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Posts Tagged ‘Economics’

I have periodically done a collection of what I consider my better material, such as here and here.  I haven’t done one in a while so, for newcomers in particular, I have compiled what I consider some of my more interesting and enduring entries over the last five years. I hope you enjoy.  I truly appreciate everyone who takes the time to read, comment, and support this blog.  For conservatives, it is becoming a real time in the wilderness, so one small contribution I have tried to make here is to let conservatives know that they are not alone and to give them intellectual ammunition with which to defend common sense and basic decency.

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Finance and Free Markets

A very interesting piece in the New Yorker explores the way that finance has begun to swallow up capitalism, sucking money, talent, and bailouts into its orbit, while doing a mediocre job at its most socially beneficial function:  raising capital for productive enterprises.  Increasingly, big banks engage in trading for clients and themselves through the prop desk, while doing much less (and earning much less) from ordinary finance activities like raising capital for companies to expand, invent, and distribute whatever it is they make.

It’s become increasingly clear to me why European conservatives have harbored a certain suspicion of capitalism.  In addition to destroying traditional societies–especially agricultural ones–the big bank capitalism of the last 150 years has often allowed a small group to accrue great power, its leaders have shown little attachment to one or another nation-state, and speculative bubbles of one kind or another have often crashed creating great harm to innocent bystanders, including most recently American homeowners.  Where ordinary businesses, even big ones, rise or fall on their merits, banks are closely tied to big government players and have obtained bailouts and other special favors, while in effect holding the government and the broader society hostage through their infamous powers in the bond market.

Americans of all stripes have long believed in some version of free markets.  But equally dominant in our history is a suspicion of “eastern finance,” as represented in such movements as the National Grange, the support for various protective tariffs in the 19th Century by nascent industries, and the anti-trust movement of Teddy Roosevelt.  Those Americans knew that banking, at best, was supposed to be a modestly paid middleman, and not the hyperdominant player it has become of late (and had become in Europe in the late 19th Century under the Rothschilds et al.).

The post Great Depression era of a smaller, less dynamic, and thereby more stable banking and finance sector appears in many ways superior to the present.  And conservatives should avoid a knee jerk support for free markets among fair-weather-friends of capitalism that benefit from various government largese including access to artificially low interest rates, FDIC insured deposits, and most recently the TARP.  If Obama were a more serious person and not a dilettante stuck in the ideas of his youth he’d hire guys like Jeremy Grantham and Paul Volker to come up with appropriate regulations to prevent speculative bubbles and other abuses of finance.  Instead, he is selling last year’s model and ignoring most of what goes on on Wall Street to our collective detriment.

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Not Getting It

Thomas Friedman has gone from being a cheerleader for globalism to a cheerleader for un-American, command-and-control industrial policy of the type enjoyed recently by China and, less successfully, the Japan, Mexico, and Brazil of yesteryear.  What he does not understand and is completely dishonest about is the widespread American rejection of the measures undertaken by Obama on the stimulus and healthcare that emulate these foreign models.  He says for example:

That is why I believe most Americans don’t want a plan for deficit reduction. The Tea Party’s vision is narrow and uninspired. Americans want a plan to make America great again, and at some level they know that such a plan will require a hybrid politics — one that blends elements of both party’s instincts. And they will follow a president — they would even pay more taxes and give up more services — if they think he really has a plan to make America great again, not just bring him victory in 2012 by 50.1 percent.

That hybrid politics will require hard choices: We need to raise gasoline and carbon taxes to discourage their use and drive the creation of a new clean energy industry, while we cut payroll and corporate taxes to encourage employment and domestic investment. We need to cut Medicare and Social Security entitlements at the same time as we make new investments in infrastructure, schools and government-financed research programs that will spawn the next Google and Intel.

There is no evidence to support this. The American conservatives and moderates that rejected Obamanomics this last election have no interest in the kind of internal nation-building he calls for.  Instead, they are aware of and have rejected the economy-destroying implications of big government.  Some, no doubt, have not thought things through and still want generous benefits.  But, nonetheless, they do not want more government, even if they want the unsustainable same amount.  And they do recognize intuitively that large deficits create problems, not least inflation, but also constraints on the government performing essential tasks like defense. Finally, most Americans know that the first Google and Intel did not require government seed capital and direction; they simply required a government that did not get in their way.

Friedman has become delusional, and he is ensconced in a bubble of fancy dinners among wealthy foreign patrons and the carefree life created by his billionaire wife’s money.

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Quantitative Easting 2.0 that is.  I really found Jeremy Grantham’s letter this month particularly insightful in exploring the ways that cheap money does little to advance the economy, while creating asset bubbles all over the places that must eventually be deflated.  He also makes the good point that a housing bubble is much more damaging and persistent than a stock asset bubble.  And, finally, he exposes the Federal Reserve for all of its foolishness and inability to do very much useful, other than kick the can down the road.  His bottom line:  ” In almost every respect, adhering to a policy of low rates, employing quantitative easing, deliberately stimulating asset prices, ignoring the consequences of bubbles breaking, and displaying a complete refusal to learn from experience has left Fed policy as a large net negative to the production of a healthy, stable economy with strong employment.”

Of course, the Austrians knew this a long time ago.  And, it should never be forgotten, the Federal Reserve was put in place in 1913, had much to do with the housing asset bubble of the 1920s, and in spite of its promises to prevent the business cycle, auguered the Great Depression, which, like our current depression, was made worse by various hair-brained fiscal stimulus projects under FDR.

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Sorry kids, it’s been a busy week (out in the non-blogging world), but I found a few interesting things to share.

Lying Eyes had a nice piece on the limits of markets.

Jonah Goldberg notes that the taboos on criticizing Obama (and his manifest arrogance) are becoming the stuff of ordinary observation.  This breaking of taboos on criticizing bad politicians from “victim” groups is a healthy one.

The gang at Alt Right note the not-terribly-surprising interest of neocons in embracing gay marriage.

Larry Auster’s hippy past comes to light without shame or regret (or much explanation). Incidentally, this guy criticized John Kerry’s service record back in the day, as if he were the second coming of Audie Murphy.  It’s apparent that Larry served in the marijuana trenches of Colorado during the Vietnam War. And he banned me for noting the contradiction and absurdity of his highly judgmental grandstanding on the physical courage of a man, a man whom I do not particularly like, who at least spent some time on the Two Way Range.

Hillary Clinton suggests Serb minority in Kosovo might be oppressed (this after supporting her husband’s genocidal war of Muslim Kosovar liberation that left the Serbs to the tender mercies of the KLA terrorist regime run by head terrorist, Hacim Thaci).  For some reason, I think admitting that this was a huge mistake, the equivalent of Soviet “liberation” of the Poles in World War II, is quite unlikely, as are American promises of protection to the Serbs, who are the whipping boy of Europe.

In other news, Serbs will be Serbs:  young toughs were battling the cops this week in the street to stop a gay pride parade in Belgrade.  Honestly, I don’t support thuggish violence, but at least these people still have enough blood in their veins to know that Euro-decadence is the harbinger of national decline.  Conservatives in America react with a little venting and then a shrug at this and much else.  In a just world, no one beats up gays, and gays do not go out into the street in their bondage gear and expect to be treated as if they were anything but a dangerous, antisocial subculture.  (Sadly, Paladino in New York does not have the guts to defend his first instinct on this issue.)

I was happy to see the Chilean miners be freed  from their long ordeal.  It’s truly great news.  To his credit, their president mobilized national and international resources to help, including America’s NASA, and thereby showed a self-confidence that is often absent in the prickly, insecure Third World.  (Of course, Chile is probably the least Third World of all such countries, not least due to the stability and economic growth of the Pinochet years.)

Everyone is in a tizzy about the fraud of mortgage lenders being addressed now by BofA’s moratorium on foreclosures.  These issues, frankly, are interesting only to lawyers, and I’m one of them, and even my eyes glaze over at the details.  Mortgages and foreclosures are far too technical, as is our old-fashioned regime of property transfer and registration.  Once payments are stopped and a workout cannot be had, the rest is all details. No one has alleged anyone had their house taken when they were making timely payments; it’s all a question of whether some highly technical documents that no one reads or understands were signed by the right bureaucrat or not. The whole thing is a tempest in a teapot.  Since post-foreclosure any title is good against the world, contrary to the hype, this should all blow over.  More important, how much national wealth do we want sacrificed so that a completely outdated and overly expensive process is conducted with scrupulous regard for the defense bar.  That said, if you’re of a Machivellian bent, now is a great time to stop paying on your house; you could probably live their for four to five years with minimal efforts at defending from the bank, particularly in hard hit areas like California and Florida.

What can we make of all this news.  Well, America and the world are having a reckoning with their loose money fiat regime unleashed barely 70 years ago after World War II.  This whole system is unsustainable, and now the real gap between our perceived (i.e., paper) wealth and real wealth is more and more apparent.  The name of the game is deleveraging, which means paying back debts individually and collectively.  And that means pain, austerity, and, due to our nation of welfare addicts, instability in the transition. In such times, anything is possible, both in foreign and domestic affairs.  The best one can do is try to hedge.  And this means being prepared for uncertain times, i.e., anything from the Dust Bowl 30s to the Somalia 90s. And the best way to do that is to reduce debt, sock away some cash (literally, under the mattress), buy tangibles, adopt a minimalist personal philosophy, and be prepared for anything.  America may have sold its soul for granite countertops, but right now a few gold coins, an AR-15, and a month or two worth of stored food and some tradeable stuff like a generator will do a hell of a lot more for you than a stainless steel refrigerator or a jet ski.

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Most people recognize that there are disparities of unemployment by region or education.  Florida and the other “sand states” are particularly hard hit. But VDare did an interesting review of unemployment differences between native-born and immigrant workers, and this revealed a serious disparity in unemployment that tilted in favor of the newcomers.

Why might this be?

The folks at the WSJ would suggest this is because immigrants are harder working, more “real” Americans than the lazy welfare cases that are born here.  But is that all of it?  Could it be immigrants don’t want things like insurance or are more willing to walk away from mortgages or have less compunction about paying taxes, nor do they care as much if companies’ adhere to safety protocols?  (By way of illustration, I once observed a Mexican construction worker welding without any eye protection whatsoever.)  And could it be companies like to hire people that are “living in the shadows” because they are more easily exploited?

Here’s Ed Rubenstein’s numbers:

Over the past 12 months:

  • Foreign-born employment rose by 1.7%, or more than eight-times native born job growth (0.2%)
  • The immigrant unemployment rate declined by 4.2%, while the rate for natives declined only 2.1%—half as much.
  • The share of the native-born working age population that is actually workingdeclined for natives; the share of the immigrant working age population that is actually working rose.
  • Perhaps most indicative of future trends: the foreign born population 16 and over (i.e., of working age) rose by 1.6%, nearly double the 0.7% increase for natives.

America’s people, habits, and demographics are all being transformed, and so is our workforce.  These changes benefit a small number of rich business owners and the immigrants themselves, while burdening native-born Americans with lower wages, higher crime, a less solvent state, worse schools, and a weakening of the American character.

America’s Constitution makes no promise to the world or to immigrants or to anyone other than its citizens and their progeny, as it was made to “secure the Blessings of Liberty to ourselves and our Posterity.” But the false consciousness of America as an “immigrant nation” and the willful blindness to the facts by decision-makers and the American people has blinded large swaths of the country too the harm that mass, Third World immigration does to our country’s health and prosperity.  While the more dramatic cases of immigration policy failure are those of terrorist Muslim interlopers, the larger numbers (and problems) come from Latin America. Here the consequence of that is undeniably harmful American worker displacement.

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The economic journalist and consultant behind Shadow Stats has an absolutely off the wall interview in a mainstream business publication that begins reasonably enough, but ends sounding like a cross between Ludwig von Mises and the Road Warrior.

It’s worrisome when guys in pinstripes who went to Ivy League schools begin to make the kooks talking about the Illuminati at gun shows sound like the moderate wing of the movement.  These are very tough times for so many Americans. I hope our country somehow pulls through.  But I fear that it will get much worse before it gets better.  There is so much that is unsustainable right now; it can’t go on like this indefinitely. 

I try to count my many blessings in times like these–a job, a great family, freedom, my education, my faith–but it’s so downright depressing to see so many good, hardworking people caught up in a storm beyond their control, while the worst of the worst, the least productive and most parasitical in DC and Wall Street, are living the high life on a combination of government bailouts and central bank sponsered hustles.

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