Fiscal Suicide as Recovery Strategy

Only solution: a return to markets

BY DETLEV S SCHLICHTER

I do not want to waste your time and my energy with shooting down misguided Keynesian schemes all the time, schemes that have been refuted long ago and should by now be instantly laughed out of town whenever put forward. But arch-Keynesian Richard Koo’s latest attempt in the commentary section of the Financial Times to justify out-of-control deficit spending in the United States as a smartly designed and necessary policy that will keep ‘aggregate demand’ up and lead to recovery, is making the rounds on the internet. Koo’s article is a mechanical and naïve exposition of the 101 of Keynesian stimulus doctrine, clearly aimed at those who still perceive the economy as a simple equation with Y, C, I and lots of G in it. If private demand falls out from under the bottom of the economy, it can be replaced with the government’s demand. Simple.

And wrong, of course.

But the piece is not without some educational value. I promise this will be shorter than my attack on the new money mysticism at the IMF.

Fiscal suicide as recovery strategy

I am not sure if even in Washington there is anybody left who still seriously claims that $1 trillion-plus deficits year-in and year-out are anything but a sure-fire sign of a public sector out of control – a public sector that despite generous and growing staffing levels is simply running out of fingers to put into the many holes from which the money is leaking. Yet Richard Koo wants us to believe there is a method to the recklessness, that this is a finely calibrated strategy to save the economy.

Koo’s story goes like this: The private sector has overdosed on credit in the preceding boom and is now in the process of balance sheet repair. Households and corporations are not borrowing, investing and spending but instead saving and paying down debt. This is sensible and unavoidable, and not even artificially low rates of zero percent can persuade them to change their ways and rather borrow and spend. This is where the government has to step in. It has to borrow the funds that corporations and households save and pay back to their original creditors, and spend these funds for the greater good so that ‘aggregate demand’ is kept from collapsing and the economy from tanking.

The Keynesians’ New Clothes

Après nous, le déluge

BY JOHN BUTLER
Since early 2010 I have been arguing against the core neo-Keynesian precepts of the economic and monetary policy mainstream. In general I have not been optimistic that, notwithstanding their abject failure to foresee the global financial crisis, and their ongoing, failed responses thereto, the mainstream would reconsider its views. But some interesting developments on multiple fronts indicate that they are doing just that. So does this represent the beginning of the end of the flawed neo-Keynesian policies that treat debt rather than savings as real wealth; consumption rather than investment as sustainable growth; and money as something to be manipulated to ‘manage’ the economy? Sadly, no. While they may realise that their policies are failing, what they are now contemplating is an even more radical programme of outright debt monetisation, wealth confiscation and vastly expanded central planning. Investors must take appropriate actions to protect themselves now, before such policies are implemented.

A Brief Word on the US Elections

Naturally there is all manner of comment out there at present about the investment implications of the US elections. My thoughts have already been expressed in the past. I will reprint two excerpts here and leave it at that. The first is from November 2010, when I briefly discussed the impact of a divided Congress, which will remain so divided for at least the next two years:

[G]ridlock, it would seem, makes it all the more likely that the government is going to go right on doing more or less as it has done during the past few years. This is made all the simpler by the fact that the vast bulk of the US federal budget is non-discretionary. Yes, that’s right: All the time and money spent lobbying and lawmaking in Washington may keep the local economy booming and fill the newspapers with all manner of suspenseful headlines but, in reality, it is increasingly irrelevant with respect to the overwhelming portion of the federal budget, which grows automatically and is no longer just chronically in deficit, but amidst weak economic growth, exponentially so.

So for all those out there who believe that somehow gridlock is good, think again. The US is on the path to economic ruin... Après nous, le déluge.¹

And more recently, during the just-concluded campaign, I had this to say:

President v Congress, Republicans v Democrats, left v right: If there is anything the post-WWII history of US monetary and fiscal policy should teach us, it should be that when it comes to growing the money supply and the federal debt, Washington DC is run by a single branch of government, a single party and a single point on the left-right spectrum. And this branch, the party that controls it and its political orientation is not something that changes with elections. It is a national political pathology.²

So now, with the US elections settled, let’s step back and take in the larger, global picture. It isn’t pretty.

The Era Of Big Government Is Back!

It’s more than just the nanny state, it’s the sugar daddy state

By Merrill Matthews

In his State of the Union speech on January 23, 1996, President Bill Clinton famously proclaimed, “The era of big government is over.”  If anything is clear from the Obama victory, it is that the era of big government is back.

While the pundits pour over the voter turnout results and parse their meaning for Republicans and future elections, there is at least one common thread uniting all of those who voted for President Obama: They all believe in big-government handouts and bailouts.

It’s more than just the nanny state, it’s the sugar daddy state.

More so than race or gender, the biggest divide in the country may be those who embrace the government as sugar daddy, versus those who don’t.  Obama’s whole campaign was based on handouts and bailouts.  While Governor Mitt Romney tried to maintain his focus on the economy, Obama stressed how much he had given away—and would give away if reelected.

In Michigan and Ohio the president wanted voters to know that he came to the rescue of the auto industry—though for some reason he didn’t blame George W. Bush, who actually initiated the first bailouts.

While Romney tried to talk about getting the government out of health care, Obama wanted to make sure women knew that he provided them with free contraceptives.

Four More Years

Get ready for real trouble

by Andrew P. Napolitano

Only in America can a president who inherits a deep recession and whose policies have actually made the effects of that recession worse get re-elected. Only in America can a president who wants the bureaucrats who can't run the Post Office to micromanage the administration of every American's health care get re-elected. Only in America can a president who kills Americans overseas who have never been charged or convicted of a crime get re-elected. And only in America can a president who borrowed and spent more than $5 trillion in fewer than four years, plans to repay none of it and promises to borrow another $5 trillion in his second term get re-elected.

What's going on here?

What is going on is the present-day proof of the truism observed by Thomas Jefferson and Alexander Hamilton, who rarely agreed on anything in public: When the voters recognize that the public treasury has become a public trough, they will send to Washington not persons who will promote self-reliance and foster an atmosphere of prosperity, but rather those who will give away the most cash and thereby create dependency. This is an attitude that, though present in some localities in the colonial era, was created at the federal level by Woodrow Wilson and Theodore Roosevelt, magnified by FDR, enhanced by LBJ, and eventually joined in by all modern-day Democrats and most contemporary Republicans.

Mitt Romney is one of those Republicans. He is no opponent of federal entitlements, and he basically promised to keep them where they are. Where they are is a cost to taxpayers of about $1.7 trillion a year. Under President Obama, however, the costs have actually increased, and so have the numbers of those who now receive them. Half of the country knows this, and so it has gleefully sent Obama back to office so he can send them more federal cash taken from the other half.

Bad Ideas Never Die

Gaga Over Galbraith

by Joseph T. Salerno

Based on his book sales, John Kenneth Galbraith was probably the most read economist of the 20th century. From the publication of his first bestselling book The Great Crash in 1954 through the 1980s, the American left-liberal intelligentsia and media breathlessly anticipated and wildly celebrated the publication of each new book. Nonetheless, most technical economists, regardless of their political orientation, did not take his work seriously. By the 1990s Galbraith's work had been thoroughly discredited among professional economists. Indeed, in his 1994 book, Peddling Prosperity, leftist economist Paul Krugman held up Galbraith as the prototype of a left-wing "policy entrepreneur" who, like his supply-sider counterparts on the Right, sought an audience among policymakers and the educated public, outside the cozy circle of academic economists.

In his book, Krugman ridiculed The New Industrial State, Galbraith's magnum opus. He pointed out its wildly erroneous predictions regarding the evolution of the US economy toward greater dominations by giant corporations that were insulated from market forces, manipulated consumer preferences at will through advertising, and whose interlocking managerial and technological elites (the ominously labeled "Technostructure") could make decisions without regard to the interests of stockholders. With rhetorical understatement, Krugman concurred with the sentiments of earlier academic critics, characterizing the book as one that "could safely be ignored."

The far-right-sounding ideas of Swiss greens EcoPop display the misanthropy of Malthusian thought

The greens showing their true colours

by Patrick Hayes 

For greens, the ends will always justify the means when it comes to saving the planet. In the UK, they have opportunistically latched themselves on to left-wing movements to try to gain purchase with a broader public. But, as Swiss campaign group Ecology and Population (EcoPop) has demonstrated, in an attempt to pursue their Malthusian goals, greens can be equally happy tapping into the anti-immigrant rhetoric of the far right.

In a stunt last week, members of EcoPop carried dozens of cardboard boxes into the Swiss chancellery which contained 120,700 certified signatures calling for immigration into Switzerland to be capped at 0.2 per cent of the resident population. Under Swiss law, this means that a referendum will now be held on the proposal. Such a move trumps even the efforts of the far-right Swiss People’s Party, which has long lobbied for greater immigration controls.

But these greens aren’t mobilising for an immigration clampdown with banners claiming ‘keep the darkies out’ as right-wing groups have done in the past. Nor are they using dodgy, discredited scientific arguments to justify racial superiority, wielding books like Madison Grant’s The Passing of The Great Race for evidence.

No, instead EcoPop delivers its demands for immigration curbs carrying a banner asking: ‘How many people can the Earth tolerate?’ The group’s members use the (equally dodgy and discredited) Malthusian science of population growth and babble on about our ‘finite planet’. And they have reportedly been strongly influenced by the theories of US Malthusian Paul Ehrlich, author of The Population Bomb.

EcoPop bends over backwards to claim that it is not singling out particular races when advocating its policies. According to the BBC, it claims to be ‘opposed to all forms of xenophobia and racism’. But, the group says, ‘Switzerland must limit immigration to avoid urbanisation and to preserve agricultural land’.

Defending the press as an unruly mess

The myth that the UK press is too free

by Mick Hume 

As the debate about press regulation warms up with the reportedly imminent publication of Lord Justice Leveson’s report, there seem to be some important misconceptions around.

On one side, those demanding regulation backed by statute appear to be either deluding themselves or attempting to delude the rest of us that this is not the same thing as state interference in the press. But it is.

On the other, some of those resisting such a regulatory system seem to assume that anything short of statutory-backed regulation would be a victory for press freedom. But it would not necessarily be so.

These issues came into focus at two events I spoke at recently, involving both sides of the debate. One was the first event of the Free Speech Network (FSN), a loose alliance of media-industry groups. The other speakers were Professor Tim Luckhurst, whose important pamphlet against statutory regulation, Responsibility Without Power, was launched at the meeting, and Conservative MP John Whittingdale, chair of the House of Commons Culture, Media and Sport committee. The audience included a lot of media people and various journalism lecturers and professors from the Hacked Off lobby – hackademics, the poachers-turned-gamekeepers of this whole debate. They were given plenty of scope to argue for statutory-backed press regulation by the chair, John Humphrys, in his best the-BBC-really-is-neutral mode (he even allowed them the last word, from the floor). Hacked Off’s celebrity voiceover artists were also there, but made less of a contribution: Hugh Grant went off in a huff after his Channel 4 film crew was refused entry, while Steve Coogan stood at the back looking grumpy throughout and at the end gave a half-hearted ‘boo’.

Russia's Socialist Heritage

Why is such a rich country so poor?

By Anthony de Jasay

Why should Russia lag so far behind other industrial countries, why is it unable to make more of its obvious economic potential?

Admittedly, the country is penalised by a number of initial structural handicaps. Culturally, it is neither fish nor fowl, being neither wholly European nor wholly Oriental on personal characteristics and traditions, suspicious of and suspected by both worlds. It extends over too large an area compared to its population, saddling both the production and the distribution of its output with heavier transport costs than countries of denser population have to bear. Perhaps most important, it has an unfriendly climate. Some historians, tongue in cheek, explain the expansionary drive of Russia over the last three centuries by the longing of its people to escape from the climate of their homeland and settle under a sunnier, less humid, healthier sky, yet still their own empire. As for cultivating the land, the saying goes that there are four natural catastrophes in Russia every year, Spring, Summer, Autumn and Winter.

All in all, however, the endowments almost certainly outweigh the handicaps. Russia, even after the secession of the Ukraine, has enough high-quality farmland. It has inexhaustible resources of timber and vast deposits of every kind of ore from iron and bauxite to gold, much of it low cost. Using these resources, there is a reasonably educated work force of mixed quality, working 1,900 hours a year that compares with about 1,500 in Western Europe. Russian workers are mostly obedient and bow to authority, they have weak unions, strikes are rare and wages are settled on the level of the enterprise rather than of the nationwide industry, an advantage the Russian labour market has over the West and that keeps unemployment at just over 5 per cent, close to the level of practically full employment. Skill from shop floor to middle management level is adequate. Far more decisive than any of these more or less commonplace advantages is Russia's exceptional oil and gas wealth, of which more below. Taking a rough-and-ready account of both the obvious helps and hindrances, the visitor from Mars would expect Russians to be no less prosperous than Englishmen, Frenchmen or Germans. His expectation would be legitimate, but very far out.

Who Killed Rudy Giuliani?

How Ron Paul won the war for conservatism’s future

By W. JAMES ANTLE III

When Ron Paul leaves office in January, he will have been more successful than many of the legislators who spent decades maligning him. Paul’s ideas have gradually gone from marginal to mainstream, and his record shows how much even a single determined man of principle can do to change a movement. In foreign policy especially, the Texas congressman leaves behind a new generation of leaders, both libertarian and conservative, who challenge the disastrous bipartisan consensus.

A decade ago, only seven Republican members of Congress voted against the Iraq War—six congressmen and one senator. The number of conservative legislators who opposed the war was even smaller still, the redoubtable trio of Jimmy Duncan, John Hostettler, and Paul.

The other dissenters were moderate to liberal Republicans representing districts where George W. Bush and any policy he proposed—much less sending young Americans to die in a war of choice—would have been deeply unpopular. Lincoln Chafee, the only GOP senator to vote against the authorization of force, was the son of the last great Rockefeller Republican and easily his party’s most liberal member of Congress. Connie Morella of Montgomery County, Maryland represented the most Democratic congressional district held by a Republican.

Rounding out this group was the unpredictable Iowan Jim Leach and Amo Houghton, a New Yorker who voted with Democrats on many issues. While Paul, Duncan, and Hostettler all opposed the war from the right, the bare majority of antiwar Republicans opposed it from the left.

Small as this group was, its ranks would soon grow thinner. Morella was defeated in 2002, right after voting against the war, the victim of redistricting by Maryland Democrats. Houghton retired after the 2004 elections. Chafee, Hostettler, and Leach were all defeated in the Democratic tidal wave of 2006.

Barack Obama’s new ethnic majority

An irresistible political force is about to meet an immovable economic object — on the edge of a vertiginous fiscal cliff

By John O'Sullivan

‘I’ve come back to Iowa one more time to ask for your vote,’ said President Obama at an emotional ‘last ever’ campaign meeting. ‘Because this is where our movement for change began, right here. Right here.’ And his eyes briefly moistened. The nostalgia was doubtless sincere, and the address correct, but it was misleading to describe his 2012 election campaign as a continuation of his earlier ‘movement for change’. In reality, it has been a smoothly ruthless operation to distract attention from a record that has been disappointingly bereft of change. He triumphed over himself as much as over the hapless Mitt Romney.

Until it produced a glossy economic leaflet so that the President could wave it as evidence that, like Romney, he too had a ‘plan’, the Obama campaign had concentrated on blaming George W. Bush for America’s continuing troubles. It denounced Romney as a vulture capitalist murderously hostile to ordinary people, and promised to protect women against the GOP’s supposed plan to abolish both contraception and abortion. Both sides ran relentlessly negative adverts but, as the result showed, the Democrats did it better. Obama will be President for another four years.

To win in circumstances that seemed ripe for his defeat is a remarkable achievement — but the victory can scarcely be described as glorious. The President almost tied with Romney (whom he reportedly despises) in the popular vote. The loss of Senate seats had little to do with his coattails but was largely due to the individual follies or bad luck of Republican candidates. Republicans retained control of the House and now control 30 governorships, the highest number since 2000. The President will have to deal with a hostile half of Congress in an atmosphere poisoned by the extraordinarily ruthless partisanship of this ‘post-partisan’. And in one vital particular, the campaign almost foundered.

The Case For A Constitutional Convention In 2016

That which is unsustainable will go away, and the Status Quo is unsustainable on multiple levels

by Charles Hugh Smith

Now that the billion-dollar theatrics between various vested interests have finally concluded, it's time to ask if there is an end-game to Imperial over-reach and corporatocracy.

The Status Quo won--no surprise there, as there was no other choice offered.

The Imperial Presidency won, too, of course; anyone anywhere can still be assassinated by order of the Imperial President, regardless of their citizenship. Anyone can be labeled "an enemy of the State" and either liquidated (high fives all around!) or crushed by the Espionage Act (transparency is a crime), Patriot Act (dissent is also criminal), the NDAA, or maybe another Executive Order.

The neofeudal Aristocracy also won, as vested interests were free to buy "free speech" in unlimited quantities.

Everyone at the trough of the Central State won, as the welfare state--personal transfers and corporate welfare, there's something for everyone--has created its own Id Monster, the tyranny of the majority: Tyranny of the Majority, Corporate Welfare and Complicity (April 9, 2010).

This pursuit of self-interest guarantees that the Savior State will lurch off the fiscal cliff at some point, much to the dismay of everyone feeding off it; it was supposed to be permanent, right? Alas, as the Buddha taught, permanence is illusory, even for global Empires.

Unfortunately for the Status Quo, this is the apogee of "extend and pretend." When the wheels finally come off the global economy in 2013, the Status Quo will not be able to "save the day" by lowering interest rates to zero--interest rates have already been zero for four years.

Obama Wins A Second Term

Now What?

By Ron Holland

I'm certainly glad the election is finally over. While I have loved politics my entire life, this presidential election has gone on for over three years, including the GOP primaries, and I've had my fill of meaningless slogans and counter-slogans, lies and counter-lies. I had to quit watching political news the last few weeks, as I thought I would become physically sick if I watched any more establishment political "experts" give their required opinions and propaganda bites.

The 2012 presidential election has been like a ballgame hyped and built up over three years. We are programed to cheer and act out our sheep-like roles in partisan politics when, like the game, unless we have money bet on the outcome the actual winner will have absolutely no impact on our lives.

This was destined to be a close, statistically tied election, as get out the vote efforts included repetitive harping on its life-changing importance and the evils of the opposition candidates and party. The bottom line is that voting percentages generate credibility for the failed American political system.

"There's not a dime's worth of difference between the Democrat and Republican parties." George Wallace, 1966 Alabama governor and presidential candidate.

Note it now takes 71 cents to equal the purchasing power of a dime in 1966 – if you believe the false inflation statistics out of Washington. Actually, I could buy a soft drink for a dime in 1966 whereas today it is closer to $1.50. Check house prices even with the pullback or college tuition if you want an accurate inflation estimate.

The Elections, Gridlock and Foreign Policy

The elections will paralyze Obama domestically and reality will limit his foreign policy latitude

By George Friedman

The United States held elections last night, and nothing changed. Barack Obama remains president. The Democrats remain in control of the Senate with a non-filibuster-proof majority. The Republicans remain in control of the House of Representatives.

The national political dynamic has resulted in an extended immobilization of the government. With the House -- a body where party discipline is the norm -- under Republican control, passing legislation will be difficult and require compromise. Since the Senate is in Democratic hands, the probability of it overriding any unilateral administrative actions is small. Nevertheless, Obama does not have enough congressional support for dramatic new initiatives, and getting appointments through the Senate that Republicans oppose will be difficult.

There is a quote often attributed to Thomas Jefferson: "That government is best which governs the least because its people discipline themselves." I am not sure that the current political climate is what was meant by the people disciplining themselves, but it is clear that the people have imposed profound limits on this government. Its ability to continue what is already being done has not been curbed, but its ability to do much that is new has been blocked.

The Plan for American Power

The gridlock sets the stage for a shift in foreign policy that has been under way since the U.S.-led intervention in Libya in 2011. I have argued that presidents do not make strategies but that those strategies are imposed on them by reality. Nevertheless, it is always helpful that the subjective wishes of a president and necessity coincide, even if the intent is not the same.

A small victory in a small campaign

When you play for small stakes, the spoils of victory are also small

Barack Obama has returned to the White House following one of the most acrimonious, negative and ideas-free campaigns in living memory

by Sean Collins 

The polls before the US presidential election showed a tight contest, with Barack Obama edging out Mitt Romney. And that is what happened, more or less. The nationwide vote tally was very close, with Obama ahead by 50 per cent to 48 per cent as we go to press. But under America’s electoral-college system, Obama won handily, currently holding 303 votes to Romney’s 206 votes, with Florida’s 29 votes looking like they, too, might go to Obama.

This Obama victory was rather different to his win in 2008, and not only because Obama won by a much narrower margin. Turnout was down from 2008, although it held up more than some had expected. More importantly, the level of enthusiasm was significantly lower. In 2008, you could feel the excitement; this year voters went about their business in a low-key way.

You could say that it was inevitable that the turnout and passion would be lower, given that the novelty of electing the first black president was no longer a factor. But the drop-off had more to do with the character of the campaign. In 2008, Obama offered the promise of moving beyond the old politics of petty divisions and rancor, and he spoke in transcendent terms of ‘hope’ and ‘change’. People were genuinely inspired – not just because Obama was black, but because he seemed to present a way forward. In 2012, that message vanished. Where once Obama spoke of ‘transforming’ the future, he now spent most of his time attacking his opponent, occasionally defended his record, and said very little about what he would do if elected.

Indeed, the election put to an end one of the most acrimonious, negative and ideas-free campaigns in living memory. The most striking thing was how the attacks were so personal in nature. Obama’s campaign was most guilty in this regard, spending the entire campaign attacking Romney’s character: depicting him as a ‘vulture’ capitalist, and suggesting he was unethical and unpatriotic. In response, Romney himself mostly held back from retaliating, but his surrogates suggested that Obama’s failings as president had to do with his aloof, unenergetic or vindictive nature.

It Doesn't Matter

A choice of who is going to captain the sinking Titanic

By Simon Black

It’s really hard to ignore what’s happening today; the election phenomenon is global. Over the last several weeks, I’ve traveled to so many countries, and EVERYWHERE it seems, the US presidential election is big news. Even when I was in Myanmar ten days ago, local pundits were engaged in the Obamney debate. Chile. Spain. Germany. Finland. Hong Kong. Thailand. Singapore. It was inescapable.

The entire world seems fixated on this belief that it actually matters who becomes the President of the United States anymore… or that one of these two guys is going to ‘fix’ things.

Fact is, it doesn’t matter. Not one bit. And I’ll show you mathematically:

1) When the US federal government spends money, expenses are officially categorized in three different ways.

 Discretionary spending includes nearly everything we think of related to government– the US military, Air Force One, the Department of Homeland Security, TSA agents who sexually assault passengers, etc.

Mandatory spending includes entitlements like Medicare, Social Security, VA benefits, etc. which are REQUIRED by law to be paid.

 The final category is interest on the debt. It is non-negotiable.

 Mandatory spending and debt interest go out the door automatically. It’s like having your mortgage payment autodrafted from your bank account– Congress doesn’t even see the money, it’s automatically deducted.

History is cyclical

Will A Prophet Assume Command?

by Jim Quinn 

[Yes it's daunting; but well worth the time to grasp the inexorable path that we are on and rather stunning parallels to previous periods in our history]

“The next Fourth Turning is due to begin shortly after the new millennium, midway through the Oh-Oh decade. Around the year 2005, a sudden spark will catalyze a Crisis mood. Remnants of the old social order will disintegrate. Political and economic trust will implode. Real hardship will beset the land, with severe distress that could involve questions of class, race, nation and empire. The very survival of the nation will feel at stake. Sometime before the year 2025, America will pass through a great gate in history, commensurate with the American Revolution, Civil War, and twin emergencies of the Great Depression and World War II.” – Strauss & Howe – The Fourth Turning

Strauss & Howe wrote these words in 1997. They had predicted the arrival of another Crisis in this time frame in their previous book Generations, written in 1990. This wasn’t guesswork on their part. They understood the dynamics of how generations interact and how the mood of the country shifts every twenty or so years based upon the generational alignment that occurs as predictably as the turning of the seasons. The last generation that lived through the entire previous Crisis from 1929 through 1946 has virtually died off. This always signals the onset of the next Fourth Turning. The housing bubble and its ultimate implosion created the spark for the current Crisis that began in September 2008, with the near meltdown of the worldwide financial system. Just as the stock market crash of 1929, the election of Lincoln in 1860, and the Boston Tea Party in 1773 catalyzed a dramatic mood change in the country, the Wall Street created financial collapse in 2008 has ushered in a twenty year period of agony, suffering, war and ultimately the annihilation of the existing social order.

We have experienced the American High (Spring) from 1946 until 1964, witnessing America’s ascendancy as a global superpower. We survived the turbulent Consciousness Revolution Awakening (Summer) from 1964 until 1984, as Vietnam era protests morphed into yuppie era greed. The Long Boom/Culture Wars Unraveling (Fall) lasted from Reagan’s Morning in America in 1984 until the 2008 Wall Street/Federal Reserve spawned crash. The pessimism built to a crescendo as worry about rising violence and incivility, widening wealth inequality, and the splitting of the national consensus into extremes on the left and right, led the country into a winter of discontent. The Global Financial Crisis (Winter) has arrived in full fury and is likely to last until the late 2020’s. It will be an era of upheaval, financial turbulence, economic collapse, war, and the complete redefinition of society, as the existing corrupt status quo is swept away in the fury of powerful hurricane winds of change. History is cyclical and we’ve entered the most dangerous season, when the choices we make as a nation will have profound long lasting implications to the lives of future unborn generations.

The linear thinkers and so called progressives who believe that history charges relentlessly forward and human ingenuity overcomes all obstacles as the world becomes progressively richer, advanced, and humane ignore the lessons of history that have been re-written every 80 to 100 years for centuries. Generational theory is so simple that even an Ivy League intellectual economist, corrupt congressman, or CNBC anchor bimbo could grasp the basic concept.

What we need is not a new president but a new presidency

Imperial powers will only expand as crises offer new opportunities for extra-legal power grabs

by Charles Hugh-Smith

There are few practical limits on presidential power. This is a key dynamic in the failed presidencies of G.W. Bush and Barack Obama.

If you're not familiar with the term The Imperial Presidency, here is an introduction:

Through various means, Presidents subsequently acquired powers beyond the limits of the Constitution. The daily accountability of the President to the Congress, the courts, the press and the people has been replaced by an accountability of once each four years during an election. These changes have occurred slowly over the centuries so that that which appears normal differs greatly from what was the original state of America.

Historian Arthur M. Schlesinger, Jr. popularized the term with his book The Imperial Presidency (Kindle edition), originally issued in 1973 but updated in 2004 to include a discussion of the G.W. Bush presidency. Schlesinger summarized the "World War II and beyond" expansion of presidential powers thusly:

“The weight of messianic globalism was indeed proving too much for the American Constitution. If this policy were vital to American survival, then a way would have to be found to make it constitutional; perhaps the Constitution itself would have to be revised. In fact, the policy of indiscriminate global intervention, far from strengthening American security, seemed rather to weaken it by involving the United States in remote, costly and mysterious wars, fought in ways that shamed the nation before the world.

When the grandiose policy did not promote national security and could not succeed in its own terms, would it not be better to pursue policies that did not deform and disable the Constitution?"

Capitalists uninterested in Capitalism

How To Bring Back Capitalism

by Tyler Durden

"Capitalists seem almost uninterested in Capitalism" is how Clayton Christensen describes the paradox of our recovery-less recovery. In an excellent NYTimes Op-ed, the father of the Innovator's Dilemma comments that "America today is in a macroeconomic paradox that we might call the capitalist’s dilemma."

Whatever happens on Election Day, Americans will keep asking the same question: When will this economy get better? 

In many ways, the answer won’t depend on who wins on Tuesday. Anyone who says otherwise is overstating the power of the American president. But if the president doesn’t have the power to fix things, who does?

It’s not the Federal Reserve. The Fed has been injecting more and more capital into the economy because — at least in theory — capital fuels capitalism. And yet cash hoards in the billions are sitting unused on the pristine balance sheets of Fortune 500 corporations. Billions in capital is also sitting inert and uninvested at private equity funds.

Capitalists seem almost uninterested in capitalism, even as entrepreneurs eager to start companies find that they can’t get financing. Businesses and investors sound like the Ancient Mariner, who complained of “Water, water everywhere — nor any drop to drink.”

So businesses and investors are drowning in Fed-sponsored liquidity but are endowed with what he calls the Doctrine of New Finance - where short-termist profitability guides entrepreneurs away from investments that can create real economic growth.

... the Doctrine of New Finance is taught with increasingly religious zeal by economists, and at times even by business professors like me who have failed to challenge it...

His three forms of 'innovation' (empowering, sustaining, and efficiency)...

·        "empowering" innovations. These transform complicated and costly products available to a few into simpler, cheaper products available to the many.

·        "sustaining" innovations. These replace old products with new models.

·        "efficiency" innovations. These reduce the cost of making and distributing existing products and services.

Election 2012: How The Winner Will Destroy America

The guy in the White House into 2013, Republican or Democrat, is going to be a part of the problem, nothing more…

by Brandon Smith

Of all the hollow and uninspired elections that this country has suffered through over the past several decades, one might think that at some point long ago the American public would have finally struck a plateau of disenfranchisement; that we could sink no further into despondency, that there is a saturation limit to the corruption of our voting process.  Unfortunately, there has been no such luck.  I have to say that in all honesty I have never seen more people gut jumbled and disgusted with our electoral system than I have in 2012.  Sure, there is still a hyper-gullible segment of the populous that continues to play the game, but even those idiots are beginning to admit that the choices offered are dismal at best, catastrophic at worst.  The fog of the false Left/Right paradigm is starting to lift, and all that lay in its wake is a hoard of lost wide-eyed flabbergasted followers without a coattail or a talking point to cling to.  Sudanese refugees have a better chance of survival than these people do…

Even in the more obvious of fraudulent past elections there was at least an attempt by the establishment to present a pageant of conflicting ideologies (George W. Bush vs. John Kerry comes to mind).  There has always been the Democrat who pretends to be anti-war, or the Republican who pretends to be small government, or the Democrat who pretends to defend our right to privacy, and the Republican who pretends to be pro-2nd Amendment.  But in 2012, even the theater of rhetoric has disappeared.  Both primary party candidates seem to be sharing the same intestinal tract and the same teleprompter, and now, the average American is asking a new set of questions.  They do not wonder how these men will change things for the better.  Not at all.  Instead, they wonder which one will do LESS DAMAGE while in office.  This is the terrible reality we have come to understand in our society today.  It is a sad awakening, but a necessary one. 

Whoever Wins, We’re in for an Age of Austerity

America's demographic crisis will stretch our entitlements past the breaking point

By PATRICK J. BUCHANAN

“Are the good times really over for good?” asked Merle Haggard in his 1982 lament.

Then, the good times weren’t over. In fact, they were coming back, with the Reagan recovery, the renewal of the American spirit and the end of a Cold War that had consumed so much of our lives.

Yet whoever wins today, it is hard to be sanguine about the future.

The demographic and economic realities do not permit it.

Consider. Between 1946 and 1964, 79 million babies were born–the largest, best-educated and most successful generation in our history. Bill Clinton and George W. Bush, both born in 1946, were in that first class of baby boomers.

The problem.

Assume that 75 million of these 79 million boomers survive to age 66. This means that from this year through 2030, an average of nearly 4 million boomers will be retiring every year. This translates into some 11,000 boomers becoming eligible for Medicare and Social Security every single day for the next 18 years.