Initial jobless claims unexpectedly jumped by 24,000 last week to 399,000 as more workers lost their jobs, the Labor Department said Thursday. At the same time, the economy continues to lose workers.

In the 30 months since the recession officially ended, nearly 1 million people have dropped out of the labor force — they aren’t working, and they aren’t looking — according to data from Labor’s Bureau of Labor Statistics. In the past two months, the labor force shrank by 170,000.

This is virtually unprecedented in past economic recoveries, at least since the BLS has kept detailed records. In the past nine recoveries, the labor force had climbed an average 3.5 million by this point, according to an IBD analysis of the BLS data.

…According to the BLS, the “labor force participation rate” — the ratio of the number of people either working or looking for work compared with the entire working-age population — is now 64%, down from 65.7% when the recession ended in June 2009. That’s the lowest level since women began entering the workforce in far greater numbers several decades ago.

If you adjust for this drop, the unemployment rate would be close to 11%, instead of the official 8.5%.

At this rate, the completely politicized Bureau of Labor Statistics should just remove several million more workers from the labor force, so they can get the unemployment rate down to, say, 4.8%. Like it was during those nightmarish Bush years.

 
Related: Obama Labor Politburo Now Publishing Patently Bogus Unemployment Propaganda.

Vivian: So you don’t actually have a billion dollars, huh?

Edward:  No, I get some of it from banks, investors…

Vivian: And you don’t make anything and you don’t build anything.

Edward: No. No.

Vivian: So what do you do with the companies once you buy them?

Edward: I sell them.

Vivian: … You sell them.

Edward: Well, l… don’t sell the whole company; I break it up into pieces… and then I sell that off; it’s worth more than the whole.

Vivian: So it’s sort of like, um, stealing cars and selling ‘em for the parts, right?

Edward: [ Exhales ] Yeah, sort of. But legal.

Edward Lewis could have added:  “… and I love being able to FIRE PEOPLE!!”  Or so the soundbite-driven understanding of all this would have it.

You’d think Romney’s opponents would know that much of the base they’re trying to appeal to hates demagoguery against business.  When a business isn’t profitable, there are good reasons why it’s better to repackage and repurpose its assets for more profitable use.  Unprofitable businesses aren’t made profitable by political bailouts; they are made dependent and unsustainable.  Businesses like Bain Capital ensure that resources are being put to the most profitable, job-creating uses, given the environment of regulation and taxes that businesses have to operate in.  There’s nothing wrong with the existence of such companies; indeed, they are a positive factor in a dynamic business climate.

But then, Romney is tin-eared himself on some significant things.  He did, in fact, say that he likes to be able to fire people if they’re not performing.  That is a stupid, politically insensitive way to word a valid requirement of a healthy economy.  People sometimes have to be fired, but it’s suspicious for someone to “like” being able to do it.  There is nothing more gratifying than an employee who does well, and in particular one who improves over time, while there is nothing that makes the average boss feel as terrible as having to fire one who simply can’t seem to measure up.

Why couldn’t Romney have said instead that businesses need to be able to fire non-performing employees, even though it’s never any fun to do that?  Apparently because that’s not the way he sees it.  His phrase about liking to be able to fire people is the one that came naturally to him.  It doesn’t mean he’s a cold-hearted jerk who loves to give people bad news, but it is a personality problem for him in political leadership.  ‘80s-era pop psychologists would have said that he is very “objective-oriented”: he resonates to the idea of the goal and the achievement, and gives short shrift to the people.

Republicans do want a better climate for business, but the more abstract, data-focused perspective of a Bain Capital graduate is not necessarily what they are looking for.  I don’t actually want a president who imagines he can boost the bottom line of US companies.  I want one who understands that government policies affect people, largely through the constraints they put on business.  And I want him to respect the rights and dignity of individual people, neither trying to bribe them with goodies nor trying to herd them into programs that he sees as financially smart.  I’m not looking for a president with an opinion on whether a whole bunch of things he isn’t in charge of can be profitable.

Bringing up Bain as an issue has also turned up the fact that Bain profited from a deal in the early 1990s involving a steel company that received a $44 million federal bailout for its pension plan.  While it is demagoguery to equate this with Bain itself receiving a federal bailout, it is still a problem for Romney.  Companies like Bain have been operating in the environment of government incentives, regulations, and bailouts for quite a while now, and Romney’s record is one of being comfortable with that.  (He endorsed the TARP bailout in 2008.)

More and more of the people are not comfortable with it.  It is well and good that Romney wants the government to get off business’s back, but it’s not OK to remove only some constraints while leaving others, and continuing to bail the whole mess out.

Sadly, Romney’s opponents have wasted a superb opportunity to talk about what they think is the proper relationship between business and government.  They have simply jumped on the demagoguery bandwagon, which frankly is cheap and annoying.  If I were crafting talking points, I would address the “liking to fire people” comment graciously – something along the lines of “I’m sure this is what Governor Romney meant to say” – and focus more on Romney’s comfort with the extent to which government regulates business, profits from regulating business, and bails business out so it can keep regulating and profiting.

One last thought.  In contrast to the bloviation-fest precipitated by the Bain Eruption, consider the cool dispatch and intelligence with which the candidates knocked down the idiotic social-issue questions posed by Stephanopoulos and Sawyer in the debate on Saturday night.  The candidates were ready to talk about those issues – irrelevant as they were – with principled specifics.

On the matter of business and government, however, it’s been all big-government complacency on one side, and all mindless demagoguery on the other.  Not a hint of a principled argument about the free market and the appropriate role of government, from the perspective of either a man-and-the-state theory, or a regulation-vs.-the-market theory.

Nothing has made clear like the last 40 months that there is no longer an American consensus on these matters.  The Obama camp knows exactly where it stands.  But the GOP candidates aren’t internally motivated and prepared to make specific cases about it, as they are about social issues.  Yet that’s what the voters are waiting to hear.

J.E. Dyer’s articles have appeared at The Green Room, Commentary’s “contentions,” Patheos, The Weekly Standard online, and her own blog, The Optimistic Conservative.

Perhaps the next edition can provide kids with a full accounting of the Occupy-related illnesses, vandalism, rapes, deaths, and other criminal violations — and a related pop quiz on John Nolte’s Occupy arrest rap sheet.

The kids deserve the whole truth. The teachers unions’ Alinsky brigade won’t give it to them.

However, while Scholastic continues its love affair with OWS, it also has a hypocrisy problem (yes, go figure).  Seems Scholastic senior editor, Natalie Smith, who wrote this OWS puff piece dated well after this gem of a photo, conveniently forgot that her company is a $1.9 Billion publicly-traded company on the NASDAQ exchange.  Smith writes:

The Occupy protesters argue that large companies like those on Wall Street are making too much money while millions of Americans are struggling just to put food on the table. The protesters say they want average Americans to have more job opportunities and share in companies’ prosperity. They want their voices to be heard.  (emphasis mine)

What Smith fails to report is that Scholastic is in quite good shape financially:

In fiscal 2011 operating income was $100.7 million on revenue of $1,906.1 million, primarily reflecting lower sales of educational technology relative to a year ago, when the Company benefited significantly from the federal stimulus program, as well as increased strategic spending on digital initiatives in the children’s book business. Free cash flow was $120.5 million, which exceeded net income, compared to $171.6 million a year ago, which reflected that year’s strong educational technology sales. The Company also returned $176.4 million to shareholders in the form of share buybacks and dividends in fiscal 2011.

Last year we celebrated the 90th Anniversary of the founding of Scholastic. From the launch of a single classroom magazine in 1920, Scholastic has grown to become the world’s largest publisher and distributor of children’s books and a leader in educational technology and children’s media.

Ah, yes, the sweetness of a capitalistic economic system, vision, ingenuity, and success.  Scholastic has been able to grow due to the very capitalistic system OWS condemns.  It’s mind-boggling, to say the least, how Scholastic can support a movement that validates and teaches children class warfare, lawlessness, and lewd behavior.  But then again…

A report from the Center for Responsive Politics (CRP) reveals that 47% of Congress members are millionaires, some of them many times over. When you contrast that finding with the percentage of U.S. households with net assets of at least $1 million—a mere 4%—the handwriting on the wall is clear. Extend the number of seats in Congress to roughly 115 million, one for each household recorded in the 2010 census, and we become a nation of mostly very wealthy people. How’s that for wealth redistribution?

Sheila Krumholz, executive director of CRP, writes that “the vast majority of members of Congress are quite comfortable, financially.” That’s putting it mildly. Of the current 250 members who are millionaires, nine of them have over $100 million. One of them, Rep. Darrell Issa (R-CA), is within hailing distance of half a billion dollars, with an average net worth of over $448 million.

Issa, who is the richest, is followed by Rep. Michael McCaul (R-TX) with $380 million, Sen. John Kerry (D-MA) with $232 million, Sen. Mark Warner (D-VA) with $193 million, and Sen. Herb Kohl (D-WI) with $174 million.

Since there are 531 Congress members in total, that means that 281 members have an average net worth of less than a million dollars. But is anyone in Congress poor? If the records obtained by CRP are accurate and truthful, the answer is a resounding yes. Rep. Alcee Hastings (D-FL) is in debt to the tune of $4.7 million. Rep. Steve Fincher (R-TN) is also reportedly in the red $3.3 million, followed by Rep. Ruben Hinojosa (D-TX), who owes $2.5 million.

But back to the good news: Despite the global economic meltdown and moribund recovery, the estimated median net worth of a current U.S. senator (senators tend to be richer than House members) is up about 11 percent, from $2.38 million in 2009, to $2.63 million in 2010 (the most recent year for which financial data were available).

A complete list of Congress members and where they fall on the wealth continuum is here. You might also enjoy tabbing over to a listing of the most popular investments among members of Congress. I’ll give you a sneak preview: The number one favorite investment vehicle is a company that paid no federal tax in 2010.

Do you think this is what the founding fathers envisioned when they established Congress?

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In the process, European leaders will begin to change the fundamental structure of the union, creating a form of centralized oversight of national budgets, with sanctions for the profligate, to reassure investors that this kind of sovereign-debt crisis is finally being managed and should not happen again.

The immediate focus of worry is on Italy and Spain, which have been buffeted by market speculation even as they move to fix their economies. That process took an important step on Sunday, as Italy’s cabinet agreed to a package of austerity measures to put the country in line for aid that would improve its financial stability.

The new euro package, as European and American officials describe it, is being negotiated along four main lines. It combines new promises of fiscal discipline that will be embedded in amendments to European treaties; a leveraging of the current bailout fund, the European Financial Stability Facility, to perhaps two or even three times its current balance; a tranche of money from the International Monetary Fund to augment the bailout fund; and quiet political cover for the European Central Bank to keep buying Italian and Spanish bonds aggressively in the interim, to ensure that those two countries — the third- and fourth-largest economies in the euro zone — are not driven into default by ruinous interest rates on their debt.

Emphasis mine. In other words these disparate countries linked only by a common currency are now going to give up their national sovereignty (i.e. their budgets) to ensure its stability? Really?

Well someone believes that’s going to do the trick because after the outline was announced, Italian bond yields “collapsed”. From a high of 7.4% before Thanksgiving, they’re now down to around 6.15%. While that’s a huge move, it still spells a country in trouble. Now, of course, they’re going to give up having the final say on their budgets?

I wonder how that’s going to play in Greece.

The problem, of course, is the usual one:

So Mr. Sarkozy and other European leaders are working on a less elegant and more phased way to create a pool of bailout money that is large enough to convince the markets there is little chance of a default on Italian and Spanish bonds, which should drive down rates to sustainable levels, European and American officials say.

Mrs. Merkel says it is time to get the euro’s fundamentals right. She is insisting on treaty changes to promote more fiscal discipline, including a limit on budget deficits, with outside supervision and surveillance of national budgets before they become dangerous, and clear sanctions for countries that fail to adhere to the firmer rules. Berlin wants the new standards backed up by the European Court of Justice or perhaps the European Commission, with the power to reject budgets that break the rules and return them for revision.

She would like the treaty changes to be accepted by all 27 members of the European Union, but failing that, she said she would accept treaty changes within the euro zone, with other countries who want to join in the future, like Poland, free to commit to the tougher rules now. Many countries, and not only Britain, are opposed to institutionalizing a two- or even three-tier European Union, fearing that their interests will be sacrificed and their voices diminished.

Mr. Sarkozy, as the political inheritor of Gaullism, disagrees about the reach and nature of European supervision of national budgets and about the role of European institutions in overseeing the fiscal affairs of sovereign states. The French are more jealous of their sovereignty and more skeptical of European courts, not wishing to give them — let alone the bureaucratic European Commission — more sway over national budgets and policies.

“Europe must be refounded and rethought,” Mr. Sarkozy said last week. “But the reform of Europe is not a march toward supranationality.”

But in reality, “supranationality”, while possibly the needed solution, is very unlikely to come about. And then there is enforcement of sanctions by some entity outside of a national one. National politicians would only have a preliminary say in national budgets.

We’ve seen how the Greeks react to their own government attempting to enforce austerity measures. Imagine an outside body like the European Commission forcing the Greek government to revise its budget. Its also very clear the French want no part of it either. The emphasized sentence is how it has always been, i.e. distrust and fear about being sacrificed and diminished. That’s no way to hold a “union” together and it speaks volumes about the less than latent nationalism still in existence in all those disparate countries (and cultures). It all comes down to trust and it appears they really don’t trust each other.

So while the tentative deal may seem to be workable there have to be serious doubts about whether, even if finally agreed too, it can work. It just doesn’t factor in the national paranoia among most members about being subsumed by a “supranational” entity. Their identity, which most have guarded jealously, has always been a problem and, given the financial mess in the south, likely to intensify vs. lessening.

Is there a solution to save the Euro? Perhaps. But is giving up national sovereignty on budgets and allowing a “supranational” entity to overrule them and enforce sanctions going to actually come to pass? And if it does, will those who agree in a time of crisis actually do what they promise now if the crisis lessens?

I’m betting “no”.

Unemployment has dipped slightly, to 9.1%, but that’s hardly a stat Obama wants to boast about on the campaign trail. The most recent Bureau of Labor Statistics jobs report shows 80,000 new private sector jobs for the month of October, but that too is woefully short of the quarter million-plus jobs the economy will need to add each month to eventually reach pre-recession unemployment levels.

So where does that leave the president, and what are his chances for reelection? That, needless to say, is anybody’s guess, and enough commentators have handicapped the election to make another opinion superfluous. Instead, I will simply lay out some facts that will be—or can be—make-or-break issues for the president:

• Independents’ low opinion of the American Jobs Act. The president and his Democratic colleagues have been touting  the results of a Gallup poll conducted in September that shows strong support for his jobs plan—and especially its provisions for taxing “the rich.” According to the poll, 66% favor raising taxes on families earning at least $250,000 versus 32% who do not. What the Democrats conveniently overlook is a second poll released around the same time by Public Opinion Strategies showing that independent voters reject the plan by a 20-percent margin. Only 33% support the bill while 53% oppose it. The independent vote was instrumental in helping Obama win election in 2008. He will need it again in 2012 if is to have a chance of renewing his lease on 1600 Pennsylvania Avenue.
• The power of the self-fulfilling prophecies. People like to back a winner. In my own case, that simple truth explains why I am an avid Pittsburgh Steelers fan but haven’t followed, much less rooted for, the Pirates in decades. So with elections. Even though a trip to the polls takes relatively little time, many voters will stay home if they believe the man they plan to cast their ballot for is toast. And that is the current scuttlebutt surrounding Obama. Intrade, the prediction website, currently gives Obama a 49.9% chance of winning the 2012 election, but assigns Mitt Romney a much healthier 69% chance. Put in more conventional terms, no president ever won reelection with an approval rating of 47% or lower one year out from the election. Obama’s Real Clear Politics aggregate approval rating is currently at 45.4%.

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That being said, I am beginning to have nagging doubts, none of which are related to the allegations of sexual misconduct leveled against him last Sunday. Rather, the more television exposure Cain receives—and as GOP frontrunner in many polls, he is on the small screen often—the more skeptical I become about his readiness for primetime. Increasingly, his answers to questions seem poorly thought out and disjointed, making his position on key policy issues unclear.

Take, for example, his position on abortion, which he was asked to clarify on FOX News Channel’s Special Report with Bret Baier last night. Here is the exchange between the candidate and panelist A. B. Stoddard of The Hill (cue 11:52 in the video, which is here):

CAIN: I believe that abortion should be illegal. I’ve always thought that way. I believe that life begins at conception—life begins at conception—and I do not believe in abortion. The point I was trying to make is that legally I don’t think abortion should be allowed, but the point I was trying to make, if a situation exists where they may consider some other alternative, then how will the law prevent that? That was the only point I was trying to make.

STODDARD: You [previously] said that it was best left to the woman and her family. What are you describing? A situation that they would—

CAIN: An extreme situation, a very extreme situation—

STODDARD: Involving abortion?

CAIN: And I can’t describe all of the— First of all, these extreme situations, we can never say never relative to these extreme situations. I go back to—

STODDARD: Do you have any exceptions for rape and incest?

CAIN: No, I do not.

Got that? Putting aside the troubling notion that a rape victim would be forced to carry to term the child of the man who violated her, the response conjures up disquieting visions of dirty knives and dark alleys. Was this really the best Cain or his handlers could do in a friendly environment?

Earlier in the same session, Cain was asked by Charles Krauthammer to enlarge upon his signature 9-9-9 plan. Cain’s defense of criticisms that his 9% federal sales tax would duplicate state sales taxes was on point. He correctly noted that the cost of goods and services already reflects multiple systems of taxation, federal and otherwise.

Where Cain ran astray, however, was when Krauthammer asked him whether the nation under his plan would experience a deflation (video cue 11:39).

CAIN: We’re saying that the price of goods are gonna go down.

KRAUTHAMMER: That’s deflation.

CAIN: Yes, the price of goods are gonna go down.

If Cain genuinely believes that his economic plan will precipitate a cataclysmic change in the economy of the type he claims to anticipate, then he needs to explain the long-term implications to the American people. In particular, he needs to elaborate on how the deflation he envisions will be different from the one some economists claim fueled the current recession.

Early in the debates, Cain largely ducked questions on foreign policy, claiming he would surround himself with savvy advisers to provide needed council. If he is to remain a serious contender, he needs those advisers now, and not just to tell him the name of the president of Uzbekistan.

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His most recent politically calculated gambit is to win back the youth vote by issuing an executive order that mandates “student loan relief.” That the proposal happens to cater to one of the anti-Wall Street protesters’ demands is purely coincidental.

In actuality, the plan is nothing new. The order merely fast-tracks an income-based student loan repayment program passed by Congress last year.

Here is how Obama introduced the plan to an audience of students at the University of Colorado this week:

When a big chunk of every paycheck goes toward student loans instead of being spent on other things, that’s not just tough for middle class families; it’s painful for the economy and it’s harmful to our recovery.

Sounds good. So how does the plan work? Basically, it envisions two fundamental changes to federally backed student loans. Neither of the changes will apply to private student loans that are not government-guaranteed.

The first change falls under the heading “Special Direct Consolidation Loans” and mainly affects loan holders who have already left school. To qualify, the borrower needs to have two types of student loan—one issued by the Department of Education under the direct loan program, the second by a bank or other private lender under the Federal Family Education Loan (FEEL) program. Borrowers who meet these conditions can consolidate their loans and in so doing shave a quarter of a percentage point off their rate of interest.

What do the savings translate to? Suppose hypothetically, that a qualifying borrower has $25,000 in student loan debt to be paid back over 120 months at an interest rate of 6.8%. Currently, that individual’s monthly payment is $287.70. Once the quarter percent is subtracted from the rate, which becomes 6.55%, the monthly payment shrinks to $284.50. The savings works out to $3.20 a month. Multiplied times the 6 million students estimated to qualify for loan consolidation and extrapolated over a year, those will savings return just over $23 million to the economy annually—not quite enough to rescue the recovery or register as even a dimple in the nation’s towering debt.

The second change covered by the executive order is nicknamed in true Obamaesque doublespeak “Pay as You Earn.” This change is also a retread more or less of an extant program called Income Based Repayment (IBR). Pay as You Earn will apply to an estimated 1.6 million students who are currently in college.

The differences between IBR and Pay as You Earn are matters of degree. IBR caps student loan payments at 15% of discretionary income and forgives outstanding debt after 25 years. Pay as You Earn decreases the cap to 10% and forgives the loan after 20 years.

The problem with IBR is not the numbers but its low visibility among students applying for loans. According to Mark Kantrowitz, of the student financial aid website Finaid.com, a scant 1.25% of current borrowers take advantage of IBR because few people have ever heard of it. Before the government incurs more debt by replacing IBR with Pay as You Earn, the Education Department might try publicizing the extant program.

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That would include the man who is arguably Wall Street’s biggest detractor and an OWS sympathizer—Barack Obama. A study by the nonpartisan Sunlight Foundation’s Influence Project finds that Obama has received more in campaign donations from the financial sector than any other politician in the last two decades.

So far, the president has received $16 million in Wall Street contributions. The amount, which accounts for 20% of Obama’s total campaign funding, is $2.7 million more than George W. Bush received.

The Daily Caller quotes former White House Press Secretary Ari Fleischer as commenting:

It’s almost as if President Obama won’t cross across a Wall Street picket line except to get inside with [his] hand out, so he can raise money. That sort of support causes him to look hypocritical.

Fleischer adds that if Obama and other Democrats, including New York Sen. Charles Schumer, are so offended by Wall Street’s actions, they should put their mouths where their money is. Schumer has received roughly $8.7 million from the financial sector since 1989.

But the disconnect between what Obama says and does becomes more pronounced when you examine his specific list of donors. One of them is Bank of America, which donated $421,242 to Obama’s 2008 presidential campaign. The president returned their kindness last week when he pounced all over B of A for its newly announced $5 monthly fee on debit card users.

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First, the collapse of the Eurozone, which does look likely to happen, is the death of a Big Idea.  It represents more than the collapse of a common currency.  It’s the death of an idea of human life, regulated and directed and comprehensively administered by the state.  The collapse represents a triumph of reality over hallucination.  You can’t, in fact, build a sustainable model for having the state organize most of the investing for the people, and use its resulting power to tell the people what they are allowed to think and say, how much electricity they can use, and what medical services they will be allowed to have recourse to.

It is impossible to maintain a sound currency – much less a sound fiscal policy – when that’s your going-in proposition.  And it’s good news that we are reaching the breaking point.  The collapse of the Eurozone means Europeans cannot keep doing what they have been doing.  They will have to do something else.

There are millions of people in Europe who will all still be there the day after the official collapse, however that ends up being marked.  The collapse represents a gigantic opportunity for them, if they will take it.  Each nation already has a mechanism for choosing new representatives, people with different ideas, to govern it.  I am not convinced that there is no one left in Europe who has the discipline and character to chart a new course, instead of collapsing in the gutter, whimpering.  There is a colossal infrastructure in Europe, and what it needs is not solicitude and life support but a release of the clamps in which it is immobilized by the 20th-century “European idea.”

America is not that far behind Europe.  We have deceived ourselves that we don’t intend to end up overregulated and overspent like Europe, but the Obama presidency has demonstrated with disastrous clarity just how vulnerable we already were – had already made ourselves, long before January 2009 – to Sudden Overregulation and Sudden Overspending.  If we are to recover, politically and economically – not to mention spiritually – this cannot stand.  We, too, like the Europeans, have to do something else.

At the heart of the European idea is ratcheting up the “civilization premium”:  the extra that it costs us to earn our bread and lodging in a complex society, as opposed to foraging for nuts and berries while we wait to be eaten by the local wildlife.

In many ways, civilization and complexity make things more efficient for us.  But paying for civilization pulls against that effect in a perpetual dynamic.  And the very purpose of the Euro-nanny-state is to add a growing premium to every unit of work effort or purchasing power, in order to pay for civilizational goals.

It has been a long time since anyone in Europe, or in the rest of the modern, post-industrial world, has worked almost entirely to pay for his own needs. The most productive are working at least 4 out of 12 months to pay the civilization premium levied directly by the state through taxes. We then work some months after that to pay the premium imposed indirectly by regulation.

Obviously, we have to pay for police and fire services.  We want to; those services create a stable environment for family life, property, and business.  But paying government regulators to withhold water from us, terminate oil-and-gas drilling, and maintain a system of litigation in which we can be made to pay rent to others for exhaling, doesn’t do that.  It doesn’t enhance our well-being or economic prospects; it merely makes the necessities of life cost more.  It makes us work harder to pay for the same things.  Very often, that’s not worth it to us, and one of the costs of civilization becomes a systematic discouragement of our efforts at the margin.

Today, America and Europe are drifting on a sea of resources idled artificially by government policy.  To begin with, we have a combined population that is less well-educated than its ancestors.  That is a huge idled resource.  The same population operates increasingly on a mental attitude of entitlement and resentment, and that idles it further.  Both of these conditions were created by the implementation of the European idea in the public schools.  Our people – the ones walking around right now – would be much more productive without these handicaps.

To me, this is the most important idled resource, but it cannot be unleashed without removing the clamps of regulation and taxation.  Regulation has taken the place of taxation as the worst imposition on our daily economic life.  It is a silent, mostly invisible killer.  I would like to see the American capital gains tax rolled back, but it’s not our capital gains tax that is destroying our economy, it’s regulation.

Don’t forget the words idled resources.  I’m not talking here solely about capital available for investment, although I’m talking about that too.  I’m talking about how much more you could accomplish, and how much more you could save and buy (with cash), if the government didn’t keep driving up your basic costs (and, indeed, the cost of everything else) with regulation, while diverting 30-60% of what you’re worth to your employer in the form of taxes, mandated benefits, and “social investment.”

I’m talking about the natural resources we could be making use of if the state weren’t literally putting them off-limits to us.  I’m talking about what each of us could do to escape the industrial-job straitjacket if the cost of starting a small business weren’t so prohibitive.  Above all, I’m talking about the new lease on life the younger generations could have if their heads weren’t being filled with hate-thoughts about normal human life 24/7.

Imagine how the economies of the Western industrial nations would surge to life if people were allowed to profit from deciding to work however long it took to do profitable things.  A simple proposition, but fewer and fewer of us can do that today.  The idea of profit in any form is demonized; major segments of profitable work are effectively prohibited, either outright or through regulation; “jobs” are defined in terms of what benefits must accrue to them, rather than in terms of what needs doing; and when there is a profit, it gets hunted down and confiscated in one way or another.  If the capital gains tax doesn’t get you, the regulation will.

Government, as Reagan said, is the problem.  There is nothing we can’t do if we will allow the people to put our idled resources back to work.  Those idled resources represent trillions of dollars in wealth and revenues.  And those trillions would pay down an awful lot of debt.  But they can’t be extracted from a controlled, limited, managed citizenry; they can only be produced by people who are free to labor and profit on the basis of their own motivations.

The impending collapse of the Eurozone is proof of the first truth.  It represents the biggest opportunity Europe has had in a century to acknowledge the second, and act accordingly.

Europe, get rid of your failing welfare state, your unsustainable national health systems, your religious belief in regulation, and your “multiculti” hate-management schemes.  Unleash your people.  Get the demons of self-hatred and institutionalized discouragement off your back.  This is the chance of a lifetime.  Go ahead.  Show us the way.

J.E. Dyer’s articles have appeared at The Green Room, Commentary’s “contentions,” Patheos, The Weekly Standard online, and her own blog, The Optimistic Conservative.

John Podhoretz, who is either a masochist or a man endowed with infinite patience, takes the time to chronicle a number of the recycled phrases in a New York Post article that would be funny if it weren’t so sad. (An example is the line “This isn’t class warfare, this is math,” which, JPod notes, Obama said verbatim on September 8.)

The basic premise of the president’s speech is that every taxpayer should pay his fair share. I doubt there is a sentient being among us who wouldn’t agree with that notion. Some would even extend it to 51.6 million American tax filers, or 36%, who pay absolutely nothing into the system but still enjoy the same rights, privileges, and services as those of us who do.

But that segment of the population is not the one the president has in mind when he speaks of income equality. He means millionaires and billionaires (which—credit due—is a slight improvement over his previous definition of rich people, which meant couples jointly earning $250,000 or more). In making his case—that we should raise the top marginal rate to a point where the richest Americans end up contributing $1.5 trillion in new tax revenues—he argues that “middle-class families shouldn’t pay higher taxes than millionaires and billionaires.” He’s right: They shouldn’t. And with rare exception they don’t.

According to the Tax Policy Center, a Washington think tank, households making more than $1 million this year will pay an average of 29.1% of their income in federal taxes. By way of contrast, those making between $50,000 and $75,000 will pay 15% of their income in federal taxes, and those making between $40,000 and $50,000 will pay an average 12.5%.

On the night that Obama unveiled his jobs bill, he made the argument that “nothing in this proposed bill hasn’t been tried before or agreed to before by some or all members of the Republican Party.” Although in of itself that’s not a ringing endorsement for enacting a piece of legislation, his claim could be extended to his proposal to increase the highest marginal tax rate on income. It’s been done before, many times. In 1944 the top tier was raised all the way up to 94%. However, every time the highest marginal tax rate has been adjusted upward, the other four marginal rates have been adjusted as well. To do otherwise would be unfair. That seems a truism to everyone except the man who professes to champion fairness.

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1.  Iran’s nuclear reactor at Bushehr has finally been connected to the power grid.  A “pre-launch” ceremony has been scheduled for 12 September.  The important thing about this is that it means Russia has decided not to hold the Bushehr start-up in reserve any longer, as a bargaining chip with the various players in the Iranian nuclear drama.  (Note: Bushehr is not an important resource for the nuclear weapons program, but its fate is a signal of how seriously Iran takes the UN supervision and inspection regime.)   It’s been the Russians, dragging their feet for years, who have kept postponing the operationalization of the reactor.  They have now chosen to make the break.  Why?

2.  Turkey is rattling the naval saber around the Aegean Sea – and is planning to sign a strategic cooperation agreement with Egypt this month.  The agreement will reportedly include military cooperation.  Recep Tayyip Erdogan, who did an interestingly-timed turn in Somalia last month, plans to visit Egypt – and, reportedly, Gaza – in mid-September.  It’s no accident that Russia and Iran will be celebrating at Bushehr at the same time Erdogan is exercising Islamic leadership in post-Mubarak Egypt.  Russia is using Iran (as opposed to throwing in with her) to signal the Turks that Ankara doesn’t have a free hand and will meet resistance and counter-power in the region.

3.  Russia is motivated to do this by the same things that have reportedly put the Greek military on alert.  Turkey’s naval saber-rattling is both general and particular, and the particular focus is the plans of Cyprus to begin offshore gas exploration in the next several weeks.  Turkey has announced on multiple occasions that this exploration will be prevented.  Cypriots and Greeks are gravely concerned; it is being reported in Cyprus that Russia will send submarines to patrol Cypriot waters and defend the offshore commercial activities there.  (Not as unlikely as it was two years ago, and certainly not impossible.)

The more general purpose of the saber-rattling is regional power projection.  This week, the Turks used the pretext of the UN’s “Palmer report” on the 2010 flotilla incident – which acknowledged that Israel had not violated international law – to announce their new program of naval presence in the region.  Eerily (and pointedly) named the Barbaros Action Plan, the naval program will entail the following:

The Barbaros Action Plan, which aims to display the Turkish Navy’s presence in neighboring seas, now plans for Turkish maritime components to be in constant navigation not only in the Black Sea, the Aegean Sea and the Mediterranean but also in the Adriatic Sea, the Red Sea as well as the Indian Ocean.

In other words, Turkey plans to conduct naval security patrols of the waters of the former Ottoman Empire.  We’re way beyond pre-Pax Americana here; we’re in pre-Pax Britannica territory.

4.  Not unnaturally, Greece has just concluded a security cooperation agreement with Israel.  Those in the Eastern Mediterranean expect the offshore plans of Cyprus to become a flashpoint, and Israel is a cooperative partner in the Cyprus endeavor, having agreed with Cyprus in 2010 on a maritime boundary and a mutual recognition of seabed claims (and being an offshore gas driller herself).  Israel, Greece, and Cyprus have a common interest in both freedom of economic action off Cyprus and reining Turkey in across the board.

The Red Sea patrols in the Barbaros Plan are another new and special concern, one that can ultimately put in question the neutrality and quiescence of a key region of the NATO perimeter.  From the Red Sea, the Turkish navy – by far the biggest and best one in Israel’s immediate neighborhood – can flank Israel.

5.  The Eastern Med isn’t the only area where the old Pax Americana behaviors are behind us.  It cannot be emphasized enough that we have already entered a period in which the US is likely to have to struggle diplomatically for what we have been able to assume in the past.  A parade of West Europeans has been making up to Moscow this year, for example:

• ·         Britain and Russia agreed to significantly increased military cooperation in July, after decades of frosty relations.
• ·         In August, Britain lowered another barrier to cooperation with Russia, deciding – again, after years of pursuing the opposite policy – to allow Gazprom to enter the British energy market.  Gazprom, effectively an arm of Russian foreign policy, is meaner than a junkyard dog with its weaker investment targets, but the Brits are now willing to take on that problem.
• ·         France concluded the agreement this year to sell Russia Mistral-class, helicopter-carrying amphibious assault ships.  The burgeoning cooperation between France and Russia goes much further, however, including gas deals and negotiations on the privatization of Russian defense manufacturing by French defense giant Thales.
• ·         Germany contracted in June to build the Russian army a new combat training center (a move that evokes, for European and American observers, the secret training agreement in the 1920s and 1930s between Soviet Russia and Germany, which allowed the Germans to circumvent Treaty of Versailles restrictions).
• ·         Ireland’s president made the first visit of an Irish head of state to Russia in 2010.  In 2011, the Russian navy has sent a destroyer to visit Ireland, and the Irish navy has visited St. Petersburg.
• ·         In an event redolent of a golden pre-1914 twilight, Queen Margrethe II of Denmark sailed to St. Petersburg this week on her royal yacht, with a Danish navy escort, for a state visit to Russia.  The Queen visited Russia once before, in 1975; this time, she has a delegation of 100 businessmen in tow, and a lot of business to do.

6.  Central Europeans aren’t taking this trend lying down.  In May 2011, the Central European consortium called the Visegrad Group, which traces its modern history to the mid-1930s, decided to form its own military “battlegroup” under the command of Poland.  (The Visegrad Group consists of Poland, Hungary, Czech Republic, and Slovakia.)  The land-warfare oriented Visegrad battlegroup will operate independently of NATO.

As Richard Cashman of the Henry Jackson Society implies, this development isn’t just indicative of a break-up of NATO-era security assumptions.  It’s in part a reversion to the power/security vision of a century ago, exemplified by the writings of British geopolitical thinker Halford Mackinder and his collaboration with Polish leader Josef Pilsudski in the interwar years.

7.  The essential feature of that older vision was the absence of a superpower on the model of the United States.  The US model matters, because Mackinder’s famous concept – modified and repopularized after WWII by Nicholas Spykman – envisioned the dominant power of the “World Island,” or Eurasia, being the dominant power of the globe.

The missing piece in Mackinder’s theory was the importance of naval power for a (relatively) easily-defended economic titan.  The US, her alliances, and her Navy accomplished after WWII what Mackinder did not envision:  the maritime encirclement of the World Island.  Even the British Empire had not achieved a true precedent for it.  The Soviet Union perceived the American encirclement feat with crystalline clarity, but throughout most of the Cold War, the US, NATO, and Japan persisted in thinking of themselves in Mackinder’s terms:  as a weaker hinterland of the “Heartland” (or Pivot Area – Central/Eastern Europe and the expanses of Russia and Central Asia), trying desperately to defend themselves.

Mackinder's map (from Wikimedia Commons)

(Note for aficionados of these ideas:  essentially, it was a successful US offensive posture with the strategy suggested by Spykman’s analysis that turned the World Island-Rimland construct on its head.   “Containment” was the shorthand defensive formulation of the Spykman-based strategy, but using containment as a basis for rollback was what succeeded in the end. Through alliances, and economic and naval power, the Rimland achieved dominance over the World Island, rather than being consigned to a permanent condition of strategic inferiority.)

No single theory is comprehensively explanatory, but identifying the present situation as a gradual collapse of the maritime encirclement of the World Island goes a long way.  With the absoluteness of US naval power receding, the dynamics predicted by the Mackinder vision are reemerging from long-term storage.

8.  In the West, the emerging drama off Turkey may turn into the first real post-Pax Americana showdown.  In the East, a showdown is all but underway.  As the fear of Chinese ambitions grows among Beijing’s neighbors, the naval powers of the region are beginning to assert a counter-influence.  Late last week, the news came out that an Indian warship, conducting a port visit in Vietnam in July, was confronted by the Chinese navy in international waters and subjected to peremptory demands.

(In an interesting sign of the times, INS Airavat was not in the Indian task group that met with unexpected failure in its attempt to hold a planned exercise with the Russian fleet in April.  Airavat was on a separate deployment.  These multiple naval deployments by the Indian navy to East Asia would have been unimaginable even three years ago.)

Japan, meanwhile, has just gained a new prime minister, whom observers expect to counter Chinese maritime claims – e.g., in the Senkaku Islands at the south of the Japanese archipelago – more “assertively.”

The potential maritime disorder affects arrangements on the continent, as indicated by Russia’s new charm offensive with the Koreas.  US ally Seoul agreed with Moscow in July to significantly increase military cooperation, including hosting Russian troops for training in South Korea.  A month later, the Russians were in North Korea, China’s client, conferring on stepped-up military cooperation and a program of joint exercises.  At virtually the same time, the Russians welcomed Kim Jong-Il for a rare visit.

9.  China gives Russia plenty to worry about in general, having established military exercise series in the last year with Pakistan, Afghanistan, and Turkey, deployed thousands of Chinese troops to the Gilgit-Baltistan region of Northern Pakistan, and continued construction of the Karakoram Highway into Pakistan, which would allow rapid military as well as commercial movement across the heart of Central Asia.

 But Asia isn’t the only part of Russia’s near abroad in Chinese sights.  In July 2011, China dispatched airborne troops for her first-ever military exercise with Belarus.  And in August, China and Ukraine agreed to expand military cooperation. Romania, which inaugurated a series of military exercises with China in 2009, agreed in July 2011 to boost naval cooperation with China.

10.  Every hour brings a new update.  Today – Tuesday, 6 September – China and New Zealand agreed to expand their military relations.

11.  One last gem crops up today.  In her continuing barrage of bizarre announcements, Iran has offered the new analysis that her territory is actually “14 percent larger than previously thought.”  What that means, only the days ahead will make clear.  It sounds like bad news for Iran’s neighbors.

Bottom line

The pressure of encirclement is being released on the World Island – a reasonable starting point for discussing what is going on.  The scramble for dominance of it is underway.

And the time for lament is past.  Too many things are changing; we cannot recapture the post-WWII, post-Cold War Pax Americana along its old outlines.  But neither will the world leave us alone, or retain its generally beneficial features – such as peaceful tradeways and uncoerced agreement to borders – without the use of American power.  No other aspirant to international leadership even has those things as objectives.  With the exception of the British Empire, no other aspirant ever has.  The old Pax Americana is gone; our task now is to get to work on the new one.

J.E. Dyer’s articles have appeared at The Green Room, Commentary’s “contentions,” Patheos, The Weekly Standard online, and her own blog, The Optimistic Conservative.

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The theme of this particular address, recorded at a country store in Illinois, was “what Washington politicians can learn from the folks.” (“The folks” is Obama’s homey way of referring to you, the taxpayer.)

Now, I’m out here for one reason: I think Washington, DC can learn something from the folks in Atkinson and Peosta and Cannon Falls. I think our country would be a whole lot better off if our elected leaders showed the same kind of discipline and integrity and responsibility that most Americans demonstrate in their lives every day.

The president exhibited his own discipline and self-restraint the following evening by taking the missus out to a restaurant where starters average $16 and entrees run around $37. Sides, which are extra, cost $8. Add in dessert, coffee, and booze, and dinner had to set Obama back at least $200 after tax and tip were factored in.

I know, I know: It’s the president’s money (one assumes), and he has a right to indulge himself. The problem, however, is not whether he is justified in spending $50,000 (!) on a vacation but how it looks at a time when the economy is flat-lining. You can’t tell the “folks,” as he did in his Saturday—whoops, Wednesday—address that “we’re going through a tough time right now” when you’re dining on twin Menemsha lobsters at $48 a pop.

The president’s words ring doubly hollow when he lectures members of Congress for putting “country ahead of party.” Even giving him the benefit of the doubt and assuming he does not mean Republicans, who is he to dispense that advice after repeatedly accusing the GOP of having driven “the country into a ditch”?

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Unfortunately for the president, that bit of wisdom extended onto side #2 of the fortune cookie he extracted it from, which read, “but actions matter more.”

A good leader leads not only by words but by example. Yesterday, the Dow Jones Industrial Average lost another 420 points. So what did the president do to bolster the confidence of panicked voters? He led by example. With 14 million Americans out of work, he embarked on a “10-day retreat at a 28-acre Martha’s Vineyard compound called Blue Heron Farm, which costs an estimated $50,000 per week to rent.” He went, in the words of usually sympathetic Washington Post columnist Colbert King “to dwell in splendid seclusion among the rich and famous.”

King goes on to ask:

What is he thinking? It’s not as if the Obama family is living in deprivation in Washington.

Without leaving the White House grounds, they have access to five full-time chefs, a tennis court, a bowling alley, a swimming pool, a jogging trail, a putting green and a movie theater that shows first-run films on demand. That’s hardly roughing it.

But words matter. So here are some more of the president’s words:

We will not rest until we are succeeding in generating the jobs that this economy needs. (November 2, 2009)

I will not rest until businesses are investing again, and businesses are hiring again. (November 23, 2009)

We will not rest until we build an economy that’s ready for America’s future. (January 28, 2010)

I’m not gonna rest and my administration is not gonna rest in our efforts to help people who are looking to find a job. (March 5 2010)

My administration will not rest until every American who is able and ready and willing to work can find a job. (July 8, 2010)

One more quote:

And on the seventh day God ended his work which he had made; and he rested on the seventh day from all his work which he had made. (King James Bible)

Welcome to Day 7.

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One of the challenges in terms of rebuilding our economy is – businesses have gotten so efficient, that, uh, when was the last time somebody went to a bank teller? Instead of using an ATM. Or, used a travel agent instead of going online. A lot of jobs out that that used to require people now have become automated.

Apparently you have to be an economic illiterate to be a Democrat.

Since the dawn of recorded history, scientific and industrial advances have raised the average standard of living, not lowered it.

• In 1712, the invention of the steam engine touched off the Industrial Revolution, providing an inexpensive mechanical power source to replace manual and animal labor.

• In 1733, the invention of the flying shuttle allowed a weaver to produce a wider band of cloth. This facilitated faster production of textiles for fabric, clothing and other uses.

• In 1769, James Watt added a crank and flywheel to other steam engine improvements, providing efficient rotary motion for a wide variety of industrial uses.

• In the early nineteenth century, the invention of the power loom — a steam-powered, mechanical cloth-making machine — allowed women to replace men in many textile manufacturing facilities.

• In 1830, the invention of the sewing machine facilitated the “ready-made clothing” industry.

All of these advances created brand new industries and began to free mankind from routine, manual labor. The sewing machine, for example, required hundreds of parts. These parts, made of many different materials, had to be manufactured and machined, often by dozens of suppliers. New companies arose to source these parts, new industries — like repair services — were created, and massive economic value was achieved through the creation of end products.

Such is also the case — multiplied by orders of magnitude — with ATMs and the Internet.

It’s truly a shame and an outrage that we have leaders in Washington who no more understand general economic principles than they do quantum physics.

Fortunately, the American people know what’s going on: a new low of only 26% approve of Obama’s handling of the economy.

 
Related: “The Progressive and the Pencil“.

 
Image hat tips: The Corliss Engine.

No s***. He really said that.

Well, obviously, it’s putting people to work. Which is why we’re going to have some interesting things in the course of the forum this morning. Later this morning, we’re going have a press conference with Secretary Mavis and Secretary Chu to announce something that’s never happened in this country — something that we think is exciting in terms of job growth…

…I should point out, when you talk about the SNAP program or the food stamp program, you have to recognize that it’s also an economic stimulus. Every dollar of SNAP benefits generates $1.84 in the economy in terms of economic activity. If people are able to buy a little more in the grocery store, someone has to stock it, package it, shelve it, process it, ship it. All of those are jobs. It’s the most direct stimulus you can get in the economy during these tough times.

Bask in the sheer genius of Tom Vilsack, peons: the government taking money from you hard-working Americans — and giving it to others, without regard for their ability to work — stimulates the economy!

Why didn’t we think of this before?

In fact, let’s put everyone in America on food-stamps! That’ll be the ultimate Stimulus!

Ultimate, I say!

As an aside, my fellow Tea Party terrorists, Vilsack’s wife is running against Rep. Steve King of Iowa, a true fiscal conservative.

Do we need another economic illiterate in Congress? I think not. Therefore I urge you to give $5, $10, whatever you can spare to Steve King’s campaign.

We need exactly zero Vilsacks in office in 2012.

 
Related Fun: So the Democrats Finally Want Fiscal Responsibility? Great. Let’s End Their Disastrous “War on Poverty”

Reagan did not start an era of unprecedented growth by any measure: employment, GDP, productivity, whatever. But maybe the easiest way to see what didn’t happen is to look at median family income in constant dollars:

The NYTimes helpfully provided a graph:

Krugman:

A spectacular increase during the high-tax, strong-union postwar generation; fitful improvement since, with the only sustained rise during the Clinton years. That’s the story; it’s amazing how many people don’t know it.

“That’s the story” Krugman says; high taxes (and unions, he adds in a non-sequitur) cause prosperity.

Like household income exists in a vacuum, affected only by taxes (and union membership).

I’m tempted to drive to New York, collar Krugman, and ask ”what else happened during this timeline?”

What else happened between 1947 and 1971, besides unfettered taxes and government growth?  Like, the German and Japanese economies starting the period in ruins, and spending the entire period rebuilding?  China and India starting as third-world countries, enduring forty years of socialist governments that couldn’t feed their own people?  And, respectively, a mass-murdering socialist dictatorship and civil wars?

Did Germany and Japan only get their economies rebuilt, and start to seriously compete with the US, in the late sixties and early seventies – about the time America’s rise in income leveled off?

Did America’s unions develop their high-salary, high-benefit, often low-skill paradigm perhaps because America’s economy had no competition?  The whole world was America’s market for those 25 years!

(And when Germany and Japan’s economies took off, they adopted high-tax, high-”service”, strong-union systems.  And when did their performance start levelling off?

That’s right, it shot up like a rocket from reconstruction until 1990…

…until China and India and Taiwan and the Republic of Korea started performing.

But don’t mind that.  According to “nobel-prize-winning” economist Paul Krugman, none of that matters.  Just taxes.

Media academics:  Distrust, then verify. Then, usually, distrust some more.

Do you realize that America has the worst economy on our continent?

White House officials will get unbelievably angry when this is pointed out, but 5% unemployment was what this nation enjoyed under President Bush. So what did President Bush know, and what do Mexico and Canada now know that President Obama doesn’t know?

Most likely it’s got something to do with the idea that small businesses are the engine to a growing economy. And while Mexico is building things and growing things, inner city Obama voters are sitting on their tukas (or in the collective “tukai”) groaning about how much the government “ain’t doin’ for me!”

Read the entire thing…

…next time Obama or his allies in the press go back to the well and recite the well-worn verse that spending is all the other guy’s fault, take a look at the facts…

President Obama has steered a fiscal course that will lead to more spending and deeper deficits and ultimately to vastly higher taxes…

…If you want to know the real cause of our deficits today, the answer lies primarily with Obama. If you want to know the real cause of our deficits in the near future, the answer lies in entitlement spending, which Obamacare increases.

That John Boehner, who was put into power by the same Tea Party conservatives he condemns, could ignore the so-called “emergency Stimulus” package — and leave it in all subsequent baseline budgets — is a freaking moral outrage!

Fight! Why won’t they fight? Because: (a) they’re cowards; or (b) they like big government. Either answer is un-freaking-acceptable. Has Barack Obama given an inch in his battle to Cloward-Piven-ize America? No! Did Stretch Pelosi? No! Did Harry “Chuck Schumer writes my speeches” Reid? Hell, no!

Boehner had two nuclear weapons at his disposal. And he chose to use neither. He had the debt ceiling and a threat of a downgrade by the rating agencies.

Cut, Cap & Balance addressed both issues.

If Republicans had united behind CCB, they could have forced a vote in the Senate — by putting massive pressure on the 20 Democrats who had earlier pledged to support a Balanced Budget Amendment — and send it to the President’s desk.

Boehner could then tell the American people: there’s only one plan that addresses the deficit and prevents a downgrade.

And let Obama deal with the fallout of a veto — if he has the guts.

Instead, we submit a plan that still results in downgrade and default.

Idiocy. Sheer, unmitigated idiocy.

We need to elect a boatload more conservatives in 2012, politically eradicate the RINOs, and jam true conservatives into leadership positions.

Because all of these pantywaists — put together — don’t have the cojones of Michele Bachmann.

They’re wimps who are selling out the American people — just a tad bit slower than the Marxist, Democrat Left. We’re headed for fiscal apocalypse and these feckless RINOs won’t even put up a fight.

 

 
Related: The question for the House Republican leadership: will you do what is politically expedient — or will you do what is right?

That is the question of the hour, as a downgrade looms for our public debt bond rating.  The question is far larger than mere return on investment.  Return on investment is a small investor’s perspective: the perspective of someone who just hopes to get a return on margin from a system he has no real say in – and not much of a stake either, all things considered.

But there is a larger perspective.  US Treasury securities have performed a unique role for the last 70 years.  The biggest one by far may not be the one you think.  Many readers probably have a mental image of US securities being a safe place to park colossal chunks of change and generate lendable capital, backed by the dynamism of the US economy.  That is an important function, but an even more basic one is setting the standard for transparency and accountability.  A key reason why such a standard matters is that if it exists, everyone else issuing public securities has to compete with it.

If you’re Country B, and you want your securities to be interesting to buyers at the most advantageous rate for you, you and your securities have to meet the fiduciary standard of the US Treasury.  If they don’t, you’ll have to offer a higher return to attract buyers, and probably a substantially higher one.

US Treasury securities have been the standard for so many decades now (and before our securities, those of the United Kingdom) that we hardly think about this factor today.  In the minds of many, the assumption of fiduciary accountability in the management of a national treasury is simply a given.  Indeed, a lot of people will mistake my meaning here for the concept of sound fiscal management.  But that’s not what I’m talking about.  The concept I’m addressing is public accountability.

A national treasury is only accountable when the people have real power over the government.  When the people don’t hold such power – when they can’t remove officeholders at will, or expect to have their electoral choices respected – the accountability of the national treasury is one of the first casualties.  Honesty and transparency with the public is not the natural state of affairs when it comes to public treasuries.  Those qualities have to be guarded with the vigilance inherent in consensual, electoral systems of government, where the citizen’s rights are respected, and the rejection of incumbents results in peaceful transfers of power.

We have become so accustomed to a global regime in which the US Treasury is the standard of fiduciary accountability that we have little concept of what it would be like without that standard, existing in the same form it has since World War II.  The world’s largest economy has had the government with the world’s most accountable treasury.  The US Treasury has set another standard as well:  what we might call customer blindness.  What a buyer can expect to get out of his transaction with a US Treasury security depends on generic Treasury policies and independent market factors – not on who he is.

The power of the US standard lies not in any ability our government has to enforce it on other nations and their securities issues.  Rather, as long as we adhere to our own standard, the market enforces it on other nations, to everyone’s advantage.  The reason this factor has been so powerful since World War II is that the US economy is so very large, compared to all others.  There are other nations that will continue to operate accountably even if the US loses market prominence in this regard (e.g., Japan, much of Europe, the British Commonwealth nations), but none of them has the economic size to generate the same effect.

China, meanwhile, has a very large economy, but a very poor record when it comes to public accountability.  Global financial analysts have had to speculate for years about things like what China’s cash and gold reserves really are, because Beijing is not at all transparent on these matters.  Brazil, Russia, India – the other BRICs may have relatively stable government, tremendous natural resources, and growing economies, but they are also rife with low-level public corruption and bureaucratic caprice, and they have nowhere near the public financial-transparency record of the US or other G-7 nations.

Investing with their public treasuries is one thing when there is a US standard for them to compete with.  If that standard ceases to dominate the public-securities market, however, there is literally nothing that can take its place.  The market would sort itself eventually into a different steady state, but it would be likely to fragment into politicized consortiums of securities sellers and buyers – and lose its comparative customer blindness, along with any semblance of political neutrality in honoring fiduciary obligations.

The convenience and desirability of a public-securities market dominated by the US Treasury standard has been one of the props under our continuing AAA bond rating.  No one in foreign capitals wants to see that prop crumble – at least not yet – because if it does, everything will change.  Trillions in global capital is available almost seamlessly across borders today because US Treasury securities are administered accountably, transparently, and fairly.  The “faith” part of “faith and credit” is as important as the “credit” part; we just haven’t had to think about it much for a long time.  But it’s why global investors have stuck with our public securities, and why we are still in a limbo in which they are willing to give us a chance to get our house in order.

We need to take advantage of that chance.  It is quite likely that Moody’s could downgrade our bond rating and nothing would change, at least not quickly – because there is no alternative to the US Treasury security.  There is nothing that produces the same effect for the rest of the world.  Investors, in the aggregate, have nothing to flee to that offers them even the same payoff, much less a better one. The alternative to a continued robust position for US Treasury securities is not and cannot be continuation of the status quo; it’s tectonic and unpredictable change.

But our obligation as a people – first to ourselves, and then to those who hold our securities – is to take advantage of the opportunity this gives us, rather than coasting on the precarious interim in which inertia is still preferred by all over the collapse of the existing order.

J.E. Dyer’s articles have appeared at The Green Room, Commentary’s “contentions,” Patheos, The Weekly Standard online, and her own blog, The Optimistic Conservative.

For their part, House Republicans refuse to raise taxes. That’s their non-negotiable and has been all along. Many of these folks were elected in a Tea Party wave that was all about limited government. Many of them made an explicit pledge not to vote for a tax increase. They simply can not raise taxes and expect to survive. Tax increases are off the table.

Meanwhile, President Obama has refused any short term deal which would force him to face this issue again next year. He knows he can’t negotiate with his re-election on the line, so he wants this off the table for 2012. Last week, Jake Tapper did a fine job of pointing out how transparently political this demand was. But the President repeated this demand again yesterday. Election year debt negotiations are off the table.

So those are the non-negotiables on each side. Here’s the difference. Speaker Boehner isn’t asking for a short term deal. In fact, he was asked this question yesterday and explicitly said he was not interested in one. In other words, he is not pushing the President on his non-negotiable.

Meanwhile, on Thursday the President demanded $400 billion in additional revenues which Speaker Boehner says would come from tax increases. The President does not deny that he asked for the additional revenue at the last moment. When asked a sharp question about moving the goalposts by Norah O’Donnell the President’s reply was halting:

What this came down to was…there doesn’t seem to be a capacity for them to say yes.

Well, when you’re asking people to negotiate their non-negotiables after you’ve already agreed to something else, they do tend to balk. And in case you’re wondering, there is no doubt the President knows just how non-negotiable this is for GOP House members. In fact, he talked about the tax pledge many of them had signed yesterday, saying this left them “boxed in.” Boxed in is just another way to say they made tax increases a non-negotiable.

And yet the President seems to think House GOP members should violate a pledge they made to their constituents, one which a) they believe in as a matter of principle and which b) helped get them elected. He just expects them to “say yes” anyway.

Here’s the most frustrating part. Obama has a pledge of his own in this debate, something he promised more than two years ago. Obama pledged to reform Social Security and Medicare from the earliest days of his administration:

President-elect Barack Obama pledged yesterday to shape a new Social Security and Medicare “bargain” with the American people, saying that the nation’s long-term economic recovery cannot be attained unless the government finally gets control over its most costly entitlement programs.

So while Paul Krugman and others on the far left may not like it, Obama will certainly claim the reforms that the GOP are demanding from him are a promise kept, not one he has broken. Entitlement reform isn’t a concession for him, it was a goal!

That’s where things stand. President Obama is demanding the GOP violate their non-negotiable pledge on taxes so that he can fulfill his pledge to reform entitlements. The President repeatedly called this a “fair deal” yesterday. Well, it certainly is fair to him.

U.S. taxpayers likely lost $1.3 billion in the government bailout of Chrysler, the Treasury Department announced Thursday.

The government recently sold its remaining 6% stake in the company to Italian automaker Fiat. It wrapped up the 2009 bailout that was part of the Troubled Asset Relief Program six years early.

“The fact that the company has done so well — that they were able to go out and raise private capital to repay us the loan so quickly, is really the big story,” said Tim Massad, Treasury assistant secretary for financial stability.

If the company has done so well, why are taxpayers out $1.3 billion?

Well apparently because the government couldn’t wait to sell their shares to a foreign company, Fiat, giving the Italian automaker a majority share in Chrysler:

Fiat paid the Treasury a total of $560 million for the remaining shares, as well as rights to shares held by the United Auto Workers retiree trust. Fiat now owns a 53.5% stake in the company.

And CNN continues to propagate the myth that Chrysler paid back its loans early:

Originally, the government committed a total of $12.5 billion to the struggling automaker, Old Chrysler, and the company’s newly formed Chrysler Group. Of those funds, $11.2 billion have been returned through principal repayments, interest and cancelled commitments, the Treasury said. The new Chrysler Group paid back $5.1 billion in loans in May.

Actually that’s not at all the case:

The Obama administration already forgave more than $4 billion of that debt when the company filed for bankruptcy in 2009. Taxpayers are never getting that money back.

[…]

The Obama administration’s bailout agreement with Fiat gave the Italian car company a “Incremental Call Option” that allows it to buy up to 16% of Chrysler stock at a reduced price. But in order to exercise the option, Fiat had to first pay back at least $3.5 billion of its loan to the Treasury Department. But Fiat was having trouble getting private banks to lend it the money. Enter Obama Energy Secretary Steven Chu who has signaled that he will approve a fuel-efficient vehicle loan to Chrysler for … wait for it … $3.5 billion.

[…]

So, to recap, the Obama Energy Department is loaning a foreign car company $3.5 billion so that it can pay the Treasury Department $7.6 billion even though American taxpayers spent $13 billion to save an American car company that is currently only worth $5 billion.

There’s your story. Taxpayers mugged again by the Obama administration.  Media complicit. Film at 11.

–

Bruce McQuain blogs at Questions and Observations (QandO), Blackfive, theWashington Examiner and the Green Room.  Follow him on Twitter: @McQandO

IBD: What’s the single biggest impediment to job growth today?

Marcus: The U.S. government. Having built a small business into a big one, I can tell you that today the impediments that the government imposes are impossible to deal with. Home Depot would never have succeeded if we’d tried to start it today. Every day you see rules and regulations from a group of Washington bureaucrats who know nothing about running a business. And I mean every day. It’s become stifling.

If you’re a small businessman, the only way to deal with it is to work harder, put in more hours, and let people go. When you consider that something like 70% of the American people work for small businesses, you are talking about a big economic impact.

Remember that Home Depot was launched during the then worst recession in 40 years and Marcus took it public 3 years later. He’s built a business from the ground up and created thousands of jobs. He actually understands what it takes. He also clearly understands what will kill it.

Here is one of the key points one has to understand about this administration and Marcus is on it:

IBD: President Obama has promised to streamline and eliminate regulations. What’s your take?

Marcus: His speeches are wonderful. His output is absolutely, incredibly bad. As he speaks about cutting out regulations, they are now producing thousands of pages of new ones. With just ObamaCare by itself, you have a 2,000 page bill that’s probably going end up being 150,000 pages of regulations.

We’ve been warning you from the beginning to pay no attention to the man’s words and instead scrutinize his deeds. Often they are the opposite of what he has said he’d do. For example:

In January, however, he issued an executive order requiring federal agencies to review their regulations, looking for rules that are inefficient or outdated. His aim, he explained on The Wall Street Journal‘s op-ed page, was to “root out regulations that conflict, that are not worth the cost, or that are just plain dumb.”

But there’s a catch: All those new regulations Obama put in place will not be subject to review. Just days after the president issued his order, an anonymous administration official conceded to the Journal that “new regulations will not be priorities for the look back.” Meanwhile, more than a dozen federal bureaucracies—including the Securities and Exchange Commission, the Federal Communications Commission, and the National Labor Relations Board—are exempt from the review because they are independent agencies.

That’s another in a long list of many examples of him saying one thing and doing something else. His speeches are politically driven and designed to give him political cover while his actions are ideologically driven and part of an agenda.

Marcus is then asked about the debt talks:

IBD: Washington has been consumed with debt talks. Is this the right focus now?

Marcus: They are all tied together. If we don’t lower spending and if we don’t deal with paying down the debt, we are going to have to raise taxes. Even brain-dead economists understand that when you raise taxes, you cost jobs.

With all the talk about tax increases it means we have a lot of zombie politicians who haven’t a clue, unfortunately. I mean how difficult is this? When you raise taxes in a recession, many businesses are going to have to make a decision aren’t they? Use the money to pay the tax or hire. Any guess which will win out? You can’t go to jail for not hiring.

Finally, and this one is devastating in its forthrightness, Marcus is asked what he’d tell Obama if he could sit down with him and talk about job creation. His answer is a classic:

IBD: If you could sit down with Obama and talk to him about job creation, what would you say?

Marcus: I’m not sure Obama would understand anything that I’d say, because he’s never really worked a day outside the political or legal area. He doesn’t know how to make a payroll, he doesn’t understand the problems businesses face. I would try to explain that the plight of the businessman is very reactive to Washington. As Washington piles on regulations and mandates, the impact is tremendous. I don’t think he’s a bad guy. I just think he has no knowledge of this.

One can only wish Contessa Brewer was around to ask about economic degrees. Marcus is right about Obama’s lack of knowledge. He’s surrounded by a lack of knowledge in this area if his policies are any indication. As has been pointed out repeatedly, a president who was really concerned about jobs would be green lighting oil and gas exploration as fast as he could make it happen. And he’s certainly made speeches about doing just that, but as usual, his actions betray his words.

Marcus has got a bead on this administration and this president. As long as they are in power and continue with the course of their regulatory policies, the economic malaise that has settled over this country will continue.

–

Bruce McQuain blogs at Questions and Observations (QandO), Blackfive, theWashington Examiner and the Green Room.  Follow him on Twitter: @McQandO

Congressman Michael Burgess (R-TX and yes, he is also Dr. Burgess) questioned Secretary Sebelius on several key factors, including the unelected 15-person panel, their potential recess appointments to avoid Senate confirmation, and the ultimate effects of this panel in reshaping the health care system.  Burgess does not let Sebelius off the hook, but pushes her on the IPAB’s power and lack of judicial oversight. The entire exchange is worth watching:

Sebelius touts that the IPAB is only a “fail-safe” and only makes recommendations if Congress does not act:

But Sebelius was defiant against claims that IPAB risks usurping the power of Congress to make changes to Medicare. “All final decisions remain in the hands of Congress,” Sebelius said in her prepared statement. “If Medicare costs are rising at an unsustainable rate, it’s Congress’s choice whether to accept those recommendations, or come up with recommendations of its own to put Medicare spending on a stable, sustainable path.” She reiterated her argument from yesterday’s Budget hearing that IPAB serves as a “backstop to ensure Medicare remains solvent for years to come.”

However, former OMB Director Peter Orszag has a quite different analysis regarding the IPAB with this interview, highlighted by Naked Emperor News for Breitbart TV:

Orszag clearly emphasizes ”[the IPAB] has an enormous amount of potential power.”  Orszag goes on to explain, “The proposals take effect automatically unless Congress, not only specifically votes them down, but Congress specifically votes them down (with 67 votes) and the President signs that bill. So, the default is now switched in a very important way.”

Orszag has repeated this in other forums stating that the IPAB was the most important part of ObamaCare (all emphasis mine):

The Medicare Commission, or Independent Payment Advisory Board, would have the power to override Congress if it rejected cuts to the entitlements programme for seniors, said Mr Orszag, a key architect of the reforms signed into law this week.

“This could well turn out to be as consequential for health policy as Federal Reserve policy was for monetary policy,” he said in an FT View from DC video interview. “The commission will put its proposals forward and if Congress does not act on them, or if it votes them down and the president then vetoes that bill, they will automatically take effect. Huge change.”

So, who is right?  Sebelius or Orszag?  My money is on Orszag. The fact is that no matter what Congress does, the IPAB will always have a way to enforce its “recommendations” and override Congress. Sebelius is intentionally misrepresenting the IPAB as being similar to the MedPAC board, which does indeed only give recommendations to Congress. Why would they need to have a duplicative board? Truth is, they are not the same and Sebelius knows it.

With the Democrats zeal to ram through ObamaCare, they created a monster and then stripped themselves of any oversight of said monster as clearly explained by Orszag.  If only the Democrats had read the original ObamaCare bill, didn’t scoff and snear at Republicans’ warnings, and didn’t believe their own rhetoric, it wouldn’t be so imperative to repeal the IPAB.  But wait, can they?

Under a premium support system, the government would pay a percentage toward the insurance premium for each individual; there would likely be more help for low-income and sicker people. And enrollees could (not required) kick in more money to get better coverage.

Henry Aaron, senior fellow at the Brookings Institution, and Robert Reischauer, president of the Urban Institute and former head of the Congressional Budget Office, in 1995 were among the first to explore alternatives to Medicare’s system of paying for individual services. And in 1998, President Bill Clinton’s National Bipartisan Commission on the Future of Medicare, chaired by then-Rep. Bill Thomas, R-Calif., and then-Sen. John B. Breaux, D-La., developed a “premium support” idea, but it never became a formal recommendation. Breaux and then-Sen. Bill Frist, R-Tenn., tried unsuccessfully to advance the plan as separate legislation.

Let’s take a look at her ‘confuzzled’ look as she was clearly caught off-guard by Congressman Michael Burgess (R-TX and a physician) as seen here at the July 13 subcommittee hearings (skip to .59 to 2:16):

The Weekly Standard also  reiterates and shreds her original comment:

This, of course, is as ludicrous as it is uncouth. First, the Ryan plan (which wouldn’t affect anyone who is not yet 55 years old) would not give seniors a voucher, as Sebelius well knows. Instead, the government would provide premium support to help seniors purchase private health insurance. Seniors would pick the insurance plan of their choice, and the government would funnel the premium support directly to the insurer — just as it does for Medicare Advantage, the Medicare prescription drug benefit, and the health care system for members of Congress.   

The Ryan plan would require insurers to cover any and all seniors as the condition of their being allowed to compete for seniors’ business. It would provide higher levels of premium support for less healthy and less wealthy seniors, and poor seniors would have every dollar of their care provided at taxpayer expense. The premium support would start at the average level of funding for traditional Medicare ($15,000 a year) and would rise with inflation from there. 

In truth, seniors would likely have better catastrophic coverage under Ryan’s plan than under traditional Medicare. There’s a reason why the vast majority of Medicare beneficiaries buy private Medigap coverage: There’s a whole lot of care that Medicare currently doesn’t cover. Despite that fact, Medicare is going bankrupt, and it desperately needs an infusion of private competition and choice to make it more efficient, cost effective, and affordable.

In short, seniors wouldn’t “die sooner” under Ryan’s plan. But Medicare would die sooner without it.

This is just more proof that Sebelius is nothing more than a partisan mouthpiece.  Her ideology gives away her game with her wanting to insert government into the playing field, and further evidenced the day before by none other than Paul Ryan who grills Sebelius on whether seniors should have control of their own health care and choices for their drug coverage.  Sebelius stumbles at the basic principle of allowing seniors to choose their own plan, but knows that choice is good for competition, and would gladly put the government at the top of that competitive scale.  Watch to the end.

Update: This is not the first time Sebelius has been clueless.

OK, this is the equivalent of a European economic Armageddon. First Greece came along, then, a few days ago, Italy. And now Ireland: Moody’s downgrades Ireland to “junk” status.

So, when can we officially roll up the European Union?

Quote from the article:

Credit ratings agency Moody’s has cut Ireland’s bonds to junk status and warned of further downgrades as the euro zone economy struggles to pull out of a financial crisis. Moody’s said it had reduced Ireland’s government debt ratings by one notch, to Ba1 from Baa3, saying there was a ‘growing possibility’ that the country would need more bail-out aid in late 2013, when the current EU/IMF programme is due to end.”

This is absolutely insane. We’re nearing a cliff… and instead of using the break to stop this ridiculously expensive car, we speed up. We can’t afford to continue this insane behavior much longer, the weaker European states can’t be bailed out time and again.

The political elite have to make a decision (and I kindly ask my fellow citizens to force them into making the right one): either the EU now has to become more powerful than most of them ever dreamed of, or it’s time to end it, at least partially (by pushing out the weak countries, for starters).

As an aside, I don’t believe the first option is truly possible (although some of them may certainly try). The EU is set to implode.

This post first appeared at Right Across The Atlantic.

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Mr. Edison, describe for the committee the nature of your “light bulb” invention.

Distinguished representatives and guests, while the idea of electric lighting is not a new one, neither had it been a practical matter until we produced our new incandescent light bulb.

It uses a lower current of electricity and is both safe and economical.

So this electric light bulb that your firm invented: do you agree that demand for affordable lighting will skyrocket and that more and more electricity will need to be produced? Have you considered the impact on carbon emissions into the atmosphere — the inevitable result of lighting all of these “bulbs”?

No, sir. We were simply trying to create a useful product for consumers, one that enhances safety and society as a whole.

Have you considered alternative lighting mechanisms that would consume less electricity? How many “green collar” scientists are working in your laboratories? Have you considered the impact of your invention on climate change?

No, sir — I’ll admit we were simply trying to create a functional light bulb.

And this phonograph you’ve invented, Mr. Edison, have you evaluated how its production could skyrocket due to high demand for musical recordings? Have you produced an assessment for the EPA and state regulators as to its impact on the environment? Production of tin, vinyl and other substances could explode!

Ah, never mind.

The committee calls Henry Ford.

Here.

Please explain this “invention” of yours: this “mass-produced” automobile.

Ladies and gentlemen, one day it struck me. We could produce cheaper goods, without compromising quality, by standardizing designs and assembly processes. We created an “assembly line” that helps us mass-produce vehicles…

These “cars” of yours are reproducing like locusts! Virtually everyone is driving them! And where do you think you’ll get the fuel, the gas for these –

Distinguished Representative, America’s natural resources are plentiful and there is no shortage of oil. Furthermore, our new processes are a significant improvement because automobiles can be produced more efficiently and consistently.

Mr. Ford. Mr. Edison. The conclusions of this committee are clear. The U.S. government cannot tolerate out-of-control corporate entities run by super-wealthy individuals such as yourselves. We must confiscate your factories and laboratories until they can be unionized; vetted by federal, state and local regulators; and certified as “green”.

In short, we must call a halt to your outrageous activities. You and Mr. Edison are dismissed.
 
 

Cross-posted at: Doug Ross @ Journal.

It should go without saying, but I’ll say it again, that increasing tax rates does not produce a commensurate increase in revenues.  The truth about tax rates is that raising them produces a less-than-proportional increase in revenues, whereas lowering them produces a greater-than-proportional increase in revenues.  Tax rate changes do not produce a one-for-one change in revenue levels, period.  Arguments are usually made as if they do, but history demonstrates otherwise.  You cannot solve a public debt problem by raising tax rates.

The chief reason for this is that people change their economic behavior when tax rates change.  An excellent way to discern this effect is through the tool falsely referred to as a “tax subsidy.”  There is no such thing as a “tax subsidy.”  There is only a “tax break.”  Oil companies get tax breaks on drilling leases; they do not receive subsidies.  It is important to understand this and not to buy into the false proposition that a tax break is a subsidy.  And an important aspect of that reality is that the imposition of a tax is a cost added to production from outside the intrinsic production process – and it is passed on to the customer.

When government imposes a tax, it makes the product cost more, and the customer therefore has to pay more.  When government gives producers a break on the tax, that reduces the cost of the product, and the customer pays less for it.

Eliminating the tax breaks for drilling leases will cause the price of gas at the pump to go up.  It will also cause the prices of everything else made from a barrel of oil to go up.  This in turn will depress the economic activity that would have been more robust at the lower price point – and that depresses revenues for the government.

A similar principle is in operation with regulation.  The more there is, the greater the costs added to all economic activity.  All regulation imposes a cost.  There is no such thing as regulating without increasing the cost of a process.  We consider some amount of regulation to be necessary; there may be libertarian arguments against using a priori regulation to achieve the effects we desire, like unpolluted rivers and clean air, but in general, our society has agreed to the proposition of a priori regulation (rather than, for example, leaving all such issues to lawsuits among property owners).

But whether we favor specific regulations or oppose them, they all add costs.  In many cases, they go further and prohibit outright certain kinds of economic activity.  The overall effect of regulation is to discourage economic activity.  No argument can be made that regulation has any encouraging effect on the economic activities on which everything else hinges:  production, transportation, and sales.  Regulation serves in every case – every case – to make it cost more to produce, transport, and sell.

If a government wants revenues to increase, its best option by far is to let production, transportation, and sales increase, and the people prosper.  To a limited extent, government can encourage production, transportation, and sales by arranging for infrastructure like roads and sewage, which private individuals and businesses use in common.  If government is functioning properly, the reliable maintenance of law and order, respect for property, and a national defense ensures against obstacles to commerce.  But government’s main effect on commerce is routinely a discouraging one, because governments are so prone to enlarging the scope of regulation.

It ought to be obvious to us today that regulation is depressing commerce, and therefore revenues for the government.  There are wildly obvious examples like the hundreds of miles of coastline off which we prohibit drilling for oil and gas.  There are less obvious examples like the effects of freon licensing (minor) and disabled-access regulations (major) on small businesses.  Even when such regulations don’t drive small proprietors out of business, they force price increases – and they slice into profits and investment, and therefore depress the prospects for revenue.  They also increase the entry price for small businesses, guaranteeing that fewer will get started, fewer will make a go of it, and more sectors of the economy will be less subject to competition and innovation – the mighty engines of revenue generation.

What we need today is a regulatory version of what Reagan did with taxes.  (Reagan also lifted some important regulatory restrictions, of course.)  California, for example, could close much of its budgetary gap with breathtaking speed and efficiency if it merely did three things:  opened up its coast for offshore drilling; eliminated its alternative-energy policies; and favored delivering water for human use over actively preventing its delivery.  Even California’s mind-blowing pension obligations could be met if the state would also change its litigation environment, its posture on workplace regulation, and its practice of implementing virtually all regulatory policies by enthusiastically imposing costs on business.  The average person in California doesn’t even know that 90-plus % of regulations have been imposed; all he knows is that things keep costing more and more, and businesses keep pulling up stakes and moving elsewhere.

Across America, regulatory policies are actively inhibiting the economic activity that produces revenues for the government.  The only way to change that is to lift the burden of regulation.  Raising tax rates will merely exert an upward pressure on consumer prices, and drive private money away from the taxable categories that strengthen the economy.  Lightening the burden of regulation, however, will unleash the economy to produce, sell, and deliver significantly increased revenues to the government – without raising tax rates.  Oh, and it will also reduce government spending.  Regulating less means government spending less, on regulators and their infrastructure.

J.E. Dyer’s articles have appeared at The Green Room, Commentary’s “contentions,” Patheos, The Weekly Standard online, and her own blog, The Optimistic Conservative.

CNNMoney is reporting that one out of every three White House staffers makes in excess of $100,000 dollars. And perhaps that wouldn’t be terrible if there were only 3, 9, 12, even 90 employees total. But there are 454.

And as the CNNMoney story points out, the list leans to the bigger payday. Only 3 WH staffers are volunteering their time – receiving no pay for the work they perform. (No doubt outside revenue allows them to donate their time to the nation’s cause.) But 21 staffers are raking in $172,000. Including newcomers Jay Carney and Bill Daley.

Supporters of the White House may say that as a contemporary CEO, the President’s salary of $400,000 and his executive team should receive competitive pay.

Yet one of the problems there is that in the world of real business, if anyone had produced the backwards “progress” that his team has, they would be getting pink slips, and taking hair cuts on options until they got the issues “turned around.”

There won’t be a huge outcry from the left on this, which is sad given that they like to play the class warfare game so often. But when you look at the average salary in the White House against the media salary for the American worker–you uncover one more “we’re better than you” scenario. And this where the aura of “us all being in this thing together” is growing thin and shrill for the one in ten workers looking for work who can’t find it, and the one in five American families who are working as hard as they can, but can not cover their most basic living expenses.

Parting question: The fact that CNNMoney is the one reporting on this disparity means “what” in terms of the middle left base that tends to put their trust in the Turner News property that supported Obama blindly through 2008?

I’m Kevin McCullough and that’s how I “Binge Think.”
And sometimes I write things to make you think too…

Stephen and Kevin CARE about your health!

As I was beginning to write my new best-selling book, “No He Can’t: How Barack Obama is dismantling Hope and Change” my heart grew increasingly sad. As I watched the entire health care debate in 2009, the tea-party revolt and the repeal push in 2010, and the reality of where we are now–I grew even MORE sad.

And this is why…

In all of the discussion about repeal, replace, Obamacare, Medicare, Medicaid, it just felt like the voice of common sense had completely died.

In my book I advocate a serious engagement by the reader into the debate of the day and the “rolling up of the sleeves” to take the process of finding solutions to problems into their own hands and to begin to leverage their abilities of thoughts, behavior, and impact to implement solutions that they find distasteful in the public arena.

It was over a year ago that Stephen and I founded XtremeCharity and through it we have been able to raise awareness and dollars for things like feeding those who were hungry, housing those who are homeless, and getting other resources to people in need.

But we didn’t have any solutions for the challenges of how people were forced to deal with their own health care. The maintenance of costs associated with staying well, or getting well, much less access to doctors that were in the least bit reasonable.

Our frustrations led us on a mission to uncover methods that could be discovered, put into place, and begin to genuinely change the look and process of taking control of one’s health. That mission culminated this morning with the announcement on national television and radio of “The Cares Project 2011.”

Combining free market principles with former top minds in the health care industry, and formulating innovative approaches with health maintenance and control of costs we are significantly reducing the expense of the process, increasing the access to medical resources, and exposing the corruption of outdated systems all at the same time.

Let me give you an example.

Even if you HAVE health insurance drug coverage, even government assistance for drug coverage, did you know that the drug manufacturers, in conjunction with pharmacies, have worked together with lawmakers to rig the prescription drug game? Even if you have a co-pay on your drug benefit–you are likely getting cheated. Here’s how:

Pharmacies are legally allowed to charge you the maximum co-pay on your policy every time you go for drugs. $25, $30, $45 – whatever your co-pay is they are legally allowed (and will) charge you that amount at almost every possible chance. Yet with the emergence of generics and the mass quantities drugs are produced at today some prescriptions will not cost the pharmacy more than $6-$12 to fill.

Well if you have a $45 co-pay and the drug is $6 – the pharmacy is allowed to pocket $39.

So step one of the CaresProject 2011 we wanted to immediately bring down the cost of your out-of-pocket cash, and with the help of a tremendous consortium of talent we have created the CaresCard. AND WE MADE IT AVAILABLE FOR FREE!

When you click and create one, take it with you to your pharmacy. It is honored at 60,000 pharmacies across the nation. There are only 62,000 or so pharmacies (not counting the 3,000 operated in prisons.)

No matter what type of feedback they give you, (positive, inquisitive, or negative) you instruct them to enter the CaresCard2011 into your prescription file into their system. The card, once entered, will automatically provide a trip wire so that if your drug is LESS than your co-pay you will never be charged the higher cost. And if you have no insurance at all it will also automatically discount generics as much as 55% and name brand drugs as much as 15-23%.

Bottom line is, you will IMMEDIATELY begin to save on every prescription you fill. And you IMMEDIATELY begin to put more money directly back into your own pocket. THIS is free market innovation, over turning the apple cart of Big Pharm, Big Government, and Big Brother.

Tomorrow on the show I will roll out the 2nd part of the CaresProject2011 and it will include a feature that will give you access to a U.S. Board Certified American doctor 24 hours a day, 365 days a year — UNLIMITED — for the entire year, for less than the cost of a single office visit.

But for now, please accept our CaresCard2011 as a personal gift from XtremeCharity and let a little hope fill your heart, that no matter how tough these times get, it will be our innovation, our determination to solve the problem, and our incredible charity towards one another as Americans that will ultimately solve the problem.

I’m Kevin McCullough, and that’s how I “Binge Think!”
I’ve been called a “MuscleHead”
And many say I’m full of “Hot Air”

The Greek problem

There is no doubt that these measures represent a part of the solution.  But they are incredibly discouraging for Greeks who have no freedom to do anything other than participate in their nation’s appallingly dysfunctional economy.  Almost anywhere else in the developed world, people of working age perceive themselves to have better opportunities.  There is something legal to do, other than continue at (or angle for) public-sector jobs that promise only to pay less in the future, with pension benefits turning from iffy to completely unreliable.

Greeks facing pay cuts in the public sector can’t just go home and polish up their resumes for the three dozen private companies that might want to hire them.  Many public-sector workers were hired originally through de facto political quotas, and have no marketable skills.  Families benefit from having at least one member employed in the public sector, not just because of the (previous) reliability of the paycheck and the guaranteed holidays, but because of the contacts in the state bureaucracy.  Corruption and bureaucratic whim are facts of life in Greece, and relatives in the public sector can save a family money and time in at least some of its routine dealings.

The private sector, meanwhile, is hard to get into, even on merit.  With the public sector accounting for a colossal 40% of the economy, there’s definitely less opportunity than there is in other OECD nations.  Unemployment has been on a steady upward climb for nearly three years, hitting more than 16% as of March 2011 – but the truly eye-popping figures are the 42.5% unemployment among Greeks 24 and under, and the 22.6% for those 25-34.

The US Bureau of Labor Statistics doesn’t provide exactly parallel data, but for comparison, in March 2011, the following unemployment percentage figures applied for Americans:

Men 16-19:  26.2%

Women 16-19:  22.7%

Men 20-24:  16.4%

Women 20-24:  13.5%

Men 25-34:  9.3%

Women 25-34:  9.0%

So, basically, the 25-34 demographic in Greece faces the same unemployment picture as the current crop of burger-flipper-age teens in the US, and the entire nation of Greece has no better prospects than men ages 20-24 in recession-plagued America.

Unemployment has been ugly for Europe’s young for a long time now; breaking into professional private sector employment is particularly difficult.  But Greece’s private sector is even smaller than the European average.  It simply doesn’t generate enough jobs to employ new generations of Greeks.  That is the central problem, and the root of it is the sheer size and weight of the state regulatory apparatus.

Greeks thrive in foreign climes; they are hard-working, successful entrepreneurs and professionals in the US and Canada, for example, and in enclaves of Western Europe, Latin America, and the Far East.  There is nothing wrong with Greeks.  What’s wrong is with the political, economic, and regulatory climate of Greece.  Greece won’t let her people succeed.

Lightening the regulatory load in Greece is easier said than done.  Many people’s livelihoods currently depend on its existence.  Their prospects are not merely a matter of their salaries as bureaucrats or other state employees (e.g., doctors and dentists, electric power professionals), but of the bribes they receive to get things signed off, facilitate the jumping of lines, or offer higher levels of service.

There is zero production in this parasitical segment of the economy; it’s all overhead – and much of it, even the statutory regulation, is unnecessary, as witness the numerous other economies that do better without it.  Regulation and state employment amount to a giant rent-seeking scheme that idles an enormous amount of labor and potential capital.

Greece doesn’t have to be doomed.  Greece is organized about as stupidly as possible, outside of full-blown communism.  Everything in the political economy is designed to discourage the productive employment of the nation’s most economically powerful demographic:  householders between the ages of 25 and 55.  Millions of young, healthy, alert, smart, reasonably well educated Greeks are sitting around with no prospect of legal, productive work, but instead, only of a life of economic parasitism, cloaked in the fiction of “work.”

If this changed, Greece could wipe the floor with her debt problem.  No unbudgeable, systemic economic factor has dictated this situation.  It was created entirely by politics.  It can’t be fixed by trying to balance a ledger while leaving Greeks without hope and a future.  Greeks have to be able to do what they are unable to do today because of the layers of regulation and corruption:  start new businesses, expand existing ones, attract foreign investors, and generate production, jobs, and profit.

China and Russia ready to buy Greece?

One major cost of not addressing this problem could well be the purchase of Greece’s infrastructure industries – for which there is a proposed privatization scheme – by China and Russia.  These industries include virtually the entire energy and transportation sectors, from oil, gas, and power generation to rail, air, shipping, and warehousing.  There is a legitimate fear that Western companies will be unwilling to take on the problems – the political headaches, the unlikelihood of profitability – that would come with buying out the Greek government’s holdings; whereas China and Russia operate with different priorities, seeing the privatization plan as an opportunity to gain a strategic foothold in Asia’s gateway to the West.

The Russian oil and gas industry – Moscow’s major sources of global revenue and a key arm of state policy – has Greek interests already, but Russian military interest in Greece has been heating up as well.  Turkey’s new activism and the recession of US power are driving Moscow and Athens into each other’s arms; in the context of tightening military ties between the two countries, the chief of Russia’s naval staff was quoted by Greek media in August 2010 wishing for a forward naval base in Greece.  Russia had a naval concession in the Balkan port of Tivat (in former Yugoslavia, now in Montenegro) for years during the Cold War; there is no question the Russian navy would know what to do with another one nearby.

But China is hovering as well, having stepped in to bolster Greek solvency last year, shortly after the historic visit of China’s naval antipiracy task force to the port of Piraeus.  The Chinese defense minister is in Greece this week – while the world’s attention is fixed on the debt crisis and the exertions of the Greek parliament and the Eurozone managers – negotiating “closer military ties” between Beijing and Athens.

Neither Russia nor China is in anything close to invincible economic shape.  China’s export-dependent economy is taking a beating with every downturn in US indicators; China’s countryside is wracked with an unrest prompted by rising expectations in a time of economic recession.  China has been working to minimize her exposure to US Treasury debt, but her finances are broadly and perilously exposed to global debt.  It is a myth that China is in better economic shape than other nations.  The same would be true for Russia if there were any myth to debunk, but Russia’s economic woes are widely recognized.

Competition for the future

China and Russia aren’t lining up to pick over Greece’s public-sector yard sale because they’re better positioned for an economic rescue than the West.  Their interest is strategic and geographically competitive.  While Western nations are acting from fear of Greece, and preaching austerity lest Greek weakness bring everyone down, China and Russia are acting on a strategic vision of purposeful engagement with Greece.

The West could be doing that too.  Russia and China don’t have nearly as much to offer in terms of models for political and economic freedom and long-term success.  They are after geographic position and raw materials; their ideas are centered on the getting and keeping of concentrated power, whether political or economic.  Under their tender ministrations, Greek unemployment and economic dysfunction will remain dominant; a politically connected elite will benefit, but empowerment of small entrepreneurs and the aspiring middle class will not be on the agenda.  This is the pattern wherever Russia and China invest in economically troubled nations.

The West has a better idea to offer.  Even in the deepest recession since the 1930s, economies that operate on the Western model still outperform their centrally managed, socialist counterparts.  We have all behaved foolishly with public debt and entitlements, but that’s a choice, not a pattern dictated by the inexorable workings of an indifferent universe.  We can and should treat Greece as a brother, not a leper; police up our own financial problems; and help Greece recover her economic vitality – constructively, and laying prudent groundwork for the future.  A “visit from the Chicago economists,” on the model of Chile in the 1980s, would not come amiss.  Greece needs tough love, not mere stringency or strategic exploitation.  The future of Western civilization is riding on it.

J.E. Dyer’s articles have appeared at The Green Room, Commentary’s “contentions,” Patheos, The Weekly Standard online, and her own blog, The Optimistic Conservative.

The political situation in Greece is not encouraging. The Greek parliament will vote this week on an austerity plan — which bankers are demanding in order to extend the country further credit — and it is by no means certain that the unpopular cost-cutting measures will pass: “If Greece refuses to accept more austerity measures, the consequences for Greece, the EU and indeed the global economy could be dire.”

The good news, such as it is: French banks have reportedly agreed to a plan to roll over Greek debt. However, Germany’s finance minister doesn’t sound optimistic: “We are doing everything we can to prevent a perilous escalation for Europe but must at the same time be prepared for the worst,” Wolfgang Schaeuble said, invoking the specter of 2008, when “the world was able to take coordinated action against a global and unpredictable financial market crisis.”

Recall that the 2008 meltdown led to the Dow Jones Industrial Average — which had been above 12,000 in June 2008 — falling below 7,000 by March 2009. If Europe dodges the Greek bullet this week, stocks should gain, but the threat of civil unrest in Greece is sufficiently serious that there have been rumors of a military coup.

So while CNN is consulting stargazers and necromancers, I am citing a more mundane prophet:

“The problem with socialism is that you eventually run out of other people’s money,” Margaret Thatcher once observed, and for Greece, “eventually” is now.

(Cross-posted at Right Wing News.)

Just in time for the end of QE2, when the US needs every possible foreign buyer of US debt to step up to the plate, we get confirmation that yet another major foreign central bank has decided to not only not add to its US debt holdings, but to actively sell US Treasurys… The WSJ reports that “Russia will likely continue lowering its U.S. debt holdings as Washington struggles to contain a budget deficit and bolster a tepid economic recovery…”

Well, with Russia out, at least we have China and Japan continuing to buy US debt…. Oh wait, China is contemplating dumping two thirds of its debt you say? And the biggest buyer of Japanese bonds is now in the process of selling Japanese bonds in the open market for the first time (so not really in the market of US bonds)…

Well, surely US households will step up to the plate. After all they all have so much “cash on the sidelines” courtesy of the RecoveryTM ©® that they can’t wait to dump it all into paper yielding less than 3% a year, and has negative real rates of return. Wait, what’s that: according to the Fed, in Q1 US “households” sold $1.1 trillion annualized in Treasurys to the Fed?

So, let’s get this straight: China, Japan, and now very much openly Russia, the three countries with the largest financial reserves in the world, are threatening, if not already dumping US bonds, just in time for US households to sell their holdings of US paper to Brian Sack. And this is happening 2 weeks before QE2 ends… Um… Are we and Bill Gross (and certainly not Morgan Stanley) the only ones to see a problem with this?

Those rumbling sounds you heard in the background are Ben Bernanke’s printing presses preparing to initiate Quantitative Easings III, IV, V, ad infinitum…

Got Weimar?

 

 
Cross-posted at: Doug Ross @ Journal.

 

Her point is good, as far as it goes.  There ain’t no such thing as a free lunch.  But as long as we have “Medicare,” we’re going to continue, willy-nilly, to behave as if we think there is one.

It is not possible to do otherwise.  When people don’t see their arrangements for medical care as a fee-for-service proposition, but rather as a collective “social insurance” scheme, in which the emotion of the moment will always be the tiebreaker for lawmakers’ decisions about other people’s money, no one has to “grow up.”

How do people “grow up” in the course of normal life?  From what does the concept of “growing up” derive?

“Growing up” means assuming responsibility for yourself.  It seems absurd to have to point out anything so basic, but then, we’ve been living under a nanny state for quite a while now.  Growing up is what you do as you transition from infant to child, from child to adolescent, and from adolescent to adult.

At each step of the way, the transition is marked by your increased ability and willingness to assume responsibility for yourself.  At a certain point, you – and you alone – are held accountable for your actions.  With that accountability comes an autonomy that almost everyone looks forward to with longing, during his or her teenage years.  You can do what you want to do about the big choices in life: what career you choose, where and how you live, whom you marry.

The price of that autonomy is taking care of your own needs.  The more responsible you are about that, the less interference there will be from others – family, the civil authorities – in your life.

Before Medicare existed, “medical care” was something you planned for as part of that responsible mode of living.  Hard as it is to believe, people paid cash for all their routine check-ups, doctor visits, and prescription drugs.  Most in the middle class maintained insurance for what was called “hospitalization,” meaning the need for expensive in-patient care, whether because of an auto or work accident, childbirth, children’s illnesses, or the health problems of the elderly.

That insurance cost far less, as a percentage of income, than today’s health program premiums.  Premiums were higher, of course, for older rate-payers and those who were especially likely to make claims, such as young couples in their child-bearing years.  For many on the payrolls of large companies, medical insurance – on the “hospitalization” insurance basis – was a benefit provided by employers.  (Naturally, your pay was lower by the amount of the monthly premium.)  Whether you paid out of pocket or your employer paid, it was smart to enroll in medical insurance early in life, as that meant your premiums – if you stayed with your insurer – would be better when you got past 50.

People were very particular about buying their insurance, because they understood that their choices about it would determine the kind of services they could claim if they needed medical care.  The concept of paying some money by the month in order to have unlimited access to medical care did not exist.  It was understood that there would be limits on what the insurance company would pay for, just as there are limits with auto and home insurance.  Saving money “for a rainy day” was targeted on the kinds of contingencies insurance might not pay for.

But middle-class Americans had much more discretion over their income then.  They didn’t fork over everything they earned in the first four months of the year to three or four levels of government.  The social contract that was based on being responsible for your own medical needs came with the particular benefit that you kept more of what you earned.

None of this meant that there was no provision for the indigent.  States and counties across America maintained publicly funded hospitals and clinics whose purpose was to provide care for those who couldn’t pay.  Religious organizations provided medical care for the indigent as well, and in some places their facilities were the first resort.  The system wasn’t perfect, by any means, but it reflected the social contract of individual responsibility combined with compassion.

When Medicare came along, it changed all that.  Literally, all of it.  Medicare divorced medical care from any understanding about prior limits on contractual obligations.  It treated medical care not as an element of individual arrangements and responsibility, but as a political issue of collective entitlement.

When experts today point out that a Medicare beneficiary draws from Medicare several times what he paid into it, they are only noting what was supposed to happen.  It was the intention of Medicare to ensure that prior contributions and prior arrangements would not limit the care retirees would receive.  Of course that’s what it does.  That was the whole point.

Beth Haynes urges us to repudiate that idea, and she is right to.  But repudiating that idea is repudiating Medicare.  If we can be brought to repudiate it, we won’t need “Medicare” at all.  Indeed, it will be a hindrance to us.  There is no point in turning something over to the government if the basis for claims on it is not to be divorced from what we put into it.  Only if it is important to us that medical care be allocated on a political basis, for political purposes, is there a reason to continue Medicare on its current model.

No one has ever argued that today’s seniors should be left to fend for themselves.  We’ve had Medicare for nearly 44 years; most who are on it today spent most of their working lives paying into it – money they could have spent differently if it had been left in their pockets.  No changes to Medicare should adversely affect their access to care.

But I think one reason it has been so easy to flog the “Mediscare” theme is that at least some people intuitively understand that the Ryan plan may be a step in the right direction, but it doesn’t break firmly enough with the fundamentally unsound basis of Medicare.  If you “grow up,” as Ms. Haynes urges Americans to, and accept that what you get out of your medical insurance has to be limited, and has to be tied to what you chose to pay into it – then what do you need a government entitlement program for?

J.E. Dyer’s articles have appeared at The Green Room, Commentary’s “contentions,” Patheos, The Weekly Standard online, and her own blog, The Optimistic Conservative.

The British newspaper the Guardian reports that experts are increasingly fearing the U.S. may be sliding back into a recession.

Shares fell heavily on Wall Street on Wednesday after a gloomy report from US factories and signs of a slowdown in employment growth prompted fears that the recovery in the world’s biggest economy is fading.

With weaker than expected data from Europe and China adding to the downbeat mood, the Dow Jones industrial average lost almost 200 points in morning trading in New York.

The left-wing paper adds:

Despite the additional $600bn pumped into the economy over the past eight months, it grew at an annualised rate of only 1.8% in the first three months of this year, a sharp slowdown from its performance last year.

Oh my. If the Obama-friendly the Guardian is now preparing its readers for a new recession,  you can bet on it that it’ll happen.

Mike Riddell, fund manager at M&G, is quoted as saying: “The last month has been a horror show for the world’s biggest economy, and things are getting even worse if data released today is anything to go by. It seems that almost every bit of data about the health of the US economy has disappointed expectations recently.”

Shorter: you’d better prepare for some rough years indeed.

The reason, of course? Obama’s failed economic policies. The man did the exact opposite of what had to be done: he made the government bigger and made life virtually impossible for small and middle sized businesses.

Quite an accomplishment Mr. President, Ché Guevara himself couldn’t have done worse.

This post first appeared at Right Across The Atlantic. Follow me on Twitter.

“There’s no need to have a Democratic budget, in my opinion,” Reid told the Los Angeles Times last week. “It would be foolish for us to do a budget at this stage.” Instead, Reid wants to wait to see if the deficit-reduction meetings led by Vice President Biden bear any fruit. Before that, Reid wanted to wait for the Gang of Six — now nearly defunct — to come up with something.

Sessions was appalled when he read Reid’s words. “It was a fundamental statement that they’re playing politics,” Sessions said. “They don’t think it’s politically smart to produce a budget. They’d rather produce nothing and attack Paul Ryan and the Republicans and think they’re going to gain politically by avoiding their fundamental statutory responsibility. It’s pretty breathtaking to me.”

Reid isn’t alone. The chairman of the Senate Budget Committee, Kent Conrad, is also happy to not produce a budget. Last week, he told reporters that he planned to “defer” work on a 2012 budget indefinitely.

And not just Senate Democrats are looking ahead to their political futures.  Liberal Republicans, (yes, I said liberal, they’re not even qualified Rinos), Susan Collins and Scott Brown have already committed to voting against the House Budget.  Brown is up for re-election next year, but Collins isn’t until 2014.  Both seem to be oblivious to the fact that serious entitlement reforms are needed in the near future to insure their stability.  Brown’s decision to reject the House Budget brought out condemnation from House Republican Joe Walsh (R-Ill.), who also took a political shot at, (whoops, I meant to say reprimanded), the president:

“Respectfully, Scott Brown ought to be ashamed of himself,” Rep. Joe Walsh (R-Ill.) told Neil Cavuto on the Fox Business Network. “This is the defining moment of this generation. We have got to be bold. We know these entitlements have to be reformed to be saved. He knows that.”

“Any Republican that doesn’t vote for this or doesn’t support this is purely being guided by political reasons,” Walsh continued. “This is not time to be politically scared. Every day I am in this town I am more convinced this president has no clue as to the financial cliff we are about to fall off of.”

So, as our “Senate Democratic Leaders” choose to “defer” or find “no need” in producing a serious budget for most likely the third year in a row, this nation continues to head down the path of fiscal insolvency, and exploding deficit spending, with no end in sight.  Reid and Conrad have officially kicked the can down the road, abdicating their responsibilities in the name of political expediency, (apparently with the President’s blessing since he’s taken little or no part in the budget process).  I would submit that these folks are the “radicals” and “extremist” in our government, not Paul Ryan or House Republicans who were sent to Washington to rein in the Democrat’s spending, (and taxing), programs this country can not afford.   Democrat demagoguery is not going to cut it.

The roof, the roof, the roof is on fire.

That’s basically how one can summarize the situation in Europe. Several (South) European countries are on the brink of collapse. Greece is as near bankruptcy as can be. At the same time, Western and Northern Europeans are becoming increasingly disturbed by the irresponsible behavior of the Greek, and of other nations.

Other nations, you ask?

Why yes. You see, Spain is almost in a state of civil war.* Spanish youth have been protesting announced economic reforms for some time now, because once again they are the ones who have to bear the grunt of the government cuts. This while the unemployment rate among the youth is up to 40% (or more).

Meanwhile, the ones actually responsible for Spain’s economic mess – the middle-aged and the elderly – are not asked to make any significant sacrifices.

If I were a Spaniard, I wouldn’t quite accept that either.

Having said that, reforms are desperately needed. If the Spanish continue living the way they’ve lived for decades, they’re doomed – and so will the rest of the European Union. After all, Europe’s economies are interconnected. If Spain falls, the Euro suffers a major blow. And if the Euro suffers a major blow, the other Euro-countries are in deep trouble indeed.

As for Greece, especially the Dutch are increasingly angered by the attitude of the Greek. The EU has bailed out Greece, but now they want another  ’loan’; even though they haven’t paid back the other one. What’s worse, many believe they will never pay these loans back. A small country like the Netherlands is asked to give the Greek 3,5 billion Euro (that’s approximately 5 billion in US Dollars. Such an amount may be peanuts for, say, the United States, but not for a country like the Netherlands that has a total population of a mere 16 million souls.

So what’s ahead for Europe? Well, to say that the future looks rather grim would be the understatement of the century. The Old Continent can’t bail out weak, corrupt, lazy and irresponsible states infinitely. One of these days, we’ll simply run out of money.

* For some photos of the mass protests see here and here. Go here for a video.

This post first appeared at Right Across The Atlantic.

One place I wouldn’t have expected to be hit quite so hard would be the black hole where all money flows, Washington, D.C. But, as Liz Mair points out, this effect is striking the beltway as well.

Everywhere I go lately, I see new or barely “pre-loved” homes sitting empty in massive gluts, it seems. Up the street from me, there is a big condo complex that I believe was completed in 2009; I’ve only ever seen a couple of lights on in the entire set of buildings at night– the whole thing is basically vacant, and this is in an area where a lot of people rent and there’s a lot of demand…

Before the 2008 crash, we heard a lot of stories about people who owned multiple homes, which they intended to rent out (though it’s not clear if they ever did) or flip to people who intended to rent them out. Hate to say, but my gut tells me that at least in some places, we may have too much housing either as a matter of course or specific current circumstances (i.e., a lot of cheap “used” property that has been foreclosed upon; a lot of people out of work and unable/unwilling to assume the responsibilities that come with owning a home and maintaining a mortgage). If the economy ticks up, we may see concerns surrounding the housing market and construction decline. But my sense is, even if that happens, we may still observe more supply than demand.

The news is bad in many places, it’s true. But not everywhere. These trends are always regional, as one report shows, and there are a few places where the trend is upward, not down.

Builders had been hopeful that a strong spring season, traditionally the best time for home construction, could help power a turnaround. But that has yet to happen.

Regionally, the West saw a two-point gain and the South received a one-point gain in their index of construction activity, both to 16. The Midwest held steady at 14. The Northeast fell five points, to 15.

The index gauging current conditions rose one point, to 16, while the recorded foot traffic of prospective buyers also rose by a point, to 14. But the outlook for the next six months fell two points, to 20. That was the lowest level in eight months.

Let’s see if we can’t figure out this puzzle. The four worst states for housing sales were Arizona, California, Florida and Nevada. But regionally, the biggest drop came in the Northeast. So who were the big winners? Among them, South Carolina and Texas. One of the biggest individual losers in the Northeast? Connecticut.

What do the elements of this tale have in common? States embracing right to work laws and electing legislatures who are lowering taxes to attract businesses which bring jobs are seeing growth in housing sales. States who seek to balance their budgets on the backs of higher taxes and engage in anti-business practices are seeing their populations flee and their houses go unsold.

Did this really come as a “Wow, I could have had a V-8″ moment for anyone? Class dismissed.