Ponderstorm My Brainstorm on Life & Politics

As I noted in my polling post yesterday, we are witnessing an unprecedented amount of pro-Obama bias in the mainstream media. The bias is so widespread that in many circles it has become politically incorrect to even voice support for John McCain. This peculiar political scenario reminds me of the fairy tale “The Emperor’s New Clothes” by Danish poet Hans Christian Andersen.

As the story goes, the emperor cares about little more than clothing and always wants to wear the best in the land. One day he is approached by two swindlers who promise him the finest suit from the most beautiful and amazing fabric in the world. This fabric, the emperor is told, is visible to only the wise. In short, anyone who is either stupid or unfit will not be able to see the fabric.

The weak-minded emperor is flattered by the swindlers and, when shown the magical “fabric” does not want to admit he cannot see it. So, to not appear stupid or unfit as emperor, he vainly pretends the fabric is beautiful and authorizes the suit be made at once. Similarly, none of the emperor’s ministers want to appear unfit or stupid so they also pretend to see the fabric and proclaim their admiration.

After much supposed labor, the swindlers tell the emperor that the suit is finished. The emperor, still not admitting he cannot see a stitch of clothing, is “dressed” in the suit. Those around him applaud and gush over the tailors’ workmanship and how good it looks on the emperor. The emperor in his vanity enjoys the attention and proceeds to parade through the capital in a special procession to show off his new “clothes” that only the wise can see. Everyone in the kingdom succumbs to the pressure to not appear stupid. They lavish admiration for the beautiful “clothing” that is fit only for the emperor.

During the parade, however, a small child cries out, “But he has nothing on!” At that moment the crowd no longer withholds their better judgment and admits that the child told the truth — the emperor really is wearing no clothes! The emperor, though, not admitting his foolishness, holds his head high and continues to proceed through the town without clothing.

I feel this nearly 200-year old fairy tale fits our times very well. I offer the following analogy: The emperor is Barack Obama who has been swindled into thinking he is “the change we can believe in” and a few other foolish, empty campaign slogans.

The mainstream news media, much like the emperor’s ministers, don’t want to appear foolish in front of the emperor since he has a rock star-like following among the young and the elite. Instead of researching the fabric (and noting its flaws, including lack of executive experience, radical associations, ACORN fraud, “spread the wealth around” socialism, give 95% a tax cut when only 65% pay any income taxes lie, etc.), the media swoons over the emperor’s fabric and overlooks the obvious. Meanwhile, they busy themselves microscopically researching the fabric worn by John McCain, Sarah Palin, Joe the Plumber and others not associated with the emperor.

The American people, not wanting to appear stupid, feel compelled to go along with the adoring ministers (mainstream media) and likewise admire the fabric. In droves they also overlook its obvious flaws and enthusiastically proclaim its greatness. When asked, however, few can explain why they like the fabric. Instead they loudly proclaim that we need the emperor because he talks so well and looks so good to the world. Besides, what he is wearing doesn’t matter.

The rest of this analogy will be written on November 4th. Hopefully a child will step forward and tell the voting crowds that the emperor has no clothes on. When the crowds hear that child will they open their self-imposed blinded eyes and admit that Obama is an empty suit and unfit to serve as President? Only then, when voters realize the emperor is naked, will it be politically correct to oppose Barack Obama.

Posted under Barack Obama, Campaign

Let me clearly state that I don’t like or approve of the recent federal intervention in the United States economy. Government policy over the past three decades, pushed to extremes by left-leaning and radical groups like ACORN and using the Community Reinvestment Act, created the corrupt lending environment that was exploited by Fannie Mae and Freddie Mac to produce the toxic mortgage situation in which we find ourselves. So, since government is primarily responsible for this crisis, why should we then trust government to fix the problem they created?

This unfavorable economic environment is not a shortcoming of capitalism. It is a direct result of government manipulation within our economy for the benefit of a few people. Sometimes manipulation gives an unfair advantage to the rich and sometimes the poor. In this current environment, those who should not get a loan it were encouraged to borrow beyond their means.  While historically no bank would loan money under such terms, Fannie and Freddie created an unnatural market for banks to offload risky mortgages. The result was the poisoning of our entire financial system.

Unfortunately, as is often the case, the federal government stepped in and removed even more of our individual freedoms and made our economic system less of a capitalistic one and more like a planned economy under socialism. To give you an idea of the extent of the change, we’re now talking about the government owning or nationalizing large portions of our banking system. We’re also talking about government confiscating taxpayer money to buy up and refinance failing mortgages. We’re also talking about government, not shareholders, owners or investors, telling companies how much they can pay their employees and how to run their businesses. Sounds more like the old Soviet Union than what the Founding Fathers set up, doesn’t it?

This is an extremely dangerous precedent that will severely damage our economy in the long run. It makes the American taxpayer the ultimate holder of risks that the market should allocate to willing investors. It also gives government enormous control over our economy, our money and our everyday lives. In effect, a government bureaucrat will soon be deciding who can borrow, how much they can borrow and under what terms. In the name of fairness and environmentalism, other factors will probably be imposed later like how large our house can be and whether we really need what we can afford.

Instead of the massive bailout that was adopted, I wish government had essentially stepped out of the picture and removed Read More…

Posted under Economy, Government

After watching three debates and many speeches, we all know John McCain is not an eloquent speaker. His mannerisms sometimes appear strained, partly due to torture-related injuries received decades ago as a prisoner of war, and partly because he is not as refined as his opponent. However, in this election we’re choosing a leader, not a celebrity spokesman, and so those cosmetic factors should be of little concern given the grave issues we face as a nation.

With that in mind, there are at least 10 things I’d like to see John McCain address everyday on the campaign stump.  If he will fully embrace and show energy and emotion on these ten populist issues, I feel the election will be his to lose. However, if he won’t actively campaign on them, then he will be defined by his opponent and will miss the chance to paint Barack Obama as the extreme liberal he really is. Apart from a strong stance on these issues, the race will degenerate into a popularity contest for which McCain cannot win.

Here are 10 things I’d like to see McCain embrace in his campaign:

1.  Fighting pork and cutting government spending.

Obama likes to accuse McCain of using a hatchet instead of a scalpel when McCain proposes a broad spending freeze. If I were McCain I’d welcome that accusation and say “Just a hatchet? Give me a chain saw.” The simple truth is you cannot cut much with a scalpel but you can cut vast quantities more with a larger tool. Government has so much pork and excessive spending that we need a chainsaw to cut it all out.

2. Support for the War and the need to kill terrorists.

National security is still the President’s number one task.  McCain should talk daily about his successes in this area and drive home the need for a competent Commander in Chief who supports winning the War and not just withdrawing. The same should be said about Iran and their support of terrorism. Iran must also be stopped in their efforts to enrich uranium and make nuclear weapons. This is a serious international problem that the next President will have to deal with.

3. The Supreme Court.

The next President is likely to appoint at least two Supreme Court Justices as well as scores of federal judges. These are lifetime appointments. McCain says he will nominate strict constructionists. Obama supports those who will legislate from the bench. Need I say more?

4. Abortion and the right to life.

Embracing a culture of life is critical to the survival of our nation. Forty million abortions since Roe v. Wade is equivalent to exterminating more than the entire population of California. To kill that many Americans today would mean that more than 13 out of every 100 of us would have to die.  Read More…

Posted under Campaign, John McCain

Jeffrey A. Miron is a senior lecturer in economics at Harvard University. He is a Libertarian and was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan. His commentary, entitled Bankruptcy, Not Bailout, is the Right Answer, was published today at CNN.com and the American Future Fund, an organization that advocates conservative, free market ideals.

The latest bailout plan that was voted down yesterday would have authorized $700 billion for the U.S. Treasury to purchase “troubled assets” from Wall Street financial institutions. Miron argues that this bailout proposal was a “terrible idea” and explains why. First, however, he explains how we got ourselves into this mess.

The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.

Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared.

This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle.

Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets.

After pinning the blame squarely on failed government policy, Miron correctly reasons that it is unwise to let government do more of the same in the name of recovery.

The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.

Miron then builds a case for allowing financial institutions to declare Read More…

Posted under Taxes

Think about this with me for a minute if you would. The government is asking us taxpayers to hand over $700 billion more dollars on top of the $2+ trillion we already give them (or they obligate us with in the form of debt). That’s an enormous amount of money.

Today there is an Associated Press article that looks at what just how big $700 billion is compared to other spending. I quote some of the article below:

You could buy yourself a war with that kind of money - the U.S. has spent $648 billion on Iraq war operations so far.

You could match Franklin Roosevelt on his New Deal and raise him billions more.

Even in a town where billions come and go without anyone blinking, the money that could go into the Wall Street rescue is eye-popping. The House on Monday voted down a proposed $700 billion bailout package, but congressional leaders said they were committed to trying again.

What else could the government do with a $700 billion blank check? There are, well, billions of possibilities.

It could ensure universal health care coverage for six years, for example, or upgrade the country’s most deficient bridges four times over. All the work to upgrade coastal levees that’s been done since Hurricane Katrina? It’s a mere drop in the proverbial $700 billion bucket - $7 billion, or just 1 percent. You could build 1,750 bridges to nowhere.

Or run an entire country. Seven hundred billion dollars is more than twice the size of the economy of Denmark, which had a gross domestic product of $312 billion in 2007.

Seven hundred billion dollars would buy 70 Hubble-type space telescopes. Or about seven international space stations. It would finance the National Institutes of Health, the nation’s premier medical research institute, for two decades. Or pay the U.S. national intelligence budget for 15 years.

According to the Wall Street Journal, half the money FDR spent on his New Deal program to lift the country out of the Depression and banking crisis was for public works projects. For $250 billion in today’s dollars, the nation got 8,000 parks, 40,000 public buildings and 72,000 schools.

The article provides even more examples but I think you get the picture. My question for the government is simple: You created this problem so why should I trust you to fix it with more government?

Posted under Taxes