The March To Fascism And How To Stop It

People know I've been beating the drum, warning of the Fascist trends in our government which have been building for years and are reaching a crisis.

Jack Gildern did a much better post on this subject than I have called Fascism: Foolish Fallacy Or Frightening Fact. I urge you to read it-please.

He starts with a simple definition of Fascism.

Here is the literal definition of Fascism:
fas⋅cism [fash-iz-uhm]
–noun
1. A governmental system led by a dictator having complete power, forcibly suppressing opposition and criticism, regimenting all industry, commerce, etc., and emphasizing an aggressive nationalism and often racism.
2. The philosophy, principles, or methods of fascism.

Of course, we haven't reached this level yet. Exactly when one says something that walks like a duck and quacks like a duck can be described as a duck is always a judgement call. The problem is--- This is not a duck we are talking about here-- It's Fascism!-- or perhaps some other brand of totalitarianism. We test and test for cancer in a way we don't for colds because- it's a deadly and often fatal disease and when we find it we try to kill it and cut it out. (no that was not just a call to kill the president. Our troubles go much deeper than one man. He was actually elected)

I made two comments that prescribe what I think might be the quickest and most effective way to stop this train and get people to think. You need to read the post and comments for context.

Comment One

"One of the best posts on here ever. I think one of the biggest factors at work here is what Hitler called the big lie. Admiting just how bad, Obama is means confronting our own guilt for having elected him and going deeper into just how the government got this out of control means looking at almost a century of guilt.

We as American's as whole- not all, have betrayed our founders and the basic ideals and foundations our country was founded on in exchange for a few favored programs or vague promises.

People need to stop and admit they live a nearly bankrupt and nearly Fascist country and then decide what role they have played in it and what they are going to do about it.

As, I mentioned before-- I think the Tenth Amendment route might be the fastest clearest way to stop this train. There are states and places in the country where enough broad support for individual rights and the Constitution exists. We need to work from there, to both educate and broaden this base and use it to confront the Monstrous powers in Washington.

After all, the Constitution and the founding documents of the country are on our side. If enough people scream that they really matter, and that the law matters and rights and truth matter, something might be done."

Comment Two

Well, I'm going to have to admit to living in "blue states" all my life in either NY or PA.

But my perception from my reading, interactions and occasional travels is that there really are very large chunks of the country that could almost be called "occupied territory" at this point. I mean when was the last time Wyoming, Utah or Alaska voted blue. I think we need to start from there and work to educate the people about just how deeply damaging the federal occupation of their states has been. Instead of working from positions of weakness, we can start from strength where there is already a lot of political and media support and build on that.

The starting point should be for the "occupied states" to one by one re-affirm their commitment to the original Constitution and it's tenth amendment- which in reality is an implied threat to take the clear course out of the union that the Constitution allows.

Hopefully, a chain of firm resolutions by a large number of states that seem very serious will in itself put a radical brake on things. Remember that just by taking these actions, one is calling attention to all the Constitutional and legal violations, which may help more people in other states to wake up and think deeply about what's going on. This will be hard for the media to ignore.

Remember---the Constitution and all the legal traditions of our country are on our side. Every founding document shows a clear intent to protect individuals from out of control federal power and to protect minorities from a possible tyranical majority.

We can't do this blindly so each resolution needs to state clearly the exact Federal moves that would trigger further action. For example, I think every state should declare federal limitations on free speech and the press to be an instant trigger for further action. Moves against the Second Amendment are in close to the same territory.

Is Obama Offering Military Technology To China To Cancel Debt?

This was also first posted on Smart Girl Politics

I want to start this out in bold print. This falls into the unbacked rumor category.

We do know that, the U.S. is deep, deep, deep in debt, much of which is held by foreigners. This has been the underlying theme behind the trips abroad to creditor nations by the President and administration officials. People on Wall Street call them Dog And Pony Shows.



We also can make an educated guess that Obama doesn't see many government programs he wants to cut, but rather an ever larger number of worthy causes and bankrupt party backers that need help. We also know that nations like China are becoming more and more nervous about our debt and eager to start exchanging their dollars holdings into things they really want like--oil fields, gold, copper, iron ore and uranium mines as well American technology.



Placed in this context, the president of Squanderville may soon have to shop around some real assets like this...

"According to the Administration, this proposal will help the United States resolve its debt issues. They point out their belief that the B-2 bomber is "strategically obsolete", according to a source in the White House Press Office. In addition, the
source claims that the Chinese would be unable to create their own functioning stealth bomber fleet for "at least eight years."

"American allies Taiwan, Japan, and South Korea are very wary of the proposal. Koo Syi, a geopolitical analyst from South Korea, points out that this technology could be passed to China's allies. This was the case when Chinese nuclear technology was transferred to Pakistan and North Korea. According to Koo, Obama has rendered US allies' opinions as "irrelevant."

My point, really isn't that this rumor is true or false, it's that it points out the underlying fact that sooner or later, we will have to do things like this to keep on spending the way we have been."

I honestly blame not only the Democrats for this but also many of the so called
Neo-Cons many of whom seemed to think we could remain a powerful nation while allowing spending levels that were sure to make us weak. Remember the Suez Crisis?

More Thoughts About Secession

Here are more of my thoughts about the secession/10th Amendment issue.

First,I included my entire original post in quotes.

"Secession from any country is a drastic measure that can't be taken lightly, most especially from one with such a long and successful history. Doing so during what should be the happy early moments of our first black presidency doesn't make it easier. Reading about the Pre-Revolutionary period makes one aware how far fetched the break which we now see as positive and inevitable seemed at the time.

Take my word for it, I don't take it lightly but I think bringing up and realistically using this threat may provide the only near term path towards fixing our nation.

Living, at this moment in Western PA, and having lived my entire life deep in one "blue state" or another, I find it almost impossible to see broad support for a return to the Constitution or fiscal sanity.

As the long political divide between "red" and "blue" states becomes deeper, two paths seem to be emerging. The first is the continuation as a nation loyal to it's geographical borders, but not it's political and philosophical ones, in which at best- only small relative degrees of freedom remain; a nation too crippled and bankrupt to remain whole for long. The second being a move towards two nations in which- at least one has a near term possibility of returning to the Constitution.

The trick in my opinion is to focus less on convincing the most extreme "blue states" they are on the wrong path than in more thoroughly educating and creating deep broad support for the original values in the states already trending red. Remember that as separation seems more likely--this trend will be aided by an influx of new liberty loving refugees from the socialist republics.

A consistent trend of states asserting their sovereignty and directly affirming loyalty to the original meaning of the Constitution- may help knock enough sense into people to forestall a final breakup.

All thoughts are appreciated. Please understand, that our Federal government's total liabilities in relation to it's GDP are already far beyond what has sunk most nations. We are at a point of extreme crisis."

This lead to a two very good comments which you can read here as well as my response.I think Nancy Hart's statement cuts to the heart of the matter.

"Secession does sound rather extreme; however, are we not in an extreme place in our country's history? And are not states' rights under attack from the Federal government's ever-increasing efforts to tread on these rights and all the citizens living in those states (you know, the USA!).? I think we should review the 10th amendment and back the efforts of a coalition on behalf of this amendment."

Here was my response.

It really comes down to your opinion on the position our country is in. I think the facts show that it's pretty extreme. Federal liabilities already acknowledged are already something like 4x all private debt levels and interest alone on this debt will in a few decades take up close to half the federal budget or much worse if rates rise. The dollar is near all time lows and gold near all time highs.

Make no mistake about it-- The 10th Amendment's only real teeth is each states implied right to secede. If handled with firmness and resolution it might provide a powerful check against what is happening.

I think:

"First, all the firmly "red states" must pass strong resolutions affirming their tenth amendment rights. Since these comprise a potential block of southern and western states and form the largely contiguous borders of a new country- if it comes to that.

Second; These states must agree on what final lines the Feds cannot cross without triggering possible secession. In my opinion these should include- major new federal encroachments on the 2nd Amendment; the 1st Amendment and also moves to guarantee or back the debts of insolvent states. Remember that backing the debt of states like California, New York and New Jersey would create just the kind of "taxation without representation", that triggered the Revolution from colonists tired of being bled to pay for Britain's wars and debts. It would mean that the citizens of states that had acted more responsibly would have no chance to pull out of this situation and would almost surely enable new rounds of out of control state spending and pension entitlements. The result would be a delayed-- but much larger crisis; almost certain hyperinflation and probably a chaotic future crackup of the country anyway."

I want to elaborate on this. The Republican party and the last holdout defenders of real freedom and free markets as well as the Republic as whole are likely at a true turning point. Imagine for example being caught deep in the wrong lane of traffic on a rapidly moving expressway and seeing the last exit off for 1000 miles or more and having to take the risk of changing lanes and making a desperate cut for it. A closer metaphor would be to imagine that the road is actually out up ahead and this is the last exit before a cliff.

It's been far from perfect but in the past, the federal system of government which large amounts of state and local freedom has let at least parts of the country to escape some of the worst effects of misguided federal policies and retain at least strong relative levels of growth and opportunity. For example, many "right to work" states have escaped the job killing impact of forced unionization.

This freedom as well as the formerly vibrant networks of churches, charities and independent organizations(yes, once most of these groups did more than beg for and channel federal funds and grants and were actually independent) that made up "civil society" allowed a range of experimentation in new ideas.These more independent cities and states also could become the incubators for fresh and less tainted leaders who might then infuse new blood into national politics.If the national tree of liberty was sick, at least some fresh new plants and seeds might be nurtured somewhere.

What Obama's policies are likely to and are designed to do is to extinguish these sprigs-- and actually drag every remaining state down to the level of the worst. We have seen this process in the banking and car industry. The result of backing and bailing out states like California will be to make suckers (like you ain't already) out of any state or city with even a shred of fiscal responsibility and sanity while rewarding the worst possible behavior. We've done enough of this already, but "You ain't seen nothing yet".

Thinking About Secession

Secession from any country is a drastic measure that can't be taken lightly, most especially from one with such along and successful history and doing so during what should be the happy early moments of our first black president don't make it easier. Reading through the Pre Revolutionary period makes one aware how far fetched the break which we now see as positive and inevitable seemed at the time.

Take my word for it, I don't take it lightly but I think bringing up and realistically using this threat may provide the only near term path towards fixing our nation.

Living, at this moment in Western PA, and having lived my entire life deep in one "blue state" or another, I find it almost impossible to see broad support for a return to the Constitution or fiscal sanity.

However, as the long political divide between "red" and "blue" states becomes deeper, two paths seem to be emerging. The first is the continuation as a nation loyal to it's geographical borders, but not it's political and philosophical ones, in which at best- only small relative degrees of freedom remain; a nation too crippled and bankrupt to remain whole for long. The second being a move towards two nations in which- at least one has a near term possibility of returning to the Constitution.

The trick in my opinion is to focus less on convincing the most extreme "blue states" they are on the wrong path than in more thoroughly educating and creating deep broad support for the original values in the states already trending red. Remember that as separation seems more likely--this trend will be aided by an influx of new liberty loving refugees from the socialist republics.

A consistent trend of states asserting their sovereignty and directly affirming loyalty to the original meaning of the Constitution- may help knock enough sense into people to forestall a final breakup.

All thoughts are appreciated. Please understand, that our Federal government's total liabilities far in relation to it's GDP are already far beyond what has sunk most nations. We are at a point of extreme crisis.

Some Thoughts On Sonya Sotomayor

I haven't had time to fully explore the record and views of Obama's Supreme court nominee, but the little I know so far strongly supports my view that Obama can be best described as a Fascist. Here are two previous posts that touch on how fascists and other totalitarians view the law.

Obama Admits To An Illegal, Unconstitutional Agenda

My previous posts, here, here, here and here are filled with dozens of quotes from the nation's founders, showed the pretty stark difference between their ideas and those that seem to drive most politicians today. These ideas were the basis of our Constitution, a document that is supposed to be the supreme law of the land.

In this Interview from 2001, Obama a legal scholar, admits openly that his goals to redistribute wealth are in conflict with the Constitution which was clearly designed to restrain government power. Little, we have seen since indicates things are different now.



I know that far to few Americans on either party have bothered to obey or perhaps even read our Constitution and most have seen power as a tool to do whatever they wished, always in the firm confidence that they would always be the ones wielding it. I hope we have finally woken up.

PPIC And More FDIC Lies (extended quote)

I have to be honest here. I have had strong fears for years that America is sliding rapidly towards fascism or some form of totalitarian government.

One of the biggest myths about this type of regime is that one can spot it by proliferation and strength of it's laws. In fact, totalitarian states are places in which the law is the whim of the king or dictator. Our founders feared this situation and tied leaders to the law with very few "ifs ands or buts". The president, legislators, police and government officials pledge allegiance to the law. Emergency powers are very limited and for the most part were only for use during war.

In contrast, let's look at some fascist and pro fascist political views.

Carl Schmidt

"In 1921, Schmitt became a professor at the University of Greifswald, where he published his essay "Die Diktatur" ("On Dictatorship"), in which he discussed the foundations of the newly-established Weimar Republic, emphasising the office of the Reichspräsident. In this essay, Schmitt compared and contrasted what he saw as the effective and ineffective elements of the new constitution of his country. To him, the office of the president could be characterized as a comparatively effective element within the new constitution, because of the power granted to the president to declare a state of emergency. This power, which Schmitt discussed and implicitly praised as dictatorial, was seen as more effective, more in line with the underlying mentality of political power, than the comparatively slow and ineffective processes of legislative political power reached through parliamentary discussion and compromise.

Schmitt was at pains to remove what he saw as a squeamish taboo surrounding the concept of "dictatorship" and to show that, in his eyes, the concept is implicit whenever power is wielded through pathways outside the slow and rusty processes of parliamentary politics:

“If the constitution of a state is democratic, then every exceptional negation of democratic principles, every exercise of state power independent of the approval of the majority, can be called dictatorship.”[citation needed]

For Schmitt, every government capable of decisive action must include a dictatorial element within its constitution. Although the German concept of Ausnahmezustand is best translated as "state of emergency", it literally means state of exception which,according to Schmitt, frees the executive from any legal restraints to its power that would normally apply. The use of the term "exceptional" has to be underlined here: Schmitt defines sovereignty as the power to decide the instauration of state of exception, as Giorgio Agamben has noted. According to Agamben[1], Schmitt's conceptualization of the "state of exception" as belonging to the core-concept of sovereignty was a response to Walter Benjamin's concept of a "pure" or "revolutionary" violence, which didn't enter into any relationship whatsoever with right. Through the state of exception, Schmitt included all types of violence under right. According to Giorgio Agamben, this kind of violence, which necessarily bears a juridical value, is another example of the fusion of right to "bare life" (It. vita nuda, Grk. zoe) that transforms the juridical system into a "death machine," able to perform acts of pure violence as needed for self-legitimation, creating Homo sacer, a being that cannot be "murdered" or "sacrificed" but only killed.

Schmitt opposed what he called "chief constable dictature", or the declaration of a state of emergency in order to save the legal order (a temporary suspension of law, defined itself by moral or legal right): the state of emergency is limited (even if a posteriori, by law), to "sovereign dictature", in which law was suspended, as in the classical state of exception, not to "save the Constitution", but rather to create another Constitution. This is how he theorized Hitler's continual suspension of the legal constitutional order during the Third Reich (the Weimar Republic's Constitution was never abrogated, underlined Giorgio Agamben;[2][citation needed] rather, it was "suspended" for four years, first at February 28, 1933 Reichstag Fire Decree, with the suspension renewed every four years, implying a -- continual -- state of emergency)."

Benito Mussolini (actual quote)

"The foundation of Fascism is the conception of the State, its character, its duty, and its aim. Fascism conceives of the State as an absolute, in comparison with which all individuals or groups are relative, only to be conceived of in their relation to the State. The conception of the Liberal State is not that of a directing force, guiding the play and development, both material and spiritual, of a collective body, but merely a force limited to the function of recording results: on the other hand, the Fascist State is itself conscious and has itself a will and a personality -- thus it may be called the "ethic" State....

...The Fascist State organizes the nation, but leaves a sufficient margin of liberty to the individual; the latter is deprived of all useless and possibly harmful freedom, but retains what is essential; the deciding power in this question cannot be the individual, but the State alone.... "

I won't go on endlessly about this, power unlimited by law is the defining aspect of all tyranny. At it's most extreme we have the Fuhrer Principle.

"The ideology of the Führerprinzip sees each organization as a hierarchy of leaders, where every leader (Führer, in German) has absolute responsibility in his own area, demands absolute obedience from those below him and answers only to his superiors. The supreme leader, Adolf Hitler, answered to no one. Giorgio Agamben has argued that Hitler saw himself as an incarnation of auctoritas, and as the living law itself. The Führerprinzip paralleled the functionality of military organizations, which continue to use a similar authority structure today. The justification for the civil use of the Führerprinzip was that unquestioning obedience to superiors supposedly produced order and prosperity in which those deemed 'worthy' would share."

Tragically, Obama's pick also displays not just a disregard for the constitution and the rule of law, but another ingredient common to most Fascists; racism.

FYI, Could Be A Lie

People giddy over the reported loss of "only 530,000 lost jobs" might want to know about the recent revisions in reported figures.

This is very true now.

August 2008: Initially 84,000, revised to 175,000

September 2008: Initially 159,000, revised to 321,000

October 2008: Initially 240,000, revised to 380,000

November 2008: Initially 533,000, revised to 597,000

December 2008: Initially 524,000, revised to 681,000

January 2009: Initially 598,000, revised to 655,000

February 2009: Initially 651,000, revised up 30,000

Added to this are a few more issues as pointed out by Zero Hedge

Kool Aid sales still strong

"First, the "seasonal adjustment", which is a black box that can tweek me into looking like Dumbo the flying elephant. They're knocking off ±65,000 workers for no clearly discernible reason.

Second, notice that the Census Bureau hired 60,000 people last month. Those workers (by definition) are temporary, and are a net cost to the economy, as they will not be adding marginal utility to any economic sector, the census being merely a social expenditure."

No doubt unemployment has declined in Washigton DC--- hiring some security for the next TEA Party and perhaps a few jail cells for us all.

But, But, But--- The stock market is up right???

Or is it that the value of the dollar is down? One thing Washington has done well.

The Real Stress Test Starts

"May 7 (Bloomberg) -- U.S. stocks slid from a four-month high as declines in financial, telephone and technology shares snuffed out an early rally. Treasury 30-year bonds fell the most since February as investors demanded higher-than-forecast yields at an auction of $14 billion of the securities."

No doubt it's racism that's made foreign investors nervous about our national debt.

Lessons From France

In order to fully understand why the founders so valued human liberty one needs to see that they saw it as not just a moral right but also a practical necessity.

"Laissez faire, telle devrait être la devise de toute puissance publique, depuis que le monde est civilisé.... Détestable principe que celui de ne vouloir grandir que par l'abaissement de nos voisins! Il n'y a que la méchanceté et la malignité du coeur de satisfaites dans ce principe, et l’intérêt y est opposé. Laissez faire, morbleu! Laissez faire!!

(Leave them be, such should be the motto of every public authority, according to which the world is civilized..... A detestable principle that which would not wish us to grow except by lowering our neighbors! There is nothing but mischief and malignity of heart in those satisfied with that principle, and interest is opposed to it. Leave them be, damn it! Leave them be!)"Having thus introduced a measure of order and economy into the workings of the government,"

Legend has it that these words were spoken to the all powerfull French Minister Of Finance under Louis XIV who sought to "help his economy" in ways similar to Obama today.

"Colbert now called for the enrichment of the country by commerce. The state, through Colbert's dirigiste policies, fostered manufacturing enterprises in a wide variety of fields. The authorities established new industries, protected inventors, invited in workmen from foreign countries, and prohibited French workmen from emigrating. To maintain the character of French goods in foreign markets, as well as to afford a guarantee to the home consumer, Colbert had the quality and measure of each article fixed by law, punishing breaches of the regulations by public exposure of the delinquent and by destruction of the goods concerned, and, on the third offense, by the pillory. But whatever advantage resulted from this rule, the disadvantages it entailed more than outweighed them. Colbert prohibited the production of qualities which would have suited many purposes of consumption, and the odious supervision which became necessary involved great waste of time and a stereotyped regularity which resisted all improvements. Other parts of Colbert's schemes have met with less equivocal condemnation.

By his firm maintenance of the corporation system, each industry remained in the hands of certain privileged bourgeois; in this way, too, the system greatly discouraged improvement; while the lower classes found opportunities of advancement closed. With regard to international commerce Colbert suffered equally from lack of foresight: the tariffs he devised protected commerce to an extreme, and under his tutelage enforcement of trade and quality restrictions was draconian, to the point that his technocrats put to death 16,000 small entrepreneurs whose only crime was importing or manufacturing cotton cloth in violation of French law. [1] He did, however, wisely consult the interests of internal commerce. Unable to abolish the duties on the passage of goods from province to province, he did what he could to induce the provinces to equalise them. Currency exchange rates still remained between these provinces despite a policy focusing on the unification of French trade. His régime improved roads and canals. Pierre Paul Riquet (1604–1680) planned and constructed the Canal du Midi under Colbert's patronage. To encourage overseas trade with the Levant, Senegal, Guinea and other places, Colbert granted privileges to companies, but, like the noted French East India Company, all proved unsuccessful. The narrowness and rigidity of the government regulations significantly contributed to this collapse, as well as the failure of the colonies, upon which Colbert had bestowed a great deal of energy and political capital."

Of course, at the end of this period with the help of Louis extravagant spending and wars, France was bankrupt and at the edge of total collapse.

”According to historical folklore, the phrase stems from a meeting c. 1680 between the powerful French finance minister Jean-Baptiste Colbert and a group of French businessmen led by a certain M. Le Gendre. When the eager mercantilist minister asked how the French state could be of service to the merchants, Le Gendre replied simply "Laissez-nous faire" ('Leave us be,' lit. 'Let us do').[3]

The laissez faire slogan was popularised by Vincent de Gournay, a French intendant of commerce in the 1750s. Gournay was an ardent proponent of the removal of restrictions on trade and the deregulation of industry and economic prosperity in France. Gournay was delighted by the LeGendre anecdote, and forged it into a larger maxim all his own: "Laissez faire et laissez passer" ('Let do and let pass'). His motto has also been identified as the longer "Laissez faire et laissez passer, le monde va de lui même!" ('Let do and let pass, the world goes on by itself!'). Although Gournay left no written tracts on his economic policy ideas, he had immense personal influence on the thinking of his contemporaries, notably the Physiocrats, who credit both the 'laissez-faire' slogan and doctrine to Gournay.[4]"

Adam Smith and a number of other British and American writers came to wonder why England, with it's relative lack of resources so far outperformed nations like France and Spain and concluded that the higher level of economic freedom was the reason. Sadly we are returning to the childishly ignorant world of Colbert all over again.

A Genius From Harvard

I think most of you on here have given up on The New York Times as a source of objective facts or rational insight. One cannot deny however the window it gives to the minds of people currently in charge.

In the guise of a semi serious proposal, a prominent Harvard economist floated an idea , almost perfectly designed to toilet whatever limited confidence anyone could have in the value of our dollar and cause a panic of epic proportions.

The rub is that many people and companies after seeing the negative effects of their bad investments and often reckless consumer spending have decided to rebuild their balance sheets by saving. They understand that only rational investments which pay off in the future can be a possible way to future wealth. And they understand the extreme personal risk any person takes by spending money they don't have or taking on debts they can't repay.

Lucky for them, geniuses like Bernanke, Obama and their cheerleaders like Krugman and this guy are there to stop them. Already, Bernanke has dropped the Fed funds to almost zero, and engaged in the wholesale printing of money while it and other Federal agencies have purchased garbage bank assets, guaranteed toxic loans used HUD, and FHA, to pump out factory fresh bubble loans. (many of which default right away)

Meanwhile, Obama and the Democratic Congress have implemented a national debt explosion and an ever changing array of promised taxes and regulatory schemes almost sure to choke off market confidence and scare long term investors.

The latest concept is an attempt to force people to spend by proposing a scheme of outright government theft. Please, please, please-- take it seriously. This guy is seriously floating this idea in our so called-- paper of record.

"At one of my recent Harvard seminars, a graduate student proposed a clever scheme to do exactly that. (I will let the student remain anonymous. In case he ever wants to pursue a career as a central banker, having his name associated with this idea probably won’t help.)

Imagine that the Fed were to announce that, a year from today, it would pick a digit from zero to 9 out of a hat. All currency with a serial number ending in that digit would no longer be legal tender. Suddenly, the expected return to holding currency would become negative 10 percent.

That move would free the Fed to cut interest rates below zero. People would be delighted to lend money at negative 3 percent, since losing 3 percent is better than losing 10.

Of course, some people might decide that at those rates, they would rather spend the money — for example, by buying a new car. But because expanding aggregate demand is precisely the goal of the interest rate cut, such an incentive isn’t a flaw — it’s a benefit."

He then of course quickly tries to run away from this explicit theft while endorsing a more subtle one-- inflation.

"If all of this seems too outlandish, there is a more prosaic way of obtaining negative interest rates: through inflation. Suppose that, looking ahead, the Fed commits itself to producing significant inflation. In this case, while nominal interest rates could remain at zero, real interest rates — interest rates measured in purchasing power — could become negative. If people were confident that they could repay their zero-interest loans in devalued dollars, they would have significant incentive to borrow and spend."

He seems to have gotten a lot of flack for this insanity and he defends his editorial here.

"If people are feeling poorer and want to save for the future, why should we stop them? Unless we think their additional saving is irrational, it seems best to try to funnel that saving into investment with the appropriate interest rate. And given the available investment opportunities, that interest rate might well be negative".( even he says there might not be that many good economic opportunities so you should invest in bad ones)

At no point does he appologize or even question the legal right of the government to steal the capital and savings of Americans and use them as rats in weird economic experiments.

Mish, who has a great economics blog has this to say.

"Even more galling than his blatant arrogance, Mankiw has no problems with theft. Because confiscating or expiring 10% of someone's money at will is theft of property, and would (at at least should) be a violation of the 5th amendment and due process of law. How anyone cannot see that is beyond me.

However, let's assume such a law was passed, and upheld by the courts. How would people react? Simple, they would pay off every debt they could as they would get an immediate 10% return on their money to do so! Thus credit would implode.

I repeat my call for Mankiw to resign or be fired. Mankiw is unfit to teach economics anywhere, let alone Harvard."

Was this Obama's economics teacher?

Using The Other F-Word

One word that is popping up on signs at tea parties is Fascism and it clearly seems to have invoked more than a little fear on the traditional left. In spite of their common use of the word, they have gone to elaborate lengths to obscure it's true meaning and philisophical roots.

Study the meaning of this word. Go to the Wikipedia and you will see the similarities between Obama's current policies and Fascism. The founders of our country were true Liberals and opposed these ideas with their lives.

My last post about the PPIP program implied that many of Obama's policies and methods were not socialist, but corporatist or fascist.



Steve Malanga, who I think I remember from Crains, NY has written a great little primer on this. He correctly points out that corporatist policies often gain popularty in periods of crisis and are in fact attempts by elites and existing power bases to limit and resist change.Let's start with definitions.

Corporatism

"Historically, corporatism refers to a political or economic system in which power is held by civic assemblies that represent economic, industrial, agrarian, social, cultural, and/or professional groups. These civic assemblies are known as corporations (not the same as the legally incorporated business entities known as corporations, though some are such). Corporations are unelected bodies with an internal hierarchy; their purpose is to exert control over the social and economic life of their respective areas. Thus, for example, a steel corporation would be a cartel composed of all the business leaders in the steel industry, coming together to discuss a common policy on prices and wages. When the political and economic power of a country rests in the hands of such groups, then a corporatist system is in place."

I can't paste in the whole definition but corporatism works through a complex of "public/private partnerships which ossify power through force.

"Political scientists may also use the term corporatism to describe a practice whereby a state, through the process of licensing and regulating officially-incorporated social, religious, economic, or popular organizations, effectively co-opts their leadership or circumscribes their ability to challenge state authority by establishing the state as the source of their legitimacy, as well as sometimes running them, either directly or indirectly through corporations. This usage is particularly common in the area of East Asian studies, and is sometimes also referred to as state corporatism."

Fascism

Fascism, can be described as a much broader ideology but fascist economic ideas are basically corporatist.

"The fascists opposed both international socialism and liberal capitalism, arguing that their views represented a third way. They claimed to provide a realistic economic alternative that was neither laissez-faire capitalism nor communism.[19] They favoured corporatism and class collaboration, believing that the existence of inequality and separate social classes was beneficial (contrary to the views of socialists).[20] Fascists argued that the state had a role in mediating relations between these classes (contrary to the views of liberal capitalists).[21]

An inherent aspect of fascist economies was economic dirigisme[22], meaning an economy where the government exerts strong directive influence, and effectively controls production and allocation of resources. In general, apart from the nationalizations of some industries, fascist economies were based on private property and private initiative, but these were contingent upon service to the state.[23]"

Getting to Malanga's piece

"But we are entering quite a different age right now, one in which the President of the United States and his hand-selected industrial overseers fire the chief executive of General Motors and chart the company’s next moves in order to preserve it. Conservative critics of the president have said that the government’s GM strategy is one of many examples of an America drifting toward socialism. But President Obama is not a socialist. If his agenda harks back to anything, it is to corporatism, the notion that elite groups of individuals molded together into committees or public-private boards can guide society and coordinate the economy from the top town and manage change by evolution, not revolution. It is a turn-of-the 20th century philosophy, updated for the dawn of the 21st century, which positions itself as an antidote to the kind of messy capitalism that has transformed the Fortune 500 and every corner of our economy in the last half century. To do so corporatism seeks to substitute the wisdom of the few for the hundreds of millions of individual actions and transactions of the many that set the direction of the economy from the bottom up."

I urge one to read and think about it and I leave with one last definition. Obama's ideas are in stark contrast those of our nation's founders.

Classical Liberalism

"Classical liberalism holds that individual rights are natural, inherent, or inalienable, and exist independently of government. Thomas Jefferson called these inalienable rights: "...rightful liberty is unobstructed action according to our will within limits drawn around us by the equal rights of others. I do not add 'within the limits of the law', because law is often but the tyrant’s will, and always so when it violates the rights of the individual."[25] For classical liberalism, rights are of a negative nature—rights that require that other individuals (and governments) refrain from interfering with individual liberty, whereas social liberalism (also called modern liberalism or welfare liberalism) holds that individuals have a right to be provided with certain benefits or services by others.[26] Unlike social liberals, classical liberals are "hostile to the welfare state."[9] They do not have an interest in material equality but only in "equality before the law."[27] Classical liberalism is critical of social liberalism and takes offense at group rights being pursued at the expense of individual rights.[28]"

Being Fair To Ford

I don't know how it happened, but a reporter from the NY Times did sympathetic story about Ford's proud but desperate struggle to survive, on it's own two feet and do what it has to get it's costs and financial situation in order without major government handouts.

The problem is that now it faces two major domestic rivals and a world of other car companies in which handouts and bailouts are the norm. Most likely they will have to throw in the towel and dance to Obama and the Car Czar's crazy tune.

"That was when the car market crashed and the auto companies began burning through huge amounts of cash. A month later, Mr. Mulally was in the spotlight — along with G.M.’s chairman, Rick Wagoner, and Chrysler’s chairman, Robert L. Nardelli — during Congressional hearings on Detroit’s financial woes.

Mr. Mulally said Ford never intended to ask for federal help but needed to support the industry during its crisis.

“From Day 1, we had no desire to access the government money,” he said.

Ford parted ways with G.M. and Chrysler in December, when its two rivals effectively came under government supervision as part of their loan agreements.

Last month, the presidential task force forced Mr. Wagoner to resign at G.M. and began an effort to replace the company’s board.

Meanwhile, Mr. Ford, whose great-grandfather founded the auto company, and Mr. Mulally continue to pursue their long-range turnaround plans."

Give up Ford and learn the lesson Obama and people like him are teaching us all. Failure is the new path to success.

Find Out The True Numbers

I am not an accountant, but I have some knowledge of it.

True accounting is about trying to get an accurate picture of not just one's current"cash flow" but also all assets and liabilities. A person for example with $5000 in the bank, no job, negative home equity and a leaking roof in need of $40,000 in repairs would be called broke by an honest accountant. Suppose that person had also co-signed loans promising to bail out everyone else on the block.

Let's be honest, American's would likely not have bought into most of "free" gifts offered by the government, if they knew their true cost, to themselves and future generations.

Look up the film IOUSA on the internet, to get some idea of the real reality which has only gotten much worse since the film was made.

Here is an organization dedicated to exposing the ponzi frauds both our federal, state and local governments are running.

(No, printing monopoly money in your basement, like our federal government does doesn't make you rich either)

Michigan Unemployment Rate Hit's 12.5%

This 12.5% number is the official U-3 measure. Combined measures of unemployment and underemployment in Michigan now are at 22.5%.

FHA Defaults Exploding

This is the problem. Nobody needs to use physical force or the threat of it( which is the only power government has) to get people to do things they see as in their own interest. In all markets in which coercion is banned, buyers and sellers meet in the middle at a price in which the seller gets the best available price from buyers who see the house as a good value. All parties, from the buyer to the lender who is taking on the loan risk have the incentive to look after themselves.

Of course the judgements of the marketplace often tell us things we don't like to hear. They might say that we can only afford a two bedroom home when we want one with four, or tell us we need to save a larger downpayment or even that we might be better off renting for now.

The current crisis developed after generations of government policies worked to convince more and more people that they had to buy homes they couldn't really afford. The primary mechanism at work was one of shifting risks further and further away from the primary parties involved, usually through the government "guarantee".

No need to wonder if your bank is making sound investments with your savings--- there's an FDIC guarantee.

No need to ask about larger amounts in huge institutions--- they are probably, too big to fail

No need for the bank to examine the buyers credit--- Fannie Mae will be buying and guaranteeing the loan or Freddie or the FHA etc...

The end result is a housing market filled with a huge number of people who bought homes they couldn't afford. The solution should be equally simple; just let homes fall to a price at which buyers can afford conservative downpayments of 10-20% and payments are no more than 20-25% of income.

Of course, this solution involves telling millions of people they likely overpaid for their homes-- something they don't want to hear.

So now, the house is on fire and the goverment cleanup crew is dousing it with a heavy dose of sober accounting and lending standards-- right? Well, actually they are thinking about telling banks to lie about the value of loans on their books.

They are being honest about which banks are in trouble so depositors don't give them more money to blow? Well, actually the fed and FDIC have refused to say which institutions are in trouble or which toxic assets the government has bought or guaranteed. They have done nothing to prevent troubled institutions from luring deposits with high interest rates.

But, they have worked to oust bad managements and punish frauds? Well, at this poiint almost all major firms are under the same management.

They are at least trying to toughen loan standards right? NO!, NO!, NO! The government is in fact working like crazy to reinflate the bubble by cutting loan standards again. The main mechanism for this shift is the massive growth in FHA loans which now comprise at least a third of the market.

We know for example that buyers who put down little or nothing for the downpayment were at high risk of default. So, why is the FHA making more loans of this type?

Another major red flag is the huge percentage of downpayments made by non-profit entities which are often funneling money from the seller for a fee.

"In 2005, HUD commissioned a study entitled “An Examination of Downpayment Gift Programs Administered By Non-Profit Organizations”. Later that year, another report titled “Mortgage Financing: Additional Action Needed to Manage Risks of FHA-Insured Loans with Down Payment Assistance” was completed by the U.S. Government Accountability Office. Both studies concluded that seller-funded down payment assistance increased the cost of homeownership and real estate prices in addition to maintaining a substantially higher delinquency and default rate."

The results of these policies are now bearing fruit-- defaults are exploding and so is likely fraud

"In the past year alone, the number of borrowers who failed to make more than a single payment before defaulting on FHA-backed mortgages has nearly tripled, far outpacing the agency’s overall growth in new loans, according to a Washington Post analysis of federal data.
Many industry experts attribute the jump in these instant defaults to factors that include the weak economy, lax scrutiny of prospective borrowers and most notably, foul play among unscrupulous lenders looking to make a quick buck.

If a loan “is going into default immediately, it clearly suggests impropriety and fraudulent activity,” said Kenneth Donohue, the inspector general of the Department of Housing and Urban Development, which includes the FHA."

The default rates are shocking.

"Add the percentage of FHA loans in the foreclosure process to the total loans that are delinquent at least one month and we have a total default/delinquency rate of 15.24%. Something is clearly wrong with the FHA loan program and another major bailout of a federal lending agency seems inevitable.