Barack Obama – Page 2 – Preston Poulter’s Blog

Props to Obama’s First Two Days

I have to say that it’s nice to have a Democrat in power again. I have some Republican readers out there (just embrace it, Kevin; talk to Taylor — he’ll help you) who I know will find it very annoying for me to be joining in the celebration of Obama’s first couple of days. But, I have to say, that I like what Obama’s done so far: moving to close Guantanamo and the CIA’s secret prisons is simply awesome. The very existence of these programs is not only Un-American, but, I believe, unconstitutional.

Where, in our Constitution, does it say that the United States can take people into custody and detain them for years at a time without bringing them up on charges? I was hoping that the justice system would actually reject Bush’s programs, but the years went on and nothing happened. It seemed that someone in the Bush Administration decided to leave the people detained in Guantanamo for the next President to sort out. (I felt this even before Bush got re-elected in 2004.)

For that matter, Iraq seemed little more than a talking point in the “War on Terror” in Bush’s second term; other than sending some additional troops into Iraq, what really changed there? For that matter, what did the additional troops accomplish other than to give John McCain something to ramble on about during his campaign for President? I love what The Daily Reckoning’s Bill Bonner said about the Iraqi journalist throwing a shoe at Bush: “What’s wrong with our American journalists? Have they no shoes?”

Indeed, I wondered the same thing about a lot of people. How could we allow the Bush administration to rewrite the power of the executive branch before our very eyes and have so little outrage? So, I am pleased to see Obama’s first acts being so definitive to curtail the obvious abuses of the prior administration. Although, Wall Street doesn’t seem quite so happy about it.

As Taylor pointed out in his last comment,

“The percentage decline is the worst ever for the Dow on a president’s first day in office. That would break the old record, 2.9%, set on Nov. 22, 1963, when Lyndon Johnson took over after John F. Kennedy’s assassination.”

Of course, there’s a maxim on Wall Street that the first two years of a new Presidency will be down years and the last two will be good ones.

Still, that was a particularly violent reaction to Obama’s first day.

Although, I made money. As you can see in the chart below, Barrick Gold has been doing just fine over the 3 months since Obama was elected President. On that fateful day of which Taylor spoke, when the Dow was down 4%, Barrick was up some 5.8%. What can I say? Gold’s been treating me well.

That’s not to say that I think this stock isn’t going to see some rocky times ahead. I do think the forces of liquidation are taking a breather — for now. The volatility of this week is more the Wall Street traders showing their displeasure at the forces of Socialism that Obama represents. But I expect it to stabilize over the next few weeks. In fact, I’m expecting a bit of a rally. It’s going to be a sucker’s rally, though; but I still expect it’s going to trap a lot of people who are thinking that the worst is behind us.

Barrick will probably be taken down a peg or two in the upcoming collapse, but it’ll come back. I can’t say the same for the rest of the stock market. We’re making the bitter transition from a consumer-driven economy to a producing one. The first stage is that the businesses that catered to consumer spending need to leave the scene to clear the field for the new companies. That means you can expect a lot of companies going bankrupt this year.

As for me, I’m doing a bit of trading. As you can see from that chart of Barrick, it seems to be hovering between a range of $31 and $36. That’s a pretty healthy trading range to buy in at the bottom and sell at the top, and that’s what I’ve started doing. I’ve turned some extra profit from it so far. I expect that all my profits will be taken out by the upcoming collapse, but those profits should help to cushion the blow. It’s the buying at the bottom where you can expect to make some real money.

I can only hope that these easing up on the powers of the executive branch may indicate that, perhaps, my fears of him being the next FDR and implementing a lot of BS controls — such as gold confiscation — may prove false.

Mercifully, false.

Economists Announce Biggest US Job Loss Since 1945

The forces of depression are getting a drop on the new year. The bureau of labor statistics announced today that the US had undergone the biggest job loss in the United States since 1945 in 2008. These days people are expecting bad news, but what the questions that we need to ask is how come no mainstream economist saw this coming? How come we don’t see Keynesians falling all over themselves admitting that their phony theory has little predictive value in the face of the tremendous magnitude of this decline? After all, Keynesians tout the stimulating effect of government deficits. How can it be that after eight years of George Bush, who took this country further into debt that all of his predecessors put together, that we are now facing the worst economic scenario since the Great Depression?

Of course, I know how unseemly it must be for me to be attacking John Maynard Keynes on the eve of President-Elect Obama’s inauguration. The man hasn’t even gotten to power yet, and I’m already faulting the underpinnings of his economic bailout plan. And while I’m attacking Obama, what’s up with appointing lobbyist Willian J Lynn III to be the #2 person in the Department of Defense? I thought Obama was supposed to be cleaning up Washington by keeping lobbyists out of his administration. At least, that’s what Democratic talk-shot host Rhadi Rhodes was shoving down my throat back when I called into her radio show. On that particular day Ms. Rhodes was talking about the cronyism going on in the Wall Street bailout and I called in to showcase that this was another case of where the government had proven very ineffective at performing any regulatory function because the oversight boards are inevitably dominated by the corporations they are supposed to watchdog. She fired back how Obama was going to change all that. “Change I could believe in.”

Well, I don’t mean to run the poor man down, but if he’s made a pledge to keep lobbyists out of his administration, then why break the promise? I’m sure there are plenty of other well qualified non-lobbyists out there who can run the post. And this is the Department of Defense we’re talking about. That’s only the nexus of government and the defense industry which President Eisenhower warned about in his farewell address– a warning that has since gone ignored.

When looked at from a purely Libertarian standpoint, the US Government has three branches, but they aren’t the ones you’re thinking of. Instead of the Executive, Legislative, and Judicial, the US Government has the Banking, Defense, and Welfare branches. The Defense industry expands the empire, while the Welfare branch keeps people appeased in the classic Roman “Bread and Circuses” combination. The Banking branch ensures that the other two branches have all the money that they need in order to function by creating money out of thin air and sending the bill to our future generations.

As I’ve said many a time, this story is not going to end well. No amount of bank created stimulus can keep this impossible situation going. It’s going to collapse, and soon.

2009 Off to a Rough Start

For the first five days of trading of 2009, the Dow has fallen from opening around 8800 to closing today at 8750. Gold’s down some $40 too as its Comex price has fallen to $844 an ounce. No Earth shaking moves in these first few days of trading, but the investors are watching each other and trying to gauge the mood. A lot of people are expecting 2009 to be an up year for stocks. The logic is that last year was the second most horrible on record, so this year should see a big bounce after a big fall.

As for me, I feel that making a prediction about how stocks will do in 2009 is a luxury I can ill afford at this point. It just seems so far away and there are so many unknowns that going to have to develop over the course of the year before a clearer picture emerges. Markets are, after all, made of people, and people are unpredictable. At this point in I feel like I’m watching the Super Bowl warm-up show. I’m sure the hardcore football fans will know what I’m taking about- that show that comes on before the Super Bowl where the sport’s commentators fill up airtime talking about all of the players, their strengths and weaknesses, and the game plans they tend to use. Those shows take almost as much time as the Super Bowl itself, because you can endlessly debate how the teams should match-up, but no one will really know until after the fact how they will match-up.

Well, here’s Preston’s pre-Super Bowl commentator show. The players that are going to be squaring off this year are many. We’ve got “Helicopter” Ben who’s certainly proven to be true to his nick name. He’s showering money down upon anyone and everyone who could possibly ask for it. Recently he went so far as to essentially eliminate short-term interest rates and he’s said that he won’t rest until he uses more newly created money to crank down the long-term interest rates too.

Joining Ben’s team are two new players, Barack Obama and Timothy Geither. Both are talking a big game. Obama in particular is saying that he wants to run up the deficit score another trillion dollars over the course of this year and “for years to come.” That’s quite a powerful inflationary combination. The ultimate Keynesian fantasy of monetary stimulus complemented with a strong fiscal stimulus. The classic team of the banking system and government working in combination. One makes the money and the other spends it. Together they represent a potent inflationary team that is dedicated to pumping up the stock market.

But the inflationary team is up against some tough competition this year. The biggest concern I’d have for team inflation would be that the other nations of the world refuse to soak up the dollars they are going to throw off. In particular, I’d be concerned about China. China has been the primary consumer of newly created US Dollars over the last few years, but lately, according to a NY Times Headline, China Losing Taste for US Debt. If that’s the case, then I’d say this inflationary team is about to meet it’s match; the Fed can print all the money they want, but if people don’t value it, it’s not going to do a damn thing but cause spawn runaway inflation.

Obama seems to feel that he’s stepping into the shoes of Roosevelt, but Roosevelt ran against Hoover by saying that his policies of taxing and spending were reckless. It was only after he gained power that he developed a taste for it himself. Obama’s coming onto this stage not only broadcasting his love of inflation, but just how much inflating he’s willing to do. For a President-Elect to announce to the world that he intends to run trillion dollar deficits “year after year” is simply unheard of and I’m sure it’s quite a gut-check for the current holders of our debt. Are they really going to just stand by and continue to loan us another few trillion?

Inflation has always needed a bit of subterfuge to exist. In his book, Human Action: A Treatise on Economics, Ludwig von Mises wrote:

Inflation can be pursued only so long as the public still does not believe it will continue. Once the people generally realize that the inflation will be continued on and on and that the value of the monetary unit will decline more and more, then the fate of the money is sealed. Only the belief, that the inflation will come to a stop, maintains the value of the notes.

He didn’t get that exactly right. It would seem that people tolerate a little inflation far more than Mises anticipated. Still, I doubt the Fed is going to be able to keep inflationary expectation well “anchored” with these trillion dollar deficits coming down the pike.

And if our foreign lenders decide to stop loaning us the money, then the whole inflationary plan will be wrecked. Then, and only then, will Ben, Barack, and Timothy, have to contend with how to get us out of this mess without the trusty tool that’s worked time and again since the 1980s. In that eventuality, fasten your seat belts because it’s going to be a bumpy year.

An American Christmas Carol: Part II; A Ghost of America’s Present

Today, we are a people that would best be characterized as sheep. Having taken control of our money as well as the most important functions of our Government, the banking sector is fulfilling its traditional role in support of it by creating all the money it wants to spend. The two major political parties of our nation have lost any meaningful distinction, and both favor a strong central government that oversees most areas of American life underneath layers of bureaucracy. They only differ in terms of how that power should be used: Republicans favoring the traditional fascist agenda of allowing government to work closely with large corporations to enhance their profits, while leveraging the military to open up and further expand the influence of both. Democrats favor using the power of government to reallocate wealth and correct for the errors of a free market. Both seek to expand government powers that were never granted by the US Constitution to begin with.

Instead of being outraged at the continual depredation of the American Government and way of life by moneyed powers and power-hungry politicians, Americans look to television to tell them what they should care about and how they should feel. Television serves to do little but distract them from what’s going on around them; even the news channels do little outside of featuring infotainment designed to titillate our infuriate its viewers regarding some contrived controversy epitomized by Fox News’ “War on Christmas.” And so Americans have come to look at politics much as they do sporting events: they have the team they’re rooting for and sympathize with, and the opposition they love to hate. They don’t seem to care whether the party sticks to its principles or not. Sometimes they don’t even know what those principles are.

In the midst of these sheep, the banking industry is content to make itself the power behind the curtain. Let Americans look to their government for guidance; they’re happy to just keep creating the money and lending it at interest for all of our ridiculous wants.

And why shouldn’t they? It’s not their money, after all. It’s ours.

The US Dollar is our obligation, and the bonds we take out to finance the whole circus are our childrens’. Why should the banking industry care if we spend it frivolously? It didn’t cost them anything — and they’re happy to make the interest.

At every turn in American political life, the banking industry is there to guide us. And, when it turns out that they’ve loaned Americans money they can’t afford to pay, they’re ever quick to exert their influence with Washington politicians to receive a bailout — courtesy of the tax payers, of course.

The game bankers play reminds me a bit of how parents pacify children; they know that children have short attention spans and a primitive understanding of the world, and so are happy to play on both in order to mold their behavior towards the parent’s own ends. And so it is with bankers and the American people: bankers know that Americans’ eyes roll into the back of their heads when they mention interest rates or the mathematical models of Keynes and his almighty multiplier effect, so they make what they’re doing artificially complicated as to purposefully misdirect everyone away from the obvious scam being perpetrated against us. And when they need to translate it out of economistspeak and into ordinary terms, they always do so with the most dire of warnings: Ben Bernanke himself told Congress that if they did not act to save the economy this week, that there might not be one to save come Monday. Of course, there was, but people were still scared enough to grant the Treasury and the Federal Reserve additional powers.

This can only go on for so long before we lose our prosperity and complete, in the words of FA Hayek’s book, The Road to Serfdom. And here we are, at the end of the road. Looking to our shepherds for guidance as we face a crisis that they previously promised us would never happen. Today our shepherd is Barack Obama and the Democratic party, and they are convinced that they can spend enough money to stimulate us out of the hole that naturally resulted from all the previous efforts at stimulus. As if to somehow show solidarity with Socialism, Dick Cheney recently scolded Congress for not bailing out the auto industry.

And so, we again are ready to rally around the leader and follow whatever plan he outlines to get us out of these dark times. We march forth, not really understanding the problem we are facing, but determined to do our best to fix it anyhow. Ben Bernanke has said that we have to lower the value of our money in order for us to beat this recession, and he has offered to do that for us by creating money out of nothing and loaning it out until interest rates fall to absolutely nothing. I’m sure that the average American feels somewhat suspicious of that course of action, just as they were somewhat suspicious of the Wall Street bailout, but they figure that the middle of a crisis is no time to question the orders being handed down. If the plan is to devalue the dollar, then here we go:

Printing presses: maximum warp!

This can only lead to one inevitable destination. We’ll look at that in the final installment of this series, when visited by the Ghost of America’s Future. Until next time.

The Not-So-Efficient Market

There is a theory in stock circles called the “Efficient Market Hypothesis.” It was first proposed by a student of famed mathematician Benoit Mandlebroit (who proposed Chaos Theory) named Eugene Fama. The theory is easy to understand; markets such as the stock market have so many players that it reacts instantaneously to process all known information about a given security. A corollary of this theory is that because all information about the market has already been “priced in”, that it’s impossible to beat the market because any actionable information about a given security is already reflected in its price. This theory was popularized in books such as A Random Walk Down Wall Street. It has been attacked in a number of books including Benoit Madlebroit’s The Misbehavior of Markets as well as my book, What Do You Mean My Money’s Worthless.

I’ve found that some of my biggest investing mistakes are caused by giving any credence to the notion that the market has priced in any information at all. Case in point, for much of this year I was an investor in the Prudent Bear Fund (ticker=BEARX) which is a mutual fund that is short the market, yet, despite many of my predictions of doom and gloom coming true, the stock market continued to hold its value in the face of more and more bad news. Then came October. Paulson and Bush announced that they were going to do a massive bailout of all troubled assets on bank balance sheets after allowing Lehman Brother to fail, and the stock market rallied strongly.

At that point I lost faith that the stock market was going to decline. It seemed that the Federal Reserve and the US Treasury were simply going to inflate the problem away, and the market was responding in just such a direction. So the logical move to me seemed to be to invest in gold in order to protect from inflation and away from shorting. I figured that, with all the bad news that has come out, if the stock market was going to crash it would have already done so. I closed my short positions just before one of the most violent stock market collapses ever based on the belief that knowledge of the credit freeze and oncoming recession were already “priced into” the market. I’m still up on the year (which few people can say) but I missed out on a great opportunity to profit due to my putting ANY credence in the notion that the market was efficient.

Now I’m realizing that the key to investing is not to predict the tomorrow’s headlines, but rather to figure out which of yesterday’s headlines will the have staying power to shape market movements in the future. That’s what I’m trying to do today. Call it the “Slow Market Hypothesis”- which significant piece of news will the market take the longest to get through its thick head? A question that is very much on my mind today.

The headline that’s dominated the last couple of months has been that “Deflation is Coming. Run to Cash!” Call me crazy, but I think that headline’s played out now. The headline of today was that “Dollar slides as Obama vows stimulus.” Gold moved strongly up and Barrick Gold, my personal investment vehicle of choice, closed the day up 8.39%. I think that the headlines going forward are going to become more focused on inflation rather than deflation as markets react to the new ending stream of new dollars being cranked out by the Treasury and the Federal Reserve. Just today, it seems that Congress and Bush are dipping into the bailout goody bag for $15 Billion to loan the auto industry. The hard figures on M2 straight from the Federal Reserve says that our money supply has expanded by 7% over the course of year, which is not nearly as alarming as the “Adjusted Monetary Basis” (a measure which accounts for changes in the reserve requirements as well as changes in foreign exchange market intervention) which the St. Louis Federal Reserve Bank publishes. Here, take a look at it yourself:

http://research.stlouisfed.org/fred2/data/BASE_Max_630_378.png

That’s a rather astounding rise in the monetary base (1400% annualized), and it’s only going to get worse. The next stimulus package that’s being proposed by Barack Obama is roughly $1 trillion.

The rise in the value of the dollar was caused because liquidation was forcing people to sell their assets in order to meet margin calls that were written in terms of US dollars, but that’s going to be a short lived phenomenon. As the full impact of these monetary shenanigans start to sink in, the market will seek a safe haven that isn’t being grossly tampered with, and that’s going to lead them back to gold. That’s my prediction anyway, we’ll see how it turns out.

The Main Focus of this Meeting is … to Schedule Another Meeting.

The leaders of the G-20 nations met in Washington DC over the weekend. The discussions that were had were in secret, but it seems that the main result of the meeting was the schedule the next. You see, these talks were not attended by President-Elect Obama. Instead, the assembled leaders had to make do with George W. Bush who will only be in office for another couple of months. That would make it rather hard to get any serious business done.

Politically, I think it was the right decision for Obama to not attend. The goal of the meeting was not going to be desirable to the United States. The roster of G-20 leaders basically amounts to countries the US owes money, who want less protectionism in order to help their own economies, and those who have been burned by buying “toxic debt” from us. Often, a single country can be filed in more than one of these categories. What is happening here is nothing short of an intervention. As if the friends and family of the US were forcing it to sit down and listen so that it might come to understand: “you have a problem.” And, after interventions, discipline and recovery is supposed to follow.

Really, who wants that?

Obama is in a particularly hard situation. He was elected on the Democratic ticket and they are already calling for a bailout of GM. Of course, by doing so, they will be protecting the jobs of autoworkers who have been one of the most ardent supports of the Democrats for decades. So Obama is caught between the nations of the world who want to have a “talk” with him and his own party that is basically saying “The Republicans have thrown money at their backers for too long; it’s time we get to throw money at ours!” It’s a no-win situation. By not attending, he’s at least playing hard-to-get.

I can’t imagine a worse time to be President than right now. While I feel that Obama will play the politician and negotiator, and try to say as little as possible for as long as possible, the forces at work can’t be kept waiting forever. They will want an answer. GM wants a bailout, and the G-20 wants the US to get its financial house in order. Doing both isn’t possible and neither is putting the question off forever. Returning the US to the path of financial discipline is an unpopular one in the best of times; today, doing so would involve alienating the very party that got you elected. Meanwhile, throwing more and more money at the collapsing economy will just hasten the collapse of the dollar on the world stage. The G-20 leaders, seeing that the US is not ready to end its addiction, will start making plans for how they will alienate the addict and instead do business with one another. And that can’t be good.

This is most likely the beginning of the end for the dollar.

The US is simply in denial regarding how bad the situation is, and the G-20 isn’t going to be able to penetrate a denial of that magnitude. Regardless of how many incidents you try to recount to the addict, until they’ve bottomed out, there is just no talking sense to them. I’m sure Obama can be made to see the reality of what is happening, but I doubt he has the ability to convince a nation that now’s the time to kick the “print more money” habit that has seemingly played out so well for it. Failing that, what else can really be done but to delay the inevitable?

And so the chase has begun — between our creditors who want to schedule a serious meeting so that we can have a little talk — with the REAL President in attendance this time — and the man who cannot, try as he might, find a win-win solution to all of this.

Who’s Afraid of the Big, Bad Robber Barons

As I’ve discussed in this blog before, I am a fan of what’s viewed as “shock radio.” Specifically, I really enjoy both Howard Stern and Bubba the Love Sponge on Sirius Channel 101. I’ve been a Sirius subscriber since 2005 and I’ve really enjoyed it; I’m listening to Sirius Pops right now as I compose this blog. My only complaint with them is that they might not resign Bubba whose contract ends in December, and that would really annoy me. I’m hoping they won’t do that. If you’re looking for a good Christmas present this year, I do heartily recommend that you give the gift of Sirius.

The reason I bring Bubba up is because he often discusses politics and “Spice Boy”, one of the shows cast members, lamented that the “Republicans just know how to work better.” Work in the parlance of that particular radio show meant that they knew how to lie well and present a convincing story for others to believe. This is just another way of restating the rather old joke, “No, I don’t belong to an organized political party. I’m a Democrat.”

Case in point, a right-wing friend of mine just sent me this story about how Barack Obama won’t let any gun owners be part of his administration. Well, at least that’s what the Illinois State Rifle Association says because apparently some questionnaire asks:

“Do you or any members of your immediate family own a gun? If so, provide complete ownership and registration information. Has the registration ever lapsed? Please also describe how and by whom it is used and whether it has been the cause of any personal injuries or property damage.”

Therefore, Barack hates gun owners. Therefore, he’s coming to confiscate everyone’s guns. Of course, these days the President of the United States is a rather powerful person; you know, “Leader of the Free World” and all of that jazz. So it stands to reason that there might be people out there who might try to do the President harm- hence the Secret Service and all. And it does stand to reason that perhaps Barack’s security team might want to know about firearms an applicant has access to and whether they’ve ever caused any “personal injuries”. I don’t know. If I were going to be President (and I’m thankful I’m not ever going to be) I’d probably want to ask that question to.

To me, what this story really sheds light on is the gullibility of the Republican base. They seem to get worked up by all kinds of stories about Barack’s radical Muslim heritage or his ties to black radicals that clearly mean that he hates America. Now I know that the Democrats have their fair share of ignorant voters as well, as the Howard Stern show’s Sal Governale recently showed. I’m sure that the Republican attack stories, which are mostly not true or grossly exaggerated, will continue to make the rounds, but the Republicans soundly lost the last election so I expect I will start hearing a lot more left wing lies than right wing for the next few years.

Case in point, I recently called the Randi Rhodes show. I used to listen to her on the now defunct Air America radio in Dallas back in 2003 and 2004. Yes, you heard me correctly. I so hated the Bush Administration and his legion of flag-waving minions that I was driven into the arms of the any who would have common cause with me, and in this case the arms happened to be Randi’s. Her show was a bit hard to take, even back then. She doesn’t seem to know when a bit has gone to long and she just beats her audience over the head with her parody elements and impersonations. That, and it seems like at least 40% of her on air time is devoted to commercials.

Well, things didn’t work out to well for Randi. She got kicked off of Air America radio for calling Hillary Clinton a “whore”. Probably just as well, Air America went bankrupt. Well now Randi’s doing Podcast and a streaming radio show over the internet. Yesterday she was talking about AIG and the bank bailout and I thought I’d give her a call. Randi kept saying that the only way to prevent abuses in the banking industry was through regulation. In fact, she said that’s all a government could do.

That seemed an absurd assertion. You can’t regulate away human greed. As I pointed out in my call to her, industries that are prone to greed and abuse will simply take control of the agencies that are supposed to be watchdogging them as the drug industry has done with the FDA. Truly, if she wants to end the reign of the few powerful organizations such as AIG, then what we need is not a bailout, but a liquidation. If allowed to fail, the big organizations would cease to exist. Their assets would be sold to the remaining companies who are hopefully more virtuous (or at least better funded) and life continues on. If instead, the government bails the industry out, then the big are not only allowed to grow bigger, but now they have the implied guarantee of future government bailouts the next time they get into trouble. Honestly, you Democrats, if big companies are what you fear, then you should become cheerleaders for liquidation, not advocates for endless bailouts!

Randi cut me off. She told such talk would lead back to the bad old days of the “Robber Barons.” That Barack Obama was someone who could regulate away the abuses of the system caused by greed because he had come without lobbyists and would therefore take Washington control away from the evil corporations and give it back to the people. She wouldn’t let me get a word in edgewise, then she went to commercial break… again.

I find two things vaguely humorous about this. The first is that Randi had just been saying that we need to keep our expectations of Barack down because “He’s only human.” Yet she then went on to tell me how he, free from lobbyist control, was going to liberate the Washington world from the greedy bankers. The second was the whole “Robber Baron” thing is a huge Democrat talking point. We can’t go back to the days before the Federal Reserve and the New Deal, and all those other wonderful government programs. Hell no! That’s back when the Robber Barons robbed us blind! Except they didn’t. The later half of the 1800s was one of the most prosperous times for us all as a people. The real wages of the average worker increased year after year despite the fact that there was no minimum wage laws. People were far more free to do as they pleased when it came to the wonderful vice laws of today’s society. Really, when you look over the history of the time, I don’t see the part where the evil Robber Barons swoop in and take away everyone’s money- probably because it never happened.

The Robber Barons are just an old Democratic chestnut. They are the equivalent as the Bogeyman: a shadowy figure who is up to no good and will get you when you least expect it. This is, of course, merely a lie put forth so that people will seek the protection of the government. The Robber Baron is the Democratic equivalent of the Islamic Terrorist; he is that figure who is so terrible that we must look to the government for protection. Here’s a question, who can name one? Come on, think hard. If they were so terrible, certainly we should be able to remember at least one.

Well here’s one for you, Jay Gould. As it turns out, he really wasn’t such a bad guy. Sure, he tried to take money from people, but not the working man. He didn’t have much worth taking. No, Mr. Gould was a Wall Street raider. He endeavored to take money from the other people that had it: the Rockefellers, Morgans, and Vanderbilts. Don’t believe me, here, read it for yourself in Dark Genius of Wall Street: The Misunderstood Life of Jay Gould, King of the Robber Barons. Now I’m sure Mr. Gould would have loved to own a monopoly and rip off the average consumer, but that’s not what he did. Instead, that’s what the bankers did.

The real mustache twirling villains in the tales of the late 1800s are not the Jay Goulds of the world, but rather the “money trust” of Rockefeller and Morgan. The banking families had huge wealth, but they wanted more. They wanted a lock on the power to create money and government protection in case their organizations were ever in danger. So they set about creating what G Edward Griffin called the The Creature from Jekyll Island. And it is a monopoly far worse than anything Jay Gould or Bill Gates could put together. What’s worse, it had a mandate from our government that says it gets to basically do whatever it deems necessary to make sure that its member banks stay profitable.

So really Randi, who’s afraid of the Robber Barons of the 1800s. Not me. I’m more afraid of the ones who are with us today… and have the power to print our money.

Obama’s Infommercial

I don’t watch a lot of TV, but I heard about Barack Obama’s infommercial that addressed our current economic crisis. Being that our current economic crisis is my main focus on the pages of this blog, I felt I had to go out of my way to give my readers the lowdown on what he said and what he’s promising. I found a copy of the text of the infomercial as well as the video at the LA Times.

In reading through it, I must say I felt moved. Obama has a talent for really speaking in a way that moves people that I must confess being envious of. Certain lines such as:

We measure the strength of our economy not by the number of billionaires we have or the profits of the Fortune 500, but by whether someone with a good idea can take a risk and start a new business, or whether the waitress who lives on tips can take a day off and look after a sick kid without losing her job – an economy that honors the dignity of work.

The line is pure fluff, but it’s moving fluff. Americans have witnessed CEOs getting rich by bankrupting the companies they run and I’m sure they are tired of it. It is a bizarre perversion of the free market system, which is supposed to reward people in proportion to their contributions, to instead reward greedy managers who bankrupt the company they were entrusted to grow. At least when Michael Milken was destroying companies one could argue that he was doing a service by buying them, breaking them up, and selling off the smaller pieces to the interested parties. Simply bankrupting a company serves no useful purpose and is damaging to the country and the economy. But what is Barack going to do about it? How can the President, regardless of how well meaning, somehow restore the economy to where it honors the “dignity of work”? Well, here are some of his specifics:

What happened in the financial markets was the final verdict on eight years of failed policies. And we’re now going through the worst economic crisis since the Great Depression.

A few weeks ago, we passed a financial rescue plan. It’s a step in the right direction … and as president, I’ll ensure that you, the taxpayers, are paid back first.

But we also need a rescue plan for the middle class … starting with what we can do right now that will have an immediate effect.

As president, here’s what I’ll do:

Cut taxes for every working family making less than $200,000 a year.

Give businesses a tax credit for every new employee that they hire right here in the U.S. over the next two years … and eliminate tax breaks for companies that ship jobs overseas.

Help homeowners who are making a good faith effort to pay their mortgages, by freezing foreclosures for 90 days.

And just like after 9-11, we’ll provide low-cost loans to help small businesses pay their workers and keep their doors open.

None of that grows government. It grows the economy and keeps people on the job.

He’s basically talking about handing out loans like Santa Claus. If our current financial crisis should tell us anything it’s that easy credit is not the way to prosperity. The other part he’s promising is tax cuts. I never meet a tax cut I didn’t like, and I think he’s on the right track here, but if the Republicans have taught us anything it’s that tax cuts don’t help the economy unless they are accompanied by a reduction in government spending. The typical Republican course of action of raising spending while cutting taxes is not a true tax cut, but rather merely displacing the tax onto future generations… plus interest.

Sure enough, later in the talk, Barack promises to do just that.

I’ll also go through the federal budget, line by line, eliminating programs that don’t work … and making the ones we do need work better and cost less.

And one of the biggest savings we can make is to change our policy in Iraq.

Bingo. You want a method to jump start the economy, here it is. Unfortunately, this is not a new promise coming from a politician hoping to become President. And it does beg the larger question as to why Obama hasn’t already done this. The federal government releases its budget every year, so why hasn’t he already gone through this years budget and outlined some areas of clear waste. You don’t need to be President to do that.

Of course he did identify one clear area of government spending that he’d like to eliminate in terms of the occupation of Iraq- which is excellent. However, this war has grown unpopular, so it’s not like it’s hard to come out against it. If he were, on the other hand, to come out against some of our other stupid wars, such as the “War on Drugs”, then it’s doubtful the good moral people of this country would actually elect him- which is a shame. It’s a huge drag on the economy that we spend tax money to lock up people just for getting their groove on with substances deemed illegal.

While we’re at it, let’s talk about another stupid government war: the “War on Poverty.” This is another war where we just need to admit defeat. Social Security has merely been a convenient tax from which the politicians will raid. As it stands, there’s no way we can afford all of our pledged free Medicare and Social Security payments to senior citizens. And unemployment insurance does have a crazy way of subsidizing unemployment.

Unfortunately, Obama’s not going to touch any of these issues. In fact, he seems to be stating in the rest of his speech that he’d actually like to increase spending in these areas. So, while he may go “line by line” through the federal budget, I’m guessing we’re not going to see any real change. I’m also guessing that this is the reason he doesn’t get into specifics but instead speaks in generalities.

Oh well. I suppose that’s how politicians get elected. What a crazy system.