Grab Your Tinfoil Hats, Conspiracy Theory Coming Up!
January 25, 2009
What would you do if you had seen the future? If you knew, for a fact, who was going to win the next Superbowl? I think most people would start taking out loans. A lot of them.
The president of the United States is in an interesting position. To some extent they can see the future, not because they know what will happen, but because they hold the playbook and call the shots. Unlike the time travelling gambler, the president is both under a lot of scrutiny, and has a lot of responsibilities to the nation. To some extent their power transcends the petty desire for the big payout. Put yourself in their shoes. You see the economic failings. You see the coming crash and subsequent long path back to national solvency. What do you do?
You plan. With a team of economic advisers and more information at your request than any other individual in the world.
There is a science based religion out there that exists on the premise that we strive to create increasingly realistic computer simulations of the world around us, therefore, it stands to reason that the world we live in is likely such a simulation. I would propose a similar theory. Our leaders believe that by tampering with the free market, they can make it do their bidding, therefore it is quite possible that most of the economic drama that has unfolded in recent years was not by the natural course of economic chaos, but by design. The availability of credit, the housing bubble, the crash, and the bailout, all part of a bigger plan. Think back:
We had begun losing agriculture and manufacturing to countries who were able to work with lower standards and cheaper labor. This led to a trade imbalance as it became cheaper to buy foreign goods than domestic.
So the question arises, how do we devalue our currency enough to stem the bleeding of outsourcing?
The banks don’t want inflation, it devalues their holdings. If we try to create inflation, the banks will fail as inflation goes higher than their interest. Investors, manufacturers, and rich people in general will lose money and blame the government.
How do you create inflation while looking like the hero rather than the villain? Debt. Those in debt will welcome it.
Make them think they see the future, give them their credit, and when they are overstretched?
Cut off the credit. People will stop buying, sellers will drop prices in desperation. Now what?
Threats of deflation. When deflation and debt come together you have defaults.
Defaults crash the banking system. The government gets to arrive as the hero and print money to give to the banking industry and whoever else it wants, all in the name of saving us from deflation. Those who saw the future, made the future, profit.
As we snap out of the illusion of deflation into hyperinflation, the bailouts save the banks, our debts get relatively smaller, industry returns under a weaker dollar, and those who made the future profit again.
President Bush made it a priority to get people into homes. He lowered the interest rates and made sure everyone could get loans. His administration later cracked down on subprime lending. He printed the money and bailed out the banks, and then the Harvard MBA handed over the reins and sold his phony cowboy ranch in Texas. How much of the stupid was an act?
Toyota Republicans
December 21, 2008
Recently on the McLaughlin Group, Pat Buchanan coined a new term for a faction of the Republican party: Toyota Republicans. The phrase is an odd one because it is far more subtle and complicated than it seems. Under the watch of the Bush administration we saw outsourcing become the norm. We didn’t slowly lose a difficult battle to China, we eagerly gave them the plans and asked them to take over our manufacturing. The Alabama foreign car manufacturers Pat referred to are an interesting case. When we can’t even lead in our own industry in our own country selling to our own people, we have failed. It isn’t about patriotism and buying American. I’ll buy American when faced with a tough choice, but in the end I’m going with the better product, as should we all. We don’t need to bail out the failures, we need to create successes. These foreign plants on U.S. soil aren’t entirely a bad thing, although they are still sending our money overseas.
An interesting point has been made about who pays the cost of medical care. If the American auto makers are saddled with responsibility for the health care of their workers, and the foreign competitors aren’t, because the government takes care of that, then we didn’t fire the first shot in the coming Cold War Race to Socialism, they did.
As Pat puts it: “America faces nationalistic trade rivals who manipulate currencies, employ nontariff barriers, subsidize their manufacturers, rebate value-added taxes on exports to us and impose value-added taxes on imports from us, all to capture our markets and kill our great companies.“
How should we respond? Pat wants us to “produce ourselves the guns and ships to defend the republic and the necessities of our national life so we could stand alone against the world.“ He suggests we do this by putting tariffs on imports in order to level the playing field. This isn’t a wise step forward in the new global economy; it leads to foreign retaliation, reducing our exports. When you are only selling things to yourself, you don’t earn any money. It would work well here in the U.S. Until the industries got lazy and corrupt. We already can see the results of such tactics in the corn industry. The reason everything we eat is packed with corn syrup is that we tax the import of sugar and subsidize the growing of corn. What we need is to be lighter on our feet. We need small specialized manufacturers.
Pat Buchanan puts the blame on neocons for removing tariffs imposed by Reagan:
“When an icon of American industry, Harley-Davidson, was being run out of business by cutthroat Japanese dumping of big bikes to kill the “Harley Hog,” Reagan slapped 50 percent tariffs on their motorcycles and imposed quotas on imported Japanese cars. Message to Tokyo. If you folks want to keep selling cars here, start building them here.“
Alabama is now home to several automotive plants:
- Mercedes-Benz: Headquarted in Germany
- Honda: Headquartered in Japan
- Hyundai: Headquartered in South Korea
- Toyota: headquartered in Japan
These U.S. plants make a total of more than 700,000 vehicles a year and employ over 11,000 workers. This would all be a good thing if these vehicles were being shipped out, but they are built here to be sold here. To follow the money: You buy a Toyota. Part of that money goes to the workers in the Toyota plants in Alabama and elsewhere in the US; another part goes to Japan. To some extent it is nice to have foreign industry in our country; it gives them incentive to be nice to us so they can retain their factory. On the other hand, if we are making the product in our country with our labor and selling it to our people, we could do without sending the profits to Japan.
Pat is afraid that if we don’t do whatever it takes to keep the big three in business, that these foreign owned manufacturers will take over their market share.
Agreements like NAFTA aren’t really free trade, they are managed trade. In the end, under NAFTA, manufactuuring and agriculture find advantage in moving to Mexico. This includes companies like Toyota. The question is, are these Toyota republicans opposing the bailout on strong free trade principles, or are southern politicians trying to remove the competing U.S. manufacturers in Detroit to better their own foreign owned manufacturing?
From here on I will be using the term ‘Toyota Republican’ to describe the NAFTA loving portion of the party that is partially responsible for outsourcing and the exodus of industry.
Update: Leo Gerard, the president of the United Steelworkers Union, went on Bill Moyers Joural with his take on the auto bailout and the Toyota Republicans.
Pat Buchanan
December 21, 2008
Pat is my favorite political commentator. I get a lot of flak for this. I don’t agree with a lot of what he says, but he has a solid perspective based an a mountain of knowledge. He often comes across as bigoted, which can be puzzling, since it seems to be mostly counter to the way he sees current reality. He is a paleoconservative and nationalist in the extreme. What is often mistaken for racism is a strong conviction that if you are in America, you should be an American first, including subscribing to what he sees as the socially conservative heritage and giving up other affiliations. Reality occasionally clashes with his faith-based convictions making it seem as if the man has two worldviews, each of which he argues with extreme conviction, but which are mutually exclusive. Maybe I’m just used to this because my dad seems to think the same way.
He is one of the core members of the McLaughlin Group, where every Friday he can be seen trying desperately to get a word in edgewise while enunciating all of his points with his signature chop (pictured). In the past he has been mostly in contention with Eleanor Clift, but recently the two seem to agree with each other more than they agree with the more centrist members of the group (I can identify with this). In a recent episode he coined the term Toyota Republicans to refer to the demographic of mostly southern workers at foreign car plants here in the U.S.
He is a very sharp 70 years young, and has a resume including a masters in Journalism from Columbia University, opposition speech writer and advisor to Nixon, white house communications advisor (85-87), and three time presidential candidate.
He coined the term ‘silent majority’
What impresses me most about him is that while he has a strong desire to turn the country towards Christianity, which he sees as its roots, he has an iron grip on the current reality and is able to predict how a complex political or social issue will play out with as great an accuracy if it is going against his goals as if it is moving towards them. He has biased opinions, but near impartial predictions.
Quotes:
“Whose moral code says we may interfere with a man’s right to be a practicing bigot, but must respect and protect his right to be a practicing sodomite?”
“There are only two groups that are beating the drums for war in The Middle East – the Israeli Defense Ministry and its amen corner in the United States.”
“We are thus in the position of having to borrow from Europe to defend Europe, of having to borrow from China and Japan to defend Chinese and Japanese access to Gulf oil, and of having to borrow from Arab emirs, sultans and monarchs to make Iraq safe for democracy. We borrow from the nations we defend so that we may continue to defend them. To question this is an unpardonable heresy called ‘isolationism.’”
“The village atheist has the right to be heard; he has no right to be heeded. While he has a right not to have his own children indoctrinated in what he believes are false and foolish teachings, he has no right to dictate what other children may be taught.”
“Neither Beltway party is going to drain this swamp, because to them it is not a swamp at all, but a projected wetland and their natural habitat”
Books:
Day of Reckoning: How Hubris, Ideology, and Greed Are Tearing America Apart
A Republic, Not an Empire: Reclaiming America’s Destiny
The Most Basic of Economic Principles
December 16, 2008
If you can solve this brain teaser from a 1932 issue of Modern Mechanics, you may just be a step ahead of your average congressman when it comes to fixing the economy.
Too Big to Fail?
December 13, 2008
The latest group to ask for bailout is the automobile industry. Most of their argument for bailout hinges on the thought that if they fail, they will take the economy with them. They are framing the problem backwards. The real problem is that they are too big to succeed. Any time you try to have your company do everything, you risk not being very good or efficient at any of it. What the companies really need is to be more modular. If cars were built like computers, you could choose your own build out of the most appropriate components, knowing that all of them were built by people who specialize, and that replacement parts would be standardized enough to be cheaply available. TechCrunch has a good article about the concept .
What we need is to be lighter on our feet. The days of massive self sufficient manufactueres with big pension plans should be a thing of the past. We need small specialized manufacturers. When they see a need in the market they should specialize in creating the best product at the best price to fill the need. When the need is gone, there shouldn’t be any crying about lost jobs; just restructure, retool, retrain, transfer if neccesary, and get back to work. Benefit packages should be made more easily transferrable. If another nation is seriously subsidizing an industry in order to gain market share, I think we would be better served by putting more international economic pressure on that country, which is stronger the more global the industry is. We should encourage distributed international industry in order to make it unprofitable to cheat. The alternative is a cold war race to socialism.