US Controversies and Big Ideas 2008 and Beyond

Barack Abomination

Barack Obama, when he began his campaign, seemed like a naive liberal with a beguiling smile. When I heard his opinions, he came out clearly like a left populist very familiar to people born in former third world countries. As I looked more closely, I saw increasingly alarming signs. His oratory sounded more and more like demagogy. The cheering crowds in the background  hinted a growing personality cult building up. Then, when he started accumulating votes in the primary in caucus states, I suspected a person working on underhanded deals while he was preaching change. 

Then came the flimsy lies. He had not heard the inflammatory speeches in all the twenty years he attended Rev Jeremiah Wright's church. Anyone with any degree of familiarity with the liberal left in the USA could have recognized the familiar anti-American rage that is the sum total of the world view of this creed. Obama with his record as a left wing community organizer was in his church to be with his political brethern.

Then he dressed up his redistribution program as a tax cut. The definition of the rich has started to decline from $250,000 to $120,000 as Governor Richardson announced today. What is more alarming is that he is willing to raise taxes on capital gains even if the revenues decline. Just to be fair!

Now it is getting creepy. Punish those who dare to question him. An anchor asked Joe Biden a question about the similarity between Karl Marx's famous quote "from each according to his ability and to each according to his need" and his redistributive program and was slammed with a ban on any appearances. The trade unions will lose their right to a secret ballot and will be lorded over by the union bosses.

The chilling finale is Obama's willingness to even change the constitution to bring about redistributive justice. He is not just the pinko left in democratic countries but a communist in the closet. We have heard the lies and now the outlines of a diabolic plan are emerging. This is the way communists always worked. They collaborated with proponents of liberal democracy to oust monarchies and then stabbed their former partners in the back to launch a coup d'état. Americans will make a big mistake to vote for this stealth mode abomination.

Alternative to the $700 billion bail-out plan--a costless way to build confidence

The probability of a policy error in an emergency is high and once again the $700 billion bail-out plan is likely to leave behind a legacy of poor judgment and government folly much like the "New Deal" did. Clearly, the distrust that people had of financial institutions and the possibility of running out of cash was keeping banks away from lending. Surely, this cannot be solved by either monetary expansion or measures such as cash infusion by the Government. A much more direct way is suggested by the Levy Economics Institute of Bard College. In one of their papers, they recommend that the Fed could be temporarily turned into a clearinghouse and use its financial clout to support it. Banks then deal with a counterparty which is credible.

The commercial paper market froze after the demise of Lehman Brothers which had in the past acted as the market-maker in short-term borrowing and lending. In addition, the inter-bank lending market froze because it raised the specter of other banks being allowed to fail. Before letting Lehman go, the Fed could have announced that it will be a make-shift clearinghouse for ensuring the flow of commercial paper. The cisis had been underway for a year so the Fed had enough time to prepare for it. If it had, the $700 billion bail-out plan would not have been necessary.

Several possibilities are conceivable to directly address the confidence issues. Some people such as Warren Buffett continue to enjoy the confidence of the public. It should be possible to set-up a non-profit organization, headed by Warren Buffett, which administers funds from the public and other non-profits to extend loans to banks and businesses during the course of the emergency. One simple way could be to have individual banks park their funds with the non-profit and borrowing banks could be in touch with the non-profit. The Government could have simply provided a temporary gaurantee to support the non-profit.  

The $700 rescue plan may well recover the costs incurred to buy bad debts when the markets recover. They do have housing assets backing them. The one thing that the taxpayer is not going to be able to recover are all the goodies, amounting to another $150 billion, that were attached to the bill or simply put the spoils of office. The alternatives would have saved these extra costs and the attendant corruption.

Nobama: The Economic Rip Van Winkle

Barack Obama is best decribed as a Rip Van Winkle who appeared years after a free market across the world, with an extensive framework of rules, was established in 1995 along with the World Trade Organization. He has dusted off some old cliches of socialist redistribution and changed the language with worlds like "fairness", neighborliness, etc. As he enters the modern world, he encounters a familiar bewildered population. The old communists knew how to manipulate people in times of crisis. It was in 1917 that Russia, after a period of 50 years of solid economic growth, had fallen on bad times. The old monarchy had lost control of a country torn apart by the stresses of a long war. The Bolsheviks, with their demogogy, knew how to fire up the soldiers returning from the battlefield. Where calm minds would have focussed their attention on solving problems, they set about their agenda of grabbing power.

The confidence that Americans suddenly have in Obama's ability to be an able steward of the economy is completly inexplicable. He has neither the expertise nor a belief in the ability of free markets to ensure prosperity. Market economies have always gone through their ups and downs. Not so far back, cataclysmic downturns such as the Asian meltdown, the Mexican crisis and the Internet bubble have come and gone not to mention the Savings and Loan crisis. The one difference between this and the previous crisis is the absence of the confidence Americans have always had in their ability to cope with bad times. 

It is ironical that the very people who brought about this disruption are the ones who are posing as saviors.  Freddie Mac and Fannie Mae liberally bought housing related securities and ignored warnings about the dangers to the rest of the financial system. The Chris Dodds and Barney Franks of the world shielded them from any scrutiny while helping themselves to sweetheart deals from the Countrywide and others. Now they want regulation of the private financial world! Barack Obama received generous contributions from Fannie Mae and Freddie Mac.

There is something about the social psychology of the people influenced by Barack Obama that is hard to understand. I suspect people are soon going to get a rude awakening if they do elect Obama.