor of government officials. The normal established method of making law will be the same.

The Executive will still have the civilian police, FBI, Military, etc… The FBI will have police powers over the Numa. All laws that are forced on the citizens of a country must be enforced on all members of government… Including the Numa. Legislation that renders the Numa powerless however would be unconstitutional, as would legislation pertaining only to the Numa. Any and all legislation that applies to any citizen must be applied to all elected and appointed members of government.

The Numa’s funding will be passed by the Legislature and signed by the Executive.

The Numa will be headed up by the “Phocon”. He or She will have three officers reporting to him or her, one for each of the three other branches. These top members would be elected for four (4) year terms. With no more than two consecutive terms.

The Numa will have the power to wire tap any official phone line, e mail, or any other means of communication. Video surveillance of all offices, halls, meeting rooms etc… will be constant and the actions in them are to be taped and released to the public via the internet. If deemed to be detrimental to the national security they will be held until they are no longer pertinent to national security or twenty (20) years whichever comes first.

The Numa will have the power to drug test or otherwise compel a member of the government to the extent that any citizen could possibly be compelled to do by law. Random drug testing for CDL truck drivers for example, forces random drug testing on all elected and appointed officials.

When a citizen has reason to think that he or she has been treated unfairly by the government he or she can resort to the Numa. There will be a department within the Numa to deal with government “consumer” complaints.

The impeachment process will be abolished and replaced by the Numa. If the Executive is found to be in conflict with the law the Numa will investigate, and prosecute if necessary. The Judicial will provide a court of law and the Supreme Court will be the deciders in the matter.

The powers defined herein are the only ones granted to the Numa.

Failed Economy

Friday, January 2nd, 2009

Dear Friends,

It seems to me that we have the term “Failed State,” maybe it’s time we added to the vernacular, the term “failed Economy.” The definition of a Failed Economy would be an a national economy that cannot support it’s population. So any country that cannot produce the economic output to feed, cloth, and house it’s people it is by definition a Failed Economy.

Another characteristic of a Failed Economy is that the people want to leave the country. If the general migration is out of a country then that country has a problem. It is experiencing a Failed Economy. Until it can get out of the way of the entrepreneurial people within it’s boarders it will continue to have a Failed Economy.

The term “feed, cloth and house” is relative. It can mean different things in different countries. But the floor can be seen by all. If there is famine, that country has a Failed Economy. If the country needs money sent in from it’s citizens, that live in other countries, it has a Failed Economy. To feed a people all a country needs to do is allow the free market to farm the land. Despite the name calling, modern agribusiness is still producing productivity gains, in the field of agriculture.

A nation need not produce the actual clothes that it’s citizens wear. It need only produce the equivalent economic output, (or more), to purchase them from another country. The international trade produces more opportunities for growth to a nation than theoretical total independence. Think of the Dead Sea versus the Mediterranean. The Dead Sea is not connected to the ocean, the Mediterranean is. Scientists say that the Dead Sea will be dry in our children’s lifetimes. No such prediction has been made of the Mediterranean.

It is poor policy for a government to try to get into the housing business. The free market can find the equilibrium price for housing in a nation. The market will produce houses as efficiently as possible. If the government insures that the process is open and nothing about the transaction is hidden, that government will have adequate housing. If a house is built of straw, and the purchaser knows the consequences of this buy, the house should be sold. Perhaps the house will burn down and perhaps it will not. But both parties know the facts. Like an organism evolves, the style and methods of home building will be more and more to the tastes of the people and the durability will improve as well, that is the natural progression of a market system.

If a country wants housing to be expensive and only for the elite, it need only highly regulate the means of house building, not the means of the sale of property. To regulate the means of house building is to decide minutia like the rise and run of staircases, the thickness of concrete walls, or even if there must be concrete walls, etc… To regulate the major aspects of housing is even more counter productive to effective housing policy. Things like the style and size of houses are far better left in the hands of people deciding for themselves what they want to live in.

So in all cases it is the State that stands in the way of a rectifying a Failed Economy.