The View From 1776

The Free-Trade Dilemma

Free trade may no longer be the winner of the past, but liberal prescriptions will only make the problem worse.

Posted by .(JavaScript must be enabled to view this email address) on 03/28 at 05:13 PM
  1. Deterministic systems, ideological symbols of abdication
    by man from his natural role as earth's Choicemaker,
    inevitably degenerate into collectivism; the negation of
    singularity, they become a conglomerate plural-based
    system of measuring human value. Blunting an awareness
    of diversity, blurring alternatives, and limiting the
    selective creative process, they are self-relegated to
    a passive and circular regression.

    Tampering with man's selective nature endangers his
    survival for it would render him impotent and obsolete
    by denying the tools of variety, individuality,
    perception, criteria, selectivity, and progress.
    Coercive attempts produce revulsion, for such acts
    are contrary to an indeterminate nature and nature's
    indeterminate off-spring, man the Choicemaker.

    The arts and the sciences of man, as with his habits,
    customs, and traditions, are the creative harvest of
    his perceptive and selective powers. Creativity, the
    creative process, is a choice-making process. His
    articles, constructs, and commodities, however
    marvelous to behold, deserve neither awe nor idol-
    atry, for man, not his contrivance, is earth's own
    highest expression of the creative process.

    Human is earth's Choicemaker. The sublime and
    significant act of choosing is, itself, the Archimedean
    fulcrum upon which man levers and redirects the
    forces of cause and effect to an elected level of qual-
    ity and diversity. Further, it orients him toward a
    natural environmental opportunity, freedom, and
    bestows earth's title, The Choicemaker, on his
    singular and plural brow.

    - from The HUMAN PARADIGM

    Does anyone really believe the 'Tuesday Morning Quarterbacks' will ever really learn?

    Remember: Definitions Determine...
    Posted by Choicemaker  on  03/29  at  09:54 AM
  2. Sadly, the union workers were misled by socialist leaders who promised things that in the long run would really hurt them. Thus, every decade since the 1950's we have lost manufacturing to other nations that could have been built here. We grew manufacturing and that is often pointed to as proof of various things but, the growth was less than the growth rate of population. During the same period we added 50% to the population (200 million to 300 million) we declined from 30.4% manufacturing to GDP to 15%. During the Clinton years, job growth in virtually every sector peaked and began the decline that eventually, not only didn't keep up with population growth but didn't even keep up with current levels of employment in those sectors. It has risen some since the Bush tax cuts spurred growth but will soon decline again when we have our next recession that our spending on entitlement programs and poor monetary policy by the Federal Reserve will create.

    As the last report from the Social Security Administration reported, we need a 16% increase in taxes for Social Security and 121% increase in Medicare taxes to keep them viable for the next 75 years as the "boomers" retire. Socialism has caused more spending on social programs while our infrastructure is in decay. The American voters won't pay the taxes needed for both and as a result they have tried to tax business which passed the taxes on in prices or close or move.

    The American voter isn't going to want the tax increases called for by the S.S. admin, so I look for a cut in benefits which won't be popular either. Another area that unions are hurting the nation in, is government unions. State and local governments have made agreements with government unions that tax payers are going to have a hard time funding now that the "boomers" are retiring from those jobs too.

    We could easily face a decade long recession if they make the wrong decisions in Congress.
    Posted by JanPBurr  on  03/29  at  07:41 PM
  3. Mr. Burr's argument sounds quaint, thinking that the decline in manufacturing jobs in America is strictly due to socialism.

    Mr. Burr doesn't understand that no country remains preeminent in anything over the long haul. Most of America's manufacturing jobs have gone due to the fact that the rest of the world has caught up with it. The rest of the world has become capable of doing the manufacturing America used to do. America, also, asked and taught the rest of the world to be more like it. And the rest of the world has obliged, so naturally it has lost manufacturing jobs to the rest of the world.

    Britain once lost its preeminence to America and now America is losing its to the rest of the world. It's evolution. But the world is more balanced and saver for it.
    Posted by .(JavaScript must be enabled to view this email address)  on  03/30  at  11:29 AM
  4. David said:
    Mr. Burr doesn
    Posted by JanPBurr  on  03/30  at  12:32 PM
  5. I think you should check this out about your beloved Ireland: .

    Perhaps Ireland is experiencing what every maturing economy experiences, that the bloom eventually wares off. The Irish economy is leveling off and I wouldn't be surprises if there is a ression there due to over exuberance and over capacity.
    Posted by .(JavaScript must be enabled to view this email address)  on  03/30  at  01:10 PM
  6. Yes and it will get worse too. They are starting to experience the results of a bad decision to go into he KYOTO treaty.

    Also, like many nations that become prosperous, they will make the same mistakes again that will "cycle" them down.

    You don't seem to understand economics much David. It is human nature that brings nations down. It is people who think they can pass the buck to somebody else. You are looking at where they are going instead of what got them where they are. That is the same case with the U.S., China, Korea, Australia, New Zealand, Venezuela, Iran, etc. It is what got them where they are, up or down, that you have to look at, not where they are going, unless you want to look for "mistakes" that will drag them down.

    The bloom doesn't wear off unless the people stop doing what is efficient. If they start to look for ways to have "government" do more so they can do less, they will go into decline. If they use government rationally to do what they need to be personally responsible for and are willing to pay for, they will do much better.

    I couldn't get you link to work but this is a similar point of view.
    Growth is predicted to fall to lowest rate since 1993

    Marc Coleman, Economics Editor

    Economic growth next year will fall to its lowest rate since 1993, according to two forecasts published yesterday.

    The Economic and Social Research Institute (ESRI) said growth would remain above 5 per cent this year before falling below 4 per cent in 2008 as housing investment levels off.

    In 1993, the year that the Celtic Tiger emerged, growth was 2.3 per cent.
    According to the study, Macroeconomic Adjustment in Ireland under EMU, public sector wage restraint is needed to lower spending growth and inflation.

    It warns that Ireland has the largest share of exports outside the euro zone of any other euro zone economy, making it exceptionally vulnerable to both a downturn in the US economy and a depreciation in the US dollar. It also recommends reducing the economy's dependence on the property market, and calls for the introduction of a tax on second dwellings and the abolition of mortgage interest relief.
    However, their slowdown will still be near our normal highs. That is also true of China. They say a downturn their will drop them from 11% to 4 or 5% and that is all we can muster in a "boom."

    But, even China will peak and decline because of "human nature." It is "human nature" and our "sinful" nature that we have to guard against at all times. Anytime we think we can start pawning off our responsibilities on government to have "better life," we will decline in the long run. Government is to be a servant of the people, not their nanny. Socialists fail to understand much of what is bad about government because they fail to understand "human nature," and think they can control economies and "wealth" through government.

    Remember, Ireland has many social programs and their wages rose 300% while ours rose 79%. They have grown "greedy." However, look at the tax rates of virtually all the rapidly growing nations around the world and you will find "benefits" for business to attract business to their shores. Nations have to compete for tax rates whether like it or not. They also have to compete in areas of "cost to business" like healthcare, pensions, litigation, regulation, wages, shipping, interest rates for loans, union demands, payroll taxes, energy costs, etc.

    Anything that could be paid by the worker should be paid by the worker since that means business can stay competitive with the world market.

    But, you are right, we do go in cycles and all nations do that are free because people are going to do what people do when they think they can pass the buck. That doesn't change what should be done, however. It does prepare those of us who understand those cycles though so that we don't invest in nations that are dong stupid things.
    Posted by JanPBurr  on  03/30  at  02:55 PM
  7. Bravo! David,

    You have challenged coherent argument with coherence of your own. Much better than the down & dirty fighting of our past; and much appreciated. Still needs a bit of work to eliminate challenges to adversaries intellect. You have both scored and lost points on this one, but at least you scored. Keep it up.
    Posted by .(JavaScript must be enabled to view this email address)  on  03/30  at  06:21 PM
  8. Jan,

    I was able to access the article David referenced (try typing the link directly into the address bar of your browser), and either he
    Posted by .(JavaScript must be enabled to view this email address)  on  03/30  at  08:23 PM
  9. The reference to KYOTO is the fines that are going to be imposed. They are so successful in Ireland that the workers are buying cars and just the growth of industry, efficient, but still growth is increasing the emissions. It is like having having 2 factories replace an old one and even though the new ones might be 45% more efficient in emissions, the new "output" is more than before. Or, instead of 1 auto per 3 workers it might be 1 per 2 workers (or whatever the real numbers are).

    This is what other members of KYOTO are finding out. They have to buy credits to cover for growth even though they are improving each industries output. KYOTO doesn't allow for emissions caused by growth, just total output based on some formula. Also, the Irish are about to get a windfall amount of cash from the government that they fear will greatly fuel inflation.

    To get people to save, and thus, not spend and drive up prices, the government said they would give each person who saved for 10 years a 20% additional amount of interest (2% per year on top of whatever the bank paid in interest). That is coming due and the government is asking the Irish to take a foreign vacation to spend the money so they don't drive prices up.

    However, inflation, housing, and other factors are all coming into play. It isn't what is "now" but what may happen if the people start counting on government to be their nanny. Ireland's debt is only about 8 month's tax revenue, down from 120% to GDP when this boom started after the tax cuts. With low debt, they can do a lot, however, and not hurt the economy as long as the taxes stay on workers and not the businesses.

    My fear is that they will return to policies that got them in the mess they were in. Human nature is such that people who are now growing in wealth (Ireland is 2nd wealthiest nation in the union) will start wanting somebody else pay for what they want in social programs. That is a normal cycle for most prospering nation. However, Switzerland (each canton is different) has stayed quite stable for many decades. So, "human nature," can vary from nation to nation depending on the culture and the leadership. Some canton's in Switzerland are getting complaints filed on them by France for having such low taxes that business is leaving France for Switzerland and France says that is a "form of state aid."

    Ireland has high taxes on a personal basis and that is fine and where it should be. However, the people may decide they don't like their personal taxes high (workers are at 20% and start at a lower rate and there are VAT and other taxes that the worker pays as he consumes and lives). If they try to do what the U.S. has done and France and other socialist nations have done and redistribute wealth, they will go into decline at some point down the road.

    Education is key. If their schools and universities are teaching basic economics in a world market, they will know what they can't do and stay viable in that world market. Often education facilities are filled with socialist minds that think man can control the economy with government tax and social policies that redistribute wealth to where "it is needed." Only they don't seem to understand that the real world doesn't work like they want it to. Thus, business and wealthy leave and take the jobs that are needed with them if they can or they close if they can't compete.

    No nation is stronger than the people in it. Any nation that tries to be "one size fits all" won't last in this modern world market. Each state should be a separate society and the people in it determine the survival of that state. In a small nation, they can function as a state and have the unity a state can provide, but, that doesn't guarantee success.

    Ireland is not "perfect." It has unrest, division, a history of mistakes, etc. It won't take much to upset the apple cart. It will only take a change in attitude among the majority (workers) to change the leadership that got them where they are. Again, education and understanding what it takes to compete in a world market is the key.
    Posted by JanPBurr  on  03/30  at  08:46 PM
  10. Jan,

    All you say is true, yet
    Posted by .(JavaScript must be enabled to view this email address)  on  04/01  at  02:09 PM
  11. KYOTO is a causing some waste in that money that could be spent on growth is being spent on "credits" in nations that have signed on. That is what is facing Ireland. Ireland isn't in any real slowing and I didn't mean that it was. I was only referring to what will happen if they aren't careful. The points David makes about the forces that are being applied to not only Ireland but many rising economies are valid points. They just aren't causing a severe problem nor are they insurmountable. It will depend, not on government, but on the people and who they place in government. In France and Germany, and some others, they keep putting the wrong people in government because the people themselves have the wrong concept of "good government."

    From that fist link.
    I believe that the United States is a great country and that our problems do not arise from the people as such. They arise from the structure of our government. We are being misgoverned in all these areas but not because of bad motives or bad people. The people who run our government are the same kind of people as the people outside it. We mislead ourselves if we think we are going to correct the situation by electing the right people to government. We will elect the right people and when they get to Washington they will do the wrong things. You and I would; I am not saying that there is anything special about them.
    If you start a program that is a failure and you are in the private market, the only way you can keep it going is by digging into your own pocket. That is your bottom line. However, if you are in the government, you have another recourse. With perfectly good intentions and good will nobody likes to say "I was wrong"you can say, "Oh, the only reason it is a failure is because we haven't done enough. The only reason the drug program is a failure is because we haven't spent enough money on it." And it does not have to be your own money. You have a very different bottom line.
    very true and why, "political freedom" can actually bring a nation to its knees if that freedom allows a nation to move to socialism. It is like I have often said about China. Either accept capitalism or be shot. The people may get wealthy but, if they criticize the government, they do so at their own peril.

    In the 2nd link
    It must also review and reform our education system to help youngsters to further their education or obtain retraining opportunities so that they will not join the ranks of the impoverished. Society should revive its self-strengthening tradition and can-do spirit.

    Perseverance and hard-work instead of reliance on others were the keys to the success of Hongkongers in the past.
    Only by providing the opportunity do we advance but, providing the opportunity doesn't mean they will take advantage of it and becoming a "nanny" for those who don't defeats the work of providing opportunity for improvement.

    and the truth pointed out in the 2nd is continued in the third.
    Hong Kong's chief executive may have just laid the foundation for a massive welfare system. The taxes required to fund social welfare programs will stifle Hong Kong's economy, and the dependence on such programs will hobble the labor force. If readers have any doubt, they need only look at the United States.

    Colonial America had only a modest government safety net. Churches, charities, and the community "- known as "civil society" "- took the lead in providing assistance to those in need. These entities had the freedom to distinguish between the "deserving" and "undeserving" poor.
    It is not the job of the federal government to keep people from starving. That is the job of family, friends, communities and at the most, state governments controlled by the people in each state.

    Remember we didn't have as much political freedom at one time either. Our Senate was appointed, not elected and their job was to protect the states, not the people. The role of the House was to protect the people. When we switched and amended the Constitution to elect Senators we made a great mistake. While we increase the "people's power" over the Senate, we lost some of the protection that would have kept states from losing sovereignty.

    Political freedom can be a blessing and a curse if the people don't have the right attitude to begin with.
    Posted by JanPBurr  on  04/01  at  04:05 PM
  12. "Political freedom can be a blessing and a curse if the people don
    Posted by .(JavaScript must be enabled to view this email address)  on  04/02  at  12:20 PM
  13. The right attitude is progress, not regression which socialism creates. As you see in the U.S. and its decline over the last 50 years, the more we move to socialism, the more we drive business out of the U.S. and thus lose buying power, lose the ability to maintain our infrastructure, etc.

    Look at the condition of America's infrastructure now as we spend more and more on entitlements and less and less on maintaining our infrastructure.
    the American Society of Engineers have issued several reports, and what they said is that America's infrastructure is crumbling. For example, aviation they gave a D+ in terms of gridlock on America's runways. It
    Posted by JanPBurr  on  04/02  at  12:40 PM
  14. "The right attitude is progress, not regression which socialism creates."

    That is a matter of opinion.

    There are some forms of socialism that have been progressive. I know many on this forum will not agree, because they are more conservative than progressive, but the New Deal certainly displayed the right attitude and progress. The New Deal opened up the economic scene to many who would not have been able to participate in the American Dream, if it hadn't been implemented. America also exported the sense of fairness that the New Deal encouraged to the rest of the world, helping make the world in America's image and thus saver for Americans.

    I wish we could experiment with the economic conservatism this forum supports. I am sure that from this experiment we would discover that America would not be a very just or friendly place to live in. Neither would America be the "beacon on the hill" Ronald Reagan spoke of. And the world would not have come to admire America as it has.

    As I suggested before, the conservatism of this forum will never become mainstream. It's too harsh and denies access to too many people. However, conservatism does have a major role to play in life. It prods liberals and the liberalism that runs the world not to be too over exuberant in what they thinks is possible. The role of conservatives is to keep the foot on the brake and challenge liberals to reexamine, to make sure their liberal ideas are good. And generally they are.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/03  at  01:57 PM
  15. The atypical opinion of a mindless submission to collectivism and its socialistic rotten fruit.

    Conservatism, and what it conserves, makes possible the creative process in human experience. It is an apriori definition of 'human' and Freedom at the individual level of human prosperity.

    Brakes are only essential on collectivism destroying life, liberty, and happiness, in successful inventive productivity. History verifies the premise of the most marvelous nation in human history: USA! Individual Value and Reality re not mere juvenile opinion in behalf of materialistic justification by the needy.

    Brakes in a free society are self-applied by individuals self-restricted by principles rooted in nature and nature's God. Civil laws are minimal social requirements and obligations.

    Principles far exceed law and affirm transcendent values that rise much higher than any pragmatist's latent pubic hair. Any.

    semper fidelis
    Posted by Choicemaker  on  04/03  at  07:27 PM
  16. I certainly wouldn't point to the New Deal as progressive. It failed miserably and only a war brought us out of the depression. There was nothing that the Federal Government did that states couldn't have done and done better.

    Look at the mess social security created. Designed as it was, it has only made things worse for workers who had hoped to retire. Just investing in safe government bonds would have been better than the program they created. The New Deal was filled with "good intentions" but certainly wasn't progressive, but rather regressive in the long run. Some of the programs, as temporary programs might have been justified but as long term policies they have crippled the nation's workers and made them more dependent on government, not less.

    Progress is when workers are better off, not worse off as socialism has done to them. Each year they lose buying power. Each year they pay more for government. Each year they are closer to a collapse of the monetary system. Each year they have less rights to form and keep the societies they had for the first 175 years. Each year the education system gets worse. Each year the morals decline and the incarceration rates go up. Each year, we are more and more beholden to foreign nations to lend us money. For 70 years that trend has continued unabated with only peaks and valleys but always continuous worsening of our ability to compete in the world.

    What I think you mean is that some people have benefited. That is true. People who "use" the system and get other people to pay for their desires have done better. It is the nation as a whole that is worse off.

    Even under Communism some people were better off and had power, their needs met, and didn't "want." But those were the people who were "in the party" and had "party power." Here we have the workers, however, that have been worse off each year (in general) while only a few were better off depending on what company they worked for (government grants, exemptions, etc.) while the majority of workers saw their buying power go down each decade as government costs rose faster than worker's wages and productivity. How can workers be better off (make progress) when they lost ground every time the government expanded its power and spending? It isn't progress when a worker gets a temporary break like some of the things the New Deal created like WPA or CCC when the benefits were eroded a decade or so later by higher taxes, higher prices, fewer manufacturing jobs, loss of competitive edge, worse education, and an erosion of state rights.
    Posted by JanPBurr  on  04/03  at  09:04 PM
  17. Well, things are the way they are because that is the way they are meant to be (the best of all possible worlds and all that). The New Deal came into being to brake the power-lock of the privileged and the ruling class, and make things more equitable. (So things didn't work out perfectly. After all, we are dealing with the human race.)

    A civilization continues because it evolves. Without the New Deal the American civilization could not have evolved or expanded. Instead, without it, American civilization would have contracted because of the lack of new blood and input structures like the New Deal offer. Left without the teeming masses the New Deal released the privilege class would have eventually collapsed due to their having grown stale, as occurred in Britain - the "British Disease", not having been confronted or challenged by the masses the New Deal released.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/04  at  09:56 AM
  18. Without the New Deal the American civilization could not have evolved or expanded

    What programs in the New Deal do you think were so good? They caused the depression to last longer and only a war brought us out of the Depression, so what was so great about it that wouldn't have occurred without it? Remember, it was monetary policy that caused the Depression by fueling the "speculation" of the 20's.

    The New Deal Debunked

    Most modern economists have not yet realized what Henry Hazlitt already knew in the 1930s that FDR's New Deal made the Great Depression last longer and deeper. It is a myth that Franklin D. Roosevelt "got us out of the Depression" and "saved capitalism from itself." However recently a few modern macroeconomists have finally come to this conclusion as witnessed by an article in the August 2004 Journal of Political Economy entitled "New Deal Policies and the Persistence of the Great Depression: This is a big deal, since the JPE is arguably the top academic economics journal in the world.

    "Real gross domestic product per adult, which was 39 percent below trend at the trough of the Depression in 1933, remained 27 percent below trend in 1939," and " private hours worked were 27 % below trend in 1933 and remained 21 % below trend in 1939."

    This should come as no surprise to anyone who has studied the reality of the Great Depression without a preconceived political agenda. The U.S. Census Bureau of statistics shows that the official unemployment rate was still 17.2 % in 1939 despite seven years of "economic salvation" at the hands of the Roosevelt administration (the normal, pre-Depression unemployment rate was about 3 percent). GDP was lower 10 years later, in 1939 than in 1929 ($847Billion vs. $857Billion), as were personal consumption expenditures ($67.6 billion in 1939 vs. $78.9 billion in 1929), and Net private investment was minus a total $3.1 billion from 1930-40.
    Heck, my father, a simple factory worker, knew the "new deal" was a bunch of bunk. He lived through the depression and saw first hand what was going on.

    We face another period like that now. Are you saying you want more of what we have dragging the nation down? What we have is all a result of that change in government and the Federal government taking on power previously reserved to the states. 1913 set the stage for the 20's and 30's but, the actors that appeared on that stage in the 20's and 30's is what caused so much damage. The Supreme Court's reversal of previous rulings that then allowed FDR's socialism is what started the decline of this nation.

    I think you live in Canada, don't you David. You should be glad. As much trouble as your nation has, it isn't going to be nearly as bad for Canadians as Americans when the dollar collapses. Canada will still have the vast amounts of resources like oil, copper, iron, etc. to sell to the world. You may see a big drop in manufacturing employment as Americans can no longer buy much but, Asia will continue to buy raw materials even if not quite as much.

    One reason that Canadians won't have as much trouble is that as a nation, the people are more willing to pay for the social programs they have. You can have a fairly socialist nation and do well if the people pay the taxes willingly. If they try to pass them on to business to the degree business can't compete, then they will lose economic power and ability to fund those programs.

    American consumers aren't willing to buy the goods that have the taxes in them that were supposed to pay for the social programs we have. They prefer to buy foreign goods with lower prices. We also don't have a sound basis for our currency and with a rapidly rising debt, that spells disaster.
    Posted by JanPBurr  on  04/04  at  10:28 AM
  19. How do you know the New Deal made the depression last longer? That is too simple and answer. At the time there were so many things wrong with the economic world that it took something like a world war to end it.

    It is just speculation that the New Deal prolonged the depressions. It's human nature and unsophistication that prolonged it.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/04  at  11:17 AM
  20. How do I know? I read history, I read people's articles who are experts, I look at how long it lasted, sure, but I also look at what ended it, what happened during it, what policies worked and made things worse and which made them better.

    That is what has amazed me so much the last 50 years as manufacturing dropped from 30.4% to 14% (currently 15%). They kept doing the very things that were causing us to lose manufacturing. Unions and politicians, year after year tried to get consumers to pay for the wages, pensions, healthcare, taxes, regulation, etc. and consumers each year bought less and less U.S. goods and more and more foreign as our prices rose.

    It was that same mentality they tried during the depression to "regulate" the economy instead of do what would have really worked (create incentives). Now that even some Keynesians see the error of their thinking.
    . Austrian economists have known this for decades, but now at least a few of the socialist Keynesians and socialists neoclassical model builders are finally catching on.
    That is the beauty of history. We can look at other nations and our own history to see what works and doesn't work. We compare what we do to what other nations have done. If all of them experience the same results, good or bad, after a policy is enacted, we "know" what happened. If it is just one nation, no, we don't "know." Fortunately we have several nations that have tried the same policies we have used for the last 70 years as well as our own failed system to examine.

    This isn't rocket science. It is analysis of events and policies, cause and effect, if you will, and then recording that information for review. At least our government has records on GDP, manufacturing to GDP, exports, imports, CPI, policies, tax rates, etc. we can examine and chart along with whatever we are tracking.

    Look at the charts of CPI, incarceration, debt, mandatory spending, and you see the same pattern in all of them. You then take those charts and compare them to the policies our government enacted and see what made things worse, or better. One thing that stands out is what happened after we went off the gold standard and then later the other leg of it, the Bretton Woods policy and started using the "oil Standard (sale in dollars)"

    Going off the gold standard helped fund socialism because we could "print" what we needed since the voters didn't want to pay for the programs. Buy borrowing at one value and paying back at a lower value (inflation) it seemed like the ideal way to finance socialism. That is why "inflation" under control is "sought" and "deflation" is fought. Under deflation, you borrow at a one rate but have to pay it back with a dollar that is worth more which is like increasing the rate.

    All the information is out there for anyone to read and use. However, most voters listen to party leaders in the two parties and don't get the real picture.

    Remember David, it isn't having social programs that is the problem. All nations have them, Ireland has them, China has them, etc. Yet, they are rapidly growing because they aren't causing business to have such a tax burden they become uncompetitive or like France such a high personal rate they drive the wealthy tax payers and investors out of their nation.
    Posted by JanPBurr  on  04/04  at  04:11 PM
  21. Wanting and doing things to help end the Depression weren't the problem but the choices they made to use bad socialist policies was. In defense, socialism was a popular theory and had many advocates. Many nations were using socialism and thought they were doing well and many were, in the short run. It isn't the short run but, the long run, that socialism fails due to human nature. Any system that redistributes wealth to fund their government spending and social programs will run into trouble when they have to compete with a nation that doesn't do that.

    Therefore, as long as all industrialized free nations were high wage, high tax nations, we had no trouble competing nor did they. It is only when low wage, or at least low tax nations, like Ireland enter the picture and give business and investors more choices that socialism gets into deep trouble. Also, take a Scandinavian oil rich nation. As long as they can fund their programs through natural resource sales to the world and not penalize business or wealthy investors too much, they will do fine.

    Countries that have something the world wants and isn't in high supply from other sources, have a tremendous advantage. Take Canada's huge resource reserves and how much they are used to help fund government spending. The U.S. has some resources but many of them have been blocked from being used and that puts the tax burden more on individuals and since they didn't want it, they tried to put it on business but our business has to compete with a new world market where taxes are lower on business, healthcare costs, pension costs, and compliance costs also hurt us more than many other nations. Higher defense spending is a factor too.

    Thus, going off the Gold Standard hurt a lot because we had agreed to support middle-east nations that would sell oil in dollars to keep the dollar from collapsing. That is another thing Canada, for example, doesn't have to deal with. Their currency is still in better condition than the U.S. dollar because you have your own oil, iron, copper, etc. to help give it value.

    The best way to learn more about the U.S. economy is to listen to foreign news reports on our economy. Because they don't have the same "political" agenda, they have less reason to place bias in their reports on our economy. They may color their own nation's economy but, since they don't get "points" for distorting ours up or down, they aren't as likely. Also, getting the same basic report from China news, Australian News, Japanese News, Singapore news, lends more credibility to the news as well.

    Currently we have the GOP painting "rosy" and the DNC painting dismal. Both are right but, some of it is short run and some is long run and some is just plain wrong.

    One last thing on the New Deal. The biggest problem was that they used the federal government and federal deficit spending to try and end the Depression. The best level would have been state and local governments dealing with each states unique situations, resources, labor force, education levels, etc. to create different solutions for each community. A broad based, one-size-fits-all, federal program not only doesn't usually work but adds extra cost to taxpayers because of it.
    Posted by JanPBurr  on  04/04  at  04:14 PM
  22. I am sorry but history is not enough to explain why the depression lasted so long. One think that should be understood is that economic life back then was not as sophisticated. Today we understand much more about how to prevent economic down turns. We are more sophisticated today and understand more. Only with hindsight can we now make judgments about what really caused the depression and what prolonged it.

    Talk about attitude. The business attitude during the depression was immature in comparison with today. We have learned from that experience, learned about free trade, currency exchange, monatary supply and so on.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/04  at  04:33 PM
  23. Does history tell you that if the allies had not forced Germany to pay reparations after WWI, as Keynes counseled, that maybe the second world war could have been avoided.

    If Germany had been encouraged to adopt democracy after WWI perhaps WWII would not have happened. Also, if Germany had been forced to accept unconditional surrender after WWI as it did after WWII perhaps there may not have been a WWII.

    It took time for the world to understand that democracies don't go to war with each other. The world also learned from depressions on how to avoid them. That's why it very arguable that governments knew how to prevent the Great Depression but didn't, because such events are understood after the fact.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/04  at  05:41 PM
  24. Today we understand much more about how to prevent economic down turns. We are more sophisticated today and understand more. Only with hindsight can we now make judgments about what really caused the depression and what prolonged it.
    . We have learned from that experience, learned about free trade, currency exchange, monatary supply and so on.
    Then why is the Chairman of the Federal Reserve warning Congress they can't stop this storm that is coming. Why do experts state the Federal Reserve is no longer able to control interests rates anymore since the level of debt is driving interest rates more than the set rate. You do realize that the market controlled by foreign lenders is now more powerful than the Federal Reserve which is why the increases the Fed made didn't have an impact on lending for the housing boom they hoped. They found that because foreign lenders where willing to borrow, for example, at less than 1% from Japanese Central Banks and loan to us for 5% or 6%, that they didn't have the power they used to have.

    Why is the price of gold soaring in "dollars," but not in euro's at the same level even though the price is bid world wide? Why are even the people who said those were good policies now changing their mind and yet, our government is still using those policies?

    Why is the Chairman of the Federal Reserve warning in sworn testimony,
    ccording to the CBO projection that I have been discussing, interest payments on the government's debt will reach 4-1/2 percent of GDP in 2030, nearly three times their current size relative to national output. Under this scenario, the ratio of federal debt held by the public to GDP...Ultimately, this expansion of debt would spark a fiscal crisis, which could be addressed only by very sharp spending cuts or tax increases, or both.6

    The CBO projections, by design, ignore the adverse effects that such high deficits would likely have on economic growth. But if government debt and deficits were actually to grow at the pace envisioned by the CBO's scenario, the effects on the U.S. economy would be severe. High rates of government borrowing would drain funds away from private capital formation and thus slow the growth of real incomes and living standards over time. Some fraction of the additional debt would likely be financed abroad, which would lessen the negative influence on domestic investment; however, the necessity of paying interest on the foreign-held debt would leave a smaller portion of our nation's future output available for domestic consumption. Moreover, uncertainty about the ultimate resolution of the fiscal imbalances would reduce the confidence of consumers, businesses, and investors in the U.S. economy, with adverse implications for investment and growth.

    This is the guy in charge of the money in actual testimony to Congress. Do you think that as Chairman of the Federal Reserve he is just being a "doom and gloomer" or actually knows how bad off our currency is.

    Do you realize how many investment analysts are warning their U.S. investors to limit their investments in dollar based assets? Do you know that the Federal Reserve and Congress has no way of controlling the 2 or 3 trillion in foreign hands that selling could cause a collapse of the dollar?
    Posted by JanPBurr  on  04/04  at  05:43 PM
  25. cont:
    Do you realize that the 16% tax increase for Social Security and the 121% increase in tax for Medicare our own government studies indicate are needed could send us into a deep and long recession? Do you realize there is no way out of this since the "spending" doing most of the damage is mandatory and can't be reduced without cutting benefits? Do you think the voters are going to elect politicians in 2008 that call for cutting their benefits they have paid in decades to get?

    Where do you think government is going to get the money for those programs if foreign governments and foreign investors won't lend them the money? They have not learned from that experience. They have "excused" it as an aberration and have kept the theory intact and as you saw, only now are even any of those theorists beginning to change their views and even then, there aren't enough to educate voters in time to get them to vote for candidates who will stop using those policies.

    As one Presidential candidates states, it may take a few years but, the collapse is coming. He sees it, the Fed sees it, foreign analysts see it, and history shows that it is coming. We have run on the same theories for 70 years. They didn't work then and they won't work now. They still think they can "borrow their way out of this." You couldn't do it as a person with your own money and you can't do it as a government.

    This is like the person borrowing more money to pay off all his credit cards and then running them up again to the max and looking for more "home equity" money to borrow to pay them off again. However, eventually, the banks refuse to loan him more money and his "scheme" collapses. That is the same case with a government that has to depend on foreign lenders to finance its deficit spending. You can have an economic boom all the way up to the day the "bank stops lending."

    We are by no means, the first nation to experience what we are going to experience without major reform. Many nations have had hyper-inflation and collapse. Zimbabwe, for example is currently going through that.

    How much has an ounce of gold risen in Zimbabwe, the country with the highest inflation in the world, and which is now running at almost 2,000% a year?
    snip----------------------- writes, that in local currency,
    Posted by JanPBurr  on  04/04  at  05:46 PM
  26. David, you said
    If Germany had been encouraged to adopt democracy after WWI perhaps WWII would not have happened. Also, if Germany had been forced to accept unconditional surrender after WWI as it did after WWII perhaps there may not have been a WWII.

    Germany was a democracy. Hitler was elected. The government then supported the policies he proposed and willingly (?) surrendered the power to him that he used to then create a dictatorship.

    That can happen here too if we let Congress give too much power to a President in either party. Also, a democracy is not a good form of government and is why we chose to be a "Republic" of sovereign states and used a "representative democracy" where we did use democratic rule but with the majority as the driving force for change to the Constitution which the elected representatives were then to follow. It was when we left that principle and started letting the federal government and Supreme Court change the interpretation of the Constitution and its Amendments we began to slide down the slippery slope we have been on for 70 or more years. I actually believe we have been on that slope since 1913 but FDR definitely caused the fastest and most damaging changes.

    Regarding preventing World War II, there are several good books on what could have been done to prevent that war. However, the fact they did go to war and cause the damage in World War I can't be avoided. It is also like the policies we had that caused Japan's hatred and feeling of restriction that led to our conflict with them. Yes, we learn much but, as you can see, we took similar policies and are now embroiled in the Middle-east, again in a large part to the economic policies that began with FDR leaving the gold standard and forcing a later President in 1971 to deal with a collapsing dollar and the "oil for dollars" deal where we agreed to protect OPEC nations. So, in reality we didn't learn even after WW I and WW II what we needed to stop doing.

    Remember that George Washington in his Farewell address in 1796 gave us the very advice we ignored almost non-stop but especially in the Middle-east. Whenever man thinks he has become smart enough to control the economy vs. letting the market control the economy, he is fooling himself.
    Posted by JanPBurr  on  04/04  at  07:08 PM
  27. This discussion has taken off and I wish I had more time to devote to it. As my time must be parsed, let me just start where I left and catch up as I can.


    You say "... what is the right attitude?" and think it is best determined collectively. Yet, we have countless examples of consensus-opinion, mob-rule, majority-votes, and collective-wisdom that, invariably, turn out neither wise nor having more than a modicum of consensus. Liberals, for whom you unabashedly advocate, prefer the consensus of nine judges in black robes to the consensus of 300-million citizens or even to the consensus of 435 Congressmen and 100 Senators. How does this square with talk of "people power" and the Libertarianism you profess to cherish? If you do not or cannot entrust this love of liberty to free, non-governing individuals, but rather depend on government to guide and thwart us, then it is not libertarianism you cherish but its
    Posted by .(JavaScript must be enabled to view this email address)  on  04/04  at  09:10 PM
  28. (cont.)

    Posted by .(JavaScript must be enabled to view this email address)  on  04/04  at  09:12 PM
  29. I wish I could respond to everything that has been said here. My head is spinning.

    Jan said that Germany was a democracy prior to Hitler, that in fact it elected him. Well, Germany was just a partial democracy, if that. It toyed with democracy. However, it did not have the democratic institutions of divisive powers. If it did, Hitler would not have been able to rule as he did, as a dictator.

    If one equates democracy with just elections occurring then Jan is right and Germany was a democracy that elected Hitler. But democracy is may things in addition to having elections. For one, and most important, it is the rule of law, not the rule of men.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/04  at  11:05 PM
  30. There seems to be a disdain here for the collective. However, democracy, elections and society in general can not occur with the collective.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/04  at  11:35 PM
  31. Depends on the kind of democracy. A pure democracy is simply whatever the majority decide. In a representative democracy and a Republic you have "representative democracy" where the leaders decide what will be done but are subject to being voted out if they don't live up to expectations of the voters. To limit what those elected officials and appointed people can do (remember we appointed Senators for over 100 years instead of electing them, the majority ratified a Constitution that was supposed to restrict those representatives.

    Our problem has been, however, similar to democracies in one way though. The more government has "given" voters, the more voters have demanded. However, voters haven't been willing to pay for what they want and that has led to the mess we are in. They have requested the programs and government spending be funded by business and the wealthy which, of course, drives the very people they want to pay the bill, out of the country or to put their wealth into protective trusts, funds, tax free securities, etc.

    The attempt to redistribute wealth is the main problem we face because it drives up debt while driving out business and jobs and investment money.

    We could have a "Hitler" here and that is exactly what some are saying will happen if we keep eroding the Constitution with demands for more executive power. Also, one thought comes to mind about a "rule of law." Our nation isn't much of a nation of laws anymore. It doesn't even secure it borders. Its politicians in both parties are involved in bribes, corruption, abuse of power, etc. The citizens cheat on their taxes, speed, slander, and commit immorality.

    I have to wonder what "rule of law" is left that isn't being violated? The Courts have violated the intent of the founders, Congress has taken on social and moral issues that were reserved for the States, and many states are now seeing they are going to not be able to keep pension promises without massive tax increases.

    Virtually everything a nation can do wrong, we are doing wrong. Just like the Roman empire we are falling apart from within more than from without.
    Posted by JanPBurr  on  04/05  at  12:12 AM
  32. Jan: " Also, one thought comes to mind about a
    Posted by .(JavaScript must be enabled to view this email address)  on  04/05  at  04:42 PM
  33. David said,
    I mean, it is saver to walk the streets of New York than it was thirty years ago.

    No, actually it isn't. Have you checked the incarceration rates for New York. It is like a ski slope up for New York Incarceration just like it is for the nation.

    In 1942 it was 242,000. In the 1960-70 period, it was 332,000 to 338,000. By 1980 it jumped to 474,000 and by 1990 1,148,000 and by 2000 over 2 million. Think about that. While our population went up 33% from the 50's to 2004, our crime problem increased 800%.

    You said
    Why economics can not sustain an equilibrium is because economic circumstance are always changing and so are its participants. I mean there are business people who have never experiences a depression,
    What? We just had a recession and we have one every few years. We have the same economic condition we have had since the end of the 2nd world war. We have period wars and war spending, recessions, periods of inflation, booms, busts, tax increases, tax cuts, and through it all, the same pattern of rising debt, deficit spending 22 tax increases on Social Security, 11 times it wasn't able to meet outflows, rising imports, declining exports and mandatory entitlement spending increases.

    Where are these differences you are talking about. We have the same business and government policies we had 50 years ago where business has to compete nationally and internationally and the very things we are having problems with were foretold to government in the 50's and even before as soon as FDR started us on the road to socialism. There is nothing new. Even the Bush tax cuts aren't new since Reagan and others, including Kennedy used tax cuts to stimulate the economy and raise tax revenues and not once, were those increased revenues used to reduce debt, only to increase spending.

    You also said,
    The world is more economically active and sophisticated than it was 50 years ago. There are more variables and sectors involved. Where once if there were economic difficulties all areas of the economy would suffer simultaneously. Today, with the complexity of the overall economy things reroute themselves if they encounter difficulty in one area. The economy is more resilient that it used to be.

    Then why is the Chairman of the Federal Reserve warning Congress they have only a short time before the "crisis." Why is he warning we are facing economic collapse if we don't reform? Why is he and hundreds of others warning that we can't fund the "boomer's" retirement? Why is the social Security Admin saying we need to increase taxes for S.S. 16% and Medicare 121% to keep them funded or cut benefits.

    The economy isn't more resilient. The only thing that has kept it going is government spending with deficit spending using foreign money loaned to us. Every cut in gov. spending to try and balance the budget has caused a recession due to 1 in 4 jobs tied to government spending either directly or indirectly through gov. contracts, grants, subsidies, etc. Think of how many thousands are employed by the defense industry. Any cut in defense spending cause the unemployment rate to rise dramatically. One government employee exists for every 6 private sector employee. We have 124 million private sector employees supporting 22 million government workers and all the government spending and other costs of government like interest on debt.

    The economy hasn't been resilient for decades. It has been propped up with deficit spending each time it starts to falter and now the debt is so high we are facing a decade or longer recession and collapse of the currency.

    Tell me how we are going to avoid a currency collapse if we don't stop raising the debt? Our lenders are already switching to lending to other nations and buying gold and silver to keep from buying bonds. You don't believe the Federal Reserve. You don't believe the economic experts warning the government. You don't believe even some of the people running for President who are warning of the disaster we are headed for. You don't believe human nature, history, or statistics. You only believe "something good will happen to save us." What is that "good thing." Somebody must know what it is if they are going to use it. What is it?

    Where are your sources for your opinion. List them so we can read them and verify them and the statistics they use to reach your conclusion. When our own government admits it can't fund the "boomer's" retirement and you deny that, you have to have some source that gives you this confidence. List it. I love good news.
    Posted by JanPBurr  on  04/05  at  06:00 PM
  34. I am sorry Jan, you are to negative for me. This is the end for me. And another thing, you rely to much on statistics for me, statistics that can say a number of things, instead of grasping a sense of things.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/05  at  10:02 PM
  35. David, having lived through all this since the 40's, I have a very good grasp of what is going on. I have been watching it year after year, get worse. It is people like you that won't listen to people like the Federal Chairman who don't have a grasp of what is happening. You can't rely on U.S. news. Listen to what other nations are reporting too. Read the government reports. Study history of other nations that use our policies.
    Posted by JanPBurr  on  04/05  at  10:10 PM
  36. Lack of CRITERIA that is well-founded, accurate, and available, is rejected. Perception is no better than criteria held - and used. Self-justification is the greatest need of the natural man. I remember - I'm sure you do too.

    Jan, you mean well but volumes are available to verify our point, but these collectivist socialistic humanists are without criteria greater than themselves. Thus, they cannot see it.

    They are self-prescribed victims of their own chosen ego-god, self. So be it! In the meantime, consider today's letter to my local newspaper:

    Santa Maria TIMES 4/6/07

    April AD 2007
    The scientific world of physics is undergoing a revolutionary
    change: a paradigm shift of universe proportions and im-

    The Shroud has produced three-dimensional images of
    a body moving in space. Please seek your own trustworthy
    sources of verification.

    Sir Isaac Newton would not be surprised. Joel 3:14 kjv

    Have a truly Happy Resurrection Day!

    semper fidelis
    Jim Baxter
    Posted by Choicemaker  on  04/06  at  04:33 PM
  37. The U.S. is not the only place facing huge problems due to the shift in economic power. Consider this that came out today.

    As we have said for many months, the U.S. dollar is under attack. Yesterday, Bloomberg reported that the U.S. dollar reached a two-year low against the euro.

    As our readers will know, we believe the euro to be highly suspect in the long term. Indeed we agree with Jim Rogers, who said in an interview with our sister publication FIR, just over a year ago that,
    Posted by JanPBurr  on  04/06  at  04:58 PM
  38. David,

    This is going to seem like I
    Posted by .(JavaScript must be enabled to view this email address)  on  04/06  at  07:46 PM
  39. (cont.)

    Posted by .(JavaScript must be enabled to view this email address)  on  04/06  at  07:54 PM
  40. (cont.)

    Posted by .(JavaScript must be enabled to view this email address)  on  04/06  at  08:04 PM
  41. (cont.)

    As for Britain, you are inverting cause and effect; easily shown by tracking policy as against consequence. British culture and economy collapsed as a direct result of the same socialism that infected the New Deal, not because of any class
    Posted by .(JavaScript must be enabled to view this email address)  on  04/06  at  08:12 PM
  42. (cont.)

    The wealthy and elites have recourse to private healthcare and, theoretically, so does everyone else. However, should you oblige yourself of a private doctor (even to so much as an acupuncturist or chiropractor), you become ineligible for the public kind. For most Brits, that means they cannot risk getting a second opinion, speed up a diagnosis, or get themselves back into shape so they can return to work. In some cases, Brits have literally died waiting for a system that refuses to accommodate them. Lifesaving tests, like MRI
    Posted by .(JavaScript must be enabled to view this email address)  on  04/06  at  08:14 PM
  43. Comment on "New Deal" origin: one source I came across asserts the term comes from card-playing and that the convention speaker may have meant no more than a desire for a reshuffling and dealing out of the political deck to put someone else in power. This is no different from every election in which some dissatisfation with the reigning party is expressed by the party out of power. However, as the source gives this as no more than a conjecture, I won't either. Unfortunately, I could not find the source again and cannot give you a link to it.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/06  at  08:42 PM
  44. Posted by .(JavaScript must be enabled to view this email address)  on  04/07  at  10:15 AM
  45. David, you say:

    Posted by .(JavaScript must be enabled to view this email address)  on  04/07  at  12:46 PM
  46. (cont.)

    By the way, Germany did not elect Hitler to anything. He was reluctantly appointed by Hindenburg during a power struggle to the office of Chancellor. He elected himself to the position of supreme leader (Fuhrer) by burning down the Reichstag, suspending habeus corpus, and forcing through legislation that effectively made him the legislature. He then used the act to dissolve the Reichstag, suppress all opposing parties, isolate his rivals in government, and held new elections in abeyance when Hindenburg died. Regardless of whether Hitler was elected, his party (National Socialist German Worker
    Posted by .(JavaScript must be enabled to view this email address)  on  04/07  at  12:53 PM
  47. David,

    You are correct and I apologize for misquoting you (though you have used it).

    Also, and just so you don't think I am misquoting you again, it was Jan who said "Hitler was elected" (Tut-tut, Jan; you really should know better!).
    Posted by .(JavaScript must be enabled to view this email address)  on  04/07  at  01:10 PM
  48. Same to you Bob grin

    I think you are fast and loose about your idea that Germany had as much 'rule-of-law' as we have today. If they did, it certainly wasn't practiced because what happened would not have happened. It certainly wasn't put it into practice, that so-called rule of law. PERHAPS IT WAS A RULE OF LAW BUT IT WASN'T DEMOCRATIC.

    What is the point of rule-of-law if it is only in theory and not practiced. In pre-war Germany the courts didn't up hold the rule of law. The courts were politically interfered with. The web and workings of democracy were not sufficient enough in Germany to protect the system from people like Hitler.

    On the other hand, the web of democracy is sufficient enough in America to protect the people from an administration like the present one who wants to strip individuals of their rights.

    One more thing. Do you think you can condense your writing. Sorry, I don't have all the time in the world to read it.
    Posted by .(JavaScript must be enabled to view this email address)  on  04/07  at  01:22 PM
  49. Thank you Bob! Apology accepted!
    Posted by .(JavaScript must be enabled to view this email address)  on  04/07  at  01:27 PM
  50. Agreed Bob. He was appointed, not elected. As you point out, the elected people are who dropped the ball and I am afraid the elected people here are dropping the ball as well, in many ways. Being elected doesn't insure we will have the best government because the voters have to know who they are electing and the ramifications of what they stand for and who those elected people will appoint to positions. Look at some of the appointments the parties make for key committees. Certainly, both parties could do a better job on many appointments. Often it is a reward for "party loyalty" instead of loyalty to the people.

    The question is, what will America be like if we see the economic collapse that is expected and we are being warned about? Will America blame other nations or a group of people like Germany did rather than blame their own policies and government? Will American voters go along with the government if it does, as Germans did with their government.

    What if we have government "blame" immigrants for our problems after a collapse. Suppose some candidate runs on a platform of "the immigrants caused this." How easy would it be to blame some group of people other than those in government for the problems Americans would be facing. Look what we did to the Japanese citizens during WW II. Could we go even further during another depression?

    Bob, you have a lot of knowledge in this area. What do you think could happen if we go beyond a recession and into a depression for years?
    Posted by JanPBurr  on  04/07  at  01:30 PM
  51. Jan,

    Posted by .(JavaScript must be enabled to view this email address)  on  04/07  at  05:06 PM
  52. Fast and loose? I
    Posted by .(JavaScript must be enabled to view this email address)  on  04/07  at  06:11 PM
  53. If you
    Posted by JanPBurr  on  04/07  at  06:27 PM
  54. Cont:

    Regarding the jobs.

    ---------------------------2006-----------March--------2006 to 2007 chg
    Nonfarm employment------136,951,000-----137,622,000----671,000.00
    Goods-producing (1)-------- 22,539,000------22,530,000-----(9,000.00)
    Construction -------------------7,691,000 -------7,713,000 -----22,000.00
    Manufacturing ----------------14,147,000------14,103,000---- (44,000.00)
    Service-providing (1) -------114,412,000 ----115,092,000 ----680,000.00
    Retail trade (2)----------------15,316,000-------15,411,000------95,000.00
    Professional and bus. Serv.---17,727,000------17,829,000 ----102,000.00
    Education and health servi.---18,019,000 ------18,190,000 -----171,000.00
    Leisure and hospitality--------13,318,000-------13,449,000------131,000.00
    Government -------------------22,107,000 ------22,196,000------89,000.00
    Industry Payroll Employment (Establishment Survey Data)

    Notice the 44,000 jobs lost in manufacturing and this trend has been going on and on.

    Then note the government job growth. That trend also has been going on and on. The private sector now has to not only fund more spending by government but more salaries, benefits and cost of labor by government. That trend can't be sustained and the nation survive. Far below 50%, funding government workers by private sector workers becomes impossible. It would be impossible now without deficit spending.

    Look at the interest on debt from the 2007 budget( $440 billion) to the 2008 budget (approx $470 billion). That 30 billion may not seem like a lot but it has to be borne mostly by private sector workers who pay the taxes salaries and thus taxes on salaries for government workers come from. Government workers pay no taxes. They only pay some of the tax money we paid in back to the system but it all came from us in our taxes and the prices we paid with taxes included in them.

    There are only about 124 million private sector workers employed at any given time and that means that each worker now has an extra, $241 dollars to pay. Since the taxes will be a lot on business, and passed on, that means that workers living from paycheck to paycheck will be hit very hard even if they don't pay income tax. That 35% (or whatever it currently is) in hidden tax and compliance costs in the price they pay may soon see that at 40%. Then add the falling dollar and higher prices for imports and I see things now I didn't see even ten years ago.

    Virtually every chart shows that even in the 70's and 80's, the rapid rise wasn't so parabolic. As an engineer I am sure you can appreciate the difference between a chart going up at an even pace and one going up parabolic. Here are a couple of charts

    On page 4 is the chart of CPI with a dotted line that shows what it really is without "substitution" being used to keep inflation under reported.

    Here we see federal spending to median imcome. Note how fast it is rising now.

    This isn't parabolic but is still disturbing when you look at the "green" interest spending.

    That isn't just what I am seeing that is different but what I am hearing analysts around the world say. Before we were the "power" and if we failed, the world was brought down with us and it behooved them to support our currency and economy. That is rapidly fading. It may be years, but without change it is coming.

    I am just about fulling invested in the market but also watch it. I have some gold for insurance, yes, but also other stocks though most are index ETF's that track a sector or nation that isn't tied to the dollar. Thus, as the dollar declines, as it has been doing, my stock prices rise even if they don't rise in the "home currency." Still, if I see a collapse, I would move more to gold at that time. I have been following analysts for years and so far they have been giving me a good return on my money and so far, calling the market fairly accurately, including corrections even if they can't say exactly when they will occur. However, so far, I have got into "cash" with a good portion each time before a correction and back in after it. This could be a good year for stocks if we keep things going the way they are going. I watch all the charts for "topping" signals in the markets and for my stocks.

    One other thing that indicates things may be different or similar to the "gold run up of a few decades ago, is that gold is continuing to go up even though central banks have been selling to keep it down.
    Posted by JanPBurr  on  04/07  at  06:29 PM
  55. Jan,

    I didn't say the ride wouldn't be bumpy. I do say that the worst thing is panic followed by a total loss of confidence. You have to fight that, and behave as though these market predictors don't exist or you end up making them come true.

    All the things you point to are true and we have to do all that is reasonable to restore order to them. Yet, for all of these there are other reasons for correcting them that overshadow the economics, and it is not the economic that should dictate our actions. We should do first what is right, and have confidence the economic will tend itself.

    1. Illegal immigration needs to be stopped because it is a violation of our sovereignty and because many illegal immigrants are coming here with the notion they are within their rights to rest sovereignty from us. Secondly, a large percentage of the current wave of illegals are violent outlaws, who disregard all laws wherever they may be, and who threaten our people. Even those illegals who are not making trouble are lawless and bring with them a culture of lawlessness, as evinced by their total disregard for our borders, and whose sentiments are with movements like Reconquista, Atzlan, and the legislative forcing of open-borders. Our country is our home, and like any home is due the same respect and protection against those who break-and-enter as any other. As breaking-and-entry is a long established violation recognized in every country as necessary to the stability of society, it is not something that can be negotiated or bartered for votes. Likewise, visitors who come into your home only to despoil it while flaunting their immunity are not someone you
    Posted by .(JavaScript must be enabled to view this email address)  on  04/07  at  08:37 PM
  56. (cont.)

    Posted by .(JavaScript must be enabled to view this email address)  on  04/07  at  08:46 PM
  57. I think I don't have the faith in the voters you do. I also don't see how to keep the currency from collapsing. It was based only on demand and that demand was created by the sale of oil in dollars. That is rapidly disappearing. Remember, Russia is now a major energy producer and several European nations are pressuring Russia to sell in euros as well as the nations that have already switched sales to the Euro. We saw the damage Saddam did with his short 3 and 1/2 year sale and how it showed how vulnerable we are.

    This is why Bernanke and Paulson were both over in Asia trying to keep support for the dollar high. OPEC is the 4th largest holder of debt and they are getting out of the dollar more and more as is Malaysia and other nations. We have never faced this before because they didn't have any other choices. Now they do.

    Also, never before was the world market strong enough to survive without us. Now they are saying a recssion here won't even cause a recession in most nations because they have their own middle-class and upper class consumers that out number us by 100's of millions.

    We have now the high tech industries leaving which we didn't before because the other nations are stressing engineering and science as majors. China and India now graduate 700,000 engineer to our about 60,000 and we need 120,000 even now with the business that has already left.

    We have no way to reverse entitlement without voter support and while you and I may be prepared to work until we die, the majority of Americans won't vote for anything that makes that a necessity. How do you get any reform through Congress. You have to have 60 Senators to keep from having reform blocked by the filibuster and we just elected even more Democrats who want even more social spending, not less and want to drive even more business and investment out of the U.S.

    Never before have we seen the amount of money that is flowing out of the U.S. for foreign investment surpass the money flowing in for investment but now that is happening too.

    You are right that this could be a self-fulfilling prophecy. I have been saying that for over a year now. That is exactly what the "manipulators" are trying to do. They are heavily invested in non-U.S. things and the problem is that more and more American mutual fund advisers are joining their siren call. Millions of mutual fund advisers aren't even recommending U.S. funds anymore unless they are heavy in "international companies" or are strong service sector companies that don't have to compete internationally.

    As the Federal Reserve Chairman states, even doubling the immigration quotas won't be enough to stem the storm that is coming. We have know for 10 years or more this is coming and still not one thing has been done that is positive. Instead we made Medicare even worse. I wasn't referring much to illegal immigration because we are going to add 67 to 100 million legal immigrants and make the ones already here legal.

    Yes, we need to stop the flow of illegals but just last week the Congress stated they were backing off the "fence" and would only build a fraction of what had been authorized. While we don't know when the collapse will come, we know it will be assured if we don't reform entitlements soon. The increased spending isn't from pork. It isn't from most government departments. It is from just four departments and one of them Defense, I don't want to see cut much even if we are forced out of Iraq by this Congress eventually or the next President, Hillary or Obama or whoever.
    Posted by JanPBurr  on  04/07  at  11:19 PM
  58. We will probably lose more seats to Democrats in O8 even if we get a GOP President. The Conservatives are sitting out or going to vote third party if their is a conservative running and so, I doubt even a GOP President is that much of a chance unless the economy tanks and the blame falls on the DNC before the 08 elections take place. If we are still in a boom, the DNC will win more seats.

    Again, I have said that we can turn this around but, only if the voters support the reforms and I don't see where the 50% that don't pay income tax are going to seek the reform. They don't mind the 7.5% payroll tax that much and don't think about the 35% hidden in prices so they vote for people who will give them even more government spending.

    Regarding gov. employees, if it was just in proportion to the growth in population that would be normal but this is occurring at the same time we are losing the better paying jobs that have incomes that pay taxes. That is why, for decades, I have ignored all the doomsday reports. They were based on the fact that a fiat currency is only based on faith but as I stated, there really was no other choice and the faith was there. It was only when both of those things started to change that I decided a new trend had started.

    Think about the dollar. In just 6 years it has dropped 60% and is still fading. It is expected to drop 20% in value in the next year or two but that is a big if that depends on several economic factors and I don't know if it will be that soon or not, but there is no reason for foreign nations to "demand the dollar" when there are better deals for them now and the market share of the U.S. has for exports from China, India, Malaysia, Singapore, etc is becoming smaller and smaller.

    There is not one economist that denies there is a major economic power shift going on. They only disagree on how much time we have left before we can't influence the world market enough to make that market fear the loss of our consumers.

    Again, the Federal Reserve Chairman has repeated warned Congress they can't wait any longer. When one Congressman asked how much time they had, he reportedly told them they should have started 10 years ago.

    As he stated in his testimony:
    Under this scenario, the ratio of federal debt held by the public to GDP would climb from 37 percent currently to roughly 100 percent in 2030 and would continue to grow exponentially after that.
    The CBO projections, by design, ignore the adverse effects that such high deficits would likely have on economic growth. But if government debt and deficits were actually to grow at the pace envisioned by the CBO's scenario, the effects on the U.S. economy would be severe. High rates of government borrowing would drain funds away from private capital formation and thus slow the growth of real incomes and living standards over time. Some fraction of the additional debt would likely be financed abroad, which would lessen the negative influence on domestic investment; however, the necessity of paying interest on the foreign-held debt would leave a smaller portion of our nation's future output available for domestic consumption. Moreover, uncertainty about the ultimate resolution of the fiscal imbalances would reduce the confidence of consumers, businesses, and investors in the U.S. economy, with adverse implications for investment and growth.
    Posted by JanPBurr  on  04/07  at  11:27 PM
  59. To some extent, strong economic growth can help to mitigate budgetary pressures, and all else being equal, fiscal policies that are supportive of growth would be beneficial. Unfortunately, economic growth alone is unlikely to solve the nation's impending fiscal problems. Economic growth leads to higher wages and profits and thus increases tax receipts, but higher wages also imply increased Social Security benefits, as those benefits are tied to wages. Higher incomes also tend to increase the demand for medical services so that, indirectly, higher incomes may also increase federal health expenditures. Increased rates of immigration could raise growth by raising the growth rate of the labor force. However, economists who have looked at the issue have found that even a doubling in the rate of immigration to the United States, from about 1 million to 2 million immigrants per year, would not significantly reduce the federal government's fiscal imbalance.7

    He makes the coming storm very clear. He only provides hope in that we currently have a strong economy and some time to do something. But, as we are seeing, Congress is actually going the other way. If they continue this into the next recession it will be virtually impossible to do since the spending will rapidly increase for the rising unemployment, early retirements that might not happen at 62 with the boomers as much as they think it will. If we are in a recession, companies are going to ask all 62 year olds and older, to take early retirement or face layoffs if they are in a "downturn" sector. Many people who want to work won't have a choice. They will be either retired or laid off.

    Is Greenspan right? Will the recession possibly occur later this year? Most think the fed will keep it from happening at least until after 08. I too think the foreign analysts that say the fed will prop things up as long as possible is correct. Many say stocks will be even higher than now by the end of the year.

    Also, nations aren't going to "panic sell" if nobody else does. It would hurt them too much since they have 100's of billions of dollars that would become less valuable. They will do all they can to prolong our "life" while they are diversifying out of the dollar as they are currently doing more and more of. It will only be when they get down to a "safe" level, they won't care anymore what happens to the dollar, if the consumer base is large enough by then.

    We can't stop China from becoming a superpower. They are rapidly catching up and may even be passing us in military technology (quieter nuclear missle subs than even ours). Outspending us too if you factor their higher buying power in. Naturally, they have a much larger army than we do but, until now, they weren't better equipped. That too may be changing.
    Posted by JanPBurr  on  04/07  at  11:32 PM
  60. Cont:

    As you point out, it is what humans do in the market and that is where the huge shift in power is occurring. The rapidly growing middle-class around the world is dwarfing our shrinking middle-class. The rapidly rising skills of the world market place is rapidly replacing our declining workforce skill level. The rising "ownership" society of places like China is rapidly replacing our growing "socialist" society. Their declining tax rates are replacing our 2nd highest tax rate in the industrialized nations. Yet, Democrats would like to increase taxes on the very people that these other nations are cutting taxes on.

    What has changed the most? How nations are treating people. We are treating them worse and other nations are treating them better. When the two curves pass, ours going down and theirs going up, you will see the collapse even if it is only a perception that is wrong, that they have passed. It may very well be that self-fulfilling prophecy you are talking about.

    The American consumer has no loyalty to "made in America." Their demand for the lowest price is driving the "union." Globalization isn't the problem I fear. It is good in that it is raising 100's of millions of people out of poverty. We can have free trade and do very well but, it needs to be done in a manner that doesn't lose our sovereignty. We have to be able to compete and we can't compete with the government tax system we have if for no other reason than the tax compliance costs are even higher than the tax burden itself. For many businesses they pay 400% to 700% more in compliance cost than in taxes.

    What do you see going on that will reverse this trend in time to stop the train wreck? I don't see Congress doing anything significant. They even are proposing new amnesty bills and cutting back on securing the border and proposing 67 to 100 million more immigrants just to try and save social security and Medicare.

    Thomas Jefferson is reputed to have said that,
    Posted by JanPBurr  on  04/07  at  11:36 PM
  61. Didn
    Posted by JanPBurr  on  04/07  at  11:46 PM
  62. Jan,

    You think I put faith in voters? Well in a way I do. I have faith voters will keep voting about the same way they always do. Most voters don
    Posted by .(JavaScript must be enabled to view this email address)  on  04/08  at  06:42 PM
  63. (cont.)

    By the time recorded history rolls around, we have complex societies in which trade is a significant part of the economy. Most trade is still in luxury items that are not crucial to a society
    Posted by .(JavaScript must be enabled to view this email address)  on  04/08  at  06:49 PM
  64. Jan,

    The predicted demise of oil is a bit premature. We don
    Posted by .(JavaScript must be enabled to view this email address)  on  04/08  at  07:43 PM
  65. Quote:
    Our economy, today, involves thousands of variables instead of dozens; making the probability of controlling it infinitesimally small, even applying our best minds, computers, and enforcement agencies. This is not a matter of social or economic justice, it is simply a fact of economic life. Managing an economy is tantamount to killing it because to manage it you have to control it, to control it you must be able to measure and project all effects upon it, and to do that you must slow and diminish it to a size your computers can handle.

    That is very true. It is what I am hearing more and more analysts say. The say that beginning last year, the fed lost the ability to control the money supply even. This is because so many nations are supplying money, people were cashing in their home equity in record numbers, and borrowing to spend in other ways was all rising even though the fed had been raising rates to slow the supply down. Many loans were packaged and sold to overseas buyers in such record numbers that it boggles the mind.

    The following countries reportedly have money supply rates growing over 10%.

    Korea, Mexico, Australia, U.K., Brazil, China, India, and Russia. China, India and Russia are over 15% with India over 20% and Russia over 40%.

    The liquidity of the world market is a concern we have because they are doing things with that money supply that affect the U.S. consumer too. I wish I knew all the ways it affects us but, common sense tells us that it leads to volatility where some people who do understand it will make billions or at least millions while others lose millions. Also, it is driving up commodity prices even faster than demand in some cases.

    At the same time we see Mexico
    Posted by JanPBurr  on  04/08  at  08:34 PM
  66. Quote:
    This brings us back to scarcity. As there is no lack of scarcity, there is no danger the economy will collapse, stop expanding, or slow down from internal causes. It is a self-fueling train on a track taking us toward prosperity. Only externals can do it dirty.

    We may be in deep trouble due to a scarcity of gasoline. We import gasoline as well as oil and as the dollar declines in value, the price of oil for us rises faster than for others and that can cause a recession if it gets high enough since we are blocked from our own oil. That will reduce demand and drop prices if the world demand isn
    Posted by JanPBurr  on  04/08  at  08:37 PM
  67. That is good news for the world and it is news that should be good for the U.S. too. It means that wages are rising and as they rise, we become more competitive in wages. But, while they also move to cut taxes and other expenses for business, we don
    Posted by JanPBurr  on  04/08  at  08:41 PM
  68. So, there are solutions. Ireland
    Posted by JanPBurr  on  04/08  at  08:44 PM
  69. This CBS video deals with the huge problem we have with our budget in the future.

    It an interview with David Walker, comptroller general of the U.S., He spells out the fiscal crisis we are headed for. He has given up on the politicians listening and is going around the nation with the support of Conservative, Liberal and neutral think tanks that agree with his view. He also has the support of some in Washington but because the solutions are so unpopular, he can't get the politicians to act.

    After you listen to the interview you may wonder why so many are warning Congress and yet, nothing is being done.

    Here is the interview
    Posted by JanPBurr  on  04/09  at  07:07 PM
  70. Jan,

    You said:
    Posted by .(JavaScript must be enabled to view this email address)  on  04/10  at  05:08 PM
  71. Bob said:
    Most of Mexico
    Posted by JanPBurr  on  04/10  at  07:09 PM
  72. Cont:
    Tuesday, April 10, 2007 ~ 1:39 p.m., Dan Mitchell Wrote:
    The Tax Code Nightmare Continues
    Posted by JanPBurr  on  04/10  at  07:13 PM
  73. Cont:

    Those are the topics that can be found at that link I provided. The point is, the world market is competing, we aren't. We are facing the largest tax hike in history if the Bush tax hikes are allowed to expire. However, we also face a growing entitlement tsunami that we can't control because it is mandatory spending increases.

    All of this is weighing on our currency's value and fueling inflation that is a result of the lower value of the dollar. Whether it is energy we import or toasters from China, the price is going up, not in their currency, but in ours mostly. They aren't asking other nations to pay more and in some cases are paying less as their currency rises in value faster than China's. But we are paying more and more and more.

    Today we set a new low value with the Euro at $1.3444. Also, today, confidence in the stock market hit a new record low. More people are counting on the market going down than every before (what term? Decades? years?) according to a comment I heard on the financial news today. We are creating the self-fulfilling prophecy you were talking about. When almost all the financial advisors that manage IRA's, pension plans, 401k's, etc are saying "get diversified out of the dollar," they have a huge impact on the dollar's value. The flow of money out of this nation is growing for investment while the flow in is mainly for debt purchases in the private and public sector, or was.

    That doesn't mean it won't turn around. As you point out, it is all based on supply and demand. And, if we have a very bad recession and reform and lower wages and still have good skilled workers and a good education system and millions of people that had "wealth" in foreign based currencies, the supply of money ready to rush back in here for new factories would be huge.
    Most Americans expect a recession within a year and disapprove of President George W. Bush's handling of the economy even though the unemployment rate is at a five-year low, a new Bloomberg/Los Angeles Times poll found.

    Six in 10 who were surveyed predicted a recession, similar to the 64 percent who anticipated the economy would contract in a December 2000 poll by the Los Angeles Times three months before the last decline. In the current survey, 71 percent of those earning less than $40,000 said they expect a recession compared with about half for those making more than $100,000.
    Remember, the Democrats have been screaming the economy was in the tank for 6 years. Robt. Reich from the Clinton Admin has been hammering everything good the Bush administration has done claiming it only benefits the rich. The problem is that only the rich are prepared to deal with 67,000 pages of tax code, invest in ways to protect against inflation socialism causes though deficit spending to fund socialism. They can invest in tax free bonds, or send their money overseas or move overseas as many are already doing from other socialist nations and even here to some degree. The average worker living from paycheck to paycheck just sees more and more mfg. jobs leave and buying power disappear due to dollar losing value.

    Our bankers are losing faith in us. The Chase bank I deal with, investment adviser, told me yesterday, that was the case. He said that soon the nations lending us money will turn off the spigot. They fear a dollar collapse and are trying to be careful in how they turn it off but, he said they were already cutting back on the amounts they plan to buy of our debt. He had no good news to give me. He too is buying investments out of the U.S. personally, he said, as well as advising others to do the same.

    How widespread is this. If it is too much you are 100% correct that it will be a self-fulfilling prophecy.
    Posted by JanPBurr  on  04/10  at  07:26 PM
  74. A recession is coming! A recession is coming!

    Such is the word on the street. Since reading your comments, I am finding more and more of this negativity verging on panic. Yet also leavened among them are opportunists (see and who remind us of the fabulous fortunes made in all recessions. Note the comment made in the Lew Rockwell piece that recoveries tend to last much longer than recessions. Recessions are fairly common (about 2 per decade over the past 40 years), and are simply adjustments to overly aggressive markets and/or excessive buying (i.e., debt). Recessions force both people and governments to reform bad habits, be a bit more conservative and a lot more observant. Best of all, they force us to be more competitive and creative.

    The first guy (coming-economic-depression book hustler) dwells on much of the same indices you did (and I suspect he
    Posted by .(JavaScript must be enabled to view this email address)  on  04/11  at  05:14 PM
  75. (cont.)

    Finally, read what the Rockwell article says about who gets hit in a recession. Mostly it is those most heavily invested in speculation and those who make a living from predicting the market. These are the same guys who are spreading the panic because they are the ones on the front line. However, they typically neglect to mention that the impacts are concentrated on those exposed by gambling, and that they (as a class) are better positioned to notice and react. Next are managers and similar high rollers, for whom the impacts are measured in smaller bonuses. For the rest of us, there is some trickle down, but not much. We defer some big ticket items and ride it out.

    In the early 1990s, many companies (including my own) saw a lot of downsizing and layoffs. This was triggered by a massive and long recession which was, in turn, the product of two events. The collapse of the Soviet Union leading to downsized military spending and rapidly expanding overseas competition. I survived the layoffs, but many people I worked with did not. At the time, the layoffs made me nervous and I thought myself extremely lucky not to have been cut. Now, I am not so sure. Most of the people who left got better jobs at far better pay than I make. Not right away, but as the economy picked up from a surfeit of entrepreneurialism created by a pool of very bright people cast aside and finding ways to make it on their own without reliance on big company paternalism (remember, I said people are a market resource too). Most became job shoppers and consultants to the same industries they
    Posted by .(JavaScript must be enabled to view this email address)  on  04/11  at  05:19 PM
  76. Those are all good points Bob.
    Recessions are fairly common (about 2 per decade over the past 40 years), and are simply adjustments to overly aggressive markets and/or excessive buying (i.e., debt). Recessions force both people and governments to reform bad habits, be a bit more conservative and a lot more observant. Best of all, they force us to be more competitive and creative.
    Also the collapse of currencies is common too. That isn't the end of the currency nor the end of the nation. It just means regroup and yes, even in the "great depression" many got very rich. As long as you are prepared for both the up and down markets, you do well. We don't know when peak oil will be but in a sense we have hit peak oil as you point out, because we have been restricted from all the oil available. We have 200 years of oil in just Utah at current demand rates for the U.S. and it is recoverable according to Sen. Hatch at current prices.

    However, the rapid growth in demand is rising faster than supply because the "new fields" for the most part are in "deep water" that are accessible and not being blocked. At $500,000 a day lease rate for the rigs to drill that, oil has to stay at "low supply" to keep prices high enough to justify the outlay of capital. Therefore, oil companies aren't going to increase supply to the point that prices drop below what is profitable to drill for. Who sets the production limits? Mostly it is the state owned oil companies around the world, especially those in OPEC. Just a fluctuation of a million or two now, with demand so high is enough to drive prices up and give OPEC just as much money from less production.

    Then we have the gasoline issue here where the refinery that just got permits for Yuma, now has to face the fact that Mexico said it may not be able to supply it with oil due to their decline in production. Add to that the declines we are starting to see in Venezuela and then unrest in Nigeria where we get a lot of "light sweet" and lack of refineries that can process "heavy crude," and you have a type of peak oil because we can't replace what we are losing as fast as we need to "if" we maintain the demand we have seen in the U.S.

    What is driving that demand? How about adding 100 million people over the last 50 years and now we are adding 2 million and more a year and planning on adding 100 million over the next 30 years or less. That same growth in demand is going on even faster in Asia due to their rapidly growing middle class. Car sales in China are rising over 10% a year. That is why al-Qaeda is telling its cells to target oil production wherever it can. Nigeria is hit frequently because it is a major supplier to us and Africa in general is rapidly growing as an oil supplier. But, our loss of oil from Mexico and Venezuela may be the most troubling if it continues. Along with Canada they are the top exporters of oil to us. Canada is making deals with China to ship more of their oil to them.

    However, the currency is the biggest threat to a longer recession. We are rapidly approaching the time when the leading buyers of our debt cut us off for no other reason than the fact there are better places now to invest their money.

    Remember, nations all around the world are paying down their debt which is making their currency and "debt rating" much better than ours. We are one of the few nations currently in a "good economy" that isn't paying its debt down. A government is no different than an individual. When the credit rating starts dropping as ours is, it becomes more difficult to borrow and we are just now getting ready to rapidly increase our borrowing for entitlements as the "boomers" retire. Remember, almost all of the "storm" Bernanke and others refer to is due to entitlements and 78 million retiring and we have no way to fund that retirement except with increased borrowing.

    Again, it is different because when you look at all the charts over the 70 years, not once did they go parabolic in so many categories.
    Posted by JanPBurr  on  04/11  at  08:35 PM
  77. It will make us stronger, many will get wealthy, the U.S. will be competitive again. Nobody is saying this is the end of the U.S., only the U.S. as we knew it during these last decades of socialism. I believe we come out of this reformed, competitive and much better off than before. I am invested with about 3/4 of my money just like everyone else that is "positive" on the market because I am positive too and will be until the "collapse" or serious decline of the dollar. However, I have a plan of what to do when that time comes whether it is this year, next year, five years, or a decade from now.

    From Bernanke's comments, I would say we have a couple of years at the minimum. However, if not, I know what I will do. Also, I am getting out of debt. However, I believe interest rates will fall and later, it may be worth taking out a low interest loan on my home and investing the money in the "recovery."

    Another point I partially agree with you on is the severity of the "next recession" and how long it will last. It could very well be short, mild and followed by another boom. At least I hope so. The more time we have to convince democrats to not let the tax cuts expire, since that will be the largest tax hike in history for most Americans, and to reform entitlements, the better off we will be.

    Also, there is a service "doom and gloomers' serve. They get politicians, at times, to listen and do things that avert the "doom." Why couldn't that be the case again this time? Only if the democrats refuse to believe Bernanke and others who are prophesying doom will it happen. We do know we can't survive with debt growing this rapidly because we only have to look at the other nations with those conditions and see what happened to them. Some took longer, some reformed before full bottom was hit, and others had to go all the way to bottom before they reformed. Some have avoided it all together so far by reforming before a serious decline. Also, the 2 recessions per decade isn't necessary. We have seen nations go a couple of decades without a recession where the monetary policy wasn't creating peak/bust cycles. However, I believe personal saving was higher in those nations too. Thus, the workers could draw from savings during a downturn and keep spending up enough that the economy soon recovered without huge shifts in monetary policy that artificially changed things.

    A lot will depend on the consumer in America. If he becomes tapped out due to lost buying power, lost jobs, lost credit, no savings, and lost confidence, you will see a very hard and long recession. If you see worse than that you will see a depression. Some say we have those about every 70 years and thus, some say are due for another one. Not sure how they date it exactly but that is their claim. In other words we have mini-cycles every few years and a major cycle that lasts decades with the peaks and valleys of the mini-cycles in it. Like global warming. It has been warming for 18,000 years but with peaks and valleys that incuded a "mini-ice age." They say economies are the same.

    I also was a "job seeker" and got better jobs by moving around to where demand was higher for what I could provide. That is what is now going on all over the world. It is why wages are rising so rapidly in so many countries. People are moving around to better paying jobs as their skills and experience increases on each new job.

    This is a fantastic time in a way, to be alive. We are seeing dozens of nations rise out of poverty creating opportunity not only for their own people but the rest of the world too. We just don't happen to be joining in as much as we could. But, we may be in it enough to stave off any serious decline for years until more of the "boomers" are creating the massive drain on entitlements they will create unless we reform those entitlements.

    Do you know of one politician or economist that while not knowing when, doesn't predict a huge problem from the 78 million leaving the work force that is only 146 million with 22 million of that being government workers? That is 53% of the workforce leaving in the next 20 years and we have nowhere near enough to replace them with. We have never faced anything like this in the history of this nation. But, that may be because we were never under socialism for 70 years before.
    Posted by JanPBurr  on  04/11  at  08:45 PM
  78. I am enjoying the good economy, making money and plan to make money until the day it goes south and then make more money in different ways when it does go south. But, workers who don't have money to invest, are up to their necks in debt and have their credit cards maxed out, will be hurt seriously. The least skilled workers will be hit the hardest. Remember that even with 15% unemployment, 85% of the workers are employed, making money and supporting their families. It is the workers who don't have skills and aren't in demand and who can't take on different jobs that are the most vulnerable. Millions may even do better during the recession than they were before because the costs of many things may go down during that recession they want to buy.

    You and I won't depend on Social Security and Medicare but millions with few skills that have already retired will depend on those things. They won't be able to go back to work because their skills won't be needed.

    We are living in very historic times. Even if we don't fall, the rise of so many nations is something to behold and enjoy and rejoice in and to make history with.

    One last thought on reforms during recessions. We haven't done that. We spend our way out of every recession with more debt. Not only that but due to government spending during good times, we create a recession every time we cut government spending.

    Here is a chart and article on that.

    With one in four jobs directly or indirectly tied to government spending, we have a real problem. Also, remember that debt is included in GDP so we get a distorted picture of that as well.
    Posted by JanPBurr  on  04/11  at  08:47 PM
  79. I had to leave for a bit but wanted to add this
    Gross Domestic Product - GDP

    What does it Mean? The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

    GDP = C + G + I + NX


    "C" is equal to all private consumption, or consumer spending, in a nation's economy
    "G" is the sum of government spending
    "I" is the sum of all the country's businesses spending on capital
    "NX" is the nation's total net exports, calculated as total exports minus total imports. (NX = Exports - Imports)

    Thus, you can have many different scenarios that equal the same GDP and one isn't good. That is where government spending accounts for most of the GDP

    You could have very little or even negative export/import figures, small private consumption and huge government consumption from borrowed money.

    However, we currently have, debt funded consumer spending AND debt funded government spending. So, while GDP looks good and the "per capita GDP" is high it is based on deficit spending. Where this shows up is in purchasing power parity.

    In GDP, "official exchange rate," we are 2nd ($13.2 trillion) behind the European union for 2007 and China is 6th ($2.5 trillion).

    But in Purchasing Power Parity, we are 1st (12.9 trillion) with the EU 2nd in PPP, but China is now 3rd with $10 trillion due to there 4 times buying power for their currency.

    China will probably pass us soon in PPP ranking for GDP since they are growing so much faster than we are. Also, It is interesting to see how Hong Kong (due to the British influence) is so far ahead of China in per capita ranking and how much closer they are to us.

    U.S. ranked number 9 at $43,500 (Ireland just recently passed us with $43,600 per capita GDP)

    Hong Kong is 14th at 36,500 or $7,000 behind us.

    China as a whole is ranked number 90 at $7,600 per capita.

    By the way, due to lower buying power, Ireland is ranked 51st on the PPP ranking. So, the inflation they have experienced has had an effect on them and their cost of living (about like New York I read)

    So, we are still "King of the Mountain," but fading. We do have time to get things turned around but we need to do it soon before the tsunami of "boomers" swamp us.
    Posted by JanPBurr  on  04/11  at  09:36 PM
  80. Jan,

    I know I am saying it, but somehow you mistake my meaning. Yes, the effect of a resource whose extent is unknown is much the same as it being scarce. Yet, this has been true for petroleum since we began exploiting it. The guys propounding Peak-Oil are right that there is a bottom to the barrel. They are wrong to apply the Hubbert model to it, mistake DOE-EIA as confirming it, and misusing DOE's data to flesh out their model. Hubbert does not predict peak-oil; it predicts the point at which production falls behind demand. This only applies to developed oil fields without adjusting for any retooling of them. It does not apply to undeveloped fields, whether known or guessed at. It can only be extrapolated to these by making some SWAG's (seriously wild a$$ guesses) at how much oil is left in the ground, where it is, and how accessible it will be.

    Hubbert did not devise his model to predict anything other than what he could reliably measure. All he did was plot a bell curve predicting production from existing U.S. oil fields as against rising demand, and found an intersect 14 years beyond his starting point. That was in 1956 with a prediction we
    Posted by .(JavaScript must be enabled to view this email address)  on  04/12  at  07:03 PM
  81. (cont.)

    Okay, we
    Posted by .(JavaScript must be enabled to view this email address)  on  04/12  at  07:07 PM
  82. I hope this isn't a double post but, somehow I lost my comment.

    The only peak oil we have is as you point out, in old fields. There are many in decline. We are just not finding new supplies fast enough and some of that is by design. Look at the top 11 producers of oil from a few years back
    Million barrels per year,
    Saudi Arabian Oil Co.*
    Petroleos Mexicanos*
    Petroleos de Venezuela*
    China National Petroleum*
    BP Amoco + Arco
    Royal Dutch/Shell
    Nigerian National Oil Co.*
    Iraq National Oil Co.*
    Kuwait Petroleum*
    Chevron + Texac

    We only have 2 companies in the top 11 and there are only 4 that are shareholder owned. The rest are government run oil companies that restrict oil production anytime the government tells them to.

    Then we have the U.S. where we have 200-300 years of oil but it is blocked from production by the DNC supporting the "greenies" to get votes and to undermine the economy so this administration won't look so good with their tax cuts and other policies that have grown the economy in spite of the socialist wealth redistribution schemes that are driving so much manufacturing overseas.

    Virtually everything the DNC does hurts the workers. They are even more supportive of open borders that keep wages lower than the fools in the Republican party trying to use immigration to keep prices lower and profits higher since we tax those profits at much higher rates than we tax workers income. Thus, there is no incentive to increase workers income for government since that doesn't increase tax revenues as fast as profits and wealth from higher stock prices creates in capital gains and dividends.

    Socialism encourages low wages. That is why many businesses are leaving for nation where wages are rising so fast they will pass the U.S. and Ireland where the Per Capita GDP just passed the U.S. and wages are even higher in manufacturing there than here. They don't mind the higher wages though because they get to keep more of their profits, unlike here.

    Government under socialism manipulates supply and demand with subsidies, regulation, restriction like we have for refineries and oil production, grants, tax loopholes, tax penalties, etc. The more they "control" business, the more that leave and the more those who do stay have to charge to cover those costs of control.

    Scarcity is being artificially created to further government's goals to force people to use ethanol even though it consumes almost as much energy and if oil supplies were allowed to be tapped, would cost much more than gasoline from oil would.

    Much of this scarcity is to keep the price of oil high enough to make ethanol seem competitive. Again, 200 years of oil in Utah would drop the price like you state. While deep sea rigs cost $500,000 a day to drill with, we could get to that oil for even less cost than the deep sea oil. However, don't expect any relief. The demand of China, India and all of Asia and the old Eastern Block nations will allow governments to keep supply low enough for prices to stay high.

    I predict $100 oil if we have any crisis in Venezuela, Mexico, Iran, or other leading suppliers.

    Awhile back, we imported these percentages but I believe Venezuela and Mexico imports have dropped while African imports have risen. I'll have to look again sometime and update my files. Here is what it was though.
    17.8% from Saudi Arabia
    16.5% from Canada
    12.8% from Venezuela
    12.0% from Mexico
    7.5% from Nigeria
    From January to May of 2003, the U.S. received 42.8% of its imported oil from OPEC nations and 23.5% from Persian Gulf countries. During that timeframe, Canada was the top exporter to the U.S., supplying 16.9% of our oil.

    The problem isn't oil companies, oil reserves, demand, or anything else except government here, there and everywhere that is interfering with supply. While the motives for "controlling supply" is varied, it all affects the prices we pay. Today, the price jumped another $1.80 cents and gasoline rose as well while the Dollar lost more ground to the Euro. At least now, we are starting to see a few more Congressmen getting alarmed but the ones that are, want to use protectionism to correct symptoms instead of the real problems we have.

    This nation can't survive under socialism and the democratic party's leadership. It can't survive because the voters won't fight for the reforms that are needed as long as government makes them think they are getting something for nothing, and the RNC is almost as bad as the DNC on most issues. However, a deep and long recession might cause a voter revolt that would cause the changes we need or it could drive us deeper into a "French style" decline.

    Posted by JanPBurr  on  04/12  at  08:21 PM
  83. The more they try to redistribute wealth the more it costs workers since that "cost" of trying to redistribute it is passed on in prices and causes more and more jobs to leave the nation for nations using capitalism to attract business.

    Then add 100 million immigrants, speaking of supply and demand, and you reduce workers wages by having a glut of workers competing for the same jobs. The government, not business, is bringing that 100 million here to try and keep social security and Medicare from collapsing due to the 78 million retirees that will be drawing from them and that current funding won't support.

    Supply and demand drives everything and socialism specializes in destroying the market forces that would have regulated that and both parties are using legislation to "control the economy." One is using it to redistribute wealth and the other to try and keep those companies from leaving because of those policies. One is putting taxes on business and the other is trying to lower other costs to make up for what the taxes are doing to their competitive ability to stay open in a rapidly emerging world market. With rising healthcare, litigation, pension, tax, compliance, regulation, and other costs, about the only thing left to keep "low" is wages. If you don't keep wages low, you will drive up prices even more and drive even more jobs out of America.

    But, it isn't government that is as much a problem as voters who keep asking for bad government and re-electing representatives who create bad legislation. That is why in many of the old eastern block nations you see support for capitalism. The voters lived under that ramifications of socialism and now want capitalism and economic freedom that can't be had under socialism.
    Posted by JanPBurr  on  04/12  at  08:23 PM
  84. I should add that some nations can survive under socialism. As long as the voters pay for the programs out of their pay, and don't tax business and wealth to an extent that drives them out of the nation, they can survive. That is why I say our nation can't survive under socialism. Our voters aren't willing to pay the taxes needed to support the social programs they want. They ARE driving wealth and business out of the nation and they have funded the programs social security and Medicare with a Ponzi scheme system of funding that doesn't work in the long run because it requires too large a growth in population at an unsustainable rate, to keep funding it.

    Think about it. We added 50% to our population since we started this system. Yet, 22 times we still had to raise taxes and 11 times we didn't have enough coming in to meet the outflows. If we couldn't fund it with 50% growth, what makes them think we can fund it with just a 33% growth with 100 million immigrants and the lower birthrate of those in the nation?
    Posted by JanPBurr  on  04/12  at  08:29 PM
  85. Jan,

    Where are you getting the figure "... 200-300 years of [U.S.] oil ..." and based on what assumptions. I don
    Posted by .(JavaScript must be enabled to view this email address)  on  04/14  at  08:25 PM
  86. (cont.)

    You say "At least now, we are starting to see a few more Congressmen getting alarmed but the ones that are, want to use protectionism to correct symptoms instead of the real problems we have."

    But isn
    Posted by .(JavaScript must be enabled to view this email address)  on  04/14  at  08:30 PM
  87. Where are you getting the figure
    Posted by JanPBurr  on  04/15  at  12:59 AM
  88. I see the bidding for Gold also keeps going up each contract all the way through 2011 where currently the bid is almost $200 higher than now ($855). They don
    Posted by JanPBurr  on  04/15  at  01:06 AM
  89. While in the past, I rejoiced at a gridlock in Congress, we no either have to have action or we have the
    Posted by JanPBurr  on  04/15  at  01:09 AM
  90. Here is another source for the Oil Shales but it is for all U.S. oil shale and is lower that what Sen. Hatch says is in Utah at the high end of the estimate.

    The United States government has long recognized the strategic potential of the nation?s vast oil
    shale resources to support national security. President Taft in 1912 established an Office of
    Naval Petroleum and Oil Shale Reserves and charged that office with ensuring oil for naval
    military operations. This office continues to oversee the United States strategic interest in oil
    America?s 2 trillion barrel oil shale resource is recognized as having the same production
    potential as Canada?s tar sands. Tar sand production, initiated in the 1960s, has increased
    steadily to more than 1 million per barrels/day and is moving toward a near-term goal of 2.5
    million barrels per day by 2017. This amount of oil is equivalent to the volume of oil currently
    imported by the United States from Middle East countries. Tar sands production has enabled
    Canada to add 174 billion barrels to its recoverable oil reserves, making Canada?s proved
    reserves second only to those of Saudi Arabia.

    That is from a Dept. of Energy report from Dec. of 2004. Sen. Hatch's comments are from Aug 2005 so I don't know if he is going on new reports or just a different source for the estimate. Either way, it is a lot of oil but expensive to get.
    Posted by JanPBurr  on  04/15  at  01:33 AM
  91. Okay, I think I see some flaws in your assumptions. The main one is you did not include growth of consumption (which is a fact, if not accurately known). Assuming a future rate based on past rates and being conservative, we can expect, as a minimum, a 1% growth in consumption per year. That means in 68 years we will be consuming twice as much oil as today with another doubling 68 years beyond that, &c. If you also figure in the acceleration in consumption from countries like China who are competing for oil, then we will double consumption somewhat sooner, say by 2060. World consumption stands at 31-billion barrels per year. At that rate, assuming no new sources found, adding the shale to proved reserves, and using the 1% growth figure, I calculate the world will run out of oil by the second quarter of 2071. If I increase this to 1.4% to allow for emerging nations, we run out of oil by third-quarter 2065. I would actually expect some slowing of this acceleration 10-20 years out, though still at a higher growth rate than today, say 1.15%.

    However, let
    Posted by .(JavaScript must be enabled to view this email address)  on  04/15  at  07:49 PM
  92. (cont.)

    I don
    Posted by .(JavaScript must be enabled to view this email address)  on  04/15  at  07:53 PM
  93. All of what you say is true and I was only using that to show how much oil a current demand rates we have. We also don't know how much less oil we will use as other energy sources are developed. As far as the rest of the world, I believe the other reserves that are being found closer to those countries will be used. Also, I don't believe we will ever see shale production reach the levels needed for our own demand. We will always need offshore and even some imports from Canada and the Alaskan oil.

    That is another reason I believe the price of oil will stay high. We have to have high prices to get oil companies to spend huge sums of money to develop a field whether it is the $500,000 a day needed for oil rigs, or the money needed to heat the shale for long periods before oil will flow in appreciable amounts. SAGD and electrolysis also require additional operations besides drilling. Even the strip mining requires heating before the oil is extracted and available for refining. Then we have the problem of not enough refineries or refineries that can process other types of crude than "light sweet."

    Look at all the oil being produced by Canada from their oil sands. They are becoming a significant amount of total production. I believe it is Pickens that is investing quite a bit in Suncor (SU) and believes it will grow much larger with its oil sands production. However, oil sands have the oil bonded to water and is easier to extract, as I understand it. I was looking at the charts of Saudi Arabia's oil production and it is showing a peak now with declines from here on. How accurate that is, I don't know. Some of the new discoveries are shown to be growing in production as the other decline but, I didn't check close enough to see total output. That might be fruitless to try anyway since many of them are in volatile places where interruptions could easily occur.

    However, in the U.S. currently, I believe our biggest problem is refineries, not oil supply. Getting permits takes about 10 years and we are already short of refining capacity so that any fire, breakdown or maintenance is creating shortages. Also, we have to look for new sources to buy from as Mexico's field declines, Chavez's socialism reduces production and any hurricanes interrupt our supplies. We need more flexibility and more storage capacity for when storms do occur. We also need more refineries spread out around the nation so a hurricane can't hit so many at one time. All of those things, however, will be blocked by the democrats in Congress or by the environmentalists filing long Court cases each time a new ruling is made against them.

    Look at the over 10 years to get the permit for the Yuma refinery and now they can't get the guarantee of Mexico to supply them with oil anymore.

    Also, we have to realize that oil will cost us more even if the rest of the world doesn't pay more simply because of the declining value of the dollar. Also, as the dollar drops, more and more pressure to sell oil in another currency will come to bear on oil producing nations. That move would collapse the dollar if it happens and we could easily see $100-$150 a barrel oil while the rest of the world would be paying about the same.
    Posted by JanPBurr  on  04/15  at  08:41 PM
  94. Back to the Utah oil. If it could get up to full production levels approaching current demand, all the other fields could be used for exports now and to meet growing demand later. However, I don't see oil shale oil approaching those levels of production anywhere in my lifetime and I plan on living another 65 years. (Hmmm? That will make me 130 years old. Yeah, that's about right. Only the good die young).

    I think oil production, gasoline production and energy consumption is going to be a minor problem however, if we don't get entitlement reform and stop our rapid growth of debt. Too many people are bailing out. I see that we have low volume on our "rally days" and that has many stock analysts very concerned about the sustainability of this market. Since much of the increased tax revenues have come from capital gains, corporate profits, and the income taxes of higher income earners, we may soon see tax revenues in decline.

    I look at oil as a place to make money now and take what it does a day at a time. A long and severe recession could lower demand so much that oil prices plummet and production dries up as will exploration for new wells.

    As you point out, we have "cycles." We are in one and will move to another portion of the cycle at some point. When and how deep the swing is will depend on many things we can't control. I don't worry about that but do try to prepare for them.

    When I was growing my 401K with the company I worked in for 11 years, I bought the company stock every time in was down and sold it every time it got high relative to another choice whose cycle was the opposite. I would sell, buy the other choice, ride it up while the company stock went down and then switch again. Thus, I was able to about double my money four times in that 11 years. Then I rolled it over into an IRA when I left so I could ride the Asian boom up. Then I got out of that when many of the stocks looked like they were peaking and moved to more conservative investments.

    Now, I am looking for the next downturn as an opportunity and am trying to be ready to take advantage of it while gaining in the current up cycle with gold and oil but ready to bail out should I see a change in trends. I look at "forecasts" more for what they do to the current market movement than to how accurate they are because usually they aren't accurate. They are fun to speculate on but, the here and now of the market is what makes you rich or poor. Trying to "time" the market based on forecast, I believe, will put you at too much risk.

    I look at the market each day to see direction and volume and then look at each holding for direction and volume and pattern. If it has broke the upper trend line in a parabolic move, I get out. I often miss a few days rise but usually also avoid the rather rapid drop to the lower trend line or lower. (that only works in a bull market) I also watch and keep a list of stocks that do well on down days or corrections so that if we enter a bear market I will have some things already in mind to watch and buy if they look good. Investor's Business Daily's charts, analysis and grading of sectors and stocks helps a lot. I also get Asian news about our economy, market and sectors to help get a more unbiased view of things.

    I have noticed that most Asian news, like U.S. news is mixed on oil and the future of supply/demand with both bulls and bears "justifying" their outlook for oil. However, both sides agree that their projections are based to a great degree on politics and unrest and anticipated but not guaranteed growth in Asia as well as projected growth in supply.
    Posted by JanPBurr  on  04/15  at  08:45 PM
Commenting is not available in this channel entry.