Doubting Paul Krugman

Paul Krugman offered his thoughts on the economic crisis last week in the University of Iowa’s McBride Hall.

My commentary:

When Paul Krugman furrowed his brow and stroked his chin and told the audience that the Obama administration’s plan to create 3.5 million jobs is . . . here he slowed his speech, demonstrating his thoughtfulness . . . “about the right size,” he neglected to elaborate on how government creates jobs.

If government has the power to create 3.5 million jobs, what is the moral justification for stopping at 3.5 million? Why not 4 million, or 10 million? Why not 150 million, so America’s entire labor force can feed from the government trough?

The fact is that government cannot create jobs. Government can only redirect them. Taxes must destroy private sector jobs which produce goods and services people want, so that government may pay for public sector jobs, which exist for political reasons.

The stimulus will make us poorer, and when it does so, Mr. Krugman will furrow his brow and stroke his chin and tell us very thoughtfully that it probably wasn’t big enough.

He cautioned against the “temptation to dwell on the causes of the bubble,” which seems completely nonsensical to me. More tempting is subscribing to his indictment of unregulated capitalism and greedy businessmen.

In implicating capitalism, he did not mention the government bailout in 1998 of a hedge fund called Long Term Capital Management. When government subsidizes irresponsibility, the case against unregulated capitalism falls to pieces. Had government not set the precedent of rescuing their friends on Wall Street in 1998, we wouldn’t have had these problems in 2008.

Those of us who succumb to the temptation of actually caring how we got here might also note the government subsidizing of bad home loans, and the artificially low interest rate created by the Federal Reserve which cause unsustainable booms.

The boom was not “irrational exuberance,” as Mr. Krugman so dismissively puts it. It resulted from rational business decisions made in an economy our government warped to favor expansion and irresponsibility, and the problem is not a lack of regulation, but too much of it.

***

The hall was packed, and I didn’t get a chance to ask a question. I would have said the following: “Thank you for coming here and speaking to us. Our empire, which has a military presence in 130 of the world’s 190 countries is very expensive. Our government, which employs a sixth of America’s labor force is very expensive. The stimulus is very expensive, and the bailouts are extremely expensive. Conspicuously absent from the discussion is the notion of living within our means. Do we need to live withing our means? Or have our great economists with their deft manipulations of interest rates rendered the notion quaint and obsolete?

***

See Also: A Child in a Man’s Body: An Austrian Looks at the Economics of Paul Krugman

State of the Revolution – the national movement for state sovereignty

“If there’s one thing worse than urban elites at the New York Times, LA Times or the Washington Post who sneer at the mere hint of grassroots conservatism or populism, it’s Midwestern and Southern ‘fly over country’ journalists who strive to emulate them. In a column entitled ‘New states’ rights fight emerges,’ Brian Hicks of Charleston, South Carolina’s the Post & Courier wrote:

For a bunch of guys obsessed with 19th century history, our esteemed state lawmakers sure haven’t learned much from it.

Because the last time they got all uppity and started mouthing off about states’ rights, we got our butts kicked.

Right now, the General Assembly is considering a resolution to warn the federal government not to overstep its bounds by imposing too many laws on the state. They quote the U.S. Constitution and their new favorite amendment, the 10th, to remind President Barack Obama that ‘powers not delegated to the United States by the Constitution, nor prohibited to it by the States, are reserved to the States respectively, or to the people.’

Here we go again. Next thing you know, they’ll be shooting at the Park Service guys out at Fort Sumter.

Ah yes. How silly.

Pace Hicks, after our most recent Republican president took unprecedented liberties with the executive branch, and after the current Democratic president has promised something close to central planning, some state lawmakers have decided to take their stand. And their critics bray, ‘How dare any silly second or third-tier bureaucrats champion the Constitution!'” (from lewrockwell.com)

China, Russia call to replace dollar as global reserve currency

“China says it wants a new global currency that is weighted with the values of the major currencies of the world including the dollar, the yen, and the sterling, among others.

China is believed to have at least $1.2 trillion in US currency of its $2 trillion strong currency reserves.

China’s concern is if the U.S. begins to print money to pay debt and stimulate the economy, its own currency will lose significant value.

Most recently, about a week ago, the top Russian bank was also pushing for a new global reserve currency for the same reasons and to also strengthen Russian influence in the world.” (business2press.com)

If this is what they’re saying publicly, imagine what they’re saying privately.

Obama and the Neocon Middle East War Agenda

by Stephen J. Sniegoski

“Many Americans, in fact, many people in the world, have been under the impression that Obama’s approach to foreign policy, especially as it pertains to the Middle East, would be the antithesis of that of the Bush administration. This dichotomy, however, is increasingly questionable as the professed advocate of change looks more like a proponent of continuation.

In fact, even during the Presidential campaign Obama did not present a consistently peaceful foreign policy. For example, immediately after becoming the de facto Democratic presidential nominee he addressed the American Israel Public Affairs Committee (AIPAC), a powerful pro-Israel lobby. He not only pledged full support to Israel but also expressed strong words against Iran – promising to do everything in his power to prevent Iran from obtaining a nuclear weapon and demanding an end to Iranian support for Hezbollah and Hamas, the militant enemies of Israel, as the price for ending American economic warfare.

All of this can reasonably lead to the question: Will Obama’s Middle East policy differ significantly from that of the neoconservatives who were the driving force for the war on Iraq and have fashioned a broader Israelocentric Middle East war agenda? (The neoconservatives are the subject of my recent book: The Transparent Cabal: The Neoconservative Agenda, War in the Middle East, and the National Interest of Israel). Obama himself does not appear to be completely aligned with the neocon position as was John McCain. However, the President’s close advisors, such as David Axelrod, Rahm Emanuel, Dennis Ross, Joe Biden, and Hillary Clinton, tend to be ardently pro-Israel and hawkish, reflecting a neocon orientation, even though none of these individuals are actually neocons.” (Read more from antiwar.com)

Obama’s Moment is Passing Quickly

“If he fires and replaces his economic and military teams, and announces both a quick end to the Iraq and Afghanistan Wars and the immediate break-up of the country’s big failed national banks and financial institutions, he has a chance to become a great president. If he does not, it is as predictable as the rising of the seas that his presidency will be a failure. We are nearing a point where the American public is going to lose patience with the half measures, the continuing pouring of national treasure down the twin sinkholes of the failed financial institutions and the two endless wars in the Middle East, and the tone-deaf behavior of cabinet secretaries and advisors who don’t have a clue about how average Americans are living these days.” (Read more from commondreams.org)

Obama Envoy Richard Holbrooke Served On AIG’s Board

The crooks are in charge.
Obama = more of the same

“WASHINGTON — Obama administration special envoy Richard Holbooke was on the American International Group Inc. board of directors in early 2008 when the insurance company locked in the bonuses now stoking national outrage. Holbrooke, a veteran diplomat who is now the administration’s point man on Pakistan and Afghanistan, served on the board between 2001 and mid-2008.

During that period, AIG undertook the aggressive investment strategies that led to a near-collapse and forced a multibillion-dollar federal bailout.” (Read more from huffingtonpost.com)

Ron Paul Predicts 15-year Depression

“But the credibility of both western governments and their currencies is waning, and has been ever since the gold standard was abandoned in 1971, says Mr Paul. And that means even ‘safe’ investments are far from safe, he claims. . . .

Unfortunately, cashing out will not protect the value of investments, he insists, because ‘fiat’ currencies will all decline over the coming years as measures to try to haul the world economy out of recession fail. ‘The current stimulus measures are making things a lot worse,’ says Mr Paul.

‘The US government just won’t allow the correction the economy needs.’ He cites the mini-depression of 1921, which lasted just a year largely because insolvent companies were allowed to fail. ‘No one remembers that one. They’ll remember this one, because it will last 15 years.’

At some stage – Mr Paul estimates it will be between one and four years – the dollar will implode. ‘The dollar as a reserve standard is done,’ he says. He sees little hope for other currencies where central banks have also created too much liquidity dating right back to the early 1970s.” (Read more from infowars.com)

Israel gives US fresh intel on Iran Nukes

“American sources told the Saudi newspaper Al-Watan that Israel Defense Forces chief Gabi Ashkenazi provided fresh intelligence to the United States concerning Iran’s nuclear facility in Arak during his visit to Washington earlier this week, according to Israel Radio.

Ashkenazi on Monday said that while Israel was interested in exhausting diplomatic options against Iran’s nuclear program, the army must nevertheless prepare itself for a military attack. . . .

During a visit to Washington, D.C., Ashkenazi met with Dennis Ross, the designated U.S. envoy to the Persian Gulf, and Secretary of State Hillary Clinton to discuss the Iranian issue.

The IDF chief told Ross that Israel would not tolerate a nuclear Iran. He said that a diplomatic approach to Iran’s contentious nuclear program must be taken first, but said Israel must also prepare for other possibilities. ” (Read more from haaretz.com)

Have we already forgotten the bad intelligence about Iraqi WMDs provided by Israel, as reported here, here, here, and here?

U.S. bill seeks to rescue faltering newspapers

“WASHINGTON (Reuters) – With many U.S. newspapers struggling to survive, a Democratic senator on Tuesday introduced a bill to help them by allowing newspaper companies to restructure as nonprofits with a variety of tax breaks.” (Read more from reuters.com)

BULLSHIT!!!

1) U.S. newspapers almost unanimously lied us into Iraq, and ignored predictions of the crash. My liberal friends, do you remember how your NY Times and Washington Post helped sell the war?

2) We the people are the center. We the people decide what businesses and industries succeed and fail. WE make this decisions by spending OUR money on goods and services WE desire. The decisions do not belong to the central planners.

3) This represents an even closer marriage between media and power – very, very bad.

Obama admin. seeks powers to shut firms like AIG

“WASHINGTON (Reuters) – The Obama administration on Tuesday mounted a full-scale push for government authority to shut down troubled institutions like insurer AIG to avoid the need for future bailouts.

U.S. Treasury Secretary Timothy Geithner, testifying before lawmakers still fuming about big bonuses for executives at bailout recipient AIG, called on Congress for new powers to take over big non-bank financial firms that run amok.” (Read more from news.yahoo.com)

First government gives itself the power to redistribute our money to AIG (despite the Constitution). Now they want to give themselves the power to shut down a private company.

WTF!?!?!?!!?!?

If the assholes in government would have simply done NOTHING, then AIG would be shut down – probably by a bankruptcy court. The net effect would be identical, but we’d have more of our money, and governments would have no new powers.

Hauser’s Law of Tax Revenue

“Kurt Hauser is a San Francisco investment economist who, 15 years ago, published fresh and eye-opening data about the federal tax system. His findings imply that there are draconian constraints on the ability of tax-rate increases to generate fresh revenues. I think his discovery deserves to be called Hauser’s Law, because it is as central to the economics of taxation as Boyle’s Law is to the physics of gases. Yet economists and policy makers are barely aware of it. . . .

[Hauser writes:] ‘No matter what the tax rates have been, in postwar America tax revenues have remained at about 19.5% of GDP.'”

“As Mr. Hauser said: ‘Raising taxes encourages taxpayers to shift, hide and underreport income. . . . Higher taxes reduce the incentives to work, produce, invest and save, thereby dampening overall economic activity and job creation.’

Putting it a different way, capital migrates away from regimes in which it is treated harshly, and toward regimes in which it is free to be invested profitably and safely. In this regard, the capital controlled by our richest citizens is especially tax-intolerant.” (Read more from online.wsj.com)