Matched sets, two VDH columns, a second look at Enron, and a little Israel — and an Open Thread

National Review Online had three articles this morning that I thought worth passing on.  The first two form a matched set, although I suspect it was inadvertent that NRO published them on the same day.

We begin with Noemie Emery’s article explaining why Franklin Roosevelt was a singular phenomenon:

Put aside the fact that FDR was a great politician, who would no more have dreamed of passing a game-changing bill without strong and bipartisan backing than he would have thrown himself off a tall building in the belief he could levitate; he still had an advantage that no modern progressive will ever replicate: He became president at the one time in our history when the federal government was too small for its burdens and truly cried out to be expanded.

The match to Emery’s article is a Victor Davis Hanson piece that examines the Progressive yearning for that Rooseveltian past — and its failure in the present.

The third NRO piece I liked was Daniel Pipe’s article pointing out the significant differences we can expect in presidential attitudes towards Israel if Romney is elected or if Obama has a second term.  In that article, Romney speaks about Israel being a symbol for larger beliefs that Americans have about Middle Eastern policies generally:

Second, attitudes toward Israel serve as a proxy for views on other Middle East issues: If I know your views on Israel, I have a good idea about your thinking on topics such as energy policy, Islamism, wars in Iraq and Afghanistan, AKP-led Turkey, the Iranian nuclear buildup, intervention in Libya, the Mohamed Morsi presidency in Egypt, and the Syrian civil war.

I particularly liked that bit, because it seemed to me to speak to an interesting debate we had on this blog about whether Israel is a friend, an ally, or a useful . . . not enemy, but non-friend.  Everyone who wrote agreed that America should support Israel, regardless of her friend or non-friend status, and I think Pipes’ article helps explain why we all feel as we do about the necessity of maintaining ties with that beleaguered little nation.

From Israel to Enron.  JKB pointed me to a post that indicates that Enron wasn’t a capitalism failure, it was a government failure.  That is, putting aside the sleaziness of Enron’s upper management, the real problem is that Democrat financial policies created huge incentives for corruption.

The fifth article I’d like to bring to your attention is another VDH column, this one about the way in which Progressive policies (or Obama policies, if you want to parse words) have effectively destroyed the hopes of both the old and the young.  VDH is the first one I’ve seen who has addressed head on the consequence of keeping interest rates down.  Those seeking mortgages liked it, but the same policy has brought financial ruin to too many old people:

The hallmark advice of retirement planning was always to scrimp, save, and put away enough money to make up for retirement’s lost salary, increasing medical bills, and the supposed good life of the “golden years.” If a couple had saved, say, $300,000 over a lifetime (again, say, putting $500 away each month for 30 years at modest compounded interest), then they might expect a so-so annual return at 5% of about $15,000 a year on their stash, or about $1,250 per month.

In other words, perhaps Mr. and Mrs. Retiree could find enough with Social Security to live okay and pass on the principal to their kids. But well aside from the fact that many Americans have been laid off, taken pay cuts, lost home equity, had their 401(k)s pruned, or had to take care of out-of-work relatives, there is no 5% any more on anything, not even 2% or  in most cases 1%.  Saving money means nothing really in terms of return, only the realization that inflation eats away the principal each year.

Put another way, we’re experiencing tremendous inflation, if inflation means that money ceases to have value.  It’s just that the inflation is hidden behind dangerously low interest rates, rather than boldly announcing itself as dramatic price increases.  (Although if the $140 I spent tanking up our family cars this weekend is any indication, inflation is here, loud and clear.)

My Mom falls in this category.  She had dreamed of living of her income.  She is, instead, paying down her principal and hoping that, in a race against time, her dwindling wealth lasts longer than she does.

If you have anything to add here, please do.

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  • jj

    I disagree with Emery on a very simple basis: if you are a statist, and you believe the government does essentially everything better – and bigger government does it even faster and even more betterer – then you can always – always – find reasons in any time and place why it needs to expand.  Jugears, in current times, has successfully added 200,000 federal nestlings with their mouths open – because he wanted to, and because you can always make a case for it, if that’s what you believe.  Expanding the government is effortless, “need” has nothing to do with it.
    And we’re not experiencing tremendous inflation.  Yet.  Compared to “normal” it perhaps feels like we are, but we ain’t seen nothin’ yet in the inflation department.  We ain’t seen nothing’ like what awaits us if we keep this crap up.

  • JKB

    I was just reading Ron Radosh » It’s Not Your Father’s Democratic Party: How the Party has Changed for the Worse since Clinton’s era  over at PJMedia.  It put me to mind that Obama seems to be trying to impose the “Curley Effect” of Edward Glasaer fame.  The ‘Curley Effect’ named after an early 20th century Boston mayor who pioneered the tactic of enacting policies to force an opposing constituency to move out of the city thus ensure continued electoral success on the backs of your ‘deprived’ constituency.  It should be noted the ‘deprived’ constituency doesn’t really gain from the tactic but do become trapped in as a plaything of city hall. The tactic was also used in Cleveland.  As well as other urban cores to a lesser extent.  Which why we are now at the point where the trend is now to recapture those tax dollars without reintroducing the voters to the mix with regional taxation.  

    The ‘Curley effect’ works for cities as it is easy to move out of the city and maintain your business downtown so the influence is subtle.  Although now we are seeing those businesses as the owners age out, closing or moving to a less dangerous neighborhood leaving those urban cores without jobs or tax base.  Statewise, the ‘Curley’ Effect isn’t really viable in my opinion but California seems to be determined to test that out.  But nationally, it seems destined to fail.  Where can the disfavored go?  This may be seen as a plus to Obama, no escape so the money can be extracted, but to me, as we see with the Tea Party, it means people have to fight and can’t simply give ground.  

    This may be the drive behind dropping the electoral college and going with the popular vote.  Right now, the dependent class is dispersed and so they can be shut down in free America.  But concentrating them in states, say California and NY, means driving out the productive class which reduces the electoral votes while creating a potential mob to disrupt the ‘elites’ in their compounds on the coast. 

    I’m not sure of the best way to combat this other than what is happening with people reluctant to open/expand business in the ‘protection racket’ zone.   

  • David Foster

    “attitudes toward Israel serve as a proxy for views on other Middle East issues”

    I’ve observed a very high overlap between the set of people who hate Israel and the set of people who spell “America” with a “k”

  • David Foster

    Regarding interest rates: it’s not always possible to save a crippled economy strictly through monetary policy…and sometimes, the attempt to do so can be counterproductive, like trying for force more air through a hose when someone heavy is standing on it. Increase the pressure enough in an attempt to get some air through, and you may well simply blow up the hose.

  • Bookworm

    David Foster:  That’s a very helpful analogy to understand what’s going on now.

  • Caped Crusader

    The past 10 or so years have KILLED the older population and many retirement plans. I have just retired at age 78 and purposely worked this long, since my health was good and I enjoyed my work (except for dealing with ever increasing government and other third party interference, rules, regulations, hoops to jump through, etc.). Prior to 10 years ago you could pretty well count on a return between 5-12%, averaging 8% on investments over the long term.  NO MORE, and probably so for the foreseeable future. Over the last 10 years the stock market has done nothing, and fixed investments have next to no yields and are being constantly eroded by inflation. When I confer with my CPA, I inquire as to his personal knowledge of older people who retire with what they thought would be enough money and are now in dire straights. Every year the number is increasing. Retiring at age 55-70 with a million dollars, simply will not get the job done since you begin eating your “seed corn” from day one; unless you and your spouse die an early death. Ten years ago I was looking forward to an elegant retirement, but will now have to be contented with a comfortable one, having put aside triple the amount recommended in the past. My father died in 1952, and my mother was able to live a secure and comfortable life (after retiring in 1974 at age 62), for the next 30 years on less than $250,000; receiving Social Security, a widow’s pension, occasional part time work, and return on her investments
    Besides not learning anything of great value in school, the average person knows NOTHING about economics. I believe that this must be taught in school in the future; but it won’t and they would screw it up anyway. Almost no one realizes we are borrowing 40% of the money the government is spending. I ask patients how long their family could survive if they were borrowing 40% of their spending. NOT LONG is the constant refrain. The Republicans should state this fact relentlessly every day and drill it into peoples heads.  I actually had a very small business owner say, “Doc, how can you go bankrupt if you can print your own money? “, thinking it impossible. I said, “Ever heard of Adolph Hitler?”. He did not get the point. He was smarter than many people, yet did not have a clue. Before this is over, I may have to sell my cape.


    Caped Crusader – Well framed and said. I keep seeing Zimbabwe dollars in my nightmares. The “inflation” word is never spoken, but it’s here. has been. and it’s not going away. The “nah-nahs I can’t hear you” will persist until…? until they need wheel barrows to buy milk, cheese and bread.

    Inflation in Zimbabwe – Pictures | Financial Jesus

  • LSBeene1

    What very few are talking about – even on conservative blogs are the effects of QE1 & QE2.

    I am not an expert in economics, but I can do basic freaking math.  If I get some facts wrong …. hey, I can take correction with aplomb.
    QE1 & QE2 were a long term DISASTER – but especially for those who have saved money.
    Look, it’s simple:  The Fed created, out of thin air, or the ether if you prefer, a CRAP LOAD of money.  Now, when you put more money into circulation, what happens to the value of the money already out there?  It’s worth less.  How does this effect a citizen and our gov’t.
    For gov’t:
    It’s great – they have created a ton of money which despite there now being more, the inflationary effect is felt “down the line” as the banks that buy the notes.  So the notes the gov’t create have full value at the time they are sold – and as the money goes into circulation the value of each dollar loses buying power.  But, again, gov’t, who creates the notes gets the initial full value. 
    What this does to seniors or those that have saved:
    Now, the value of all those dollars saved has “magically” devalued.  All those years of saving and compound interest just went freaking “poof” and part of that value will never be recovered.  They ONLY way to recover that value would be for us to be running a surplus, that magically politicians won’t spend, for that money to be brought in and then (electronically) burned, thus decreasing the amount of currency in circulation, thus raising the value of each dollar each citizen holds. 
    Yea – and unicorns will be flying out of my butt any second now.
    What this does for every other citizen:
    Commodities on the world market are traded in dollars.  Oil, gold, timber, titanium, coffee & even frozen concentrated orange juice (sorry, movie reference).
    As the dollar is the reserve currency and the bench mark currency, when we “print” more money, the value of our dollar, as measured against every commodity drops.  We print 10% more money and a $100 barrel of oil now costs $110. 
    Since all countries use the dollar as the benchmark trading currency all countries must hold a certain amount (that can be leveraged) in order to say each order of each commodity is bought with the benchmark currency: dollars.
    As we “print” money and as it is released over time by the banks, as in bought notes / bonds, the trickle effect is that each dollar is worth less.  Which is one of the prime factors in why oil, and every other commodity (food esp) is going up.  They’re relative value has not increased, per se, but relative to the dollar (of which more are now in circulation) they have.
    Again – the ONLY way to re-value the dollar to make people’s saved pensions have full value again, or for the dollar to be stronger vs. commodity price, would be to run a surplus and to “burn” the excess (electronic) money.
    Anyone truly believe politicians are going to see $200 billion dollars just sitting there and decide that the value of people’s retirement funds/savings are worth more than “the good they can do” (read: dependencies they can create or re-election they can win) ?  Really?  Seriously?  Meanwhile, back at camp reality …
    The REAL nightmare:
    As the dollar is the benchmark & reserve currency it means other countries have tied their well being to our currency.  They hold a TON of our currency in their reserves.  I mean like low to mid double digits of the total dollar currency out there.
    Now imagine we keep printing money or do other things that are so blatantly stupid as to shake the confidence in our currency being the bed rock.  What would you do if your blue chip stock you bought was suddenly being run by some maniac who devalued the worth of his/her own company, was throwing crazy parties, and acting as if they thought a business model was some size 0 “Project Runway” ass model they could screw and not a sound financial plan to be followed?
    You might dump that stock, as certainly things could turn around, but you would probably be wise to diversify your portfolio.  And suppose thousands of other investors did the same.  That’s called a trend.  And because people see this trend and don’t want to take a bath, the value of that stock, during this “run on the stock” (seeing where I am going yet?), caused a partial crash for that company.
    We Americans (many Americans) live in this Nickelodeon fantasy that this cannot happen. 
    Here’s how it plays out – in a quick and dirty 1 paragraph manner.  Unlike when the banks bought all the notes the Fed just “printed” up out of the ether, wherein they sold those notes slowly and judiciously so as not to cause a run on the dollar – all those countries who hold TRILLIONS of our dollars in their reserves, as the bench mark currency with which to buy commodities (among other things), the first few countries who sell part of their reserves of dollars get full value.  They are sold on the currency market.  But, then after a few countries do this, it is entirely possible that an avalanche of others start to do this too.  And instead of a gradual guided decline in real value, as was mentioned above, you get a plummet in the value of the dollar.  And the last idiot still holding a ton of dollars as their reserve takes a BATH.  Poof, their dollar notes are worth %50.  Within a few weeks their reserve cash just went to %50 of it’s value.
    And the shock to OUR economy, as all those dollars are dumped into the world economy is disproportionately worse than other countries.  Why?  Because all we have to trade on the open market IS OUR DOLLARS.  Now gas prices double in the space of a few weeks, as do all imports, and all transportation costs skyrocket.
    I won’t go all doom and gloom – but this is not even “unlikely”, but only a matter of time, if we keep printing money. 
    THIS is why the money people saved in their bank accounts is not allowing them to retire, but barely tiding them over.  The U.S. gov’t, by printing money, STOLE 10-20% of your savings over a period of 2-3 years by printing / devaluing the dollar – for its’ own gain, and to our detriment.

    Oh, side note – wow, that sure would make a lot more people dependant on Social Security and safety nets.  Total accident and unintended consequence … I’m sure.
    Hope I added to the discussion.

  • Ymarsakar

    A lot of the corporate scams were actually a byproduct of businesses being allied with Democrats and other people in power in DC. They just got away with it often enough that people just went full blow and said Government Motors here we come. Government banks here we come. Now it has become obvious. But to some of us, it was obvious even 30 years ago.

  • Caped Crusader

    LSBeene1 #8:

    Terrific contribution!!

    Although nobody views it as such, Quantitative Easing is merely a covert form of taxation where your money is taken from you without a tax law being passed. And very few realize what has been done to them.

  • Ymarsakar

    What Steven wrote about is the largest wealth transfer in human history. By devaluing the currency, this allows people, often times rich and powerful, to invest in gold, silver, precious metals that aren’t based upon bank values or the federal dollar, and essentially. your money in stocks and bank accounts transfer in value to these precious metals. They have it, you don’t. Thus you lose most of your value, and they gain it. Just like a ponzie scheme. Just like the Democrat party. Because they are ALL allied one way or another.

  • LSBeene1

    If I may add – on a personal note.  I love to study history, and because of this I have looked at what happens to countries that start to get used to the idea od printing money to get out of debt.

    It’s like drug addiction – it starts off slowly but due to it’s very nature, to get the the first “high” you need to do perpetually more.  (not a perfect analogy, but, hey, it’s early and I need coffee!)

    My wife and I talked it over and decided that since our savings are, in effect, being tapped by our gov’t, that we’d forego saving for our retirement for 1 year and start prepping.

    At first I felt like some doom and gloom weirdo.  But, as I went around town, buying food, medical supplies, batteries, (yes, self-defense stuff) and other goods to survive for 1 year + “off the grid” should things go bad – what I found, both reassuring and disturbing was that many stores, when I mentioned why I was buying these rather odd amounts of items (1 year supply of toilet paper for instance, lol) was that a LOT of people are quietly doing this “under the radar”.

    I mean, one lady, at a sporting goods store that sells “emergency food” (freeze dried) told me they are doing a booming business in this item and then recommended many other items that others were buying for the same purpose.

    My wife and I are now about 7 months into our agreed upon 1 year prepping goal.  When we bought a house (just about to close on it in the next week or so – be in it by Oct 1), which is something we were doing before we decided to prep, we made it a requirement to have a well, and we are installing a wood stove.

    Again, initially I felt like some secret weirdo who was a totally in a tiny minority – it turns out that yes, we are the minority, but not a tiny one or some odd ball couple that are wearing tin foil hats and are as rare as hens teeth.  There are a lot of folks prepping.  

    To be clear – if I am wrong, and my chubby happy butt is sitting in front of my flat screen 10 years from now watching re-runs of Gilligan’s Island and nothing like that comes to pass – I’ll be the happiest of people.  Truly.

    When people who know I am doing this ask me why I simply tell them this:

    I have a fire extinguisher in my house not because I hope for a fire – but to prevent it.  I have a spare tire on my care not because I am making some politial statement about the state of repair of our local roads, but because I may one day get a flat.  Many people have flashlights and extra batteries not because they want to live without power, but because one day the power may go out.  It’s not that different.

    Prepping takes time, money (bit by bit is the way to go!), and planning – but it brings a peace of mind.  It should be, in an ideal and honest world that people should be able to save money for “a rainy day” to offer themselves security and peace of mind – but our govt’s fiduciary policy has taken away that security blanket.  Even prudent thrifty people who saved for years are not safe if our dollar collapses.  We, the people, must then prepare to provide for ourselves.

    I hope my post is of some use.


  • Caped Crusader

    Steven, a great idea, but will only work well if at least 100 miles from a major population center and preferably up a narrow Appalachian hollow road, with those of like mind, and well armed, nearby. We have some property similar and if younger would do exactly this; if I had the money and could work at home, for not practical if long commute to work.

  • Caped Crusader

    Inspirational video
    Do we still have enough stout hearted men, and women too?

  • LSBeene1

    Caped Crusader,
    Sir, while I realize what you say is right, on its face, I ask you to consider a few things.
    First off I am a military member.  Now, please, allow me to preface this as me NOT saying “therefore I am an authority and must be listened to” – I am not that kind of self important blowhard.
    But, like many military members (and cops, and many civilians) I am constantly in “what if” mode in my thinking.  My long suffering wife chides me about constantly gaming scenarios about bad things happening.  I’m not sure if I’ts due to who I am (born with), due to inclination of training, or a combination of the two.
    That said : I have considered what I would do in a suburban or urban setting.  May I share my thoughts?
    Surviving in those environments can be made easier with a few thoughts kept foremost in your mind.
    1)       If you can leave: having a bug out plan.  Have a “go bag”, several routes, and a plan in place for you and your family.  Take only what can be carried comfortably a long time on your back – and possibly use bicycles.  The roads are likely to become parking lots, so bicycles or dirt bikes.  One is clearly cheaper.
    Sure, it would be great if we were all rich and had a bunker with all the amenities to go to – but like you I doubt either of us is secretly rich and has such a lair available.
    Having a set of “go bags”, several routes and a plan will place you already in the right mind set. 
    2)      If you cannot leave:  Having supplies is key, but only one part.  PERCEPTION by your neighbors is essential.  If they are cold, hungry, and out of supplies, and you and yours are “living in comfort” (read: barely surviving and probably less miserable only by degrees) they WILL come to you.
    Bad guys rarely show up in ski masks and announce they are bad guys.  A neighbor stops by and asks “hey, you have heat, can my poor miserable children who are so cold and sad, can they get warm, even for just an hour?”
    Sure, right, and after an hour they’ll gladly pick up and leave.  Not to mention I suppose mom and dad and whoever they tell won’t tag along.  And then when you light up your camp stove in your living room / kitchen and dig in to your squirreled away supplies they’ll quietly, contentedly, and gladly not ask for any.
    Not even “for the children” who “don’t eat much”.
    I know that sounds harsh – truly I do.  No one who lays claim to being human can put that thought firmly in their mind and not be wrenched.  And in 2 weeks, instead of 2 months, when the food is gone, and your wife and children are hungry, what will you do?  I don’t like contemplating that thought, but you have to.
    So, perception – as you eat your canned goods, MREs, and dehydrated food goods you have to have a PLAN on how to dispose of those used food packages (hygiene is essential – 911 medical help won’t be standing by).  Your neighbors, who are suffering will have lost any sense of pride and will be, due to a sense of survival due to hunger, be picking through your garbage, and if they see empty cans, MRE packs etc,  you can BET they’ll be at your door.
    Little things: you bought 3 months supply of dog food – and your dog is going out into the yard to poop – it means he’s being fed – and he’s not a meal himself : meaning you are not starving.
    Disposal of waste in a slit trench in your back yard – and how you ARE still producing waste when others are starving.
    Perception that you are suffering and no better off will be a key to you surviving. 
    And defense:
    I have deployed twice.  Been shot at a few times, almost been blown up a bunch – but, I, again, will not pretend to be “Super Ranger Rick of the 3rd SOG” – I am not.  I try very hard to be humble and realize other suffered more than I, saw more than I, and experienced more than I  – I will not stand on their necks to receive false praise for their valor.
    Defense must be practical and thought out.  What are you willing to do – and what are you not willing to do.  Even civilians in the best of times must consider this.  If a bad guy breaks in to your house can you and will you have the foresight to have plan, the stomach to carry it out, and the proper mindset to KEEP THINKING while bad things are happening all at once.  Planning ahead before it happens, including your responses to LEOs once it’s over can save you a lot of trouble if you game it all out.
    This is a pretty poor bare bones post to really set you up for success, but it gives you a meager start if nothing else.
    There are YouTube videos on practical prepping (see: SouthernPrepper1’s channel – or – MainePrepper’s channel), on first aid (see: PatriotNurse’s channel), and tons on other subjects.  Again, I am only 7 months into this and humbly submit that I myself am still learning.
    I hope this might be of aid to you – and hopefully, none of it shall come to pass.  No one would be happier than me if I were happily planning my retirement in 10 years.
    With sincere regards,

  • Caped Crusader

    Share your devotion to our country, having been everything from an E-3 to an O-6 over a 45 year period. The old Boy Scout motto, Be Prepared, holds true in any situation. Too bad everyone does not follow it. Except in a totally isolated and self sufficient environment, it is impossible to foresee all circumstances. During the Y2K fiasco, have a friend with a farm surrounded by an Amish colony, he jokingly, and to a certain extent in admiration, said of them, “they wouldn’t know anything had happened, for their lives would not be impacted in the least.” Maybe we should become Amish!

  • Ymarsakar

    “was that a LOT of people are quietly doing this “under the radar”.” Of course they are. There is a vibrant survivalist community in the US. I mentioned before that so far they’ve been doing their own thing, their own way. They would only rise up in an armed force if the federal government sends in the shock troops, ala WACO.

    Meanwhile, some of us are quietly preparing training programs for how to handle our fellow human threats. When the time comes, I’m just going to be wandering from community to community, selling certain things that might be in high demand.

    People may want to check this but during the Great Depression, more millionaires were made than at any other time in US history. Check that one out. See if you can figure out why it is counter intuitive. Because, for simple reasons, people got their wealth redistributed. It was transfered from people who invested in the government and in paper money, to people who put their money in the right things: gold, plat, oil, etc etc.

    As hyper inflation hits, land worth millions normally, would sell for one piece of jewellry. You then wait until the market stabilizes and sell the land for real money later on. This was how they became rich so fast. Except this time, the US government will come in and eminent domain everyone’s property, everyone’s company, and suddenly you’ve turned into the Soviet union without realizing it.