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A Crazy Idea: Listen To The People Who Got It Right
Peter Schiff has an editorial in the Wall Street Journal today. If you don’t know who Peter Schiff is, or even if you do, check out this video compilation we posted several months ago. Oh heck, let’s just repost it, shall we? It never gets old:
As you can see from this footage, Schiff predicted our economic collapse years ago, when just about every other “expert” in the political, business and pundit worlds thought things were peachy. Now, in today’s editorial, he’s again warning us of trouble ahead. Our government can’t just spend its way out of this problem, he says. Why not? Because we’re broke, that’s why, and the magic Mao Zedong Visa card we’ve been charging everything on for years is maxed out:
… creditor nations [like China, Japan, and Saudi Arabia], who already own trillions of dollars of U.S. government debt, are the only entities capable of underwriting the spending that Mr. Obama envisions and that U.S. citizens demand.
These nations, in other words, must never use the money to buy other assets or fund domestic spending initiatives for their own people
… it seems inconceivable to President Obama, or any respected economist for that matter, that our creditors may decline to sign on. Their confidence is derived from the fact that the arrangement has gone on for some time, and that our creditors would be unwilling to face the economic turbulence that would result from an interruption of the status quo.
But just because the game has lasted thus far does not mean that they will continue playing it indefinitely. Thanks to projected huge deficits, the U.S. government is severely raising the stakes. At the same time, the global economic contraction will make larger Treasury purchases by foreign central banks both economically and politically more difficult.
The sections we put in bold above called to mind another editorial in today’s editions, this one by John Lee in the Times Online. Today is the first day of the Year of the Ox in China, but as we’ve written about ourselves in the past, Lee points out that China’s economy has already been badly gored by the financial crisis. In other words, the very people we are expecting to fund our grand stimulus plan could use some serious financial stimulation themselves:
Even before the global financial crisis, those in absolute poverty (earning less than US$1 a day) doubled in China over the past decade. More than 400 million had seen their net incomes decline over the same period despite record GDP growth. It is no wonder that domestic consumption growth has been slow and will not be able to take up the slack as the export sector suffers. Instead China must rely on state-led fixed investment to keep growth at 8 per cent, despite acknowledging that this strategy is becoming more inefficient and wasteful, and therefore increasingly unsustainable.
China’s government has already been stimulating its economy with massive government spending, and even keeping its people intentionally poor during the boom years. And yet, we’re counting on them to suck up another couple hundred billion–at least–in Treasury bonds to pay for our recovery? Hmm. Is it just us or, on the face of it, does that seem incredibly … well … iffy?
How long until the Chinese start spending on their own recovery? How long until they put what they have left towards their own stimulus plan? Even more frightening still, how long until they start dumping the hundreds of billions in bad Uncle Sam I.O.U.s they already own on the global market?
On a separate, but related topic, how long until we here in America get ourselves some new “experts“? Peter Schiff was one of the few figures on the national scene who predicted our current problems. At the time, most of the establishment on the left and the right literally laughed at him. (See the video above.) Wouldn’t it be wise to heed Schiff now?
Sadly, that is not what’s happening in Washington. Instead, Bailout Hank Paulson, one of the main people who caused the economic collapse in the first place, has handed the economic reins to the likes of Tim Geithner and Lawrence Summers, two men with equally dubious track records. And, true to form, they’re pulling out the government AMEX again for another trillion dollar cash advance.
Promises, Promises
On the day Barack Obama officially becomes our president, we’d like to direct you to a handy resource from Politifact. The site has compiled a list of 500 campaign promises from our new C.I.C. The list is a full 26 pages long. It’s well worth perusing in full. But here are some notable pledges that we here at Captive American are particularly interested in:
- Number 34: Bringing back PAYGO rules in Congress. PAYGO, if you aren’t familiar with it, is a radical concept that says we shouldn’t spend money on new programs without, you know, finding a way to pay for them first.
- Number 43: Approve “card check” rules for unions. Organized labor spent millions putting Obama into office and this is their top legislative priority. We’ll see how eager he is to repay them.
- Number 45: Stop bailed out corporations (ahem, Goldman Sachs) from paying exhorbitant executive bonuses. Obama took more money from Wall Street than any other politician during the last election. Will he dare to pull our money out of those bankers’ pockets?
- Number 73: Allow Medicare to negotiate for bulk drug prices.
- Number 104: Require post-deployment mental health screenings for returning veterans.
- Number 131: Allow Congress to vote on the so-called Status of Forces Agreement (SOFA) with Iraq. Iraq’s parliament got to vote on this crucial treaty, but our Congress didn’t even get to see it before it went into effect.
- Number 222: Allow Cuban Americans to travel to Cuba.
- Number 226: “Urge” China to stop keeping the value of its currency artifically low. Every recent president has made noises about this. But if China really allowed its currency to float on the market, the dollar would likely tank and you’d probably have to put a toaster on layaway at WalMart to afford it.
- Number 231: Create an independent watchdog agency on Congressional ethics. With Democrats in control of both houses? That’ll be a nice trick.
- Number 240: Stop the revolving door between the White House and lobbyists. Hmm … this one already sounds pretty hollow.
- Number 259: Decrease subsidies to private student loan lenders and help students deal with crushing debt levels.
- Number 324: Cap the interest amounts on so-called “pay day loans” and other predatory forms of lending to low-income people.
- Number 365: Appoint someone to head the Federal Emergency Management Agency who actually has experience … handling major emergencies. Wow, what a concept.
- Number 379: Create a national service program.
- Number 388: Diversify the owners of our major media outlets.
- Number 404: Cut the federal bureaucracy. Many of those same unions that spent millions getting Obama into office represent government employees. If Obama follows through on this promise, we’re interested to see how they react when their members start getting pink slips.
- Number 407: Limit subsidies for agribusiness. With a guy like Tom Vilsack as Secretary of Agriculture?
- Number 440: Reduce our consumption of foreign oil by 2.5 million barrels a day.
- Number 448: Stop speculation in the energy markets.
- Number 449: Raise fuel economy standards.
- Number 480: Build high speed rail.
Turn, Turn, Turn: The Revolving Door Spins
Sen. Claire McCaskill sounds like she just might stick her foot in the revolving door between government and the arms industry.
How’s that old song go? “To every thing, turn, turn turn, there is a season, turn, turn, turn.” The Byrds weren’t singing about the constant march of officials through the revolving door between government and big business, but they could have been. And this is certainly the season for that turning as one administration leaves town and a new one comes in.
Last week, we posted a small item on William Lynn, Obama’s choice for the number two man at the Pentagon. Like just about every other Obama appointee, Lynn was a member of the Clinton administration. He kept the Pentagon’s books back then. Remember: this is a bureaucracy so bloated and out of control, it doesn’t just fail audits of its finances. It can’t even manage its accounts well enough to conduct an audit.
You’d think the fact that Lynn was even marginally involved in, let alone in charge of, such a boondoggle at one time would disqualify him for another stint at the Pentagon. But in the bizarro-world of Washington, with its tried and true rule of reverse-accountability, Lynn’s “experience” is actually being touted as a plus.
Oy.
After he left government, Lynn became a … wait for it! … defense industry lobbyist. How refreshing. Then he parlayed his time at the Defense Department to become a … drum roll please! … top executive at a defense contractor.
Double oy.
But hold on. There’s hope. Yesterday, Lynn actually faced some stern words on these topics from a member of the Senate Arms Services Committee. From the Wall Street Journal:
President-elect Barack Obama’s pick to be the No. 2 Pentagon official, William J. Lynn, parried questions from Sen. Claire McCaskill about his defense industry ties at a Senate Armed Services Committee confirmation hearing that was otherwise smooth sailing.
…
McCaskill said she was been concerned about a “revolving door” between the defense industry and government officials. “It’s an incestuous business that’s going on in terms of the defense contractors, and the Pentagon, and the highest levels of our military,” she said.
Lynn’s defense? Think Nuremberg:
Lynn said he had followed the rules when he left the Defense Department to take a defense industry position and would continue to follow them on returning to government.
Here’s a thought. Maybe those rules that Lynn followed so faithfully need changing. Like a wise man once said, the biggest problem isn’t what’s illegal. It’s what’s legal.
Leaving the question of “the rules” aside, bully for Senator McCaskill for speaking up about the “incestuous business” between government and the arms industry. But what would speak a hell of a lot louder is a “no” vote on the guy. Of course, McCaskill was an early and enthusiastic Obama endorser. We’re not holding our breath for her to embarrass the new boss of her party by actually matching her words with action.
On the other hand, a quick check of McCaskill’s voting record shows that she toes the party line 85% of the time. That may sound highly partisan. But it’s actually an extremely independent voting record compared to her colleagues. Also, a search of McCaskill’s political donors shows she’s received a measly $36,000 from the defense industry. She’s only been in the Senate and on the Armed Services Committee for two years. That total is sure to grow. But for now, she’s about as unbeholden and ‘mavericky’ as senators get. If anyone has a chance of going rogue and casting an opposing vote on the Democratic side, it’s her.
Maybe she’ll do it. Maybe she’ll stand up to her party and her president. Maybe she’ll back her rhetoric up with a decisive, independent deed. Maybe, just maybe, it won’t be business as usual in Washington.
Then again … From Defense News:
The panel likely will approve all four nominations [including Lynn]. There was no real opposition to the nominees from panel members.
“Turn, turn, turn.”
Talkback: Captive American Readers Chime In
We love your shout-outs, Captive American readers! Please, sirs (and madams), may we have another?
You may have noticed that at the end of every one of the hundreds–going on thousands–of blog posts, Reasons to be Mad as Hell, and other assorted items here on Captive American, we offer readers the chance to pitch their two-cents into the discussion. We’d like to take this opportunity to thank commenters for their input and encourage everyone to, please, take a moment to jot down your thoughts or impressions on our ideas, and offer a few of your own. Love mail, hate mail, whatever. Bring it on. Even if you think we’re the dimmest bulbs to appear on electronic media since Max Headroom stopped shilling for New Coke, we want to hear from you!
Now, we realize that comments slip pretty quickly into the internet netherworld as new posts come online. So we’d like to highlight some of the more interesting or provocative feedback we’ve received in recent days. Consider this the first installment of a regular feature. How regular it winds up being depends on how much feedback we get. So keep it coming.
First off, a repeat commenter calling himself “Wildcat” added these thoughts to our post, “Second Step: Fire All The Experts (Again!)”:
The sad and harsh reality is crap has risen to the top in politics and finance. Because smart people usuaslly don’t go near elected or appointed office or become, goverment lawyers, lobbyists and appointees.
Hear, hear! The fact that the smartest, most qualified people–the “best and the brightest” to use a shopworn but nonetheless apt term–consistently avoid public service is one of the main reasons we’re in this mess. And rectifying that problem is order number one if we want to bring real change to Washington.
Second, another repeat commenter with the handle “datadave” reacted to our post on Obama’s planned stimulus package thusly:
Just blaming the Average American for supporting Republicratic leadership just will not do. Calling for sacrifice and letting go of comforts doesn’t reflect just what’s going on.
For one, sacrifice and comforts are being eschewed as we speak…but only by the ‘victims’ of our system: lower middle class and working people. They already are sacrificing…involuntarily.
We couldn’t agree more, datadave. The recent era of Voodoo Economics Redux, debt-driven consumerism and other delusions must end. But as we point out in the piece, and this follow up, trillions more in government “stimulus” spending is not necessarily going to undo the damage. If anything, it’s likely to prolong–rather than shorten–the pain by putting us even more in hock to foreign creditors, many of whom aren’t exactly friendly to us in the first place, while also drowning the bond markets in government securities.
We’re in a bad spot of our own making. The fact that the middle and lower classes will almost certainly suffer disproportionately (as usual) is unfortunate, even tragic. But maybe, just maybe, this shock will inspire Americans to demand real change in their government. Maybe, just maybe, we will finally see through the charade of the two major parties and their superficial differences.
Moving on, commenter and friend of the site “hcj powell” reacted to our post on Bernard Madoff and Rob Blagojevich by urging us to dig deeper into the subject of media ownership and corporate rule in this country:
Time to pull back the curtain and shine the spot light on those top 500 corporate company boards of directors
…
How about an ongoing feature that spotlights the guys and gals behind the corporate curtains? When the “big three” CEOs are testifying, wouldnt it be great to have a nice little sidebar of who they work for-their board of directors?
That’s a fine idea. We’ll get right on it. In the meantime, here’s a quote from Peter Phillips’ introduction to the book The Last Days of Democracy:
…only 118 people compose the membership on the boards of directors of the ten big media giants. These 118 individuals in turn sit on the corporate boards of 288 national and international corporations.
Yikes. Look for a post soon exploring this information, and much more.
Finally, Frank Martens wrote in from Canada to say that while he is “astounded at how closely Lee’s philosophy parallels that of mine” he warns the Captive American founder and publisher to:
STAY THE HELL OUT OF CANADA. WE DON’T NEED YOU HERE. WE DON’T WANT YOU HERE.
We’ll be sure to pass that message along, Frank! Though we know Lee admires many aspects of your country, we’re pretty sure he doesn’t plan to leave this flawed but beautiful nation anytime soon, no matter how infuriating its leaders can be.
Sick? No Insurance? Get Yourself Arrested.
You may not be free, but you won't be dead or bankrupt. And you'll get free yoga classes!
This is for the estimated 47 million Americans without health insurance. If you catch a serious illness, you might want to consider coming to California and getting yourself arrested.
Even though the state is facing a $42 BILLION budget deficit, a federal court has ordered it to upgrade its prison health facilities. Seems when Californians passed the 3 Strikes law and its politicians began spending more on prisons than on higher education, they neglected to account for the added costs of treating all those new inmates when they got sick or hurt. Now, they–that is, the taxpayers–are going to have to pay the piper. From the SF Chronicle (emphasis added):
… recommendations called on the cash-starved state to spend $8 billion on seven new hospitals - each roughly the size of 10 Wal-Mart stores - to replace a decrepit health care system that a federal judge says is killing an average of one inmate per week …
So, the fact that one inmate a week is dying in California because of the state’s dilapidated heathcare system is enough of an outrage that a federal judge is prepared to force the state to spend $8 billion that it doesn’t have to fix the situation. Meanwhile, 18,000 law-abiding Americans die every year because they do not have adequate medical coverage and the bought-off career politicians running our government do nothing about it. In the twisted world of modern America, it seems people have to commit a crime to receive medical care. And not just basic care either. We’re talking cutting edge stuff here:
The draft report … said the new hospitals’ environment “should be ‘holistic’ in expression.”
“In the place of sterile prison corridors or barren, large-scale ‘yards,’ both staff and patient should experience landscaped courtyards and places of rest and respite,” the draft said.
What kind of amenities and “places of rest and respite” can inmates look forward to?
– Workout rooms to “promote wellness,” featuring exercise machines and space for “therapeutic activities such as aerobics, yoga, (and) group exercise.” Plus handball courts.
– Outdoor courtyards “where patients will be encouraged to participate in recreational therapy programs such as horticulture.”
– Gymnasiums with a basketball court and a music room, a crafts room, game room and therapy kitchen.
– Outdoor running tracks.
To recap: sick citizens who follow the law but lack health insurance can expect substandard care and financial ruin. Convicted felons, though, can look forward to free treatment and horticulture classes while they recuperate.
When did Franz Kakfa start writing our country’s our healthcare policies?
