Ben Bernanke has apparently added a little stand-up comedy to his bag of tricks.  This past week, Chairman Bernanke indicated his belief that there are no “obvious” asset bubbles in our economy right now.  To quote Bankruptcy Ben, “It’s extraordinarily difficult to tell, but it’s not obvious to me … there are any large misalignments currently in the U.S. financial system.” 

What is he thinking?  The stock market is currently a huge bubble.  From October 2007 to March 2009, the Dow Jones Average fell by about 50 percent.  This is indicative of the fact that the previous market highs were out of whack for market conditions and needed to come down to reality.  That is how the free market works when it is given the opportunity.  Since last March, in just nine months, the Dow has rebounded off its low by an astounding fifty-three percent!  It’s a bubble being fueled by all the cheap dollars the Fed is injecting into the economy. 

If you don’t believe me, Mary Miller, director of fixed income for the T. Rowe Price Group indicated at the company’s symposium in Baltimore on Thursday, “I’m familiar with one institution that just borrowed $400 million – because they could – and then called up and said, ‘What should we do with it?”  That is what a lot of banks are doing with our money that has been given to them – not lending it but speculating once again in another Fed induced bubble.  It is outrageous.

What is even more outrageous is Bernanke saying essentially that the current stock market fueled by his printing press is not a bubble.  The economy is still in the dumper – I won’t bore or depress you further with all the numbers, but the stock market continues to climb to exorbitant highs.  Give me a break and come clean Mr. Chairman.

Bernanke is clearly being disingenuous because if he acknowledged the truth it would indict the system that he has made a very good living from.  The Federal Open Market Committee must be agonizing over whether to leave interest rates at essentially zero and continue to perpetuate the stock market bubble or raise rates and watch that bubble burst.  It is going to happen sooner or later – sooner would still be painful but less extreme.  Bernanke may not know it but the no win quandary he faces explains to a degree the Austrian School of Economics’ Business Cycle Theory.

Under the theory, business cycles, circular boom and bust periods, are not considered a natural phenomenon of free markets.  Instead, government interference in the economy, specifically through manipulating the money supply, is the culprit.  Booms are caused by artificially low interest rates and busts occur when the Fed decides to provide an “easy landing” for an overheated economy by raising rates.  In both cases, low rates and higher rates, fallible humans at the Fed decide the rate levels.  Thus, the market plays little if any part in the determination.  Having been taught in an American public school, I was cynical myself of this analysis.  After all, my Franklin Roosevelt loving social studies teachers taught me that capitalism has certain failures which we need the government to correct for us. 

However, by looking at historical data it is possible to see the correlation between low rates (the cause of booms) and higher rates (the pin that punctures the bubble) and booms and busts.  Because I have a day job, I only had time to analyze rates and recessions since 1971.  1971 is significant because that is the year Nixon opened the flood gates for the Fed’s printing presses by abolishing the last vestiges of the Gold Standard.  The following is the year of recession followed by the lowest rate during the preceding period, the highest rate during the preceding period, and the spread between low and high rates:

November ’73 – 5% – 11% – 6 points
January ’80 – 4.75% – 15.5% – 10.75 points
July ’81 – 15.5% – 20% – 4.5 points
July ’90 – 5.875% – 9.75% – 3.875 points
March ’01 – 3% – 6.5% – 3.5 points
December ’07- 1% – 5.25 – 4.25 points

Source:  www.chartoftheday.com
              http://www.newyorkfed.org/markets/statistics/dlyrates/fedrate.html

The most important observation that can be made from examining the data is there was a significant spread between the lowest rate and the highest rate before each recession.  These wide disparities in rates sent the wrong signals to investors and entrepreneurs.  In other words, because money and credit were in abundance during artificially low rate intervals entrepreneurs invested in ways that market forces would have prevented if the supply of money was realistic (market determined).  Thus, a misallocation of resources took place.  Too many products were produced; too many houses were built; too much money was invested in companies with little or no earnings.  All this happened because money was cheap and plentiful.  Remember folks borrowed millions and invested in dot com companies before many of them even went online.  Also, remember that right now we still have a glut of homes because Alan Greenspan kept rates near one percent for close to three years!  Of course it was the housing crisis that led to this current recession.

When the Fed pulls the rug out from under the artificially propped up economy by raising rates significantly, thereby increasing the cost of money, people stop borrowing and many lose their jobs because products and services are no longer being bought with borrowed money.  With higher interest rates, adjustable rate mortgages rise and homebuyers default on their debts.  Asset prices fall and unemployment rises due to further cutbacks in consumer spending.  The bubble is burst and recession sets in.

Now, recessions are unfortunate, but necessary like vomiting is essential during the flu – to rid the organism of bad material.  In the case of the economy, the bad material is all the mal-investments that were made during the boom. 

Of course, our economy was not given the chance to vomit the mal-investments made during the last boom.  Through so-called “stimulus” and the easy money policies of Bernanke’s Fed we are into our 24^th month of recession.  What’s more the reckless monetary policies of the Fed have blown up another bubble in the stock market. 

Which brings us back to the beginning of our article – Bernanke must be joking; there is a huge bubble in the stock market because there is no good reason for the extraordinary rise in stock prices given that consumers aren’t spending; commercial real estate is about to hit a crisis; and unemployment is still rising.  The only explanation is a bubble caused by artificially low interest rates.  In the words of Yogi Berra, “It’s déjà vu all over again.”  The bright side is perhaps Bernanke can find work as a stand-up comic after his tenure at the Fed is over.  He does get a good one off every now and then.

The primary responsibility of government is to protect its citizens from internal and external threats.  Last week, that basic trust was shattered with the attack by Major Hassan on his comrades in arms at Fort Hood.  Many ask the question, “How could this tragedy happen?”  Easy, government, especially big ones, are inefficient, incompetent, and essentially answerable to no one.  Look at the record.  Washington has let us down on everything it has ever promised:  affordable healthcare for the elderly and poor, eradication of poverty, excellence in education, a money supply that guarantees stable prices, care for our veterans.  The list of federal government failures goes on and on.  Now, we have the Fort Hood tragedy.  Of course, they will spend millions on the investigation and no one will be held accountable because government works very differently than the real world.

What Americans should really be questioning is not how the federal government could allow a “terrorist” to infiltrate the ranks of our military and commit such a heinous act, instead Americans should ask the question of themselves:  how could we allow our government to put us in this position in the first place?  We need to question the actions of our government like never before and hopefully come to the reasonable conclusion that our government in Washington is more responsible for our vulnerability to terrorism than the terrorists.  Put another away, if we have any hope of living in relative safety Washington must change.

Let’s begin by setting the record straight: terrorists hate the United States not because we are free or capitalist, like the pundits and politicians would have us believe, but because the United States has done the Arab world wrong.  Qatar, my country of current residence, is an incredibly wealthy country because of its primarily free market economy which allows Qatari citizens to reap the benefits of oil, natural gas, and private ownership of the means of production.  Under the above logic, terrorists should be blowing up this place into small pieces.  They are not.  On the other hand, Qatar is also not involved in occupying any other country’s territory in the Middle East.  It is not responsible for propping up corrupt dictators because it serves its own interests.  Qatar is not trying to force its way of life and its system of government on anyone.  The Emir is fulfilling his solemn responsibility as leader of the country to keep his citizens safe from external attack.

On the other hand, Americans are “free” but their government in the last twenty years has occupied Middle East territory by invasion and the enforcement of a no-fly zone.  The U.S. government has propped up with financial and military aid corrupt dictators in Iraq (let’s not forget Saddam Hussein), Pakistan, Egypt, Afghanistan, and Saudi Arabia.  For God’s sakes Saudi Arabia still cuts off hands for stealing and stones women for adultery.  Washington is currently in the process of attempting to force our system of republicanism on two countries that have as much chance of success with it as we would have with monarchy.  In the process of our meddling, literally millions of Middle Easterners have been killed, tortured, imprisoned, and maimed.  All of this was done in the cause of our national interests.

And absent from all of the meddling mentioned above is our unflinching support of Israel to the detriment of the Palestinians.  We supported Israeli atrocities in Gaza directly with financial aid and indirectly with our no vote on the resolution condemning Israel at the United Nations.

These actions of our government are what make us less safe and more vulnerable to terrorist attack.  Now, I know that Qataris are fellow Muslims and therefore somewhat shielded from the wrath of their brethren.  But, what about free and capitalist countries like Luxembourg and Switzerland?  They are closer to the Middle East but significantly less vulnerable to attack.  No, the difference is that these countries mind their own business and consequently have not made the same enemies that we have.

We would not like it if NATO sent troops onto Texas soil to prevent illegal immigrants from entering the United States.  We would balk at the idea of moving Iowans off their farmland and offering it to any Israelis who would be interested in relocating.  We would not stand by idly while a coalition of Middle Eastern countries invaded the U.S. because they perceived our country as being a part of some “axis” of evil” antithetical to their national interests – set up a Green Zone in D.C. and force upon us a structure of government – say monarchy, that is so foreign to us it isn’t even funny.

The point is that we would respond to a call to arms if any of these scenarios had any possibility of happening.  So why are we surprised when others respond to a call to arms against the U.S. when we do these things to them?  Look in the mirror America.  We will not be truly safe until you do.

For good or bad, one man’s terrorist is another man’s freedom fighter.  The Irish Republican Army fought for years to free Northern Ireland from British control.  The minutemen fought a guerilla war for our independence.  Don’t we wish the Zimbabweans or Cubans or Venezuelans would rise up and overthrow their respective dictators?  There are two sides to every issue.  Our country is facing an onslaught of violence because of its government’s actions.

In 1802 Thomas Jefferson indicated to Rufus King his foreign policy goal, “We wish to cultivate peace and friendship with all nations, believing that course most conducive to the welfare of our own. It is natural that these friendships should bear some proportion to the common interests of the parties.”  We have strayed far from the wisdom of Jefferson.  Yes, Major Hassan’s act was despicable.  He should be brought to justice.  He should be executed if found guilty.  But, instead of strengthening our resolve to continue the fight against terrorism because of this incident like our politicians and military leaders are apt to do we must reconsider our countries actions toward others and hopefully prevent the next barbarous attack on our countrymen.

Congressman Mel Watt (D-NC) is either a charlatan or ignorant of basic economics.  Either way he is unfit to serve in Congress let alone serve as chairman of the Domestic Monetary Policy and Technology Subcommittee.  This week Congressman Ron Paul (R-TX) announced that Watt took the knife to his bill to audit the Federal Reserve – The Federal Reserve Transparency Act of 2009 (HR 1207).  According to Paul, Watt as chair of the above mentioned committee cut out “just about everything”  in preparing the bill for a full committee vote.

Specifically, Watt eliminated the provisions requiring audits of the Fed’s transactions with foreign banks, its deliberations on monetary policy, the activities of the Open Market Committee, and disclosure of communications between the Federal Reserve Board and reserve banks.  Essentially the bill has become a shell of its original self.  Paul, of course, does intend to attempt to restore the bill to its original form during Financial Services Committee deliberations, but that is not the point.  The point is why has Congressman Watt gutted a bill that has over 300 cosponsors in the House and the support of a large majority of Americans?

It could be because he is repaying the financial industry which has throughout his career in Congress contributed over $890,000 to his campaigns.  That would be only fair given how much they have helped him maintain power and the privileged perks of members of Congress – great healthcare, great salary, and a great pension plan.

But, what is funny and ironic is that the industry that is second in contributions to Watt is organized labor at $873,000.  Big banks and labor unions make strange bedfellows?  You would think their interests are so diametrically opposed that they would not be #1 and #2 in contributions to the same member of Congress.  Labor union support of Watt is also curious given that North Carolina is a Right to Work state and not nearly as unionized as the People’s Republics of Massachusetts and California.   But, not to worry, Congressman Watt has traditionally taken care of unions as well.  He has supported every “entitlement” program that comes down the pike in favor of their leadership.  The list has included minimum wage, the “right” under law to collective bargaining, so-called fair employment practices, social security, socialized medicine – the list goes on and on.

So, if the congressman is so busy serving big banks and labor unions, what has he done for the actual people who elect him every two years?  Well, very little.  You see by supporting the Federal Reserve and bailing out big banks through legislation he is supporting the perpetuation of inflation.  Our dollar has lost 95 percent of its value since the Fed was given control over it by Congress in 1913.  But, most folks don’t understand how the Fed imposes this hidden tax on them by debasing our currency causing prices to rise.  Instead Watt and his ilk blame capitalism for rising prices and offer socialized medicine, minimum wages, and other socialist schemes to combat the higher cost of living for families.  If they would just support sound money in the first place there would be no perceived need for these wasteful programs.

So this is where the charlatan or economic imbecile question comes into play.  Does Watt understand that his support for the banking cartel known as the Federal Reserve System is what actually causes hardship for labor and ordinary Americans in his district?  Does he realize that by gutting HR 1207 he will help to continue the debasement of our currency?  Has it clicked in his head that his support for or at the very least his blind eye toward the reckless monetary policy of the current Fed leadership will be responsible for the future hyperinflation we will experience.  Has he considered his own culpability in the coming collapse of the dollar which will usher in an era of even higher unemployment with a drastically reduced standard of living in America?

Given the bubble mentality around Washington, a reasonable person could conclude that Watt is both a charlatan and an economic imbecile.  He is an economic imbecile because he must believe that economic doom caused by Fed policies is not inevitable otherwise he would not support them in light of the fact that the collapse would also affect him negatively.  He certainly is a charlatan because like many members of Congress Watt has the best of both worlds.  Special interests of all stripes get federal goodies from him which personally cost him nothing.  In return those special interest groups guarantee his reelection every two years with huge cash contributions to his campaigns.  In the meantime, our national debt is grotesquely high, our manufacturing base continues to move overseas, our financial industry is bankrupt, and the dollar is on the brink of collapse.

This is the essence of our problems.  Too many charlatans and imbeciles have been in charge of Washington for far too long.  Unfortunately all good things must come to an end.  The federal gravy train that Congressman Watt and his comrades have built to continually get reelected is about to crash.  When it does they won’t understand it, but they should because it will be caused by the fraud they have perpetuated on America.

Last Wednesday, President Obama signed a bill into law which adds acts of violence against the disabled, gay, lesbian, bisexual, and transgender folks to the list of federal hate crimes.  This increases coverage of the federal hate crimes protections which previously only included race, religion, and national origin.  In typical Obama euphoria, activist instantaneously proclaimed the measure to be the most important since the civil rights acts empowering blacks were passed in the 1960s. 

Of course, those of us with clearer, less emotional heads on our shoulders know that hate crime legislation is nothing more than politicians pandering to their base of support by providing them with a special interest perk in an effort to energize that base for widespread support at the next election.  Now, maybe that is a little cynical or I am just resentful because I personally do not fall into any of the “protected” categories.  I am from the United States, nominally Christian, white, and a middle aged man.  Now, this is not a knock against folks who are not what I am.  As a matter of fact, I have chosen to live a lifestyle that places me in a small minority of the population of the places where I live.  Thus, I consider myself very tolerant.  The point is that in essence hate crime protection places a greater importance on some lives over others.  More resources will be spent to pursue a murderer that killed another simply because the victim was gay or black or from Haiti.  The offender could spend more time in jail because his crime was motivated by the sexual orientation, ethnicity or religion of the victim.  We have totally politicized the criminal justice system and thrown equal protection of the law out the window by affording special protections to some groups and not others.

I know that our friends on the compassionate left will say, “Hate crimes demand a priority response because of their special emotional and psychological impact on the victim and the victim’s community. The damage done by hate crimes cannot be measured solely in terms of physical injury or dollars and cents. Hate crimes may effectively intimidate other members of the victim’s community, leaving them feeling isolated, vulnerable and unprotected by the law.”  I hear their argument, but don’t all victims of crime experience a special emotional and psychological impact?  Why isn’t rape included in the protections?

At the end of the day, if someone kills you your just as dead regardless if it was an act of passion, greed, revenge or hate.  Perhaps there are some who hate me for what I write in my blog.  If they kill me for it, too bad, hatred motivated by political speech is not covered under federal hate crimes protection.  Should it be?  My 1^st Amendment rights were violated.  See, this is the problem with hate crime legislation.  Instead of just dealing with all criminals appropriately, the politicians would rather use the criminal justice system to score political points.  It is another example of shameful, unconstitutional behavior on their part.

So, what does dealing with criminals appropriately mean?  It means equality under the law – the same judicial process and rights are guaranteed to all.  It means that criminal justice, with certain enumerated exceptions, is solely the domain of the states.  Article 1 Section 8 of the Constitution specifies that Congress only has the power to “provide for the punishment of counterfeiting, to define and punish piracy and felonies on the high seas, and to exercise exclusive legislation in all cases over…the seat of the government of the United States.”  Period.  All other crimes are the jurisdiction of the states under the 10 Amendment.  Therefore, Congress and the President have acted unconstitutionally again.

Once criminal justice has been secured to the states, they must reconsider how to deal with criminals.  Those that are dangerous to society without regard to any one special group should be put away.  States need to view crime as a violation against individuals and not necessarily society as a whole.  After all, if I hit your car don’t I owe you and not society?  Why is harm done criminally any different?  For instance, in addition to going to jail murderers should be forced to make reparations (work off their debt) to their victim’s family.  Wouldn’t this make the victim’s family more whole than just putting the killer in jail to live off the fruits of the taxpayer?  In the case of a hate crime, the punishment would be particularly effective and possibly even a deterrent if the potential killer faced serving the kin of his hated victim.  The 13^th Amendment to the Constitution would allow this and I for one would then favor the abolition of the death penalty.

If we are truly going to reach our goal of a color blind, gender equal, who cares what your sexual preference is society, then our laws must reflect those values.  We cannot make unjust laws to offset the unjust laws of the past.  Two wrongs do not make a right.  Criminal justice should be secured back to the states anyway.  It is constitutional and that way federal politicians will no longer be able to use the system to reward their political constituencies.

On Monday Deputy Attorney General David Ogden issued a memo to federal prosecutors in 14 states regarding the Obama Administration’s position on medical marijuana.  The memo declared that prosecutors “should not focus federal resources in your states on individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana.”  Ogden’s directions went on to give federal agents the authority to go after those whose marijuana distribution actions go beyond what is allowed by the various state laws.  In essence, the memo gave prosecutors wide discretion in determining which cases to pursue and which to ignore based on their interpretation if any state laws are being broken.  On the surface, this seems like a compassionate gesture towards those suffering pain from maladies like cancer, glaucoma, and spasticity.  However, upon closer inspection, the Administration simply didn’t go nearly far enough and its position is fraught with peril.

First of all, how can there be a law that the government doesn’t enforce.  I realize there are a lot of old outdated laws on the books that governments do not enforce, but federal drug laws are a big deal.  Now, don’t get me wrong I would like to see all substance laws repealed on the grounds that individuals have an absolute right to do to their bodies what they choose as long as it doesn’t violate the rights of others.  Of course, being stoned, driving a car, and hurting another through those actions should still be illegal.  But, if you want to smoke a joint in the privacy of your home it is your natural right to do so.

The problem with the Administration’s new position on medical marijuana is that instead of saying go ahead and break the law and we will look the other way the Justice Department should be petitioning Congress to repeal the law outright.  What law will he decide not to enforce next – immigration laws?  Oops, I forgot he doesn’t already.  After all, isn’t the President nullifying an act of Congress because he is refusing to enforce its law?  This is no different than when states nullify an act of Congress or when juries release defendants because they believe the law the accused is being tried for is unjust or unconstitutional.  In both circumstances Uncle Sam gets snooty and cries fowl.  Why is the President any different?  Perhaps Congress should sue him at the Supreme Court to require him to enforce the law.

It is also concerning that the Administration is giving wide discretion to prosecutors in pursuing cases.  Naturally, some prosecutors are more gung-ho than others when it comes to prosecuting these types of cases.  Thus, equal protection of the law could be violated simply because there is no concrete legal standard involved only the judgment of individual prosecutors.  And besides where is it ordained that federal agents have any role in enforcing state laws?  This is clearly a violation of our institutionalized federal system.  Next thing you know, FBI agents will be given the jurisdiction to issue traffic tickets on the nation’s interstate highway system.  No, federal agents enforcing state laws will lead to a further erosion of state’s rights and bring us that much closer to federal hegemony over all matters. 

Of course, drug laws are not within the realm of the federal government per Article 1, Section 8 of the Constitution anyway.  The states retain the right to regulate drugs under the 10^th Amendment.  There are state pharmaceutical laws and licensure in all 50 states.  You would think that somebody in the political establishment could come up with a common sense compromise that protects states’ rights yet maintains regulation over medical pot.  Perhaps federal law banning its use could be eliminated and control of the issue totally transferred to the individual states.  The states could then treat pot like they treat codeine and Prozac – as a behind the counter drug dispensed by pharmacies like CVS, Rite Aid, and Walgreens.  After all, like the aforementioned drugs pot does have significant medicinal value.  This approach would ensure that worthy patients receive the medication their doctors prescribe, states would retain their right to regulating drugs, and federal prosecutors could focus their attention where it belongs – on cases like mail fraud and illegal immigration.

At the end of the day there will be no peace on our streets until Washington ends the so called “War on Drugs” completely.  In all fairness to the Administration, with its recent medical marijuana stand it has gone further than any previous administration in at least attempting to curb one abuse of that conflict.  Let’s hope this experiment goes well and as a result Mr. Ogden issues another memo declaring the federal war on drugs over.

Recent actions of the world’s central banks have sent a warning shot across the bow of the ship known as the Federal Reserve.  Since July, 63 percent of all new cash going into foreign central banks have been euros and yen – not U.S. dollars.  The greenbacks share of new cash, 37 percent, is far lower than its 66 percent share of 10 years ago.  According to the International Monetary Fund, dollars currently make up about 62 percent of reserves at central banks.  This is the lowest on record!

Additionally, the story has broken that the Persian Gulf states have met with leaders from China, Russia, Japan, and France to set-up payments for oil in currencies other than the dollar.  Naturally, the story has been denied by several of the participants.  But, from what I have experienced so far about Qatar living here for just the past 2 months, the Qatari government is very astute at acting in the nation’s best interest.  They are not going to make bad investments (accepting debased dollars for oil) in the long run and interrupt their own economic growth just because the U.S wants them to.  A source of mine on the ground here in Doha has also indicated that the Gulf Cooperation Council (Kuwait, Bahrain, Qatar, U.A.E., Oman, and Saudi Arabia) which plans to institute a common currency in 2010, is currently debating whether that currency should float or be pegged to another currency.  Apparently, the leading favorite for pegging is the euro.  If this were to happen, overnight the euro would also become the currency of choice for purchasers of oil.  None of these indicators are good news for the dollar and its future as the world’s reserve currency.

It’s no secret how we got to this place.  The U.S. has been on a spending binge ever since Richard Nixon took us off the last vestige of the Gold Standard in 1971.  Throughout, the term of George W. Bush the welfare / warfare state accelerated federal spending, and interest rates were kept very low by the Fed.  Once the bills came due and the financial crisis hit, the politicians, especially the current president, and the money oligarchs at the Fed knew only to spend more money and lower rates even further to combat the emergency.  See, they either never considered that these actions of theirs got us into the mess in the first place or they realized that since we were in a messy fix they needed to help their benefactors on Wall Street and the best way to do that was to pursue the same policies, but label it “stimulus” or “quantitative easing” to fool the masses.  Only time will tell whether their chicanery has worked.

One thing is for sure, Fed chairman Ben Bernanke is between an overheated printing press and a hard place.  If he raises rates and siphons trillions out of the economy he will burst the current Fed induced stock market bubble.  Housing values will sink even lower to reach supply/ demand equilibrium.  Unemployment will accelerate even more given the higher cost of money for businesses.  If he maintains the status quo, which seems likely given his cowardice in the face of political consequences, the dollar will be finished as the world’s reserve currency.  He claims he has the tools and the know-how to siphon trillions of dollars out of the economy to prevent inflation once the recovery picks up.  But, given the amount of money and credit the Fed has injected since the crisis began, and Washington’s thirst for huge deficits, Bernanke would need to be more than a mere mortal to accomplish that.

Many may ask, well, what would be so bad about the dollar losing world reserve currency status?  For one thing, demand for dollars will evaporate.  Foreigners will not need them to buy oil and other commodities.  Consequently, the Fed will no longer be able to simply print new money to cover the future debts of Congress’ because no one will be interested in buying the Treasury bonds that support the monetization.  Since demand for the dollar will be gone its value will drop precipitously and this will actually force our government to raise taxes and/or print money just to buy the necessities of a nuclear power and industrialized society – namely uranium and oil.  In light of the amount of debt we already have and the future unfunded liabilities of Medicare and social security, the standard of living in the U.S. will be equivalent to Mexico’s.  One huge benefit would be the death of the welfare/ warfare state because merely put, “you can’t get blood out of a stone.”  But the loss of wealth will not be worth it.

In some ways the chairman of the Federal Reserve is the most powerful person in the world.  He supplies the money the whole world uses to buy commodities.  That distinction will soon come to an end.  When it does Ben Bernanke will go down as the worst Fed chairman in history since the dollar collapsed because of his policies and on his watch.  Congressmen Ron Paul R-Texas and Alan Grayson D-Florida are about to request that the Senate delay Bernanke’s confirmation hearing for another term as Fed chairman until he releases more information pertaining to the many bailouts of the Fed in the current crisis.  Instead President Obama should withdraw Bernanke’s nomination altogether.  It is possibly too late to stop the inevitable collapse of the dollar.  Maybe Obama can find a competent hand to pick up the pieces when it happens?

The inventor of dynamite, Alfred Nobel, stipulated in his will that a huge part of his fortune would go toward a peace prize awarded “to the person who shall have done the most or the best work for fraternity between nations and the abolition or reduction of standing armies and the formation and spreading of peace congresses.”  The five-member committee that chooses the prize’s winners is selected by Norway’s Parliament.  It has over time liberalized the selection process by choosing those that are not necessarily peacemakers but poverty, disease, and climate change foes.  In other words, they have granted awards to warriors in some of their favorite causes.

This year they really liberalized the process by selecting someone who has no accomplishments in any of the above.  Of course I am alluding to the shocking news that Barack Obama has won this year’s Nobel Peace Prize.  Hence, the reason the Prize has become a politicized joke.

The selection is proof that the committee has also gotten caught up in the whole Obama hysteria.  Give me a break.  They nominated him for the prize just 12 days after he was inaugurated as president!  Aren’t nominees based on outstanding achievement?  Simply becoming president does not qualify – take George W. Bush as an example.

In its selection of Obama the committee said it “attached special importance to Obama’s vision of, and work for, a world without nuclear weapons.”  The statement is clearly in reference to the President’s speech to the United Nations where he pledged to work for a nuclear free world.  Apparently the committee believes that words speak louder than actions since the President has never acted to reduce nuclear weapons as either a senator or president.  Besides, a nuclear free world is fantasy.  Because of the fear of Armageddon nuclear weapons have prevented World War III.  Giving up our nukes is politically impossible given his rhetoric that Iran and North Korea are out to get us with theirs.  Why would we disarm and leave ourselves vulnerable to every bad guy come lately?

 According to the committee, another rationale for their selection was because “Obama has as president created a new climate in international politics.  Multilateral diplomacy has regained a central position, with emphasis on the role that the United Nations and other international institutions can play.”  Yes, multilateral diplomacy is important, but after Bush even McCain would have looked like Dag Hammarskjold in terms of multilateral diplomacy.  I am not sure this is that great an accomplishment. 

The second part of the quote shows the committees political leanings – socialist.  The United Nations is useless.  The 20^th Century was one of the bloodiest in history.  The U.N. doesn’t prevent wars.  In fact, huge amounts of its budget are eaten up with administration costs and salaries making it nothing more than a huge international jobs program for the upper and middle classes of developing nations.  But, the socialists love it because it lends a hand to the less fortunate and provides the appearance that something has been done to ensure world peace.  Thus, the committee loves Obama because he loves the U.N.

I did read one article on Obama’s selection that hypothesized he was chosen not so much for his performance but for his promise.  This is ridiculous as well.  It’s like me as a teacher prejudging a student and giving him an “A” before the term begins because he comes from a good family background and therefore has great promise.  Even worse, it’s more like a new straight “A” college graduate getting a six figure income job over a ten year veteran with a proven track record.  These scenarios are unreasonable.  The big question is: What if Obama does not fulfill his promise?  Does he have to give up the award with its $1.5 million prize?  And how tarnished will the award be in the future?

It is ludicrous that Jimmy Carter brokered a peace deal between two historical enemies (Egypt and Israel) in the late 1970s and didn’t receive the Prize.  It is even more insane that Obama has done nothing to promote peace and he gets the Prize.  In reality, Obama in several instances has even been anti-peace.  He has not ended the cruel embargo against Cuba which has done nothing to end the tyranny and has only hurt the people on the ground and driven a wedge between our two nations.  He will not be closing the Guantanamo Bay prisoner of war camp this January.  He will more than likely commit additional troops to Afghanistan.  Like his predecessor, he continues to talk tough to Iran and North Korea.  And let’s not forget his unofficial war in Pakistan.

No, all of the reasons given for Obama’s selection just do not add up.  There must be something else under the surface.  Since the socialists on the Peace Prize’s committee love socialized medicine, perhaps they are attempting to hand Obama some political capital to use in his battle to socialize our healthcare system.  Talk about liberalizing the selection process to support their pet projects.  Whatever the case, the Nobel Peace Prize has become a politicized joke because it has been given to an unworthy recipient in the cause of promoting the committee’s political agenda.  Whatever, socialist goal that is.

It is easy to get caught up in all the hype of the media pundits, Ben Bernanke, Joe Biden and Barack Obama that the economy is slowly but surely recovering from the worst recession since the 1930s.  It’s not.  And what is even worse is that we are even deeper in debt with nothing good to show for it.

In September of 2007, just months before the current crisis began, our national debt was a little over $9 trillion give or take a few billion.  As of late last week, our national debt was quickly approaching $12 trillion.  That is an increase in debt of $3 trillion in just two years!  Of course, most of the new debt is a result of stimulus spending, other government handouts to stimulate the economy, and war – things Keynesians have always historically believed would turn any economy around.  That theory has been disproved previously and this current economic crisis is just the most recent repudiation of it.

So, with all this spending what do we have to show for it.  This week the Bureau of Labor Statistics announced that unemployment is at a 26 year high in the United States at 9.8 percent.  Payroll employment has fallen for 21 consecutive months, with total jobs lost equaling 7.2 million.  This is only the phoney government number.  It doesn’t count workers who have been unemployed so long they have given up on finding a job and those working part time that prefer full time.  The total unemployed number, meaning the number the government has always used up until the Clinton years, is actually 17 percent!  This is a Great Depression number.  So it is interesting when Fed chairman Ben Bernanke says his monetary policies have kept us from an economic calamity. 

In addition to higher unemployment, with the new debt we also have lower consumer confidence.  The 2^nd Quarter real gross domestic product number down at an annual rate of .7 percent.  And lastly, Americans continue to lose their homes to foreclosures.  They increased by 17 percent in the 2^nd quarter in spite of a government spending program meant to help borrowers save their homes.  Taking all these facts together, only a fool would believe the economy is recovering, Keynesian economics works, and Ben Bernanke has saved us from an economic abyss.

There is one sector of the economy that is doing pretty well as a result of all this new debt – big banks.  As a group their stock prices are up.  They are receiving a good rate of return on their bailout money being held in their Fed reserve accounts.  Bonuses are being paid.  And they are enjoying the privileges that come with Fed membership – anonymity when given our money and protection against failure.  Perhaps when Bernanke, Biden, and Obama talk of recovery they have the big banks in mind.

One thing is clear.  Most of America is not experiencing an economic recovery.  $3 trillion more in debt and the economy is still in the dumper.  The so-called jobless recovery policymakers speak of is an insult.  It doesn’t give much comfort to the 7.2 million folks who have lost their jobs since December 2007.  The only jobless recovery that is acceptable is the one that will result when the scoundrels that caused this mess lose their jobs.  Americans will have this opportunity starting next year.  Hopefully, they will take full advantage of it.

Famous Supreme Court Justice Hugo Black once stated, “I am for the First Amendment from the first word to the last. I believe it means what it says.”  In part, what it says is that, “Congress shall make no law…abridging the freedom of speech.”  To prove how serious the authors of the Bill of Rights were about this indispensible freedom, they gave Americans the ability to defend the right by force if necessary in the very next Amendment.  Even given the historic support from the High Court for the First Amendment and the means to defend it given by the Founders, this past week the Obama Administration violated its oath to uphold the Constitution by issuing a decree abridging the First Amendment right to speech.

In a memo to private health insurers from a senior official at the Department of Health and Human Services (HHS) the Obama Administration issued a decree ordering them to stop informing Medicare beneficiaries that health reform legislation before Congress could hurt them and curtail their benefits if enacted.  The memo went on to say that the government might take legal action against insurers that are mobilizing opposition to the legislation by sending “misleading and confusing” messages to seniors. 

Say what you will about insurance companies, this is by no means a defense of them.  It is instead a rebuke of an administration that is playing fast and loose with basic rights guaranteed to all Americans, including corporations.  In the United States, corporations are separate legal entities that retain the same rights as individuals.  Humana, the company whose letters to clients prompted the decree from HHS, has as much right to speak out for or against federal legislation as I do.  Congress, the President, and the Supreme Court have no power to abridge Humana’s right to free speech.  Obama should know this given that he is a constitutional lawyer.

Secondly, the decree smacks of fascism.  Corporations do not exist in America to serve the interests of the state.  Obama has this collectivist mindset, a lot like the previous administration, “you are for us or against us.”  Any discord with the Administration’s positions and you may find yourself threatened with legal action.  Perhaps the President is confused.  Maybe he has let his takeover and running of GM, Chrysler, and AIG cloud his vision and he now thinks that he can dictate the terms of existence for all American companies.  Unfortunately, few members of his own party have expressed any discomfort with the decree.  In fact, Democratic Senator Max Baucus has urged HHS to crack down on the mailings.  In addition to a government that is not listening to the people, now we have one that is also attempting to stifle the peoples’ dissent.

Of course, attempting to litigate any company that disobeyed the gag order would end in defeat for the Administration.  There is no precedence for restricting speech against government legislation.  Even inaccurate or misleading speech is protected.  But, to top it all off, the information Humana peddled to seniors was actually accurate.  According to the Congressional Budget Office, the bill released last week in the Senate by Baucus would cut payments to Medicare Advantage plans by about $139 billion over 10 years.  Certainly this represents a significant chunk of change and would result in reduced benefits for seniors.  If the Humana information was misleading, at least Obama could look like he was standing against deceit and chicanery.  This would be somewhat admirable.  But because the information is true, he simply looks like a despot.

In 1906, Evelyn Beatrice Hall said, “I may disapprove of what you say, but I defend to the death your right to say it.”  Taking the presidential oath of office to defend the Constitution is equivalent to Hall’s statement.  But, with the current president, he apparently has no problem not only shirking his duty but violating it.  It’s no wonder his approval rating continues to drop and Americans are taking to the streets in the millions to protest his policies.  After all, Americans are not asking Obama to give his life for free speech just to respect it even when it disagrees with his policies.

For the first time in a long time, Connecticut voters will actually have a real choice when voting for their U.S. Senator.  This past week economist and financial advisor Peter Schiff announced his Republican candidacy for the Connecticut senate seat currently held by Democrat Chris Dodd.   Baring any manipulations from the Republican establishment, Schiff’s entry into the race guarantees that important issues that are often ignored by establishment candidates will be addressed.  Once addressed, Connecticut voters will come to the conclusion that Schiff is the only candidate capable of cleaning up the financial mess produced during Dodd’s 5 terms in the Senate.

“What America has succeeded in creating is not an economy impervious to shocks, but merely one which enables their consequences to be postponed to a later date.” – Peter Schiff  

No politician of either party will admit this.  But Peter Schiff is absolutely right.  What has been built during Dodd’s close to thirty years in the Senate is an economic system that is prone to booms and busts due mostly to the easy money policies of the Federal Reserve.  So, we have a boom in the dot com sector fueled by low interest rates and then the bottom falls out and what does the Fed do but lower rates to one percent to stimulate the economy.  This in turn causes the next boom in housing.  What does the Fed do again?  You got it – lower rates practically to zero.  Once recessions set in the politicians turn to the central bank to pump in more money in to ease the pain.  This approach has worked so far to delay the inevitable but in the end all we will have is a huge national debt and a calamitous financial meltdown the proportions of which have never been seen in modern history.     

It is issues like this that are ignored by the establishment candidates in our political contests.  Another issue that Schiff is focused on that the Washington establishment is ignoring is the current reserve crisis at the Federal Housing Administration.  Reserves at the agency have fallen to $30 billion while the total amount of mortgage debt insured by the agency has risen to over $1 trillion.  Schiff asks correctly, “Didn’t we learn anything?” from the most recent crisis.  How will the agency insure so much debt with so little reserves?  Again, as long as the printing presses are rolling at the Fed, official Washington will sweep this bad news under the rug.  But, Schiff has rightly pointed out that the day of reckoning will come when the dollar has lost so much of its value that foreigners will no longer buy our debt and our standard of living will be in the dumper.

America needs leaders with the integrity and intelligence of Peter Schiff.  He was one of the very few people in America who predicted the current financial crisis as long ago as the early 2000s.  Mocked and ridiculed by political pundits for his comments that the U.S. economy was being built on false notions of wealth his position has since been vindicated by falling asset prices in the housing and stock markets.  Currently, his patriotism has come under attack for his belief that the current recession/depression is necessary to liquidate the bad economic decisions that were made during the government induced boom of the last decade.  He is the only candidate for the U.S. Senate in Connecticut that is telling the truth regardless of the consequences and standing against the establishment position that winning elections is more important than doing what’s right for the country.

When he is elected to the Senate, Schiff will fight for fiscal responsibility, sound money, and restoring the federal government to its constitutional limits.  As the candidate who is tied to no special interests including the Republican establishment, Schiff is uniquely qualified to propose and fight for policies that benefit all Americans not just the large corporate bosses and big bankers.  For the first time in a long time, Connecticut voters have an opportunity to bring real change to America.