Of Great Social and Political Import

A stopped clock is right twice a day...

American Exceptionalism, Individualism, Mutual Help will restore us.

The progressive peddlers of programs and tea party tinkerers of taxes are locking horns in Washington DC and personally I don't subscribe to either major political party's agenda. My belief is neither side is acting in the best interest of the American people but merely serving their own purposes. I keep hearing a variation on the statement "they are trying to drive us back to the pre-Depression era." 'They' being I suppose that enigmatic collaboration of tea party, Republicans and conservatives and the complaint coming from liberals who have redressed themselves as progressives. My first thought is I wonder if anyone has considered that the programs of the Great Depression may be what got us into the Disruption Depression we are in today? That and consumerism.

There is a ridiculous headline in the Wall Street Journal "Slow Growth Stirs Recession Fears." Recession? What!? A recession implies a bump in the road and what we're experiencing is far larger than a recession. Statistics can be manipulated anyway someone wants but the reality is our credit rating will be downgraded regardless of any machinations of the Administration, US Treasury, Congress or Wall Street. There are two systemic problems that cannot be ignored by printing money. We are overleveraged as individuals and so is our government and additionally unemployment has become structural. Therefore if people are not able to productively earn money then debt cannot be paid off and will be repudiated.

We never pulled out of the recession in 2009 as some economists would have us believe, merely suspended it. Paul Krugman of the New York Times can rename this the "Little Depression," after all the damage he has done promoting the excessive printing of money, but the bottom line is we are heading for a long decade of economic restructuring and rebuilding. We will have both stagnation and hyper-inflation more endemic than the US in the seventies and Japan in the nineties. If you take the political and bureaucratic classes in DC and the financiers in New York seriously and rely on them for a solution then the joke is on you. They don't have a clue or care about anything west of I-95 and are concerned only with protecting their own self-interests.

In the long term I believe American Exceptionalism and Individualism is alive and well, although buried just beneath the surface, it is burgeoning resurrection. That ideal will be the ultimate resolution to the death of consumerism by technological and economic disruption and is a great thing. We will relearn and return to what it means to be innovative and creative and produce unique and valuable goods that are useful for the new era. It will take time and hard work. The sooner people recognize that reality we will be prepared to move forward. What our government is doing now is pure folly and nonsensical and you can't make sense out of a nonsensical situation. They are postponing the inevitable by trying to revive a dead concept, the old economy.

The American people must relearn to work for themselves. If it is for an employer they need to embrace the concept of being a free agent and not love an employer because they won't love you back. Americans should accept we are not entitled to anything except what we create by reinventing our lives and subsequently recreating the country. It is about our individual responsibility to take care of ourselves and mutual help with each other. The government cannot simulate or stimulate real people doing real things only real Americans can do that.

Economic, Social and Geopolitical

My State of the Union...

We have too much debt and printing more money is now beyond counter-productive; the government can't fund any more programs or do more bailouts.

While being cautiously optimistic, I am hoping that Obama's move more to the center, will make the next two years far better than his first two years as President. There is clearly trouble on the horizon in the form of a potentially hard hitting Double Dip to this long term economic crisis recession, which has the potential to make this another great depression. Perhaps he really has learned some things on the job. My desire is that he has also studied some history and drawn reasonable conclusions but I'm holding back judgment on that. Actions speak louder than words and we already know he is excellent at the latter.

My concern is that the economic State of the Union is tenuous and there is relatively recent history to be our guide, beginning with the post-WWI twenties and the Great Depression of the thirties, of the previous century. What we can learn from the 1920s is what led up to the Depression has striking similarities to what led up to this economic crisis. We can also learn that the actions Franklin Roosevelt took in the 1930s have been partially undertaken already and did not work, meanwhile more are being proposed. What America needs to know is that before the 1929 crash the government was less than two percent of the economy and Roosevelt drove it up over thirty three percent. Whereas Coolidge was the last President who believed the government was the "invisible hand" in the nations business and economy, his successor, Hoover started the idea of government as the "benevolent hand" and Roosevelt took it to the extreme of the "controlling hand."

His famous statement, repeatedly reinforced, was "The country needs, and unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: if it fails admit it frankly and try another. But above all try something."

In other words, do something even if it's not well thought out, untested and wrong. We can't afford that.

The problem was that he also coupled this with massive regulation and micro-management of every aspect of business, small to large. The private sector held onto cash and wouldn't invest to build new or keep open all types of industries and hire people because they neither knew what to expect next from FDR and the regulatory rules were so voluminous they were difficult to interpret. This included agriculture and farming. The result was production was low and unemployment remained high. The myth we were all taught that Roosevelt saved us from the Depression by creating public sector jobs, in reality was because his increased interference had failed and it was a method to enlarge the government as an employer. What ended the Depression was not the CCC or WPA or regulatory agencies but the entry of the US into WWII in 1941.

Do we want to repeat the same mistakes?

Today President Obama, according to his State of the Union Preview Video and press statements, is going to propose ways to job creation through open markets. What I hope he also proposes is scaling back the huge regulatory expansion that has occurred in his first two years. His administration has created more red tape and interference than any President since Carter and this is what killed productivity and job growth in the private sector during the last depression. If you need an example, look towards the FCC and the Health Care Reform legislation. On another front, the Republicans are wasting precious time trying to repeal HCR, when what they should be doing is coming up with viable alternatives to modify and improve that legislation, to make it less onerous. They also need to recognize that military and defense spending is Republican welfare they are hooked on, just as much as the welfare they castigate Democrats for. It's all government growth and spending.

The bottom line is this: the last Quantitative Easing (QE2) that Obama went along with Bernanke doing is not working. It is creating inflation and worse, putting us in danger of hyper-inflation, we cannot spend our way out of this problem. It's fair to say we have avoided deflation, which would have been devastating. We cannot print anymore money, bail out any businesses or segments of the private sector, state or local governments, nor go on any public works and job programs. We do not have the money and we owe too much already.

Obama and Democrats need to back off government intervention that is counterproductive; Republicans need to be productive and propose realistic alternative solutions.

If Obama proposes any more projects for infrastructure, job creation, etc. it will never get through Congress. If he chooses to go further centrist for the larger good of the country, by backing off spending programs and regulation, allowing the fear to go out of the private sector, we will see more investment and albeit slowly, real job creation.

For their part the Republicans need to stop focusing on all the wrong things and start proposing some original ideas of their own as alternatives if they don't like what they see. Currently they are whining and sniping, adding fuel to fire, which is just as counterproductive as government interference. Democrats need to recognize that in many ways they have failed to solve our economic problems and their anger should be directed back to themselves. They must stop pandering to their constituent unions, since that has done more harm than good.

This country has taken a huge fall and so have economies all around the globe. Everyone has too much debt, not enough income due to high unemployment, along with a currency crisis from printing too much money and bailouts. These problems will not be resolved quickly, there is pain involved, hard work and sacrifice is required and all Americans need to reconcile themselves to that.

You Can Quote Me On That

We're tinkering with the steering wheel when the engine needs repair...

All of the printing of money with Quantitative Easing, Treasury Bond purchasing, tax schemes and budget cutting, extending unemployment benefits, mortgage work-out plans, social programs, ad nauseam, cannot resolve our overall economic problems unless two underlying factors are realistically addressed:

1. High unemployment due to mismatch of the skills of many job-seekers and what employers need now and will need in the future. This requires people becoming cutting-edge skilled, free-agents and/or self-employed. Eight million jobs aren't coming back because they aren't needed any more, we should be preparing for what is and will be needed. The economy can only be stimulated with significant earned income

2.   The foreclosure and indebtedness problem of individuals, organizations and government. How the lenders reconcile what people owe and how much houses are worth and deal with uncollateralized debt and collect it, is still an open question that must be resolved, in order for any across-the-board financial restructuring to occur. If a large segment of the population has no earned income due to unemployment, how do they repay the debt?