When it comes to Foreign Policy we need more Team America and Less President Obama

Posted by PITHOCRATES - March 20th, 2014

Politics 101

Thanks to President Obama the United States is now the Rodney Dangerfield of Superpowers

The American public is consumed with the missing Malaysian Airlines Flight 370.  They can’t get enough of the news coverage that is anything but news.  With cable news delivering 24/7 coverage of nothing but speculation.  Even the networks are giving the speculation expansive coverage.  They’d never give Obamacare, Benghazi, the IRS targeting conservative groups, etc., this kind of coverage.  But they will give Malaysian Airlines Flight 370 this kind of coverage.  For apart from the insufferable despair of the families who lost their loved ones it’s a great mystery people want to see unfold.  And be the one to solve it.  But while that is going on the world is becoming a less safe place.  Thanks to Vladimir Putin.

President Obama’s ‘please like us’ foreign policy has failed.  The reset with Russia has not improved our relations.  In fact, they are about as bad as they were during the Cold War.  With Putin doing some Cold War chess playing.  Completely unimpressed with President Obama he’s making bold moves.  And when he does all he gets from the United States is talk.  He annexed Crimea without any real opposition from the Western Powers.  Especially the United States.  And he is probably looking at the Baltic States now.  Seeing no reason yet to stop in his quest to put the Soviet Union back together.  This is what the American people are missing.  For the networks are barely covering it.  And the people are blissfully ignorant of how the United States is now the Rodney Dangerfield of superpowers.  We get no respect from our enemies.  So our enemies make bold moves.  Because that’s who they are.  The creators of South Park made a movie called Team America: World Police (2004).  This followed 9/11 and the beginning of the wars in Afghanistan and Iraq.  When the United States began its fight in the global war on terror.  Though a comedy the writers seem to have a better grasp on the real world than the Obama administration or the mainstream media.  Who think in the 21st century that war no longer exists because world leaders now discuss their differences like rational and civilized adults according to international law.  And honor their agreements.  But what they don’t understand is something that’s been true since the dawn of civilization.  There are three types of people in the world.  As a drunk in Team America: World Police explains crudely but succinctly.  (WARNING: The following video is for mature audiences only.  For it’s pretty rude and crude and completely inappropriate for the workplace.)

If you’ve watched the video you’ll understand what the three types are.  We’ll call them D, P and A (both singular and plural).  In the context of this movie America was a D.  And Kim Jong Il was an A.  As were the Islamist terrorists.  While the leftist ‘give peace a chance’ Hollywood liberals in the movie (who belonged to the Film Actors’ Guild) were P.  As was the United Nations who sent Hans Blix to inspect Kim Jong Il’s regime to make sure he didn’t have any weapons of mass destruction (WMD).  —SPOILER ALERT—  Team America, the world police, go tear-assing around the world, blowing up parts of countries as they hunt and kill terrorists.  Making the world a safer place.  While Kim Jong Il plots to set off WMDs, using the Islamist terrorists to plant his WMDs.  The F.A.G. actors publicly denounce Team America for their wanton destruction and call corporations the real enemy.  Even going to North Korea to attend a peace conference that Kim Jong Il was hosting.  Believing Kim Jong Il was a man of peace.  And were willing to kill Team America to help Kim Jong Il go forward with his peace plans.  Which was actually blowing up countries all around the world into third-world status.

Hitler promised the Naïve Chamberlain that the Sudetenland would be his last Territorial Acquisition

The movie showed the futility of diplomacy when you’re dealing with A.  Because they will lie and say anything you want to hear to shut you up and make you go away.  And when you do they’re just going to crap all over you and the world.  Because that’s what A do.  The P don’t understand that.  They think they can negotiate and arrive at an agreement with people who lie.  History is full of treaties that A have broken.  Because they don’t respect anything but strength.  And if all you got are words an A just isn’t going to respect you.  And will crap on you the first chance he gets.  Especially if you’re a P.  The Russian people understand this.  During the Sochi Olympics the Daily Show‘s Jason Jones interviewed Russians during the Sochi Games.  And a woman told him they have a saying in Russia.  Don’t be a P.  Which is why they love Vladimir Putin.  He’s not a P.  He’s an A.

Communists are A.  They just want to crap all over everyone.  During the Korean War every time they were losing on the battlefield they called for a ceasefire to negotiate a peace treaty.  Using the cessation in hostilities to reinforce their weakened positions.  Proving you just cannot trust an A.  Or negotiate with an A.  Yet the leftist ‘give peace a chance’ liberals think you can.  And that all George W. Bush did by being an A was make the world hate the United States.  Even though Muammar Gaddafi, who was a first class A, respected George W. Bush when he invaded Iraq.  Saw that strength.  Respected that strength.  And did not want to get his ass kicked by that strength.  So he gave up his WMDs willingly.  And joined the Americans in the fight against al Qaeda (Libya is a far less safe place today than it was under Muammar Gaddafi after the Iraqi invasion).  This is what A understand.  Strength.  It’s the one thing that makes them act.  Not words.  As this funny scene in Team America: World Police illustrates so poignantly.  (WARNING: The following video is for mature audiences only.  For it’s pretty rude and crude and completely inappropriate for the workplace.)

We ended the war in Iraq with a ceasefire.  Part of the terms that Saddam Hussein agreed to was to destroy his WMDs and document their destruction.  He never did.  In part because he didn’t have them anymore.  Having sent them over the border into Syria (most likely) on trucks and in two converted Iraqi Airways Boeings before the invasion.  Adolf Hitler promised the naïve Prime Minister Neville Chamberlain that the Czechoslovakian Sudetenland would be his last territorial acquisition.  Chamberlain returned to Britain with a treaty signed by Herr Hitler promising “peace in our time.”  Shortly thereafter Hitler launched World War II (the bloodiest and costliest war of all time) and removed Poland from the map.  Because Hitler was an A.  And you just can’t negotiate with an A.  Especially if you’re a P who believes we can settle all our differences if we only communicate with each other.  No.  An A sees anyone who wants to ‘open a dialogue’ as a P.  And they will laugh at how gullible they are.  Getting a lot of concessions by making promises they have no intention of keeping.  A love P.  Because they are so easy to crap all over.

The Russians like President Obama in Office because he is the Anti-Ronald Reagan

The Obama administration confuses being liked with being respected.  They think if people like America they will respect America.  Nothing could be further from the truth.  People respect people they hate.  At least, if they fear people they hate.  A key distinction.  For Vladimir Putin has no love for President Obama.  Who looks at him as a P.  Which Russians just don’t respect.  They even have a saying.  Don’t be a P.  So Putin has no respect whatsoever for President Obama.  Because he does not fear President Obama.  The recent sanctions President Obama issued by executive order only amused the Russians.  They thought they were nothing more than a joke.  Even replied with in-kind sanctions of their own.  Oh they had a good laugh at President Obama trying to act tough.  But they just don’t respect him.  But you know who they did respect?  Ronald Reagan.

During a radio check President Reagan was testing the sound levels before a radio address.  And he made a joke.  He said into the microphone, “My fellow Americans, I’m pleased to tell you today that I’ve signed legislation that will outlaw Russia forever.  We begin bombing in five minutes.”  This joke leaked out.  And made it to the Soviet Union.  And what do you think they did?  Did they have a good laugh like they did when President Obama tried to act tough?  No.  They didn’t.  They put their Soviet Far East Army on alert.  For they did not like Ronald Reagan.  But they sure as hell respected that crazy son of a bitch.  And feared him.  As well as the awesome military power of the United States.  Which they knew President Reagan had no problem using.  Unlike the current occupant of the White House.  Who wants to shrink the size of the military to pre-World War I levels.  Something only a P would do in the eyes of an A like Vladimir Putin.  No.  President Obama is more of an apologetic president for America’s greatness.  While President Reagan made no apologies.  He believed in American Exceptionalism.  And was damn proud of it.  The shiny city on the hill.  The beacon of liberty.  Defender of freedom.  And he would broadcast the Team America theme song proudly at our enemies.  Unlike the apologist now occupying the White House (WARNING: The following video is for mature audiences only.  For it’s pretty rude and crude and completely inappropriate for the workplace.)

America may have its faults but it is still the best country in the world.  Proven by the flow of immigrants (legal and illegal) to our shores.  We may be arrogant but that’s only because we have a right to be.  Because we are the best m-f’ing country in the world.  F*** yeah.  We’ve made the world a better place.  And the world knows this.  Which is why our enemies love having our country run by people who are ashamed of America’s greatness.  Because they can crap all over the world and get away with it.  Like Putin did by annexing Crimea.  Because they know there is no crazy son of a bitch in the White House that will use the awesome power of the United States to stop them.  Just a bunch of leftist ‘give peace a chance’ liberals who will wag their finger at them.  And if they don’t quake with fear they will wag their finger at them again.  Or write a letter.  The Russians couldn’t be happier.  And lament that if there were only people like the current administration running the United States in the Eighties the Soviets never would have lost the Cold War.  But now Vladimir Putin, former KGB officer in the Soviet Union, sees his chance.  He can put the Soviet Union together again.  As they have the anti-Ronald Reagan in office now.  And can do whatever the hell they want to.  Because they aren’t P.  They’re A.

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The Dow Jones Industrial Average and the Labor Force Participation Rate from Ronald Reagan to Barack Obama

Posted by PITHOCRATES - February 10th, 2014

Economics 101

(Originally published May 21st, 2013)

The DJIA and the Labor Force Participation Rate tell us how both Wall Street and Main Street are Doing

Rich people don’t need jobs.  They can make money with money.  Investing in the stock market.  When you see the Dow Jones Industrial Average (DJIA) increasing you know rich people are getting richer.  Whereas the middle class, the working people, aren’t getting rich.  But they may be building a retirement nest egg.  Which is good.  So they benefit, too, from a rising DJIA.  But that’s for later.  What they need now is a job.  Unlike rich people.  The middle class typically lives from paycheck to paycheck.  So more important to them is a growing job market.  Not so much a growing stock market.  For the middle class needs a day job to be able to invest in the stock market.  Whereas rich people don’t.  For a rich person’s money works enough for the both of them.

So the Dow Jones Industrial Average shows how well rich people are doing.   And how well the working class’ retirement nest eggs are growing for their retirement.  But it doesn’t really show how well the middle class is living.  For they need a job to pay their bills.  To put food on their tables.  And to raise their families.  So the DJIA doesn’t necessarily show how well the middle class is doing.  But there is an economic indicator that does.  The labor force participation rate.  Which shows the percentage of people who could be working that are working.  So if the labor force participation rate (LFPR) is increasing it means more people looking for a job can find a job.  Allowing more people to be able to pay their bills, put food on their tables and raise their families.

These two economic indicators (the DJIA and the LFPR) can give us an idea of how both Wall Street and Main Street are doing.  Ideally you’d want to see both increasing.  A rising DJIA shows businesses are growing.  Allowing Wall Street to profit from rising stock prices.  While those growing businesses create jobs for Main Street.   If we look at these economic indicators over time we can even see which ‘street’ an administration’s policies favor.   Interestingly, it’s not the one you would think based on the political rhetoric.

Wall Street grew 75% Richer under Clinton than it did under Reagan while Main Street grew 65% Poorer

Those going through our public schools and universities are taught that capitalism is unfair.  Corporations are evil.  And government is good.  The Democrats favor a growing welfare state.  Funded by a highly progressive tax code.  That taxes rich people at higher tax rates.  While Republicans favor a limited government.  A minimum of government spending and regulation.  And lower tax rates.  Therefore the Republicans are for rich people and evil corporations.  While the Democrats are for the working man.  Our schools and universities teach our kids this.  The mainstream media reinforces this view.  As does Hollywood, television and the music industry.  But one thing doesn’t.  The historical record (see Civilian Labor Force Participation Rate and Recessions 1950-Present and Dow Jones Industrial Average Index: Historical Data).

DJIA vs Labor Force Participation Rate - Reagan

The Democrats hated Ronald Reagan.  Because he believed in classical economics.  Which is what made this country great.  Before Keynesian economics came along in the early 20th Century.  And ushered in the era of Big Government.  Reagan reversed a lot of the damage the Keynesians caused.  He tamed inflation.  Cut taxes.  Reduced regulation.  And made a business-friendly environment.  Where the government intervened little into the private sector economy.  And during his 8 years in office we see that BOTH Wall Street (the Dow Jones Industrial Average) and Main Street (the labor force participation rate) did well.  Contrary to everything the left says.  The DJIA increased about 129%.  And the LFPR increased about 3.4%.  Indicating a huge increase of jobs for the working class.  Showing that it wasn’t only the rich doing well under Reaganomics.  The policies of his successor, though, changed that.  As Wall Street did better under Bill Clinton than Main Street.

DJIA vs Labor Force Participation Rate - Clinton

Despite the Democrats being for the working man and Bill Clinton’s numerous statements about going back to work to help the middle class (especially during his impeachment) Wall Street clearly did better than Main Street under Bill Clinton.  During his 8 years in office the LFPR increased 1.2%.  While the DJIA increased 226%.  Which means Wall Street grew 75% richer under Clinton than it did under Reagan.  While Main Street grew 65% poorer under Clinton than it did under Reagan.  Which means the gap between the rich and the middle class grew greater under Clinton than it did under Reagan.  Clearly showing that Reagan’s policies favored the Middle Class more than Clinton’s policies did.  And that Clinton’s policies favored Wall Street more than Regan’s did.  Which is the complete opposite of the Democrat narrative.  But it gets worse.

The Historical Record shows the Rich do Better under Democrats and the Middle Class does Better under Republicans

The great economy of the Nineties the Democrats love to talk about was nothing more than a bubble.  A bubble of irrational exuberance.  As investors borrowed boatloads of cheap money thanks to artificially low interest rates.  And poured it into dot-com companies that had nothing to sell.  After these dot-coms spent that start-up capital they had no revenue to replace it.  And went belly-up in droves.  Giving George W. Bush a nasty recession at the beginning of his presidency.  Compounded by the 9/11 terrorist attacks.

DJIA vs Labor Force Participation Rate - Bush

The LFPR fell throughout Bush’s first term as all those dot-com jobs went away in the dot-com crash.  Made worse by the 9/11 attacks.  As all the malinvestments of the Clinton presidency were wrung out of the economy things started to get better.  The LFPR leveled off and the DJIA began to rise.  But then the specter of Bill Clinton cast another pall over the Bush presidency.  Clinton’s Policy Statement on Discrimination in Lending forced lenders to lower their lending standards to qualify more of the unqualified.  Which they did under fear of the full force and fury of the federal government.  Using the subprime mortgage to put the unqualified into homes they couldn’t afford.  This policy also pressured Fannie Mae and Freddie Mac to buy these toxic subprime mortgages from these lenders.  Freeing them up to make more toxic loans.  This house of cards came crashing down at the end of the Bush presidency.  Which is why the DJIA fell 19.4%.  And the LFPR fell 2.1%.  Even though the economy tanked thanks to those artificially low interest rates that brought on the subprime mortgage crisis and Great Recession both Wall Street and Main Street took this rocky ride together.  They fell together in his first term.  Rose then fell together in his second term.  Something that didn’t happen in the Obama presidency.

DJIA vs Labor Force Participation Rate - Obama

During the Obama presidency Wall Street has done better over time.  Just as Main Street has done worse over time.  This despite hearing nothing about how President Obama cares for the middle class.  When it is clear he doesn’t.  As his policies have clearly benefited rich people.  Wall Street.  While Main Street suffers the worst economic recovery since that following the Great Depression.  So far during his presidency the LFPR has fallen 3.7%.  While the DJIA has risen by 86%.  Creating one of the largest gaps between the rich and the middle class.  This despite President Obama being the champion of the middle class.  Which he isn’t.  In fact, one should always be suspect about anyone claiming to be the champion of the middle class.  As the middle class always suffers more than the rich when these people come to power.  Just look at Venezuela under Hugo Chaves.  Where the rich got richer.  And the middle class today can’t find any toilet paper to buy.  This is what the historical record tells us.  The rich do better under Democrats.  And the middle class does better under Republicans.  Despite what our schools and universities teach our kids.  Or what they say in movies and television.

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FT204: “The young and dumb vote liberal while the old and wise vote conservative.” —Old Pithy

Posted by PITHOCRATES - January 10th, 2014

Fundamental Truth

Having the Ability to give Beautiful Young Women Nice Things helped Charlie Harper get them in Bed

On the show Two and a Half Men there was an episode where Charlie (played by Charlie Sheen) was having a conversation with someone where he was trying to defend himself and the choice he makes in women.  In broke off in mid sentence and said something like, “Yeah, you got me.  Young and dumb.  That’s how I like them.”  Or something like that.

Charlie Harper was about 40 years old.  Rich.  He drank to excess.  Smoked cigars.  Gambled.  Enjoyed strip bars and prostitutes.  And he womanized.  Getting beautiful young women back to his Malibu beach house for one night of passion.  Which was all he wanted.  One night.  The ladies thought he wanted more.  Because of the lies he told them to get them to his Malibu beach house.  And when they left in the morning they expected Charlie to call them.  But he never did.  Which is why he liked his women dumb.  For it was easier getting them into bed.  And out of it.

Charlie was skilled in the art of picking up women.  And what to do with them after picking them up.  Skill gained over years of experience.  And being rich helped, too.  Because being able to give beautiful young women nice things (expensive dinners, going to the best clubs, spending the night at a Malibu beach house, gifts, etc.) got their attention.  They liked that life.  And wanted more of it.  So they went to his bed with him.  Thinking that by doing whatever he wanted there would be more of this glamorous life to come.  But before that could happen Charlie was telling his lies to another young and dumb woman.

Every Communist Dictator that promised a Utopia to their People made their lives Absolutely Horrible

Charlie was engaged a few times.  The last time he was engaged to Chelsea (played superbly by Jennifer Taylor).  Who was a little older than most of the women he took to his bed.  Smart.  And wise.  She had a career.  Though he had a long engagement (for him) it did not last.  Because she could do better.  Eventually leaving him for someone more mature.  In fact, every age-appropriate relationship he had failed.  Because he did not do well unless they were young and dumb.  As Chelsea said one time when leaving after a breakup, “We both knew you were going to blow it eventually.”

You can learn a lot by watching Two and a Half Men.  For the world is full of Charlie Harpers.  People that lie and manipulate people to get what they want.  Who depend on people being young and dumb.  This is how liberals have risen to power.  By selling their utopian world view to the young and ignorant.  Before they get old and wise.  And learn the truth of their liberal utopia.

There was an article in Rolling Stone saying what America needs is full-blown communism.  The author is a young guy.  An academic type.  Knows everything.  But has experienced nothing.  His head was filled with communist ideals from his leftist professors.

Imagine no possessions
I wonder if you can
No need for greed or hunger
A brotherhood of man
Imagine all the people
Sharing all the world…

But what John Lennon doesn’t sing about in Imagine is that every communist dictator that promised these things to the people made their people’s lives absolutely horrible.  Where people lived in fear of the secret police.  Were tortured at the hands of the secret police.  And died at the hands of the secret police.  Communism as an ideology has killed more people than any other dictator or ideology in all of history.  Yet college kids everywhere still imagine a world where all the people live as one.  Under the boot of an oppressive police state.  That forces the people to live in a brotherhood of man.  Or die.

Liberals are in a lot of ways like Charlie Harper because they like their Electorate Young and Dumb

Joseph Stalin terrorized his people with the KGB.  The East Germans shot their own people who tried to escape climbing over the Berlin Wall.  Cambodia’s Pol Pot killed a greater percentage of a nation’s population than any other dictator in history.  Cubans risk their lives to float from Cuba to the United States.  The masses in North Korea still suffer famine because of their oppressive Stalinist state.  Where it’s the military first.  Then the people.  And so on.  Yet college students still wear shirts with pictures of Che Guevara wearing his beret.  This hero of ignorant college students.  A guy who had urged the Soviets to launch their nuclear missiles at the United States during the Cuban Missile Crisis.

And when the secret police wasn’t killing their people the people were going without the most basic necessities.  For their planned economies could not keep their store shelves stocked.  So people went without many of the things people in Western capitalist economies take for granted.  Things even ignorant college students take for granted.  Things they just couldn’t get in their beloved communist utopias.  Ronald Reagan won the Cold War not by waging nuclear war.  He won it by creating an arms race that the Soviet economy could not keep up with AND feed her people.  Like the Americans could.  In fact, the American economic output was so great that they could feed all Americans with enough left over to export to the Soviet Union.  So the Soviet people did not die from famine.

All throughout history free market capitalism provided a better life than any planned economy.  Even in the United States.  When FDR increased government spending to end a recession it only stretched out that recession into the Great Depression.  Excessive government spending didn’t work in the 1970s for Nixon, Ford or Carter.  Nor did it work during the Great Recession for Obama.  But cuts in tax rates provided explosive economic growth for Warren Harding/Calvin Coolidge in the 1920s, JFK in the 1960s, Ronald Reagan in the 1980s and even George W. Bush in the 2000s.  Yet the young and dumb buy the liberal lie that government spending can provide a better life for all despite history proving otherwise.  And keep voting liberal.  Until they get old and wise, that is.  And start voting conservative.

Liberals are in a lot of ways like Charlie Harper.  For they like their electorate young and dumb.  So they can more easily lie to them.  To get what they want.  By making promises they never intend to keep.  Such as that brotherhood of man sharing all of the world.  For after a century or so of promising this the only people who ever enjoyed the liberal/communist utopia were those few in power.

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Lee Harvey Oswald is the Godfather of Today’s American Left

Posted by PITHOCRATES - November 24th, 2013

Week in Review

The assassination of JFK ruined this country.  Because it gave us LBJ and his liberal agenda (see If Kennedy lived: Imagining a different fate for JFK (and Johnson) 50 years later by Jeff Zeleny, Richard Coolidge and Jordyn Phelps posted 11/20/2013 on Yahoo! News).

Historian Jeff Greenfield imagines how history would have changed if Lee Harvey Oswald hadn’t been successful in firing a fatal shot to Kennedy 50 years ago. It’s the latest alternative history from Greenfield in his new book, “If Kennedy Lived: The First and Second Terms of President John F. Kennedy.”

Greenfield, who re-examined the political realities that were present prior to the assassination, told “The Fine Print” he believes that Kennedy’s survival would have likely meant the demise of then-Vice President Lyndon Johnson’s political career.

“The moment John Kennedy was shot, quite literally, LIFE Magazine — a very important medium back then — was launching a huge investigation into how this public servant had accumulated a $14 million net worth, and the answer wasn’t pretty,” Greenfield said of Johnson. “It had to do with radio and TV licenses, and something close to extortion.”

The investigation was halted once Kennedy died, Greenfield said, “Because it would’ve been too much of a shock to the system.” But in Greenfield’s alternate history, the investigation grows into a scandal for Johnson, and Kennedy ultimately replaces him in his second term.

So who gained the most with JFK’s assassination?  Liberals.  For in JFK’s December 14, 1962 speech to the Economic Club of New York he sounded more like Ronald Reagan than LBJ.  Where he championed private spending, not government spending.  He favored tax cuts over tax credits to stimulate the economy.  He talked about increasing consumer spending via personal tax cuts.  And using corporate and personal tax cuts to increase investment and profits.  Yes, he talked about businesses making more profits.  So they would hire more.  Something no liberal would say.

Instead of the Ronald Reagan-like JFK we got one of the most corrupt politicians ever to become president.  LBJ.  According to LIFE Magazine.  And the greatest explosion of the welfare state since the New Deal.  The Great Society.  Turning the U.S. away from capitalism and towards European-style social democracy.

This is the great tragedy of the JFK assassination.  Thanks to that anti-capitalist, Cuba-loving, America-hating assassin who had once defected to the Soviet Union.  A nation long admired by liberals since the day of Joseph Stalin.  This is the great tragedy the leftist communist Lee Harvey Oswald gave us.  Lee Harvey Oswald gave us LBJ, the Great Society and the rise of state-capitalism in the United States.  Everything liberals want.  And conservatives eschew.  Making Lee Harvey Oswald the godfather of today’s American left.

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Debt, Jobs and Criticism—Carter, Reagan, Clinton, Bush and Obama

Posted by PITHOCRATES - November 19th, 2013

History 101

The Democrats used the Power of the Purse to oppose the Reagan Agenda wherever they Could

The left hated President Reagan.  They called him just a “B” movie actor.  With many references to Bedtime for Bonzo.   With the implication that Reagan was a chimpanzee.  He was called stupid.  Senile.  And they said he hated the poor.  The usual stuff when it comes to Democrats calling the opposition names.  But as about as demeaning as it gets.  For the Democrats hated Ronald Reagan with a passion.  They may have hated him even more than George W. Bush.  Another president they called stupid.  Even making similar chimpanzee references.

They fought Reagan tooth and nail.  The Democrats held the House and they used the power of the purse to oppose the Reagan agenda wherever they could.  So Reagan had to compromise on some things.  Especially tax hikes.  But for the most part he kept his word to the American people.  And maintained high approval ratings.  Making it harder for the Democrats to block all of the Reagan agenda.  Which just made the left hate him more.

It’s funny the short memories Democrats have.  For any criticism of President Obama is met with charges of racism.  And because of that few criticize him.  Because no one wants to be called a racist.  Giving President Obama a free pass for most if his presidency.  Something neither George W. Bush nor Ronald Reagan ever enjoyed.  Yet the left says the right says the most vile things about President Obama.  Unprecedented things.  Like calling him a liar when he lied during the State of the Union Address.  Which must be different from saying ‘Bush lied people died’ over and over again.

President Obama is on Pace to add more Debt than Ronald Reagan

Among the terrible things the left said Ronald Reagan was doing was running up the debt to unsustainable levels.  And he did run up the debt.  About 99.4% during his 8 years.  Or about 12.4% a year.  Much of that spending, though, was to reverse the damage Jimmy Carter did to national defense.  He had gutted defense spending so much (cancelling bombers and missile programs) that the Soviet Union thought for the first time that they could win a nuclear war against the United States.  At least with Jimmy Carter as president.  They actually started drafting nuclear first-strike plans to replace the deterrence of mutually assured destruction (MAD).  Anyway, that spending led to the collapse of the Soviet Union.  Allowing the U.S. to win the Cold War.  Giving Bill Clinton a huge peace dividend during his presidency.

Bill Clinton wanted to nationalize health care.  And it didn’t go over well.  His big spending liberal agenda got neutered at the midterm elections.  As he angered the people so much the Republicans won both the House and Senate.  Forcing Clinton to the center.  Dropping any thoughts of national health care.  With Republicans even forcing welfare reform on him.  The Republican Revolution kept spending down.  And the debt only grew 13.6% during Clinton’s 8 years.  Or about 1.7% a year.

After the 9/11 terrorist attacks George W. Bush ramped up military spending.  For national security.  And two wars.  He also ramped up domestic spending.  Giving us Medicare Part D.  A program to subsidize the prescription drugs for Medicare recipients.  In the 8 years of the Bush presidency he added about 41.4% to the national debt.  About 5.2% a year.  Which sounded like a lot until President Obama came along.  A near trillion dollar stimulus bill that stimulated little.  Investments into failed solar power companies and electric car companies.  Automotive (i.e., union pension fund) bailouts.  In his 5 years in office Obama has raised the debt by 53.8%.  Or 10.8% each of his 5 years.  A little more than twice the rate of George W. Bush.  At this pace he will even add more debt than Ronald Reagan.  Adding up to 18.3% per year (over 8 years) if no one stops his spending.

Under President Obama the Gap between Black and White Unemployment grew Greater

President Obama said those ‘wise’ investments and higher taxes on those who could afford to pay a little more would generate economic activity.  His income redistribution would balance the playing field.  And raise the poor out of poverty.  While people everywhere celebrated the first black president.  For it would bring the races together.  This is why some on the right joked that President Obama was the messiah.  Because he was going to do all of that.  As well as make the ocean levels fall.  Black America especially loved the nation’s first black president.  As 95% of the black vote went to Obama in 2008.  Though the enthusiasm waned a bit in 2012.  As only 93% of the black vote went to Obama.  And how has black American done under the Obama economic policies.  Well, not as good as they did under the Bush economic policies (see archived data from Table A-2. Employment status of the civilian population by race, sex, and age in the Employment Situation Archived News Releases by the Bureau of Labor Statistics).

Unemplyment Rates by Race Age Sex 2003-2013 R2

The Great Recession officially ran from December 2007 to June 2009.  Which corresponds to the transition from George W. Bush to Barack Obama.  People often call the Great Recession the worst recession since the Great Depression.  Of course they say that primarily because the current economic recovery is the worst since that following the Great Depression.  And the reason for that is President Obama’s economic policies.

Unemployment was lower for everyone under Bush.  On average the unemployment rate for white/black men, women and 16-19 year olds under Bush was 4.2%/9.3%, 4.0%/8.2% and 14.7%/31.1%, respectively.  Under President Obama these numbers jumped to 7.8%/15.7%, 6.7%/12.2% and 21.8%/40.3%.  Which should give black America cause for concern.  For under President Obama the gap between black and white unemployment grew greater.  The gap between black and white men went from 5.1 to 7.9.  An increase of 55.6%.  The gap between black and white women went from 4.2 to 5.5.  An increase of 32.9%.  And the gap between black and white 16 to 19 year olds went from 16.5 to 18.5.  An increase of 12.7%.  So whatever President Obama is doing it isn’t helping America find work.  Especially black America.

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The Democrats have refused to Raise the Debt Ceiling for Republican Presidents

Posted by PITHOCRATES - October 8th, 2013

History 101

The Democrats opposed Raising the Debt Ceiling for Republican President Dwight Eisenhower

President Obama and the House Republicans are at a standoff.  At the center of the debate is Obamacare.  The House Republicans want to defund Obamacare.  They didn’t like it when it cost $1 trillion over ten years.  And they like it even less now that the CBO has revised its cost to $3 trillion.  It has frozen hiring.  And pushed people from full-time to part-time.  President Obama has also revised the law.  Taking on legislative powers that the Constitution gives only to Congress.  With the one year delay for the business mandate being especially galling to Republicans.  As well as the 75% subsidy members of Congress and their staff get.

The House Republicans have reduced their demands to basically giving the president a continuing resolution to fund all of government if he would only give the American people what he gave to his friends in Big Business.  A one year waiver of the individual mandate.  Infuriating the president.  Saying he will not negotiate with terrorists taking the American people hostage.  However, he said he will negotiate with the Republicans.  After they give him everything he wants.  Including raising the debt limit.  For shutting down the government is one thing.  But messing with the full faith and credit of the United States is another.  With the Republicans having the gall to demand spending cuts before raising the debt ceiling.  This was just unprecedented.  Never before did anyone use the debt ceiling to bully a president before.  In the past Congresses always raised the debt ceiling whenever a president requested.  Whistling a happy tune in the process.  Except, of course, in 1953 (see Can Debt Ceiling Debates Be Useful? History Says Maybe. by Joseph J. Thorndike posted 8/28/2013 on the Huffington Post).

The idea of using the debt ceiling for leverage is not new. Indeed, the nation’s first debt limit crisis hinged on it. In the summer of 1953, President Dwight Eisenhower asked Congress for a modest boost in the debt ceiling. When austerity-minded lawmakers refused, it prompted a crisis that brought the nation to the brink of default – or to its fiscal senses, depending on your point of view…

Eisenhower didn’t believe that spending cuts would be sufficient to keep federal debt under the cap. “Despite our joint vigorous efforts to reduce expenditures,” he told Congress, “it is inevitable that the public debt will undergo some further increase.” On July 30, Eisenhower asked Congress for an increase in the debt ceiling from $275 billion to $290 billion…

Sen. Harry F. Byrd, D-Va., took the lead in fighting the increase. Raising the limit would be “an invitation to extravagance,” he declared. Keeping the present cap, moreover, would encourage much-needed economy. “It may be that the administration would be forced to operate on a very prudent and conservative budget in order to avoid an increase in the debt limit,” he predicted.

A host of senators joined Byrd’s campaign to reject the increase. The New York Times reported that Democratic opposition was “almost solid,” and many Republicans were also prepared to break with the president…

As a leverage goes, it was pretty effective. Almost immediately, Eisenhower told his department heads to cut their spending. “It is absolutely essential that you begin immediately to take every possible step progressively to reduce the expenditures of your department during the fiscal year 1954,” he told them.

So it started early.  And it started with the Democrats.  Holding the debt limit hostage to get what they want.  And in 1953, the Democrats got what they wanted.  They forced President Eisenhower to make spending cuts.  Just like the Republicans asked for in 2011.  And will ask again now.  But President Obama was not as reasonable in 2011 as President Eisenhower was.  And he is saying he will be even less reasonably now.

The Democrats opposed Raising the Debt Ceiling for Republican President Ronald Reagan

So was 1953 an isolated incident?  Were the Democrats more accommodating at other times when a president asked them to raise the debt ceiling?  As President Obama would have us believe?  Well, they weren’t very accommodating in 1984.  When President Ronald Reagan asked Congress to raise the debt ceiling (see In 1984, debt debate looked different to Biden, GOP by Stephen Dinan posted 7/19/2011 on The Washington Times).

With time running out on a looming debt crisis, the president and his allies in the Senate are fighting to win a raise in the government’s borrowing limit, only to be stymied by a minority insisting that a spending freeze be part of the deal.

Sounds like present day, but it was October 1984 — when the partisan roles were reversed. Republicans controlled the White House and the Senate, while Democrats controlled the House. Democrats also could sustain filibusters in the Senate and were balking at raising the debt ceiling unless it was attached to big spending cuts…

One of the leaders of that 1984 Democratic revolt — a man who tried to impose a spending freeze and fought for a smaller debt increase than President Reagan wanted — was none other than current Vice President Joseph R. Biden, then a senator from Delaware and now President Obama’s right-hand man in negotiations with Congress.

“I must express my protest against continually increasing the debt without taking positive steps to slow its growth. Therefore, I am voting against any further increase in the national debt,” Mr. Biden said in a floor speech just before helping fellow Democrats defeat an increase of $251 billion on a 46-14 vote.

Once again the Democrat-controlled House refused to raise the debt ceiling.  So 1953 was not an isolated incident.  But the beginning of a pattern of Democrat willingness to risk the full faith and credit of the United States for political reasons.  To get their way despite losing the election to President Reagan.  Apparently back then elections didn’t have consequences.

How embarrassing it must be for the vice president.  Being part of an administration trying to do what the Reagan administration did when he stood in opposition.  Imagine trying to argue for something you argued against previously?  Thankfully, it was only the vice president that had such a hypocritical past.  Imagine how embarrassing it would be if the president had such hypocrisy in his past.

The Democrats opposed Raising the Debt Ceiling for Republican President George W. Bush

Well, as it turns out, another young Democrat senator went toe-to-toe with another Republican president over the debt ceiling.  And he just didn’t vote against it.  He made a speech.  On the record.  For posterity.  To prove he was no spendthrift.  At least, not when a Republican was in the White House.  That president was George W. Bush.  And that senator was, of course, Barack Obama (see Obama Really Wishes He Never Gave This Speech About The Debt Ceiling by Walter Hickey posted 1/14/2013 on the Business Insider).

In 2006, then-Sen. Barack Obama gave a floor speech defending his decision to vote against an increase in the debt ceiling under President George W. Bush…

Here are some of the key parts of Obama’s speech:

Mr. President, I rise today to talk about America’s debt problem. The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.

[…]

Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘‘the buck stops here.’’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.

In the midst of the first debt-ceiling standoff in 2011, Obama was asked about his flip by ABC’s George Stephanopoulos. He chalked it up as a “political vote” and said his mindset changed as President.

Hypocrisy, thy name is Barack Obama.

Interesting.  It was okay for him to do what the House Republicans are doing now when he was in Congress.  When there was less debt.  And less of a debt crisis.  But it’s not okay for the House Republicans to do so now.  When there is more debt.  And a greater debt crisis.

So what is the right thing to do?  Well, if you’re President Obama the right thing to do is what he wants to do.  Not what is best for the country.  For if you argue both sides of the same issue at different times it means you’re more interested in what’s best for yourself.  Not the country.  Unless he evolved on this issue, too.  If so, perhaps we should ask for President Obama’s resignation.  For if he keeps evolving on issues he must be too ill-informed or naïve to be president.

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Bretton Woods, Nixon Shock, OPEC, Yom Kippur War, Oil Embargo, Stagflation, Paul Volcker, Ronald Reagan and Morning in America

Posted by PITHOCRATES - October 1st, 2013

History 101

(Originally published September 18th, 2012)

Under the Bretton Woods System the Americans promised to Exchange their Gold for Dollars at $35 per Ounce

Wars are expensive.  All kinds.  The military kind.  As well as the social kind.  And the Sixties gave us a couple of doozies.  The Vietnam War.  And the War on Poverty.  Spending in Vietnam started in the Fifties.  But spending, as well as troop deployment, surged in the Sixties.  First under JFK.  Then under LBJ.  They added this military spending onto the Cold War spending.  Then LBJ declared a war on poverty.  And all of this spending was on top of NASA trying to put a man on the moon.  Which was yet another part of the Cold War.  To beat the Soviets to the moon after they beat us in orbit.

This was a lot of spending.  And it carried over into the Seventies.  Giving President Nixon a big problem.  As he also had a balance of payments deficit.  And a trade deficit.  Long story short Nixon was running out of money.  So they started printing it.  Which caused another problem as the US was still part of the Bretton Woods system.  A quasi gold standard.  Where the US pegged the dollar to gold at $35 per ounce.  Which meant when they started printing dollars the money supply grew greater than their gold supply.  And depreciated the dollar.  Which was a problem because under Bretton Woods the Americans promised to exchange their gold for dollars at $35 per ounce.

When other nations saw the dollar depreciate so that it would take more and more of them to buy an ounce of gold they simply preferred having the gold instead.  Something the Americans couldn’t depreciate.  Nations exchanged their dollars for gold.  And began to leave the Bretton Woods system.    Nixon had a choice to stop this gold outflow.  He could strengthen the dollar by reducing the money supply (i.e., stop printing dollars) and cut spending.  Or he could ‘close the gold window’ and decouple the dollar from gold.  Which is what he did on August 15, 1971.  And shocked the international financial markets.  Hence the name the Nixon Shock.

When the US supported Israel in the Yom Kippur War the Arab Oil Producers responded with an Oil Embargo

Without the restraint of gold preventing the printing of money the Keynesians were in hog heaven.  As they hated the gold standard.  The suspension of the convertibility of gold ushered in the heyday of Keynesian economics.  Even Nixon said, “I am now a Keynesian in economics.”  The US had crossed the Rubicon.  Inflationary Keynesian policies were now in charge of the economy.  And they expanded the money supply.  Without restraint.  For there was nothing to fear.  No consequences.  Just robust economic activity.  Of course OPEC didn’t see it that way.

Part of the Bretton Woods system was that other nations used the dollar as a reserve currency.  Because it was as good as gold.  As our trading partners could exchange $35 for an ounce of gold.  Which is why we priced international assets in dollars.  Like oil.  Which is why OPEC had a problem with the Nixon Shock.  The dollars they got for their oil were rapidly becoming worth less than they once were.  Which greatly reduced what they could buy with those dollars.  The oil exporters were losing money with the American devaluation of the dollar.  So they raised the price of oil.  A lot.  Basically pricing it at the current value of gold in US dollars.  Meaning the more they depreciated the dollar the higher the price of oil went.  As well as gas prices.

With the initial expansion of the money supply there was short-term economic gain.  The boom.  But shortly behind this inflationary gain came higher prices.  And a collapse in economic activity.  The bust.  This was the dark side of Keynesian economics.  Higher prices that pushed economies into recessions.  And to make matters worse Americans were putting more of their depreciated dollars into the gas tank.  And the Keynesians said, “No problem.  We can fix this with some inflation.”  Which they tried to by expanding the money supply further.  Meanwhile, Egypt and Syria attacked Israel on October 6, 1973, kicking off the Yom Kippur War.  And when the US supported their ally Israel the Arab oil producers responded with an oil embargo.  Reducing the amount of oil entering America, further raising prices.  And causing gas lines as gas stations ran out of gas.  (In part due to Nixon’s price controls that did not reset demand via higher prices to the reduced supply.  And a ceiling on domestic oil prices discouraged any domestic production.)  The Yom Kippur War ended about 20 days later.  Without a major change in borders.  With an Israeli agreement to pull their forces back to the east side of the Suez Canal the Arab oil producers (all but Libya) ended their oil embargo in March of 1974.

It was Morning in America thanks to the Abandonment of Keynesian Inflationary Policies

So oil flowed into the US again.  But the economy was still suffering from high unemployment.  Which the Keynesians fixed with some more inflation.  With another burst of monetary expansion starting around 1975.  To their surprise, though, unemployment did not fall.  It just raised prices.  Including oil prices.  Which increased gas prices.  The US was suffering from high unemployment and high inflation.  Which wasn’t supposed to happen in Keynesian economics.  Even their Phillips Curve had no place on its graph for this phenomenon.  The Keynesians were dumfounded.  And the American people suffered through the malaise of stagflation.  And if things weren’t bad enough the Iranians revolted and the Shah of Iran (and US ally) stepped down and left the country.  Disrupting their oil industry.  And then President Carter put a halt to Iranian oil imports.  Bringing on the 1979 oil crisis.

This crisis was similar to the previous one.  But not quite as bad.  As it was only Iranian oil being boycotted.  But there was some panic buying.  And some gas lines again.  But Carter did something else.  He began to deregulate oil prices over a period of time.  It wouldn’t help matters in 1979 but it did allow the price of crude oil to rise in the US.  Drawing the oil rigs back to the US.  Especially in Alaska.  Also, the Big Three began to make smaller, more fuel efficient cars.  These two events would combine with another event to bring down the price of oil.  And the gasoline we made from that oil.

Actually, there was something else President Carter did that would also affect the price of oil.  He appointed Paul Volcker Chairman of the Federal Reserve in August of 1979.  He was the anti-Keynesian.  He raised interest rates to contract the money supply and threw the country into a steep recession.  Which brought prices down.  Wringing out the damage of a decade’s worth of inflation.  When Ronald Reagan won the 1980 presidency he kept Volcker as Chairman.  And suffered through a horrible 2-year recession.  But when they emerged it was Morning in America.  They had brought inflation under control.  Unemployment fell.  The economy rebounded thanks to Reagan’s tax cuts.  And the price of oil plummeted.  Thanks to the abandonment of Keynesian inflationary policies.  And the abandonment of oil regulation.  As well as the reduction in demand (due to those smaller and more fuel efficient cars).  Which created a surge in oil exploration and production that resulted in an oil glut in the Eighties.  Bringing the price oil down to almost what it was before the two oil shocks.

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The Soviet Union created Anti-American and Anti-Israeli Sentiment in the Muslim World

Posted by PITHOCRATES - June 29th, 2013

Week in Review

Jimmy Carter was a very weak president.  When he took over fighting the Cold War he stopped fighting it.  Choosing détente instead.  Making nice with our enemies.  And weakened the U.S. military.  It got so bad that the Soviets didn’t believe he had the guts to launch his nuclear weapons.  Thinking that perhaps MAD (mutually assured destruction) wasn’t so assured anymore.  And began formulating a nuclear first-strike plan.  Bringing the United States close to nuclear war.  Because our enemies viewed him as weak.

Then came Ronald Reagan.  Who reversed the Carter decline.  And made our enemies fear and respect us once again.  Choosing to win the Cold War instead of making nice with our enemies.  As communism was a wretched system that enslaved her people who yearned to breathe free.  Exporting its oppression wherever it could throughout the world.  Where we’re feeling the fallout to this day.  Thanks to Jimmy Carter making nice to our enemy (see EXCLUSIVE: New book reveals how KGB operation seeded Muslim countries with anti-American, anti-Jewish propaganda during the 1970s, laying the groundwork for Islamist terrorism against U.S. and Israel by David Martosko posted 6/25/2013 on the Daily Mail).

The highest-ranking Soviet-bloc intelligence officer ever to defect to the West claims in a new book that anti-American Islamic terrorism had its roots in a secret 1970s-era KGB plot to harm but the United States and Israel by seeding Muslim countries with carefully targeted propaganda.

Yuri Andropov, the KGB chief for 15 years before he became the Soviet premier, sent hundreds of agents and thousands of copies of propaganda literature to Muslim countries.

‘By 1972,’ according to the book, ‘Andropov’s disinformation machinery was working around the clock to persuade the Islamic world that Israel and the United States intended to transform the rest of the world into a Zionist fiefdom…’

Andropov began his leadership of the KGB just months before the 1967 Six-Day War between Arabs and Israelis, in which Israel humiliated the key Soviet allies Syria and Egypt. And he decided to settle the score by training Palestinian militants to hijack El Al airplanes and bomb sites in Jerusalem.

But more shocking, Andropov commissioned the first Arabic translation of The Protocols of the Elders of Zion, a Russian-forged 1905 propaganda book that alleged Jews were plotting to take over Europe – and were being aided by the United States…

Kennedy-era Soviet premier Nikita Khrushchev’s disinformation campaigns ‘widened the gap between Christianity and Judaism,’ according to the authors. And ‘Andropov’s disinformation turned the Islamic world against the United States and ignited the international terrorism that threatens us today.’

This is the enemy that Jimmy Carter was trying to make nice to.  One that was widening the gap between Christianity and Judaism.  And one that was turning the Islamic world against the United States.  Which the Soviets did well.  Giving us the mess we have today.

The Soviet Union was officially an atheist state.  Who shut down the Russian Orthodox Church.  As they wanted no other powers or influences over their people’s lives.  Which is why they had no problem putting the major world religions at war with each other.  And explains why today the Russians always seem to fall on the side against the U.S. and Israel.  For they worked hard to foment that anti-American and anti-Israeli sentiment.  And Vladimir Putin was once KGB.  The machine that created this sentiment.  And apparently he still wants to collect the dividends from their old Soviet-era allies.

So it appears that the War on Terror is nothing more than the Cold War redux.  It’s not a rogue power that filled a vacuum left by the Soviet collapse.  But a power that the Soviets created maturing at the time of the Soviet collapse.  Too late to help them not lose the Cold War to Ronald Reagan and Margaret Thatcher.  But perhaps not too late to further expand Russian power over their Soviet-era allies.  Thanks to that anti-American and anti-Israeli sentiment inflaming the Islamic world.  The Soviets made them our enemy.  Not any YouTube video.  Or George W. Bush.  And no amount of making nice to them is going to change that.

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The Dow Jones Industrial Average and the Labor Force Participation Rate from Ronald Reagan to Barack Obama

Posted by PITHOCRATES - May 21st, 2013

History 101

The DJIA and the Labor Force Participation Rate tell us how both Wall Street and Main Street are Doing

Rich people don’t need jobs.  They can make money with money.  Investing in the stock market.  When you see the Dow Jones Industrial Average (DJIA) increasing you know rich people are getting richer.  Whereas the middle class, the working people, aren’t getting rich.  But they may be building a retirement nest egg.  Which is good.  So they benefit, too, from a rising DJIA.  But that’s for later.  What they need now is a job.  Unlike rich people.  The middle class typically lives from paycheck to paycheck.  So more important to them is a growing job market.  Not so much a growing stock market.  For the middle class needs a day job to be able to invest in the stock market.  Whereas rich people don’t.  For a rich person’s money works enough for the both of them.

So the Dow Jones Industrial Average shows how well rich people are doing.   And how well the working class’ retirement nest eggs are growing for their retirement.  But it doesn’t really show how well the middle class is living.  For they need a job to pay their bills.  To put food on their tables.  And to raise their families.  So the DJIA doesn’t necessarily show how well the middle class is doing.  But there is an economic indicator that does.  The labor force participation rate.  Which shows the percentage of people who could be working that are working.  So if the labor force participation rate (LFPR) is increasing it means more people looking for a job can find a job.  Allowing more people to be able to pay their bills, put food on their tables and raise their families.

These two economic indicators (the DJIA and the LFPR) can give us an idea of how both Wall Street and Main Street are doing.  Ideally you’d want to see both increasing.  A rising DJIA shows businesses are growing.  Allowing Wall Street to profit from rising stock prices.  While those growing businesses create jobs for Main Street.   If we look at these economic indicators over time we can even see which ‘street’ an administration’s policies favor.   Interestingly, it’s not the one you would think based on the political rhetoric.

Wall Street grew 75% Richer under Clinton than it did under Reagan while Main Street grew 65% Poorer

Those going through our public schools and universities are taught that capitalism is unfair.  Corporations are evil.  And government is good.  The Democrats favor a growing welfare state.  Funded by a highly progressive tax code.  That taxes rich people at higher tax rates.  While Republicans favor a limited government.  A minimum of government spending and regulation.  And lower tax rates.  Therefore the Republicans are for rich people and evil corporations.  While the Democrats are for the working man.  Our schools and universities teach our kids this.  The mainstream media reinforces this view.  As does Hollywood, television and the music industry.  But one thing doesn’t.  The historical record (see Civilian Labor Force Participation Rate and Recessions 1950-Present and Dow Jones Industrial Average Index: Historical Data).

DJIA vs Labor Force Participation Rate - Reagan

The Democrats hated Ronald Reagan.  Because he believed in classical economics.  Which is what made this country great.  Before Keynesian economics came along in the early 20th Century.  And ushered in the era of Big Government.  Reagan reversed a lot of the damage the Keynesians caused.  He tamed inflation.  Cut taxes.  Reduced regulation.  And made a business-friendly environment.  Where the government intervened little into the private sector economy.  And during his 8 years in office we see that BOTH Wall Street (the Dow Jones Industrial Average) and Main Street (the labor force participation rate) did well.  Contrary to everything the left says.  The DJIA increased about 129%.  And the LFPR increased about 3.4%.  Indicating a huge increase of jobs for the working class.  Showing that it wasn’t only the rich doing well under Reaganomics.  The policies of his successor, though, changed that.  As Wall Street did better under Bill Clinton than Main Street.

DJIA vs Labor Force Participation Rate - Clinton

Despite the Democrats being for the working man and Bill Clinton’s numerous statements about going back to work to help the middle class (especially during his impeachment) Wall Street clearly did better than Main Street under Bill Clinton.  During his 8 years in office the LFPR increased 1.2%.  While the DJIA increased 226%.  Which means Wall Street grew 75% richer under Clinton than it did under Reagan.  While Main Street grew 65% poorer under Clinton than it did under Reagan.  Which means the gap between the rich and the middle class grew greater under Clinton than it did under Reagan.  Clearly showing that Reagan’s policies favored the Middle Class more than Clinton’s policies did.  And that Clinton’s policies favored Wall Street more than Regan’s did.  Which is the complete opposite of the Democrat narrative.  But it gets worse.

The Historical Record shows the Rich do Better under Democrats and the Middle Class does Better under Republicans

The great economy of the Nineties the Democrats love to talk about was nothing more than a bubble.  A bubble of irrational exuberance.  As investors borrowed boatloads of cheap money thanks to artificially low interest rates.  And poured it into dot-com companies that had nothing to sell.  After these dot-coms spent that start-up capital they had no revenue to replace it.  And went belly-up in droves.  Giving George W. Bush a nasty recession at the beginning of his presidency.  Compounded by the 9/11 terrorist attacks.

DJIA vs Labor Force Participation Rate - Bush

The LFPR fell throughout Bush’s first term as all those dot-com jobs went away in the dot-com crash.  Made worse by the 9/11 attacks.  As all the malinvestments of the Clinton presidency were wrung out of the economy things started to get better.  The LFPR leveled off and the DJIA began to rise.  But then the specter of Bill Clinton cast another pall over the Bush presidency.  Clinton’s Policy Statement on Discrimination in Lending forced lenders to lower their lending standards to qualify more of the unqualified.  Which they did under fear of the full force and fury of the federal government.  Using the subprime mortgage to put the unqualified into homes they couldn’t afford.  This policy also pressured Fannie Mae and Freddie Mac to buy these toxic subprime mortgages from these lenders.  Freeing them up to make more toxic loans.  This house of cards came crashing down at the end of the Bush presidency.  Which is why the DJIA fell 19.4%.  And the LFPR fell 2.1%.  Even though the economy tanked thanks to those artificially low interest rates that brought on the subprime mortgage crisis and Great Recession both Wall Street and Main Street took this rocky ride together.  They fell together in his first term.  Rose then fell together in his second term.  Something that didn’t happen in the Obama presidency.

DJIA vs Labor Force Participation Rate - Obama

During the Obama presidency Wall Street has done better over time.  Just as Main Street has done worse over time.  This despite hearing nothing about how President Obama cares for the middle class.  When it is clear he doesn’t.  As his policies have clearly benefited rich people.  Wall Street.  While Main Street suffers the worst economic recovery since that following the Great Depression.  So far during his presidency the LFPR has fallen 3.7%.  While the DJIA has risen by 86%.  Creating one of the largest gaps between the rich and the middle class.  This despite President Obama being the champion of the middle class.  Which he isn’t.  In fact, one should always be suspect about anyone claiming to be the champion of the middle class.  As the middle class always suffers more than the rich when these people come to power.  Just look at Venezuela under Hugo Chaves.  Where the rich got richer.  And the middle class today can’t find any toilet paper to buy.  This is what the historical record tells us.  The rich do better under Democrats.  And the middle class does better under Republicans.  Despite what our schools and universities teach our kids.  Or what they say in movies and television.

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Margaret Thatcher and Ronald Reagan were Good for the World but Bad for Special Interests

Posted by PITHOCRATES - April 14th, 2013

Week in Review

People either loved Margaret Thatcher.  Or they hated her.  And it all came down to their political ideology.  If you were pro-capitalism you loved her.  If you preferred socialism you hated her.  And the biggest socialist to hate her (and her friend Ronald Reagan) was the Union of Socialist Soviet Republics (USSR).  Not only did the success of her economic policies make the failure of the Soviet economic policies stark by comparison she was outspoken about her hatred of communism.  Even allowed her good friend, Ronald Reagan, base American nuclear cruise missiles on British soil.

Capitalism’s victory over Soviet socialism was so apparent that Mikhail Gorbachev opened dialogue with the Great Margaret Thatcher.  Ultimately bringing about the Soviet’s defeat in the Cold War.  Because socialism as an economic system doesn’t work.  Which is why Britain soared to new heights under the capitalist policies of Margaret Thatcher.  While the Soviet Union collapsed under their socialist policies.  And she entered office when Britain was at its worst (see To blame Margaret Thatcher for today’s problems is to misunderstand history by Allister Heath posted 4/9/2013 on The Telegraph).

[Margaret Thatcher] inherited a basket case of an economy, crippled by obsolete state-owned firms, a legacy of decades of poor policies. Management was insular and demoralised, the workforce used as pawns by militant union leaders who would call strikes at every opportunity, customers treated like dirt and production techniques stuck in the past.

Productivity was appalling, overmanning the norm and the quality of UK-made goods notoriously poor. Britain was sclerotic, anti-entrepreneurial and anti-innovation, often specialising in industries with no long-term future.

Yet it is a little-known fact that manufacturing output actually went up during her time in office, despite the necessary liquidation of so many unviable plants.

This was basically the problem they were having in the Soviet Union.  Everything was state-owned.  Production techniques were stuck in the past.  No one clamored to get their hands on good Soviet products.  Because there were no good Soviet products.  And they had far too many workers in their plants building stuff no one wanted.  While store shelves sat empty and people went without the basic necessities.  Britain was far along the path to outright socialism.  While Soviet Union was nearing the end of that path.  Margaret Thatcher turned the country around before they could end up where the Soviet Union was.  And the sun began to shine once more on the British Empire.  Albeit a smaller one.

Output had grown another 4.9pc by the start of 1997, when the Tories were booted out. Given the bitterness of the 1980s’ recession, caused by the desperate need to wring out extreme levels of inflation from the system by using high interest rates, it shows just how effective her supply-side reforms turned out to be…

…She was right to slash income tax, to repeal capital controls and to shake up the City of London with Big Bang. Most of her reforms to retail banking, including allowing banks and building societies to compete with one another, were spot-on.

There were some bad changes, however, though not the ones usually cited: still-high inflation made the ultra-safe saving banks unviable, especially after the EU forced the UK to introduce retail deposit insurance in 1979; there was a counter-productive move away from individual responsibility in retail financial services; and the UK signed up to the Basel Accords in 1990, a flawed international system to regulate banks that triggered all sorts of dangerous unintended behaviour and ensured financial institutions retained far too little reserves. In all cases, however, these were changes that didn’t really follow her basic philosophy…

Thatcherism was about choice, individual responsibility and independence from the state, not the politicised, artificially pump-primed markets we ended up with by the mid-2000s. She hated bail-outs, government subsidies and nationalisations; and would have looked on in horror at the gradual socialisation of losses and privatisation of profit in the financial services industry in the 15 years running up to the crisis.

Starting with the rescue of the LTCM fund in 1998 in New York, regulators decided that no large financial institution could ever fail. Alan Greenspan saw himself as an economist-king, manipulating interest rates to bolster financial markets and ensure perpetual growth, and triggering a giant bubble that burst twice. This was corporatism, not genuine capitalism.

Under the new order, including Gordon Brown’s late, unlamented Financial Services Authority, banks were disciplined neither by the free market – the authorities were there as a backstop, so there was no chance of going bust – nor by regulators, who allowed risk to build up unchecked. Greed was no longer balanced out by fear; moral hazard had replaced prudence. Thatcher, the grocer’s daughter and keen student of F.A Hayek, would have despaired.

A genuinely Thatcherite government in the 2000s is unlikely to have tolerated the explosion in the money supply – and house price madness – that Brown allowed, not least because Lord Lawson made a similar mistake in the late 1980s when he was Chancellor, triggering an earlier, disastrous house price bubble and bust. The parallels between the two episodes are striking but bizarrely uncommented upon.

So it is silly to blame Thatcher for today’s problems. If only one of her disciples had been in power in the 2000s, we wouldn’t be in anything like the mess we are in today.

Supply-side reforms?  Those were the same kind of reforms that her good friend, Ronald Reagan, favored.  And by using them he undid the Keynesian damage of his predecessors (LBJ, Nixon, Ford and Carter).  Pulling the United States off the path towards socialism.  Long before they got where Britain was before Thatcher.  But like in Britain it didn’t take long to return to the failed policies of the past.  The Keynesians returned in full force.  Playing with interest rates.  Keeping them artificially low to interfere with market forces.  Causing great irrational exuberance.  Those famous words uttered by Alan Greenspan.  An irrational exuberance his Federal Reserve policies enabled. Allowing people to borrow cheap money to invest with abandon.  With no fear of the economic fallout.  Pure Keynesian economics.  This wasn’t capitalism.  For capitalism would have raised those interest rates before they created such great bubbles.  And capitalism would have disciplined those free markets.  By checking greed with fear and having serious consequences for irrational exuberance.  Not government bailouts.

If Thatcher and Reagan were in office in the past decade things would be a lot better now.  And the simple proof of that is that when we moved away from their policies we created the mess we have today.

www.PITHOCRATES.com

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