15 posts tagged “economy”

Ted West was commenting on his blog about his political motivations for ranting on the Liberals from another blog site and I thought I would go over and pour out my two cents on the community.  It seems they pay their bloggers to contribute.  So, I've started another new project and have been getting some payoff.  Literal payola.  So I have some articles written that I need to cross post back here.  Apologies to my VOX community for not responding lately.  The appeal of being paid to write was inebriating, but the reality of $10 a week payoff has sobered me.  You can check out the site and my work at BloggersBase.  I will continue to write here, but I need to adjust my rss to send complete articles rather than 1 or a partial paragraph so they will auto post there.  And, I'm going to have to go back to focusing on my blog theme instead of wandering all over the topic map as I've enjoyed doing over the past couple of years.  That said, I have a few issues of interest to broach just now, soooo...

I recently saw a report on the Aussie terror campaign in the form of setting wildland fires and accompanied that report with a photo of a wild koala being rescued from the ravaged forest.  Here is a video of that same koala during the rescue.

I ran across this report on Stumble Upon, the direction our country is taking and the reason so many states are suddenly so interested in the arcane secession movement is because our 'president' and this congress are making promises they have no authority to make, to put up the government's authority to implement eminent domain as collateral to China for the loans they are making to our government.  This story still needs verification but if true, we are either going to initiate a civil war or we are going to have our property and business sold off to the People's Republic of Communist China as the U.S. economy and the strength of the U.S. dollar decline.  This story has legs thus far on the back of an earlier report that China was calling for guarantees against the failing U.S. dollar.

This is literally a mortgaging of our sovereignty away to a communist state.  On a related topic, another blogger over at BloggersBase is predicting the global collapse of the international monetary system.  Personally, I think he is as bad as Al Gore using scare tactics to sell the global warming scam, but he is marketing gold.  Apart from that, he makes some compelling arguments for the gold standard.  Presently, we are experiencing a trend called Backwardation.  Essentially, Backwardation is the increasing real value of commodoty type money like gold and silver.  With fiat money like the dollar, the yen, the mark, there is no definition of real value.  With gold or silver, their value is set by the available quantity and the market demand on that quantity.  With fiat currencies both losing value and losing interest growth rates, the demand for commodoty currencies is ever increasing so that instead of paying 2000 ounces of gold for a particular piece of real estate, you can now pay 500 ounces of gold.  With the stock markets falling to 12-13 year lows and economists projecting worse and possibly much worse, investment wealth is evaporating.  Most investments have already lost half their value.  Investors are driving their wealth into liquid, 0 interest accounts for fear of continued value loss.  Banks are tight with their loaning principals all of a sudden and capital is nearly impossible to come by if you want to buy a big ticket item or start up a new business.  The only thing that will turn this all around is confidence.  Confidence in the dollar, confidence in the market, confidence in the investment structures, confidence in the government and thus far, not one of those entities is proving trustworthy.

Our government is putting up national sovereignty for collateral against loans from China.  States are moving to intercept the Fed's ability to interject eminent domain authority to sell all or parts of them, via Constitutional provisions for secession.  This does not breed confidence in our government.  Meanwhile, the stimulus continues to grow with each new examination of America's 'too big to fail' corporations and bailout programs.  The administration has submitted a projected spending budget of 3 trillion dollars for the year 2010.  What does the market have to be encouraged about?  The administration and the congress are legislating this country's hope and opportunity for recovery into the grave.  The move to sign away rights to business, property, or territories is a huge sign of failure and decline of the Great American Experiment.

Our savior president is presently campaigning for the now passed stimulus bill, still trying to sell it on the premise that 'Only Government Can Fix This.  One thing is sure, only government can gamble this big and it is one giant trillion dollar roll of the dice.  This video by my friend over at Liberty Pen explains it clearly with professionals giving their opinions on the subject.  Only government can screw up this bad.  Only government can condemn generations to squalor.  The only selling point is, this generation won't have to face the consequences.

Soon enough Obama will disappoint and people will learn they were fooled again.

We are depleting capital rapidly.  The Fed is busy pulling all its tricks out of the bag, one by one.  Now, I think they have pulled out one in desperation.  Reducing the interest rates have failed.  Printing more money?  The banks have stockpiled the cash.  Buying up stock in the market?  Roulette table gambling, as in go for broke, lay the whole pile on black.  A 50/50 shot where the government either suddenly has a lot of capital to fund programs and pay debt OR we're busted, flat broke, and irrecoverably in debt to everybody.  Its another failure strategy.

See?  By buying stocks up in a declining market, they hope to pump capital into business to begin producing again, into the market to drive up demand again, into your and my pockets in the form of jobs via expanded business.  That won't work.  Just like the banks, the businesses will stockpile the cash until they know their investments will be secure.  If businesses thought they could turn a profit, it would grow the job market, but if demand hasn't increased, why make the product?  It will never make its way into the paychecks of working Americans and therefore demand for products will not be increased.  If the market continues to decline, the tax revenue the government will collect from all those rich people will also decline.  If it were to work, it would return a big win for the government's new money investment.  But, if it fails our debt load and absence of income stream will crush the government's ability to sustain its spending levels which continue to skyrocket.

Economic Growth=Demand+Production.  We have plenty of capability to produce or capital.  What we lack is demand.  The Fed is feeding the production machine instead of the demand machine.

The only way to get real demand to increase is by not taking it from those who WILL spend it.  That was the strategy President Bush used with the tax refund and the tax cut bills.  What President Bush didn't do was deal with the Democrat controlled or blocked Congress to get real reform into the banking industry regulations.  What President Bush didn't do was effectively use his bully pulpit to hold Congress accountable for the political strategic maneuvering for power instead of the benefit of America.  I can't fault him too much, though.  After all, he was a bit occupied with a terrorist attack that rocked the nation and forced him to begin an in depth education on the Middle East.  Meanwhile, the Democrats used even this, as a chessboard piece for political strategic power playing.  Remember the Congressional leaks of state secrets to the NY Times and others?

Steven Lendman wrote an article with loads of conspiracy crap in it, but his summation lends itself to reality.  I have parenthesized and linked corrections to straighten out his more obvious misses.

Obama's First Order of Business

The "urgent priority" of the severe financial crisis. What economist Nouriel Roubini calls "The Economic Mess and Financial Disaster that Obama Will Inherit." A sign progressivism will have to wait until it's arrested and cleared up. But no short-term fix will do it. Perhaps not even a longer-term one given the extent of the damage and no assurance new policy choices will improve on current dubious ones.

Roubini believes that the nation is in more dire straits than anything seen in decades. He calls it:

"the most severe recession in 50 years; the worst financial and banking crisis since the Great Depression; a ballooning fiscal deficit that may be as high as a trillion dollars in 2009 and 2010."

Given $2 trillion in announced borrowing; around another $1.8 trillion in loans, investments and commitments; and whatever fiscal stimulus is added this year and next, the total looks to be much higher.

On top of a "huge current account deficit; a financial system that is in a severe crisis and where deleveraging is still occurring at a very rapid pace, thus causing a worsening of the credit crunch; a household sector where millions of (them) are insolvent, into negative equity territory and on the verge of losing their homes; a serious risk of deflation as the slack in goods, labor and commodity markets becomes deeper; the risk that we will end in a deflationary liquidity trap as the Fed is fast approaching the zero-bound constraint for the Fed Funds rate; the risk of a severe debt deflation as the real value of nominal liabilities will rise given price deflation while the value of financial assets is still plunging. This is the bitter gift that the [Democrat controlled or blocked Congress through the] Bush administration has bequeathed to Obama's [administration] and the Democrats."

New macro data supports the dire state of things. It's been "worse than awful: collapsing retail sales and consumption, free fall in capex spending, sharply falling production," employment as well, "housing still in free fall and home prices bound to fall 40% from the peak, collapsing auto sales, forward looking business and consumer confidence indicators dropping to multi-decade lows, sharp surge in corporate defaults, a wrecked banking and financial system that will have to be partially nationalized."

Overall the most daunting economic and financial challenges since FDR in the Great Depression, and adding to it, the rest of the world as bad off. Severe recession is hitting Europe, Japan and other advanced countries. China risks a hard landing. So do many emerging economies. A severe global recession and financial crisis are certain. We're already in it despite some observers still in denial. Especially on its severity and likely duration.

According to Roubini, "the US and global recession train has left the station." The financial and banking one as well. It will be long and severe for at least two years regardless of the best of policy actions going forward. Stock market rallies are deceptive. They're classic bear market ones. At a time when 2009 earnings projections are "delusional." Projected to rise 15% from 2008 when, if fact, they'll fall off sharply. Roubini thinks the S & P 500 could drop as low as 600 or over one-third lower than its 931 valuation on November 7. And if things are worse than expected, 500 may be a bottoming low. It's no exaggeration to say the downside risks are significant at a time of severe economic contraction.

"The worst is ahead of us rather than behind us." Beware of excessive optimism that each time has been wrong. A severe meltdown possibility may have passed but it's not out of the question if poor future policy choices are made. That's for the new Obama team to avoid plus having to deal with whatever else the Bush administration does in its final weeks. It's botched things so badly up to now so there's no telling how much more piling on they'll do into January. Whatever happens until then, they'll be no joy in 2009, and no simple task for the ablest of appointees or assurance that their best efforts will work.

Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at lendmanstephen@sbc global.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Global Research News Hour on RepublicBroadcasting Mondays from 11AM - 1PM US Central time for cutting-edge discussions of world and national topics with distinguished guests. All programs are archived for easy listening.

The Federal Reserve Chairman says, "Why are we worried about money?  We own the presses, we'll just print more."  Sure.  No worries.  Why not just print all the money we need?  We have the power.  Take a look around you flippin' idiot.  This is what it looks like when you don't educate yourself and take an oversimplified solution to a long standing policy problem.  When we left the gold standard, our money value began to decline in value so that today we pay easily 10 times as much in dollar figures for real value. 

What can happen has happened in Zimbabwe.  They have printed 29 NEW denominations of currency THIS YEAR!!  The latest is a five hundred million dollar ($500,000,000) note.  Zimbabwe's highest inflation was last estimated in July at 231 million per cent but is now believed to be much higher.  How does this happen and why hasn't it happened here in the states at anything like that rate of inflation?  It started to back in the 70's under Jimmy Carter.  We had double digit inflation that was nipped in the bud by the Reagan Revolution.  However, we have a Carter Copy Cat named Barack Obama who had hired many of Carter's advisers to help him run his campaign.  Where are these guys now?  Could they be incorporated into his administration?  With hundreds of positions to fill, its likely.

Online MSN News reports

If our legislaters don't pull their heads out of the dark stinky places, going to the grocery store for a gallon of milk and a loaf of bread could look like this.

At last counting, this was worth about $1.40 and its getting much worse, daily.  The value drops several times each day so these grand denominations have expiration dates.  No, this does not solve our national debt problem.  When our currency becomes unstable, do you think the world willl keep the dollar as the world standard?  They will want their payment in Euros.  There are calls at the UN to switch to another currency now. 

On a really good day, I get about 1000 readers, and 100-150 is normal.  We do not have the power of big information systems to throw legitimate scares into the populace so they can demand policy changes or policy standards.  I'm saying put your money in something solid and hang on for a few years.  We're in for a rough ride.  Inflation is no joke.  You may grow your dollar amounts tremendously in investments and still lose most of its value.

Slow slicing (Traditional Chinese: 凌遲, Simplified Chinese: 凌迟, Pinyin: língchí, alternately transliterated Ling Chi or Leng T'che), also translated as the slow process, the lingering death, or death by a thousand cuts, was a form of execution used in China from roughly AD 900 to its abolition in 1905. In this form of execution, the condemned person was killed by using a knife to methodically remove portions of the body over an extended period of time. The term língchí derives from a classical description of ascending a mountain slowly.  Our nation is suffering this very death at the hands of its own legislators.  Ordinarily when referring to Congress I wouldn't use the word CUTS in such a negative tone.  We would normally think tax cuts or spending cuts.  In this usage the word is BILLS or Taxes which are relatively small injuries to our economic well being.  This year the Congress has more than lost its mind.

Every year Congress enacts nearly one thousand bills, many without any debate on the floor of the house or senate, the vast majority appropriating taxpayer funds in one form or another.

  These bills have become a pain with which we can almost grow accustomed.  Well, this is the year the cuts did their job.  We are officially in decline on the world stage.  With the election of Barack Obama and his tax more and spend more, and let our great, great grandchildren pick up the bill, our national economic health finally succomed to the thousand cuts per year.  Probably because some of those cuts were deeper than the weilders of knives believed they were.  They weren't really hating America.  They didn't really want her to fail. 

Now that the market has crashed, the weilders of knives have decided to plunge the knife to the hilt in the economy's legs and gut.  They are doubling down their failing strategy to spend our way into prosperity.  Yes, that is the wisdom or our powerful Washington bureaucrats.  "SPENDING our way toward prosperity!!!"  Following in the footpath of their hero from the fallout after Black Monday (which was also caused by over regulation and taxation) Franklin Delano Roosevelt, they are going to bailout every industry/mega corporation which is "TOO BIG TO FAIL."  Now I understand when conservative economists say, "Nothing is too big to fail."  Congress is making the same mistakes made by government after the markets failed kicking of the Great Depression and EXTENDED that depression, some estimate, 3 times as long as it should have taken to recover and they made it worse than it would have been.  It either walks, runs or flies on its own, or let the wolves have it.  Its failing for a reason.  The business model as operated, whether by foolish management or foolish regulation must be allowed to die.  Otherwise the successful producers carry the failing producers on their backs while they continue trying to produce.  It makes the entire system a failure and if it continues, America will deserve to die for its foolishness. 

Fred Thompson does a good job of explaining how politics got to be over the head of the common voter.  In this video he makes it clear how the economy is over the head of the common taxpayer.  He is giving us the current government plan to get us out of the economic mess they got us into.  That is; the same people who got us into this mess are telling us the way to get out is to multiply what they've been doing.  In this way we can understand how elite the elitists are.  Politics and the economy are just too complicated for us to understand how good a job they are doing for us.

They can make decisions for us better than we can make them for ourselves.  I can understand how they came to think this way.  After all, they keep getting elected.  I'm beginning to agree with them.

The campaign slogan of our next president was "Change for America" but it took months to find out what he intended to change and how he intended to change it.  We had to deduce from little slips during debates and campaign speeches and conversations, which he thought were semi private but were virally published, that he had one huge agenda in mind.  Fundamentally changing America is a huge agenda.  An obscure radio interview released late in the campaign cycle revealed how huge, and how fundamental a change to which he was referring.  In that radio interview, he was talking about the extreme liberal Supreme Court under Justice Warren and how they had not gone far enough.  He felt they had made great strides in what government can't do but had missed their responsibility and opportunity to define what government must do for the people.  Expanding and developing the thought, he went on to explain that they should have ensured the government would redistribute the wealth.  He labeled it 'Redistributive Change.'  He intends to use his presidential powers to influence both the Legislature and the Courts toward that end.

In the words of President Elect Barack Obama  "I don't want to punish you for your success (Mr. Smallbusinessman) - but I think when you spread the wealth around it's good for everybody. "

"We need somebody who's got the heart, the empathy, to recognize what it's like to be a young teenage mom, the empathy to understand what it's like to be poor or African-American or gay or disabled or old - and that's the criterion by which I'll be selecting my judges."   Barack Obama

Folks, the responsibility of judges is not to 'feel' for victims or plaintiffs.  The responsibility of judges is to ensure justice prevails.  If somebody steals my truck and takes it for a joy ride, I don't want a judge who 'feels' the economic injustice of the thief's monetary circumstances or his stress levels due to public rejection of his sexual preference.  Likewise, it is not the job of legislators to legislate philnathropy, giving away taxpayer's money and then call that economic justice.  Listen carefully, for every dollar of your money they give away, they have to charge you three dollars because its expensive to operate a bureaucracy. 

But that's not the worst of it.  For every dollar they take away from business, that's one less dollar that could be used to hire more workers or pay more for their workers' work, or invest in new business ventures creating new businesses and more jobs.  It doesn't increase available revenue for the bureaucrats to spend.  It actually reduces the amount they have to spend because it reduces the number of paychecks and sales for them to tax.  This is not a theory, but has been proven thanks to the work of Ronald Reagan.  I should clarify that statement.  Ronald Reagan's economic plan was exceptional because it worked.  Lower taxes increased tax revenue as he promised, because it expanded commerce.  More paychecks, more products bought, more taxes paid overall even though less taxes were paid individually.  The Conservative model of economic politics is to grow the entire pie so everybody benefits.  The Liberal model of economic politics is to take some of Paul's earnings to give to Peter to grow Peter's portion, but government has to hang on to 2/3 of what they took from Paul to pay themselves for doing such a fine job.  (approval rating hit an all time low of 9% under extreme leftist liberal control)   It does not matter to them that they are shrinking the whole pie to increase Peter's portion.

But this is still not the worst of it.  All that extra money they take from you and those business people is hurting the very people they claim to be helping.  Listen to this historian and economist debate an advocate for interventionism.

Interventionism as a government policy, is not based in the reality of consequences.  It is based on feelings and in good intentions and it does tremendous damage to the very groups it endeavors to help.  Interventionism is a fine idea on a personal basis.  That's what philanthropy is, an endeavor to help those less fortunate than yourself.  On a personal basis, it works well because you are cautious how you spend your money to help and you are cautious that you are not hurting the ones you try to help with your hard earned money.  But as a governmental policy where party c (caring politician) is employed to require money of party b (businessman/worker) under threat of incarceration, to pay for the benefit of party a, (assisted) the person footing the bill b, is not only not appreciated, he's labeled evil.  The person who is appreciated, c didn't personally pay a dime and also benefitted.  The person who was supposed to benefit, a has to jump through hoops to qualify for this aid, assistance, help thanks to the ineffecient bureaucracy created to handle a national scale operation which simply doesn't care what it cost or if it really helps.  The result is that the assisted group overall is rewarded for bad behavior and choices and penalized for good behavior and choices.  Throwing your responsibility to "Do Something" onto the government is not worth it.

And that's still not the worst of it.  While in the Senate, the Senator from Chicago sponsored a bill to tax the US citizenry for the poverty stricken around the world and hand off that money to the corrupt United Nations.  It was called the Global Poverty Act.  Another version is known as the Jubilee Act  also co-sponsored by Barack Obama.  This one gets its name from the Jewish tradition under direction of the Torah to dissolve all debt every seven years.  The Act gets this name because it is designed to dissolve debt to the tune of almost $1,000,000,000,000.00 (one trillion dollars)  What this means is that taxing America to donate to the world is a recurring theme in the Obama agenda.  Remember the principal of taking from Paul to pay Peter.  (Bureaucratic help rewards bad behavior and penalizes good behavior.)  Nobody wins except the government and a few despots.  Those recipients will wind up in worse condition than they're in now.  They're in trouble in the first place because of despots and their wars and previous attempts to help are continually abused by the despots and their militaries.  Its sad, its horrible, but unless we are willing to take our military and enforce our form of government and values on them, nothing will help.  And feel good policies don't generally include sacrificing our troops in the cause of ending the bloodshed of foreigners.  In the case of national disasters, our citizenry have stepped up and out donated every other entity in the world including our own government.  How much more could they do if the government weren't stealing from them?

Lest anyone think my words too strong, or my conclusions about the will of the founding fathers wrong, let's just examine a few quotes on the subject.  Shall we?

“To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it.” — Thomas Jefferson, letter to Joseph Milligan, April 6, 1816

“A wise and frugal government… shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.” — Thomas Jefferson, First Inaugural Address, March 4, 1801

“Congress has not unlimited powers to provide for the general welfare, but only those specifically enumerated.” — Thomas Jefferson

“The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence. If ‘Thou shalt not covet’ and ‘Thou shalt not steal’ were not commandments of Heaven, they must be made inviolable precepts in every society before it can be civilized or made free.” — John Adams, A Defense of the Constitutions of Government of the United States of America, 1787

“With respect to the two words ‘general welfare,’ I have always regarded them as qualified by the detail of powers connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators.” — James Madison in a letter to James Robertson

In 1794, when Congress appropriated $15,000 for relief of French refugees who fled from insurrection in San Domingo to Baltimore and Philadelphia, James Madison stood on the floor of the House to object saying:

“I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.” — James Madison, 4 Annals of Congress 179, 1794

“[T]he government of the United States is a definite government, confined to specified objects. It is not like the state governments, whose powers are more general. Charity is no part of the legislative duty of the government.” — James Madison

There are brilliant economists who think like President Elect Barack Obama and their are brilliant economists who think like the authors of our founding documents, the framers of our system of governance.  The current argument from the progressive/leftist/liberal ranks goes something like this; "Isn't conservatism by definition trying to conserve the status quo? and doesn't that mean that you conservatives are stuck in the past?"  I rather believe the new way of thinking as those people who think like the founders (those men who wrought from whole cloth something that had never existed on earth since the beginning of civilization, a nation as much as possible, ruled by its citizenry) than those who think like every other form of governance from the beginning of theifdom and the liberal is still labeling the old way of thinking the "NEW THING."  (that the citizenry are too dimwitted to rule themselves)  Without a doubt, America is changing beyond recognition from its framers' ideals into the all too familiar, socialist, fascist state. 

In the following article we find that the arguments the conservatives have been making for decades was proven and is continuing to be proven as countries around the globe are revamping their governments.  This speech was delivered in February 2004.  There seems to be so much information available these days that it is difficult to stay abreast of the evidence available.  I accidentally happened across this article by invitation from MySpace to participate in Canada's election commentary.  One of the commenters linked this article in support of his arguments for conservatism in Canada.

How well this speech fits with correcting the problems we are seeing from government interference on Wallstreet, with what many are planning to do with the health care industry, how it interferes with successful programs and how it rewards bad behavior in its current form.  Tax reform to simplify the code and reduce as much as possible tax and regulation increases national economic health and personal development and happiness in its citizens through self reliance.

Rolling Back Government: Lessons from New Zealand

Maurice P. McTigue

Maurice P. McTigue is a distinguished visiting scholar at the Mercatus Center at George Mason University, where he directs the government accountability project. Previously, he was a member of the New Zealand Parliament and New Zealand’s ambassador to Canada, and was closely involved in New Zealand’s deregulation of labor markets, deregulation of the transportation industry, and restructuring of the fishing industry through the creation of conservation incentives. He also served as Minister of Employment, Minister of State Owned Enterprises, Minister of Railways, Minister of Works and Development, Minister of Labour and Minister of Immigration. Among his many honors, Mr. McTigue is a recipient of the Queen’s Service Order, bestowed by Queen Elizabeth II in a ceremony at Buckingham Palace. In the U.S., he was recently appointed to the Office of Personnel Management Senior Review Committee, formed to make recommendations for human resources systems at the Department of Homeland Security. He also sits on the Performance Management Advisory Committee for the Commonwealth of Virginia.

The following is adapted from a lecture delivered on February 11, 2004, on the Hillsdale campus, during a five-day seminar on “The Conditions of Free-Market Capitalism,” co-sponsored by the Center for Constructive Alternatives and the Ludwig von Mises Lecture Series.

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If we look back through history, growth in government has been a modern phenomenon. Beginning in the 1850s and lasting until the 1920s or ’30s, the government’s share of GDP in most of the world’s industrialized economies was about six percent. From that period onwards—and particularly since the 1950s—we’ve seen a massive explosion in government share of GDP, in some places as much as 35-45 percent. (In the case of Sweden, of course, it reached 65 percent, and Sweden nearly self-destructed as a result. It is now starting to dismantle some of its social programs to remain economically viable.) Can this situation be halted or even rolled back? My view, based upon personal experience, is that the answer is “yes.” But it requires high levels of transparency and significant consequences for bad decisions—and these are not easy things to bring about.

What we’re seeing around the world at the moment is what I would call a silent revolution, reflected in a change in how people view government accountability. The old idea of accountability simply held that government should spend money in accordance with appropriations. The new accountability is based on asking, “What did we get in public benefits as a result of the expenditure of money?” This is a question that has always been asked in business, but has not been the norm for governments. And those governments today that are struggling valiantly with this question are showing quite extraordinary results. This was certainly the basis of the successful reforms in my own country of New Zealand.

New Zealand’s per capita income in the period prior to the late 1950s was right around number three in the world, behind the United States and Canada. But by 1984, its per capita income had sunk to 27th in the world, alongside Portugal and Turkey. Not only that, but our unemployment rate was 11.6 percent, we’d had 23 successive years of deficits (sometimes ranging as high as 40 percent of GDP), our debt had grown to 65 percent of GDP, and our credit ratings were continually being downgraded. Government spending was a full 44 percent of GDP, investment capital was exiting in huge quantities, and government controls and micromanagement were pervasive at every level of the economy. We had foreign exchange controls that meant I couldn’t buy a subscription to The Economist magazine without the permission of the Minister of Finance. I couldn’t buy shares in a foreign company without surrendering my citizenship. There were price controls on all goods and services, on all shops and on all service industries. There were wage controls and wage freezes. I couldn’t pay my employees more—or pay them bonuses—if I wanted to. There were import controls on the goods that I could bring into the country. There were massive levels of subsidies on industries in order to keep them viable. Young people were leaving in droves.

Spending and Taxes

When a reform government was elected in 1984, it identified three problems: too much spending, too much taxing and too much government. The question was how to cut spending and taxes and diminish government’s role in the economy. Well, the first thing you have to do in this situation is to figure out what you’re getting for dollars spent. Towards this end, we implemented a new policy whereby money wouldn’t simply be allocated to government agencies; instead, there would be a purchase contract with the senior executives of those agencies that clearly delineated what was expected in return for the money. Those who headed up government agencies were now chosen on the basis of a worldwide search and received term contracts—five years with a possible extension of another three years. The only ground for their removal was non-performance, so a newly-elected government couldn’t simply throw them out as had happened with civil servants under the old system. And of course, with those kinds of incentives, agency heads—like CEOs in the private sector—made certain that the next tier of people had very clear objectives that they were expected to achieve as well.

The first purchase that we made from every agency was policy advice. That policy advice was meant to produce a vigorous debate between the government and the agency heads about how to achieve goals like reducing hunger and homelessness. This didn’t mean, by the way, how government could feed or house more people—that’s not important. What’s important is the extent to which hunger and homelessness are actually reduced. In other words, we made it clear that what’s important is not how many people are on welfare, but how many people get off welfare and into independent living.

As we started to work through this process, we also asked some fundamental questions of the agencies. The first question was, “What are you doing?” The second question was, “What should you be doing?” Based on the answers, we then said, “Eliminate what you shouldn’t be doing”—that is, if you are doing something that clearly is not a responsibility of the government, stop doing it. Then we asked the final question: “Who should be paying—the taxpayer, the user, the consumer, or the industry?” We asked this because, in many instances, the taxpayers were subsidizing things that did not benefit them. And if you take the cost of services away from actual consumers and users, you promote overuse and devalue whatever it is that you’re doing.

When we started this process with the Department of Transportation, it had 5,600 employees. When we finished, it had 53. When we started with the Forest Service, it had 17,000 employees. When we finished, it had 17. When we applied it to the Ministry of Works, it had 28,000 employees. I used to be Minister of Works, and ended up being the only employee. In the latter case, most of what the department did was construction and engineering, and there are plenty of people who can do that without government involvement. And if you say to me, “But you killed all those jobs!”—well, that’s just not true. The government stopped employing people in those jobs, but the need for the jobs didn’t disappear. I visited some of the forestry workers some months after they’d lost their government jobs, and they were quite happy. They told me that they were now earning about three times what they used to earn—on top of which, they were surprised to learn that they could do about 60 percent more than they used to! The same lesson applies to the other jobs I mentioned.

Some of the things that government was doing simply didn’t belong in the government. So we sold off telecommunications, airlines, irrigation schemes, computing services, government printing offices, insurance companies, banks, securities, mortgages, railways, bus services, hotels, shipping lines, agricultural advisory services, etc. In the main, when we sold those things off, their productivity went up and the cost of their services went down, translating into major gains for the economy. Furthermore, we decided that other agencies should be run as profit-making and tax-paying enterprises by government. For instance, the air traffic control system was made into a stand-alone company, given instructions that it had to make an acceptable rate of return and pay taxes, and told that it couldn’t get any investment capital from its owner (the government). We did that with about 35 agencies. Together, these used to cost us about one billion dollars per year; now they produced about one billion dollars per year in revenues and taxes.

We achieved an overall reduction of 66 percent in the size of government, measured by the number of employees. The government’s share of GDP dropped from 44 to 27 percent. We were now running surpluses, and we established a policy never to leave dollars on the table: We knew that if we didn’t get rid of this money, some clown would spend it. So we used most of the surplus to pay off debt, and debt went from 63 percent down to 17 percent of GDP. We used the remainder of the surplus each year for tax relief. We reduced income tax rates by half and eliminated incidental taxes. As a result of these policies, revenue increased by 20 percent. Yes, Ronald Reagan was right: lower tax rates do produce more revenue.

Subsidies, Education, and Competitiveness

…What about invasive government in the form of subsidies? First, we need to recognize that the main problem with subsidies is that they make people dependent; and when you make people dependent, they lose their innovation and their creativity and become even more dependent.

Let me give you an example: By 1984, New Zealand sheep farming was receiving about 44 percent of its income from government subsidies. Its major product was lamb, and lamb in the international marketplace was selling for about $12.50 (with the government providing another $12.50)per carcass. Well, we did away with all sheep farming subsidies within one year. And of course the sheep farmers were unhappy. But once they accepted the fact that the subsidies weren’t coming back, they put together a team of people charged with figuring out how they could get $30 per lamb carcass. The team reported back that this would be difficult, but not impossible. It required producing an entirely different product, processing it in a different way and selling it in different markets. And within two years, by 1989, they had succeeded in converting their $12.50 product into something worth $30. By 1991, it was worth $42; by 1994 it was worth $74; and by 1999 it was worth $115. In other words, the New Zealand sheep industry went out into the marketplace and found people who would pay higher prices for its product. You can now go into the best restaurants in the U.S. and buy New Zealand lamb, and you’ll be paying somewhere between $35 and $60 per pound.

Needless to say, as we took government support away from industry, it was widely predicted that there would be a massive exodus of people. But that didn’t happen. To give you one example, we lost only about three-quarters of one percent of the farming enterprises—and these were people who shouldn’t have been farming in the first place. In addition, some predicted a major move towards corporate as opposed to family farming. But we’ve seen exactly the reverse. Corporate farming moved out and family farming expanded, probably because families are prepared to work for less than corporations. In the end, it was the best thing that possibly could have happened. And it demonstrated that if you give people no choice but to be creative and innovative, they will find solutions.

New Zealand had an education system that was failing as well. It was failing about 30 percent of its children—especially those in lower socio-economic areas. We had put more and more money into education for 20 years, and achieved worse and worse results.

It cost us twice as much to get a poorer result than we did 20 years previously with much less money. So we decided to rethink what we were doing here as well. The first thing we did was to identify where the dollars were going that we were pouring into education. We hired international consultants (because we didn’t trust our own departments to do it), and they reported that for every dollar we were spending on education, 70 cents was being swallowed up by administration. Once we heard this, we immediately eliminated all of the Boards of Education in the country. Every single school came under the control of a board of trustees elected by the parents of the children at that school, and by nobody else. We gave schools a block of money based on the number of students that went to them, with no strings attached. At the same time, we told the parents that they had an absolute right to choose where their children would go to school. It is absolutely obnoxious to me that anybody would tell parents that they must send their children to a bad school. We converted 4,500 schools to this new system all on the same day.

But we went even further: We made it possible for privately owned schools to be funded in exactly the same way as publicly owned schools, giving parents the ability to spend their education dollars wherever they chose. Again, everybody predicted that there would be a major exodus of students from the public to the private schools, because the private schools showed an academic advantage of 14 to 15 percent. It didn’t happen, however, because the differential between schools disappeared in about 18-24 months. Why? Because all of a sudden teachers realized that if they lost their students, they would lose their funding; and if they lost their funding, they would lose their jobs. Eighty-five percent of our students went to public schools at the beginning of this process. That fell to only about 84 percent over the first year or so of our reforms. But three years later, 87 percent of the students were going to public schools. More importantly, we moved from being about 14 or 15 percent below our international peers to being about 14 or 15 percent above our international peers in terms of educational attainment.

Now consider taxation and competitiveness: What many in the public sector today fail to recognize is that the challenge of competitiveness is worldwide. Capital and labor can move so freely and rapidly from place to place that the only way to stop business from leaving is to make certain that your business climate is better than anybody else’s. Along these lines, there was a very interesting circumstance in Ireland just two years ago. The European Union, led by France, was highly critical of Irish tax policy—particularly on corporations—because the Irish had reduced their tax on corporations from 48 percent to 12 percent and business was flooding into Ireland. The European Union wanted to impose a penalty on Ireland in the form of a 17 percent corporate tax hike to bring them into line with other European countries. Needless to say, the Irish didn’t buy that. The European community responded by saying that what the Irish were doing was unfair and uncompetitive. The Irish Minister of Finance agreed: He pointed out that Ireland was charging corporations 12 percent, while charging its citizens only 10 percent. So Ireland reduced the tax rate to 10 percent for corporations as well. There’s another one the French lost!

When we in New Zealand looked at our revenue gathering process, we found the system extremely complicated in a way that distorted business as well as private decisions. So we asked ourselves some questions: Was our tax system concerned with collecting revenue? Was it concerned with collecting revenue and also delivering social services? Or was it concerned with collecting revenue, delivering social services and changing behavior, all three? We decided that the social services and behavioral components didn’t have any place in a rational system of taxation. So we resolved that we would have only two mechanisms for gathering revenue—a tax on income and a tax on consumption—and that we would simplify those mechanisms and lower the rates as much as we possibly could. We lowered the high income tax rate from 66 to 33 percent, and set that flat rate for high-income earners. In addition, we brought the low end down from 38 to 19 percent, which became the flat rate for low-income earners. We then set a consumption tax rate of 10 percent and eliminated all other taxes—capital gains taxes, property taxes, etc. We carefully designed this system to produce exactly the same revenue as we were getting before and presented it to the public as a zero sum game. But what actually happened was that we received 20 percent more revenue than before. Why? We hadn’t allowed for the increase in voluntary compliance. If tax rates are low, taxpayers won’t employ high priced lawyers and accountants to find loopholes. Indeed, every country that I’ve looked at in the world that has dramatically simplified and lowered its tax rates has ended up with more revenue, not less.

What about regulations? The regulatory power is customarily delegated to non-elected officials who then constrain the people’s liberties with little or no accountability. These regulations are extremely difficult to eliminate once they are in place. But we found a way: We simply rewrote the statutes on which they were based. For instance, we rewrote the environmental laws, transforming them into the Resource Management Act—reducing a law that was 25 inches thick to 348 pages. We rewrote the tax code, all of the farm acts, and the occupational safety and health acts. To do this, we brought our brightest brains together and told them to pretend that there was no pre-existing law and that they should create for us the best possible environment for industry to thrive. We then marketed it in terms of what it would save in taxes. These new laws, in effect, repealed the old, which meant that all existing regulations died—the whole lot, every single one.

Thinking Differently About Government

What I have been discussing is really just a new way of thinking about government. Let me tell you how we solved our deer problem: Our country had no large indigenous animals until the English imported deer for hunting. These deer proceeded to escape into the wild and become obnoxious pests. We then spent 120 years trying to eliminate them, until one day someone suggested that we just let people farm them. So we told the farming community that they could catch and farm the deer, as long as they would keep them inside eight-foot high fences. And we haven’t spent a dollar on deer eradication from that day onwards. Not one. And New Zealand now supplies 40 percent of the world market in venison. By applying simple common sense, we turned a liability into an asset.

Let me share with you one last story: The Department of Transportation came to us one day and said they needed to increase the fees for driver’s licenses. When we asked why, they said that the cost of relicensing wasn’t being fully recovered at the current fee levels. Then we asked why we should be doing this sort of thing at all. The transportation people clearly thought that was a very stupid question: Everybody needs a driver’s license, they said. I then pointed out that I received mine when I was fifteen and asked them: “What is it about relicensing that in any way tests driver competency?” We gave them ten days to think this over. At one point they suggested to us that the police need driver’s licenses for identification purposes. We responded that this was the purpose of an identity card, not a driver’s license. Finally they admitted that they could think of no good reason for what they were doing—so we abolished the whole process! Now a driver’s license is good until a person is 74 years old, after which he must get an annual medical test to ensure he is still competent to drive. So not only did we not need new fees, we abolished a whole department. That’s what I mean by thinking differently.

There are some great things happening along these lines in the United States today. You might not know it, but back in 1993 Congress passed a law called the Government Performance and Results Act. This law orders government departments to identify in a strategic plan what it is that they intend to achieve, and to report each year what they actually did achieve in terms of public benefits. Following on this, two years ago President Bush brought to the table something called the President’s Management Agenda, which sifts through the information in these reports and decides how to respond. These mechanisms are promising if they are used properly. Consider this: There are currently 178 federal programs designed to help people get back to work. They cost $8.4 billion, and 2.4 million people are employed as a result of them. But if we took the most effective three programs out of those 178 and put the $8.4 billion into them alone, the result would likely be that 14.7 million people would find jobs. The status quo costs America over 11 million jobs. The kind of new thinking I am talking about would build into the system a consequence for the administrator who is responsible for this failure of sound stewardship of taxpayer dollars. It is in this direction that the government needs to move.

I knew about Sharia Finance strategies through ACT! For America's regular newsletters.  Today I learned that America's financial institutions are in a clearance sale.  Of course the customers are those countries and despots we've been transferring our wealth to for the past 30 years or more.  With the exception of FreddyMac and FannieMae and perhaps IndyMac, all of the giant financial organizations are publicly traded.  With the current crises in the financial industry, they've been selling at bargain basement prices and the petrodollars are buying them.  So what?

Imagine the world's financial institutions being governed by Sharia compliant financiers.  Imagine those institutions refusing to finance any business or government that insults or opposes Islam in any way.  Imagine them refusing to do business with any manufacturer which produces a product or service non-compliant with Sharia's restrictive ideology.  More importantly, imagine them supporting a despot like Ahmadenijad or Habbas.

Dollars for Dinars

(IsraelNN.com) First it was Citibank. Now it's Barclay's and New York City's Chrysler Building skyscraper. Muslim Arabs are buying out collapsing Western banks and businesses and gaining growing international power, but some Arab investors are worried their investments may go down the drain with the American economy.

The current financial crisis in the United States has spread to other countries because of a massive debt that was not backed by enough real and liquid collateral. Banks and businesses gasping for financial breath are up for sale at basement prices, but no one is certain if the basement is the bottom.

"The possibility remains that more Arab white knights will be sought to rescue ailing financial institutions," wrote Dr. Mohammed Ramady, a former banker and Visiting Associate Professor at the King Fahd University of Petroleum and Minerals in the Financial Adviser magazine. He said he fears that Arab investors will end up chasing their investments with more money to keep them from going under.

Read the full article here.

http://shariahfinancewatch.wordpress.com/shariah-compliant-banks/

Shariah Compliant Banks

Alpha Natural ResourcesAsset Acceptance Capital Corporation

Aviva Plc

AXA

Barclays PLC

BNP Paribas Group

Citibank, N.A.

Credit Agricole, S.A.

Deutsche Bank AG

Dow Jones & Company Inc.

Equity Insurance Group Limited

Goldman Sachs Group

HBOS plc

HSBC Holdings plc

INVESCO Perpetual

Julius Baer Group

Maersk Logistics

Merrill Lynch & Co., Inc.

Morgan Stanley

NYSE Euronext

Silicon Graphics, Inc.

Singapore Power

National Security and Financial Risks: Islamists are attempting to impose Shariah Compliant Finance (SCF) on Western institutions to use our own financial strengths against us. The most serious problem with SCF is that it legitimates and institutionalizes Shariah law (i.e., Islamic law), a theo-political- legal doctrine violently opposed to Western values. With $1 -$2 trillion petrodollars annually looking for an investment home, blind exuberance is driving financial institutions to adopt SCF, without even a minimal baseline for legal compliance. This willful blindness, and lack of both transparency and due diligence may cause SCF to be the next sub-prime crisis, but this time with deadly consequences.

Legal Risks: Western financial institutions which adopt SCF may have criminal and civil exposure to claims of aiding and abetting sedition and the material support of terrorism, securities fraud, consumer fraud, racketeering, and antitrust violations, as well as exposure to tort claims for sedition and terrorism, and for the violation of internationally recognized norms of the law of nations.

Terror Financing Mechanism: SCF as monitored by paid Shariah law advisors to U.S. banking institutions must “purify” certain return on investment (ROI) dollars that do not meet Shariah law standards. This money must be donated to Islamic charities - including some that promote Jihad and support suicide bombing. Investment disclosures state that these profits can be as high as 6% of profits of investments. With $800 billion already in SCF assets, the potential for billions of dollars to be siphoned off for terrorism is real. This would be a serious criminal violation of U.S. law.

Consider this example: Shariah Mutual Funds promote themselves as “ethical funds.” To be Shariah-compliant, they donate “tainted” revenues to Shariah-compliant “charities.” A post 9-11 U.S. investor in a Shariah-compliant “ethical investment” is not told that Shariah law also requires imposing Shariah as U.S. law, execution of gays and female apartheid. Is he a victim of consumer fraud? Is this same post 9-11 investor unwittingly funding terror? The government has shut down the three largest Shariah-compliant charities in the U.S. - the Holy Land Foundation, Benevolence International Foundation, and the Global Relief Foundation - after proving they funded terrorist organizations. The American taxpayer deserves answers to these questions. The Center for Security Policy (CSP) is meeting directly with members of Congress, U.S. regulatory agencies and Wall Street financial institutions in order to ensure the enforcement of existing U.S. laws on sedition, disclosure, material support of terrorism, and money-laundering. CSP is committed to revealing the civil liability and criminal exposure of Shariah law and Shariah-compliant finance.

WHAT IS SHARIAH LAW?
Understanding Shariah law is integral to understanding the dangers of Shariah-compliant finance. Shariah law is Islamic law dating back to the 7th century and is today the law of the land in Saudi Arabia, Iran, Sudan and the law under which the Taliban operates. Recent polls reveal that only 10-15% of Muslims worldwide want to live under this all-encompassing system of Islamic jurisprudence that covers all aspects of a Muslim’s life including religious, social, political, and military obligations. However, with a current population of 1.5 billion Muslims, this translates to a huge pool of Jihadist recruits and supporters - a base of approximately 150 - 225 million Muslims. Shariah law authorities, some of whom are now being paid handsomely by Barclays, Dow Jones, Standard & Poors, HSBC, Citibank, Merrill Lynch, Deutschebank, Goldman Sachs, Morgan Stanley, UBS, Credit Suisse and others have the power to dictate Shariah compliance as deemed by “scholarly consensus” on matters of finance, family, penal law, apostasy, and war. Examples of authoritarian Shariah law include: requirement of women to obtain permission from husbands for daily freedoms; beating of disobedient woman and girls; execution of homosexuals; engagement of polygamy and forced child marriages; the testimony of four male witnesses to prove rape; honor killings of those, principally women, who have dishonored the family; death to apostate Muslims who chose to leave Islam; inferior status of non-Muslims, and capital punishment for those “slander Islam.”

------------------------------------------------------------------------------------------- American Congress for Truth P.O. Box 6884 Virginia Beach, VA 23456 member@americancongressfortruth.org http://www.americancongressfortruth.org Every day, American Congress for Truth (ACT) a 501c3 non-profit organization is on the front lines fighting for you in meeting with politicians, decision makers, speaking on college campuses and planning events to educate and inform the public about the threat of Islamofascism. To maintain and bolster our efforts, we need your continued solidarity, activism and financial support. We are only as strong as our supporters. We thank you for helping us carry on this important work.

Today, I witnessed something I've only read about in history books and heard through the eyewitness accounts of my Granny.  There is an IndyMac bank across the street from where I have to report to work.  From the time I arrived until the time I left, the bank had people lined up outside the doors and across the parking lot.  This is what is known as a run on the bank.  People are scared they won't get their money out before the bank collapses.  This is a Federally Insured Corporation through the Federal Deposit Insurance Corporation, which means everybody with less than $100,000 in their account is guaranteed to get their money.  I can't believe that all those people, all day long were each only concerned about the amount in their accounts over the insured amount.  This is a fear based in ignorance.  In their ignorance, they have guaranteed the failure of IndyMac and the same is true of FreddieMac and FannieMae.  The banks will still be there come this time next year.  Nobody is talking about converting them to Burger Kings or anything like that.  They may have a different name on the door, but their accounts are secure.  However, if this keeps up, the insurers could be put out of business.

These banks are so big that America cannot afford to allow them to go under without a huge economical effect.  So, once again the American taxpayer is going to have to bone up and bail out another huge mess like we did with the Savings and Loan mess under Bill Clintons first term as president.  When is the Fed and the Legilature going to learn that we cannot allow these institutions to get that big?  You broke up Ma Bell, its time to break up these lending institutions so when one goes down it does not fall to the taxpayer to foot the bill over and over.  We have to allow the markets to correct these bad business practices.  By bailing them out over and over, we are enabling their (our) self destruction.  They are as addicted to power and wealth as an acoholic is to alcohol or a drug addict to his drug of choice.  Without experiencing the losses that go along with bad business practices, we effectively facilitate and enable their continued bad practices.  By allowing them to consolidate and merge until they are this big, big enough to ruin our economy with their failures, we have to bail them out.

Make this the last time.  Write some laws that limit their size to negligible in the natioanl economic scheme of things.