Wednesday, January 26, 2011
From David's Desk
My friend David has a great interest in history and he is very well grounded in reality. Today I received his analysis of the current economic turn down and the attempts to right the ship and I am in total agreement with his commentary. If you want to read something that makes sense take the time to read his timely offering.
The downward spiral was caused by a lot of things, but you are correct that the Bush administration contributed to it in several ways.
I like Bush as a person and his wife was the kind of First Lady we can all be proud of, but except for certain issues such as gun control, he is not a conservative. He did have a better understanding of the economy than Obama, but his understanding still fell short.
However, let us not forget that he also inherited an economy that was headed downhill and was actually in a minor recession when he took over. The economy grew under him until 2007. In fact, set records for growth in a number of quarters.
A lot of what caused the collapse in his last year was that it was time to pay the Piper for years of Democratic programs. Where Bush and his administration and the Republicans in general failed was not correcting these things for the six years they controlled the government. Considering that they are all politicians, it's not surprising, but during they time they were in control things were pretty good and they just let it rock along rather than taking the necessary and painful steps to do something about problems which were going to eventually surface...as they did. Bush recognized some of them. He gave speeches decrying the law passed by the Dems which allowed the banks, Freddie Mac, and Fannie Mae to loan money to millions of people who could not pay them back...but he didn't do anything about it. He didn't so anything about the regulatory agencies who were allowing the banks to over extend and signed many Democratic bills which exacerbated the situation. When the Dems took over Congress in 2007, everything really went to Hell and he did nothing about any of that, either. Perhaps he was unaware of what the banks were doing but he was the Pres and the buck stopped with him.
So yes, he bore some, but nowhere near all, of the responsibility for what happened. Most of it was caused by Democratic programs and laws, some of long standing, which he did nothing about and in some cases actually went along with. He, like many of the Congressman and Senators, became Republicrats on certain issues...but they were the issues which hurt us.
So far as Obama, he is making the same errors that Hoover and FDR made and doubling down on them. This is not surprising in that he is a committed socialist/fascist ideologue therefore unable to learn from real history. He operates off of ideology, fanaticism, and what he wishes were true but is not.
The lesson all of us should keep in mind is Harding. He was not a good president except for one thing. He was hit with a depression in 1920 for which the indicators were worse than the '29 depression. He only took three actions. If a company went bust, too bad. Free enterprise would replace it. He cut taxes by 50% and government spending by somewhere around 30% as I remember. Within a year and a half the depression was over. Within three years unemployment was less than 3%.
I don't at all agree that Obama's policies have been successful at all. There is no actual evidence of this except what is put out by the Obama propaganda machine. In fact, history totally repudiates his policies. They have never worked before and will not work this time.
We must also remember that he has added almost 30% in two years to a national debt we cannot pay and unemployment is up over 2% from when he took office. Taxes are going up and costs are going up. Even something as abundant as wheat has gone up more than 60% during his watch.
Looking again at history, Hoover tried to do a number of things which Obama is doing. He made things worse. FDR tripled down on Hoover's programs and also made things worse. Furthermore, they stayed worse for years until the war started.
If you want a more current example of how Obama's policies will lead to further disaster, look to Argentina. The below, italicized comments come from a piece entitled "Cry For Me, Argentina". Compare what brought Argentina to its knees to Obama's policies. I know you don't like to read long articles, this one is not long, and particularly articles about past history, but read this. It is important and timely. It explains what led to the complete collapse of the economy in Argentina in 2001. The underlines are mine.
In the early 20th century, Argentina was one of the richest countries in the world. While Great Britain ‘s maritime power and its far-flung empire had propelled it to a dominant position among the world’s industrialized nations, only the United States challenged Argentina for the position of the world’s second-most powerful economy.
It was blessed with abundant agriculture, vast swaths of rich farmland laced with navigable rivers and an accessible port system. Its level of industrialization was higher than many European countries: railroads, automobiles and telephones were commonplace.
In 1916, a new president was elected. Hipólito Irigoyen had formed a party called The Radicals under the banner of “fundamental change” with an appeal to the middle class.
Among Irigoyen’s changes: mandatory pension insurance, mandatory health insurance, and support for low-income housing construction to stimulate the economy. Put simply, the state assumed economic control of a vast swath of the country’s operations and began assessing new payroll taxes to fund its efforts.
With an increasing flow of funds into these entitlement programs, the government’s payouts soon became overly generous. Before long its outlays surpassed the value of the taxpayers’ contributions. Put simply, it quickly became under-funded, much like the United States ‘ Social Security and Medicare programs.
The death knell for the Argentine economy, however, came with the election of Juan Perón. Perón had a fascist and corporatist upbringing; he and his charismatic wife aimed their populist rhetoric at the nation’s rich.
This targeted group “swiftly expanded to cover most of the propertied middle classes, who became an enemy to be defeated and humiliated.”
Under Perón, the size of government bureaucracies exploded through massive programs of social spending and by encouraging the growth of labor unions.
High taxes and economic mismanagement took their inevitable toll even after Perón had been driven from office. But his populist rhetoric and “contempt for economic realities” lived on. Argentina’s federal government continued to spend far beyond its means.
Hyperinflation exploded in 1989, the final stage of a process characterized by “industrial protectionism, redistribution of income based on increased wages, and growing state intervention in the economy…”
The Argentinean government’s practice of printing money to pay off its public debts had crushed the economy. Inflation hit 3000%, reminiscent of the Weimar Republic . Food riots were rampant; stores were looted; the country descended into chaos.
And by 1994, Argentina ‘s public pensions — the equivalent of Social Security — had imploded. The payroll tax had increased from 5% to 26%, but it wasn’t enough. In addition, Argentina had implemented a value-added tax (VAT), new income taxes, a personal tax on wealth, and additional revenues based upon the sale of public enterprises. These crushed the private sector, further damaging the economy.
A government-controlled “privatization” effort to rescue seniors’ pensions was attempted. But, by 2001, those funds had also been raided by the government, the monies replaced by Argentina ‘s defaulted government bonds.
By 2002, “…government fiscal irresponsibility… induced a national economic crisis as severe as America ‘s Great Depression.”
In 1902 Argentina was one of the world’s richest countries. Little more than a hundred years later, it is poverty-stricken, struggling to meet its debt obligations amidst a drought.
We’ve seen this movie before. The Democrats’ populist plans can’t possibly work, because government bankrupts everything it touches. History teaches us that ObamaCare and unfunded entitlement programs will be utter, complete disasters.
Read and learn, but most importantly, prepare. Look at the similarities. This is where we will be in a much shorter time if those who espouse "progressive" policies are not stopped very, very soon. In fact, they must be reversed. As someone recently said, if one is headed toward a cliff, one doesn't proceed at the same speed. One slams on the brakes and then throws the vehicle in reverse.
Obama's speech last night gave no indication he has learned anything. He wants to freeze "discretionary spending" for five years. That is a tiny portion of the budget and he is merely proceeding at the same speed as well as continuing to add to the deficit. He wants to fund a high speed rail system. What the hell for? Who wants that? The only government run rail system now in operation, AmTrack, loses billions of dollars every year and that is indicative of all programs where the government sticks its nose in things it should never be involved with and has no constitutional authority to fund.
So, sorry, I can find nothing positive in this administration.
Reality is the leading cause of stress amongst those in touch with it.
- Jane Wagner