The New, New Deal

A couple of readers have recently commented to me, that I am assessing the news but maybe not making loud enough statements of opinion. I take an analytical approach to figuring out problems and seek to synthesize a day or a few days worth of news into a post.

Because I know everyone knows where to go to get over-the-top statements telling you how to think; this is not my plan. Instead, my approach is to point out problems. If you are reading instead of looking at porn, I can only assume you have a somewhat intelligent mind that can do its own thinking.

I may also mention that I was also told by someone close to me in a recent discussion about the nationalization of Citibank that, "it does not matter what we (Citizens) do or think (when it comes to public policy)." Let me knock that statement out of the sky. IT DOES MATTER WHAT WE THINK!!! Do you think that the American colonies would have won the Revolutionary War if they had not already won the war of minds? So instead of just doing a news analysis today, I am going to take a historical approach.

Before the history lesson, let me just mention, that these are hard times that we have fallen upon. To illustrate this, just recently, I had made note of the Volatility Index (VIX) measured by the Chicago Board of Exchange. This measure is largely attributed with measuring "fear" in the marketplace. The reason I made note was not because I look at it with feverish intent but that, it was so much higher than I had ever heard it before. I was used to hearing numbers in the 20's, but now it is up in the 50's.

Similarly, the jobless rate is rising at a sickening pace, and here in California for instance, it has already hit double digits at 10.1%, just 3/10ths below the 1982 peak. This is uncertainty embodied. We must admit - fear is a big deal right now.

Would you like another factoid to prop up my argument?

The Dow's 11.7 percent loss in February was its worst since 1933, when it fell 15.6 percent, and its sixth straight monthly drop. The half-year slide totals 38.8 percent, the worst since 1932, when it fell 45 percent.*

If you watch the evening news you will here doomsayers like Nouriel Roubini, who seems to be a mainstay on CNBC, calling for the nationalization of large banks. As you will recall from previous posts, I do not subscribe to this theory for a variety of reasons. However, Obama and company do, and that is becoming increasingly clear.

The Obama Administration's thought is, that the way to prop up the economy is to inject money into the banks before they fail, thus keeping the prospect of lending alive. The intellectual elite from Stern School of Business, Harvard, MIT and other such academies are in agreement. Socialize is the word of the year.

A book I quoted from on an earlier post, seems to have been used almost to a "T" for shaping President Obama's economic policy so far. It makes sense because while winning fame politically, Paul Krugman is a Nobel Prize Winner in 2008 for Economics. This book, The Return of Depression Economics by Krugman, postulates that massive injections are needed to prevent catastrophic bank failures and that spending on infrastructure projects will keep the jobless rate lower.

To me, Krugman represents the leftist academic elite that has been making its power-plays on policy for years but finally has a sympathetic ear in President Obama. Krugman believes in the reformation that would be a kind of "New, New Deal (Krugman's words)." Do I need to remind you of the atrocity that continued under the New Deal which effectively prolonged a recession into a protracted Depression?

Let me take a moment to go over the accepted Depression facts and start by telling you that some are saying that we have never had a situation like we do today. These people are either lying, ill-informed or both. In 1929, Hoover used the Keynesian stimulus, much like we are today. Of great similarity the starting point was running a staggering deficit. Also similar was the rhetoric he used to push it through. Now take this statement and see if it sounds like something that President Obama recently said:

"We might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counter-attack ever involved in the history of the Republic..."

Gigantic - a better word might be gargantuan, from which we have the Hoover Dam, the Los Angeles Aqueduct and various other unbelievably expensive projects which would have been fine, if they did not coincide the economic crisis and thus contribute to tax rates increasing to 63% for upper income earners in depression years.

You might also examine the housing proposals President Hoover was pushing, banning foreclosures, and stopping auctions sales. Do these things not seem unbelievably, remarkably the same to President Obama's agenda?

To complete the story, after Hoover was run out of office on rails for the sickening decline in the economy, FDR decided he would just keep that Hoover ball rolling with the New Deal. It was a slickly packaged and well-marketed plan that was simply a continuation of governmental spending, along with some protectionist policies that ticked off the rest of the world and contributed to Global decline. FDR was the one who started doing the radio addresses. Who now is doing radio addresses regularly - you guessed it - President Obama? The parallels are ridiculously similar!

In the beginning, I thought President Obama was taking lessons directly from John F. Kennedy. But apparently, he is using almost every massive spending liberal from the last century as his influences.

It seems interesting when, his newly appointed Economic Recovery Advisory Board Chairman, Paul Volcker seems to be walking out of step with the general agenda.






Simply put, 'the stuff' is about to hit the fan. There is too much chaos occurring right now. I pointed out earlier that to me the appointment debacles (plural) for the Obama Administration showed a lack of planning and some marked ineptitude at the high office. Now, my question is exceedingly simple - Why are they spending money like drunken sailors in the South Seas? Do they really want a global Depression? If they do -WHY? Do they want to raid the coffers of hard working men and women?

I truly feel that there will be a point in the not-so-distant future where bold men take action. But we may not quite be there yet either. Right now, it is the watchful eye that will win the day.

Thanks for reading- C

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