Presidential hectoring hurts economy

When Richard Nixon was in the process of damaging the American economy back in 1971 via wage and price controls, closing the gold window, etc., he used aggressive rhetoric to support his actions. I remember specifically his demonizing of financial "speculators". He virtually spat the word: Speculators! The epitome of evil, right? This week Obama was doing much the same thing to hedge fund managers and others, bullying them, calling for them to sacrifice, implying that they are unpatriotic, giving them the full load of overbearing denunciation. As if he had any clue what he was talking about.

Well, it turned out that the "speculators" were right and Nixon was wrong. And today, for the most part, the financial managers are right and Obama is wrong. When it comes to the economy, regardless of political party, the rule is: The politicians are always wrong. Regarding the economy, government has a reverse Midas touch: everything it touches turns to c**p. In recent years Congress touched the housing market via subprime loans, and we are now living with the result. Now the government is aggressively touching the financial markets in general, and the auto industry in particular. The results are predictable.

Republican leaders today, including the establishment wing of leaders on their "listening tour", tell us that the GOP must offer an affirmative alternative to Obama's massive taxing, spending and borrowing policies. They can't combat something with nothing, they say.

Wrong, wrong, wrong. The correct approach is to educate the voters to the truth, rather than to compete with Democrats in pandering to their ignorance. The truth is that the free market, if allowed to operate, will ruthlessly correct the financial imbalances more quickly and more thoroughly than any government programs will. Government interference will just prolong the disease and the pain, and will mess up the economy for years. That's what FDR did in the 1930's, and that's what Obama is doing now.

Government has a legitimate role in enforcing contracts and in prosecuting fraud, insider trading, and other criminal activity, and in enabling a level playing field. But politicians have no ability to manage anything at all. When government attempts to override the market and to manage the economy on a large scale, the resulting economic system is called fascism. I recommend reading all about this in Jonah Goldberg's recent book, "Liberal Fascism".

Here are two informative rebuttals to Obama's hectoring of financial managers and his damaging actions in the financial markets. There's this one by Bill Frezza at Real Clear Markets. And this one by Cliff Asness at Business Insider.

If economics bores you or you think you can't understand it, please give these two articles a shot. The authors make the issues quite clear.

Upside of economic woes

Every morning when pouring my cereal and opening up my newspaper, or rather, my web browser, my mood is shattered by the doom and gloom of the American economic system. Just a few months ago hope and change reigned supreme. Not so much these days. It looks like housing meltdowns, credit crises, and our patriotic duty to spend willy-nilly have put a little bump on the yellow-brick road to prosperity. Let’s not drown ourselves in our bowl of generic, shredded wheat just yet though. We might actually get some of that sought after change— but don’t call it a comeback. It won’t be the type of change Presidential campaigns are won and lost on. It will be the kind of change you find under your couch cushions. Maybe it is just that the Bank of America “Keep the Change” savings marketing campaign is working, or more realistically, that the American people have been scared into saving. Because in the face of all chaos happening to the financial markets, layoffs, and pay cuts, Americans are actually saving more. In fact today, the Personal Savings Rate is the highest it has been in 14 years.

Call me old fashioned, but saving money seems like the best way to deal with stagnant credit markets and irresponsible financial institutions. I know, it is trendy, and “new school” to be pro bailout; pro spending; and pro borrowing (so that you are able to spend more), but I’m an old school kind of guy.

Here are a few simple things to consider. If the savings deposits in banks are higher, banks have more money to invest and loan out. And if banks, on average, are loaning to people with bigger savings accounts than they were previously, they must generally be in a safer position. But this must be too simple to be true. After all, both former President Bush and current President Obama would disagree with such analysis. After 9/11 Bush told the American people the best thing they could do to help their country was to go shopping! And Obama’s priority has been to get the credit markets back on track as quickly as possible! What is the underlying message from both the former and sitting Commander-in-Chief? Spend now, spend more, spend again (and again)! And we thought that Democrats and Republicans couldn’t agree on anything.

From our political leaders to our next door neighbors, we are proud to be a credit card nation. That is to say, not only are we addicted to spending, but if Americans aren’t spending, the whole world feels it. As we’ve recently found out, spending at unsustainable levels and living far beyond our means causes a few problems. And now that the credit fairy has run out of gold pixie dust—and we can’t take a 2nd mortgage on our houses or get an equity line of credit—we have to cut back on our $8 cups of coffee, our designer sunglasses, and our favorite restaurants.

Talking about savings isn’t very sexy, but it is essential to economic recovery and personal financial well being. China, a chief foreign investor in the United States, has cited the relative low savings levels of Americans coupled with our excessive spending habit as dangerous to long-term sustainability. That’s right. China is tutoring us in fiscal discipline. And it should be common knowledge by now that Americans are near the bottom of the list in personal savings levels compared to other developed nations. Bailouts and policies making it much easier to get credit look good at first glance; but it seems like what we are really talking about is giving the American people two new rights: the right to spend unabashedly, and the right to maintain an inflated, unaffordable quality of life. Not to mention the right of financial institutions to make poor decisions and still live to loan another day.

Our spend-a-lot policies are sending a clear message to our children, our adults, and our major companies: “spend as much as you want, and if you run out, don’t worry, the government has got you covered.”

Washingtonian wisdom these days seems to be that we are going to spend our way out of these dark economic times—but in actuality we are once again using credit cards. Don’t worry though, congress and the Administration won’t have to pay back these loans, our prosperous future generations will. As if economic growth and prosperity is guaranteed ad infinitum. But what do I know about all of this murky, economic mumbo jumbo? I am just a twenty-something year old kid. While I don’t know much, I am sure about one thing: my friends and I will be the people paying off this debt. So we had better save up now.

If the economic rollercoaster is causing Americans to save more, I say bring it on! Savings must become part of the plan to overhaul out-of-control government expenditures and excessive personal spending—so that we can actually protect the potential for prosperity of our next generation. We need to reopen a policy debate about effective and responsible savings policies that help ensure economic stability and opportunity for American people today and tomorrow.

And best of all, when you save for yourself, you get to keep the change.

Brian Calle is the President of the Young Executives of America (YEA), a member of Gen-Next, a Fellow at the Claremont Institute, and a Distinguished Speaker and the Milton Friedman Foundation School Choice Speakers Bureau.

Too cute by half

George W. Bush had his share of flaws as president, but one of his abiding strengths was his clarity on the most important issues of the day. He was never a good communicator, but you always knew where he stood. He was resolute on protecting America and was willing to put his popularity in the cross hairs of his opponents to do so. He opposed stem-cell research because he is pro-life, and was adamant against the use of tax-payer monies to fund abortions. The Bush clarity was maddening to the left, but was a source of comfort for many in the country who knew that they didn't have to guess on a daily basis where the president stood. Contrast that with Barack Obama, and you are struck by the difference. As during the campaign, Obama still seeks to be all things to all people, trying to split the middle in lawyer-like fashion in order to make everyone happy. His statements on many issues have been muddled and confused, because he is apparently interested in being able to argue both sides with equal conviction. It makes for a fine lawyer. But does it make for a good president?

Daniel Henninger has an interesting take on it today in an opinion piece entitled "Harry, I have a gift". Here's an excerpt:

Early in the campaign, in January 2007, a New York Times reporter wrote a story about Mr. Obama's time as president of the Harvard Law Review. It was there, the reporter noted, "he first became a political sensation."

Here's why: "Mr. Obama cast himself as an eager listener, sometimes giving warring classmates the impression that he agreed with all of them at once." Also: "People had a way of hearing what they wanted in Mr. Obama's words."

Harvard Law Prof. Charles Ogletree told how Mr. Obama spoke on one contentious issue at the law school, and each side thought he was endorsing their view. Mr. Ogletree said: "Everyone was nodding, Oh, he agrees with me."

The reason I have never forgotten this article is its last sentence, in which Al Gore's former chief of staff Ron Klain, also of Harvard Law, reflects on the Obama sensation: "The interesting caveat is that is a style of leadership more effective running a law review than running a country."

Senate Majority Leader Harry Reid, in a book out next week, tells of congratulating freshman Sen. Obama on a phenomenal speech. Without a hint of conceit, Mr. Obama replied, "Harry, I have a gift."

He does. We know from tradition, though, that when the gods bestow magic on mortals, the gift can also imperil its possessor. The first hint of potential peril in Mr. Obama's gift arrived last week with the confusion over where the president stood on the terrorist interrogation memos and prosecution of former Bush officials. Here, as 19 years ago, many on both sides of a contentious issue who heard him speak thought Mr. Obama agreed with them.

Henninger goes on to discuss the confusion over the interrogation memos and the potential prosecutions of the memo-writers, when Rahm Emanuel said decisively "no" to prosecutions and the President said "well, maybe". The President was, as is his want, trying to give grist to the left in his public statement, while his staff later took great pains to clarify that he "wants to move on" from this chapter and isn't really interested in a prolonged "witch hunt", etc. It was splitting the difference in a way that Obama likes -- saying enough to appease his base but not so much that he can be pinned down to any clear position. It's Obama's way to use his "gift" to obfuscate and confuse, to distract people from his real intentions. He did it brilliantly during his campaign, where he appeared to be a moderate post-partisan politician who wanted to "change" Washington. The reality as we now know is quite different: a highly partisan pol who doesn't seem strong enough to stand up to the most partisan groups in the Democratic Party.

There is a very real danger when the gift for gab become a substitute for clear thought and concise communication. Perhaps the president's teleprompter has too much sway in this administration, taking the president on verbal forays that are too cute by half. It is bad enough when it confuses the American public. It is worse when it confuses our enemies into believing that we are weak and willing to compromise on even the most vital of national security issues.

I'd take clarity over the gift, any day.

Shooting blanks

It is April 2010. Islamic terrorists have been caught attempting to blow up the Brooklyn Bridge in New York with sophisticated high-explosives. The plot was recently uncovered by the CIA, and the FBI and New York law enforcement officials foiled the attempt to destroy the bridge in progress. Two of the terrorists committed suicide when caught, but two others were captured before they could explode their suicide vests. In the ensuing hours, the NSA picked up chatter indicating that one or more additional attacks were underway somewhere on the Eastern seaboard of the United States -- though when and where could not be ascertained. The two terrorists caught are immediately transported to an FBI holding cell. Using the tight rules for interrogation that the Obama administration has decreed, the FBI attempts to get them to tell authorities the operational details of the impending attacks. Neither will talk.  Interrogators are stymied by the fact that these terrorists know that the Obama administration has banned any enhanced interrogation techniques and they only need to stay silent. They do so, refusing to talk. As the clock ticks, Federal authorities raise the Homeland Security threat level and hope for the best -- knowing that they can do little to gain the information needed to prevent the additional attacks from happening.

Sound far fetched? Hardly. This is very real possibility that America could face in the future. The Obama administration has now created a situation where it has not only publicly banned the use of enhanced interrogation, but has made it abundantly clear that those officials who might -- in a moment of crisis -- issue an order to obtain information through the use of such techniques will be subject to future prosecution once the emergency has passed. In this environment, no one will be willing to cross any lines to ensure that we obtain the intelligence necessary to save American lives. The Justice Department will have issued directives making it clear that there is no gray area in questioning terrorist suspects, and that not even the "smoking gun" scenario that administration critics have warned about is justification for the use of harsh interrogation techniques. We have chosen our democratic values over our security, and it has been made clear that this is not a choice that is subject to interpretation. Terrorists get some hot coffee, a warm bed to sleep in and a government provided attorney. And the rest of us suffer the consequences.

This is a scenario that Barack Obama should think long and hard about. He needs to understand that the threat from Islamic terrorism remains grave, and that we need all the tools at our disposal to ensure our safety. Former CIA Director George Tenet and current National Intelligence Director Dennis Blair have made it clear that the now-banned interrogation techniques were extremely effective in gathering actionable intelligence that has saved American lives. We have now unilaterally disarmed ourselves in the fight against an existential terrorist threat -- like going into battle against AK-47 assault rifles with a single-shot pellet gun. Hardly a fair fight.

The real issue here is that the decision not to provide immunity to those who approve the use of enhanced interrogation when the nation is under threat will have a chilling effect in the future. It will now be impossible to find anyone to recommend, approve or execute any technique that will create personal legal jeopardy. Even with a smoking gun or impending attack, Obama has tied the nation's hands. We are now shooting blanks.

Barack Obama, you may think you are the most moral man in America, above reproach and without any doubt of your wisdom. But someday it may be you who personally has to issue an order you have deemed illegal, because there is no one in the chain of command who is willing to do it for you. And it might be you who has to get face-to-face with a terrorist in order to glean the information you know will save American lives, because no interrogator will do more than ask for name, rank and serial number.

And if you cross the line, Mr. President, you might find a president in the future instructing the Justice Department to investigate you for breaking the law.

You should be careful what you wish for, Mr. President.

Your waistline: the latest global warming culprit

In case you were wondering what's next on the global warming/climate change agenda -- which is the same as the Obama agenda -- you may not have to look further than your (growing) waistline. A new study in the UK as reported by the BBC has found that getting back to the "slim trim days of the 1970s" would help to tackle climate change: "The rising numbers of people who are overweight and obese in the UK means the nation uses 19% more food than 40 years ago, a study suggests.

That could equate to an extra 60 mega tonnes of greenhouse gas emissions a year, the team calculated.

Transport costs of a fatter population were also included in the International Journal of Epidemiology study".

Apparently, then, that spare tire that you are more likely sporting  today is not only less attractive to look at, but  takes more fossil fuels and carbon to carry around town. In addition to calculating the increased food costs of the heavier population, the research also addressed how much additional fuel would be needed for transportation of modern-day UK compared with the 1970s version:

"Greenhouse gas emissions from food production and car travel in the fatter population would be between 0.4 to 1 giga tonnes higher per 1bn people, they estimated."

But lest you think this might lead to a campaign against obesity, the self-esteem police are making sure that everyone's "fatness" is to blame:

"This is not really just about obese people, the distribution of the whole population is what's important," said Dr Edwards.

"Everybody is getting a bit fatter. Staying slim is good for health and for the environment.

"We need to be doing a lot more to reverse the global trend towards fatness, and recognise it as a key factor in the battle to reduce emissions and slow climate change."

So, we're all at fault for not being able to fit into those 70s era hip-hugger jeans and tight knit tops with the wide stripes (not to mention the platform shoes). One wonders whether the fashion of the 1970s followed our collective level of slenderness, or whether those tight-fitting fashions and non-breathable poly-blends forced us into a perpetual state of starvation. Whatever the cause-and-effect, the eco-fanatics are now targeting our food consumption as the latest attack on mother earth. It's quite in line with the other prohibitions of personal enjoyment that are now on the chopping block, like taking that family vacation in your fuel-guzzling motor home or driving that V8 Dodge Charger you've always wanted. Nope, from now on you'll squeeze your tight little bum into a Prius and enjoy the rev of that high-performance electric motor -- that sweet hum only a committed tree-hugger could truly enjoy.

In any event, stay tuned. You can bet that this is the next agenda on the Obama mission to remake America. Last year I wrote a piece entitled "The Left's Nanny Aspirations", where I detailed attempts to ban smoking, fast-food and other sins. Left alone, these efforts -- linked to public health considerations -- pose a significant threat to our freedoms. But being able to link our eating habits to climate change will flow nicely with the EPA's recent ruling that CO2 is a pollutant that threatens our health -- even if it is the most common element in the earth's atmosphere. Finding a causal link to global warming should put us on notice that further regulation of our food consumption is coming. You can bet that second helping of potatoes on it!