Conservative Cabal

The economic truth, that is. As Obama meets with banks to try to loosen lending practices, and as he invites luminaries from private companies, the government, and, err…SEIU and other unions to forums about how to create more jobs (sigh), there is hope in this: students and younger workers are hip to the truth.

See, for example, this post by David Huffman of Chicago Young Republicans, wherein he is shocked to agree with Paul Krugman that the recent “good news” of 11,000 new jobs isn’t that good. But then the agreement with Krugman ends there, as Krugman argues for even more stimulus funds, etc etc.

And then the following note,  by Loyola University Chicago student Elizabeth Davidson about a Wall Street Journal video, reveals an understanding of Keynesian versus supply-side economics, and a thirst for rational thought: Continue reading ‘Hope is not lost — the future knows the truth’ »

This pretty much sums it up.

Today many of our friends participated in the Tax Day Tea Party in Chicago (one of the HUNDREDS around the country). These tea parties were not organized by some overarching organization. They were truly a grassroots effort from people angry about the stimulus package that does not stimulate, the trillions of dollars of debt into which the Democratic Congress and President Obama are plunging us, and the fact that these moves are not going to lead to long-term economic growth and could in the long run dampen freedom. But there we go again, the inconvenient truth of the Big Picture and the Long Term View which we conservatives (aka classical liberals) tend to take.

Were some of the tea party efforts silly? Maybe. Do some snicker at the term teabagging used by social conservatives? Yes. Well, let them.  Most people who attended these events could articulate their position better than the semi-professional anti-war protestors who we were privileged to watch for years.

Speaking of those other MoveOn protests, I wonder if this CNN “journalist” (below) would have been as snippy and snarky to them.  Somehow I doubt it. (Thanks to Tax Day Tea Party for the following).

It’s plain and clear what she’s dealing with. Yes. CNN, is it any wonder that you’ve lost market share?

The idea that government intervention helped end the Great Depression, and that the Keynesian policy of “managing demand” and interjecting a bunch of money into the economy is an effective way to fix recessions had gone, we conservatives mistakenly believed and hoped, the way of the Dodo bird. But it’s back, and with a vengeance. And a trillion dollar price tag that taxpayers will be footing for a long, long, long time.

THERE IS NO SUCH THING AS A FREE LUNCH. (Sorry, that slips out involuntarily about once every two or three hours these days.)

Managing monetary policy (via the Fed) does have its limits. It deals with what the market has and is, and doesn’t attempt changing the foundations of the market system (which is always a losing proposition because that invariably leads to socialism). Adjusting monetary policy isn’t about changing the rules of the game, but about helping the market do what it must. And believe us, the market will still do what it must, but government interference (particularly the non-nationalization nationalization of banks last week) is  exacerbating the problem.

The current generation did not live during the Great Depression. We were taught that the WPA and other FDR initiatives helped end it. But that is actually debatable. World War II did more to get America moving again than works projects. The U.S. in fact lagged far behind other countries in 1936 and ‘37.

And the list of economists who do not believe in more government interference is here, brought to you by the Cato Institute.

In protest of the Mortgage Bill and the Stimulus package that will not stimulate, libertarians and conservatives had “tea party” protests in Chicago (nice video by Founding Bloggers. We wish we could have been there!), St. Louis (where about 1,000 protestors gathered), DC (which does indeed look a little sad, compared to Chicago and St. Louis, but I’m frankly surprised they found ANYONE to protest it in DC), and elsewhere.

Protest marches struck us at first as downright unconservative. As Age of Hooper says, conservatives often have better things to do with their time — work, family, all the boring stuff that makes the engine go. But then again, there ARE some things worth fighting for, and worth protesting. Obama’s quick march to socialism is one of them.

Santelli’s off-the-cuff remarks have indeed energized at least fiscal conservatives and libertarians, who are desperate for good news these days. (Count us among them. We are ready to join the tea party!). We note also, with some glee, that Robert Gibbs is almost as bad a press secretary as Scott McClellan was. Mwahaha.

A friend of this site, John Yackley, founder of the asset management firm Be Free Investments, shares the following on Santelli, Gibbs, and tea parties (thanks, John!):

When asked last week what he thought of Obama’s mortgage bailout plan, CNBC’s now famous Rick Santelli gave a seemingly unscripted criticism of it.  (If you haven’t seen it, check it out at http://www.youtube.com/watch?v=bEZB4taSEoA ).  He attacked no one in the administration personally.  He just appealed to Americans’ sense of fairness and to a belief that hasn’t been given enough voice in Washington during this whole crisis: that in a free country, if you screw up, you live with the consequences.  In this case, if you bought too much house, you and the banker who abetted you in your bad decision, deal with it.

The White House’s response to Mr. Santelli, on the other hand, was completely scripted and full of personal attacks. In a press conference where he mentioned Rick by name six times, White House press secretary, Robert Gibbs, said, “I feel assured that Mr. Santelli doesn’t know what he’s talking about.”  OK, I don’t know if Rick had read every word of the plan in the 20 hours between its release and someone asking him what he thought of it, but that doesn’t mean he’s a complete ignoramus on the matter, Mr. Gibbs.  He knew the basic outline: the federal government is going to use $275 billion of our money to reduce some people’s mortgage payments, many of whom lied on their mortgage applications.

As a man of the left, Mr. Gibbs then couldn’t help but follow up with a couple of obligatory class warfare-ish jabs at Santelli.  First, he went with, “I’m not entirely sure where or in what house Mr. Santelli lives in, but….” And then, “I think we left a few months ago the adage that if it was good for a derivatives trader that is was good for Main Street.” Yeah, you’re right.  We all know Rick the Trader’s true motives in this. He’s a greedy guy who’s only worried about his taxes going up or his money being worth less because you’re printing so much of it.  It’s impossible for him to also have a genuine concern for the direction in which the country is headed.

I hope the administration’s attacks on Rick Santelli back-fire.  He has struck a cord with freedom and responsibility-loving people.  Websites backing, promoting and trying to organize Rick’s idea of throwing a Chicago Tea Party are popping up all over the place.  Here are two of them.  The first is a site just launched by a friend of mine…www.chicagoteaparty.com and www.reteaparty.com.

–John Yackley
John is the founder and president of Be Free Investments, an asset management firm in Chicago

This neglect in our educational system leaves the people’s financial education to the sensational press, to socialistic propaganda and to designing politicians. It permits schemers to defraud the small earner and small investor through making him believe that capital accumulations and great fortunes are matters of speculation or public robbery.
-Clarence W. Barron
Founder, Barron’s

Later this week, UBS and Credit Suisse will declare they had losses last year of nearly 30 billion Swiss francs, the largest in Swiss history, the AFP reports.  And all due to the subprime crisis that began in the U.S. (thank you Barney Frank and Chris Dodd — but that’s another post). Risk analysts, the canaries in these coal mines, foresaw and documented over-investment in U.S. mortgage-backed securities in a report to UBS in 2002, according to this article from last summer’s Telegraph.

Is this really recent news? No — there were several articles last summer and in October about the credit crunch on Swiss banks, and fears that they would collapse like Lehman Bros. UBS didn’t…yet. And why? They took warnings to heart — eventually — and did some smart selling of their “toxic assets” early last year. Good for them — oh if only banks around the world had done the same. But last year UBS relied on funding from the Swiss government, while Credit Suisse received funding from…Middle Eastern parties.

So, they may not collapse just yet, but we note that the Swiss government is not big enough to bail out the banks completely — together UBS and Credit Suisse have balance sheeets still worth 7 times the Swiss GDP. And with the price of oil plummeting, just how deep are the pockets of Middle Eastern investors?  We wonder.

Those tempted to respond by regulating banks as much as possible (especially with meaningless political gestures like salary caps on executives), could end up causing more problems in the long term. Overreaction is often the worst reaction.

Quite a bit, as it turns out. Are we numb, as this mathematician (who actually LOOKS like a mathematician) on CNN suggests?  Check out the CNN snippet at Gateway Pundit.

What’s the big deal? So it’s a lot of money. Just make Bill Gates pay, right? Doesn’t he have, like, a trillion dollars in his lake house? No? Oh. Well, the U.S. has been dominant for too long. Don’t we need a break, man? Let someone else lead. Why not China? Give them a chance.

Well, maybe Obama and Congress are making boo-boos. (Victor Davis Hanson at NRO predicts an implosion). Maybe the media is waking up a little bit and wondering if in fact it was a good idea to back someone without even a cursory effort at scrutiny. Maybe, and more importantly, voters are waking up. A trillion dollars… wow.

I am very happy that Obama, unlike the “eeeevil Bush”, is able to admit his mistakes. But we are dealing with, as Taranto very aptly put it in his Best of the Web today, a president who is managing the country like a public high school principle.

I’m more hopeful for change in two years than I was two weeks ago.

Below is a graphic that’s been popping up around the blogosphere, I copied it from Ace…

Money Supply Since 1910

It’s kind of hard to make out, but the line goes vertical last year.  Vertical.

The money supply has doubled (nearly) in the last five months.  Doubled.  All the money in the US, doubled.

As can be seen in the graph, this is unprecedented, really unprecedented.  And as Ace points out, it might be a good idea to take a wait and see attitude on this whole stimulus plan here and just see what happens first.

The history of economic stimulus isn’t exactly stellar either.  And since only about 12% of this giant bill can even reasonably be called stimulus, maybe we might want to hold off on the whole largest-bill-ever thing for a month or two.  No?

Congress is getting to work, friends. This week, Rep. Obey (D-WI) introduced a stimulus package developed by House Democrats and Obama — we mean the American Recovery and Reinvestment Act of 2009.  The $825 billion bill pleases a whole lot of special interests.

Where’s the money targeted? Oh, the usual. Medicare, teacher’s unions — we mean “education” — and something new (or actually rehashed from FDR) — public works projects. A LOT of them.

Obey, crying chicken little, said that without this  we would face an unemployment rate of 12%. And then he said, it might not even work if it is passed (emphasis mine).

But don’t worry — we’ll have digital TV to help us all dull the pain. Among many (MANY) other things, the bill doesn’t forget the little couch potato. It includes $650 million (million!) for the analog-digital tv transition. This will fund coupons for converter boxes (they ran out, you know), and “education” about the transition. Look it up — page 47.

Wouldn’t the American people, and the economy as a whole, be better served if the bill instead required everyone who is unemployed to THROW OUT their televisions? There’s nothing on it worth watching now, anyway.