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Tuesday, February 12, 2008

Buying The Government

SEARCH BLOG: GOVERNMENT and SPECIAL INTERESTS

Yesterday, I wrote about the way our federal government was for sale to the highest bidder using examples of campaign contributions. I also stated that Dean Baker's remarks about economists were off the mark [but not necessarily wrong].

Bill, who started my explosion, wrote back to agree in principle that the government does not operate as intended, but he defended Dean Baker's comments about economists [Baker has a Ph.D in economics from the University of Michigan].

I responded [slightly edited] to Bill:

I have been venting about politics and economics lately... your note was the spark that set off the subsequent explosion. Of course Baker was reasonable and I have written similar positions recently. It's just that economists argue from wildly disparate perspectives, but the underlying dynamics of our economy's problems are not truly based on economic factors as much as political manipulations and subterfuge that create "opportunities" for the unscrupulous and unethical to screw everyone else... maybe legally, but certainly questionably.

I don't truly know if Obama is "fairly honest" or not [Bill was actually talking about Dean Baker being "fairly honest"]. His little real estate deal seems to indicate that he is not beyond "bending the rules" in his own favor. McCain had his S&L party a while back. The Clintons flex the rules a bit so that Hillary can "loan" her campaign $5 mil and get it back even if she drops out... can't do that with a donation... just bending the rules again.

It has become the nature of our political system to bend the rules as much as possible. Maybe there are no Thomas Jeffersons left... or if they were around, the system would prevent them from ever winning an elected position.
I'm beginning to sense that I sound a bit crazed. Politics can do that. For example, Pat Dollard has a couple of posts that linked to articles forming a perfect non-sequitur ... how our government represents interests other than its citizens.

In the first one, certain elected officials seem to view the restriction of illegal immigrants from Mexico into the U.S. as a problem because, as I mentioned yesterday, the immigrants represent a huge voting block around which to consolidate their power. So others, like Duncan Hunter [an apparent dinosaur with regard to current political practices], have to introduce legislation to force action on legislation that has already passed.
  • Jim Kouri
    February 7, 2008

    Representative Duncan Hunter, R-Calif, author of the fencing provisions of the Secure Fence Act of 2006, has introduced new legislation in the House of Representatives to require the construction of double-layered fencing along the U.S. border with Mexico within six months, according to a memo sent to the National Association of Chiefs of Police.
Meanwhile, our government sees nothing unusual about offering up over a billion dollars so that Mexico can build a fence protecting its border to the south.
  • The White House wants a $1.4 billion stimulus/national security package…for Mexico

    By Michelle Malkin • February 11, 2008 01:54 PM


    A reader asked me to check into information that President Bush was pushing a massive foreign-aid package to Mexico to help them secure their southern border against the flow of illegal aliens from Central America.

    “We can’t even get our own border straight, and we are going to provide Mexico with funding so they can solve their problem,” the reader fumed. “I doubt the Central Americans are staying very long in Mexico anyway. We know where they are going!”

    Too outrageously outrageous to be true?

    Well, I checked it out and it’s even worse than the reader described. Far worse.

    The plan is called “The Merida Initiative.” Seems that the White House has had this plan in the works for nearly a year with little congressional input on either side of the border.

    We can’t finish our own border fence, properly supply our immigration agents and border patrol with all the equipment and resources they need, or get our house in order. Yet, the Bush administration wants to fork over $1.4 billion to Mexico and Central America–with much of it going into the hands of corrupt law enforcement officials and government bureaucrats who have worked tirelessly to undermine our immigration laws. The funding is tucked into the 2008 supplemental budget.

I'd agree with the $1.4 billion if the money was to be used for a fence on Mexico's northern border.

Good work Duncan and Michelle... although this example is tough to categorize.
Is it because of special interests... or is it just plain stupidity?
Bill framed the problem we face:
I don't have answers for correcting all of our problems, certainly not, but we can't give up on our system of government. We have to fight back with better presentations and arguments. It's the only way I know to do it effectively.
Thomas Jefferson thought differently:
The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is it’s natural manure.
THOMAS JEFFERSON, letter to William Stephens Smith, November 13, 1787.
Today, we tend to think he was talking about Iraq or Iran or Afghanistan... or maybe he was just caught up in the moment. Hell, today he probably would be arrested as a "terrorist conspirator" under the Patriot Act.

In a practical sense, Bill is probably correct. The system is too massive with too much inertia to have a convenient "bloody revolution".
Couldn't we just hope for some "revolutionary leaders" ... representatives, senators, presidents... who put the interests of American citizens... individuals... above special interest groups, foreign governments, or their own pocketbooks? Is that really too much to ask?
..

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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
The Independent (UK)

Tracking Interest Rates

Tracking Interest Rates

FEDERAL RESERVE & HOUSING

SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006 Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
November 28, 2007 FED VICE CHAIRMAN DONALD KOHN
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."
http://www.reuters.com/

December 11, 2007 Somehow the Fed misses the obvious.
fed_rate_moves_425_small.gif
[Image from: CNNMoney.com]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's Economy.com. "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.”
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)