The Bank Settlement

What can we say about this week's settlement with the banks over the "robo-signing" charges?

The facts of the situation are as follows: Millions of individuals took out loans with full cognizance of what they were doing and because, as Peter Wallison and Edward Pinto have demonstrated, they were incentivized by federal programs at Fannie Mae, Freddie Mac, and HUD to take out these loans. Those individuals defaulted on their loans. The banks that held those loans foreclosed on them. In a tiny fraction of the foreclosures, the banks made minor paperwork errors. Democratic Attorneys General, like Kamala Harris of California and Eric Schneiderman of New York and Beau Biden of Delaware, blew these errors up out of all proportion and waged a public relations and legal campaign to demonize the banks and shake them down for billions of dollars. These billions of dollars are going to be paid out to those individuals who defaulted on their loans. In many cases, these individuals have been living in their houses for months or even years now without paying any mortgage payments. The banks will cover the costs of making these payments by raising the fees they charge to you.

Is there no sense of shame left anymore? Doesn't this outrage you, America? This is what Progressivism and Obamaism has brought us.

ObamaCare and the Chevy Volt

Last week the Obama Administration announced a rule, based on the provisions of Obamacare, forcing all Catholic institutions — including charities, hospitals and schools — to provide and pay for insurance coverage that includes contraceptives, abortifacient drugs and sterilization procedures. This rule was greeted with massive opposition from the members and the clergy of the Catholic Church. So now, President Obama has retreated, offering up a new rule as an "accomodation." According to Time magazine, the new rule will work as follows:

A Catholic hospital will provide health insurance to employees that does not include contraception; the insurance company servicing the hospital will reach out to female employees and offer contraception or contraception coverage without any copays or coinsurance.

Who does Obama think he's fooling? Women will receive coverage at no cost. The insurance companies will be forced to recover their costs somehow. They will do this by charging higher premiums to the other customers of the insurance companies, including the Catholic institutions. The end result will be the same: Catholic institutions will be forced to pay to support activities that they find morally objectionable.

ObamaCare comes to this. Instead of allowing you to buy only the various insurance coverages you want, it forces you to buy the coverages the government says you should buy. I can see the future: Instead of allowing you to buy the kind of car you want, the government will force you to buy the kind of car the government says you should buy, in all likelihood, one manufactured by a government owned car company.

All good comrades, who will be defined by Clint Eastwood on Super Bowl Sunday as those who rise above "the fog of division, discord, and blame," that is, all those who support Obama, the "post-partisan President," will drive the Chevy Volt.

Obama and Catholics

Here is a copy of a letter I sent to a couple who are friends of mine, both Irish Catholics. I have not received a reply from them yet.

Dear J,

I’m curious to know what you and S think about the decision by the Obama Administration, based on the provisions of Obamacare, to force all Catholic institutions — including charities, hospitals and schools — to provide and pay for insurance coverage that includes contraceptives, abortifacient drugs and sterilization procedures.

As Jonathan Last writes:

Paul Loverde, wrote, “I am absolutely convinced that an unprecedented and very dangerous line has been crossed.” In Phoenix, Bishop Thomas Olmsted wrote, “We cannot—we will not—comply with this unjust law.” In Pittsburgh, Bishop David Zubik wrote that President Obama had told Catholics, “To Hell with your religious beliefs.” Bishop Daniel Jenky of Peoria asked his flock to join him in the Prayer to St. Michael the Archangel, which concludes: By the Divine Power of God / cast into Hell, Satan and all the evil spirits / who prowl about the world seeking the ruin of souls. … [Sister Carol Keehan, the president of the Catholic Health Association, who had actually lobbied in favor of Obamacare, early and often] was so horrified she threw her lot in with the more conservative [Archbishop Timothy] Dolan in full-throated opposition to Obama. Cardinal Roger Mahony, the spectacularly liberal archbishop emeritus of Los Angeles, wrote, “I cannot imagine a more direct and frontal attack on freedom of conscience.  .  .  . This decision must be fought against with all the energies the Catholic community can muster.” Michael Sean Winters, the National Catholic Reporter’s leftist lion, penned a 1,800-word cri de coeur titled “J’accuse!” in which he declared that, as God was his witness, he would never again vote for Obama. The editors of the Jesuit magazine America denounced a “wrong decision,” while the Washington Post columnist E. J. Dionne called the policy “unconscionable.”

Sounds like a lot of solid Irish Catholics to me ;>) .

Wikipedia defines totalitarianism as:

[A] political system where the state recognizes no limits to its authority and strives to regulate every aspect of public and private life wherever feasible. … [A] totalitarian regime attempts to control virtually all aspects of the social life including economy, education, art, science, private life and morals of citizens.

Of collectivist systems, Hayek in The Road To Serfdom writes:

The various kinds of collectivism … differ from liberalism and individualism in wanting to organize the whole of society and all its resources for this unitary end and in refusing to recognize autonomous spheres in which the ends of the individuals reign supreme.

Wouldn’t the decision by the Obama Administration be properly described as an attempt by our federal government to regulate every aspect of public and private life wherever feasible, including morals, or as a refusal to recognize an autonomous sphere (namely, the Catholic Church) in which the ends of the individuals reign supreme?

Jonathan Last writes:

Obama has left Catholic organizations a very narrow set of options. (1) They may truckle to the government’s mandate, in violation of their beliefs. (2) They may cease providing health insurance to their employees altogether, though this would incur significant financial penalties under Obamacare. (The church seems unlikely to obtain any of Nancy Pelosi’s golden waivers.) Or (3) they may simply shut down. There is precedent for this final option. In 2006, Boston’s Catholic Charities closed its adoption service—one of the most successful in the nation—after Massachusetts law required that the organization must place children in same-sex households. Which means that what is actually [being threatened] are precisely the kind of social-justice services—education, health care, and aid to the needy—that liberal Catholics believe to be the most vital works of the church.

Bill Kristol writes:

As Yuval Levin noted in National Review Online last week, institutions such as the Catholic church represent a mediating layer between the individual and the state. This layer, known as civil society, is one of the principal differences between Western liberal order and the socialist view.

So, I am wondering whether you and S are troubled by what I see as attempts by the Obama Administration to destroy the freedom of conscience of individual members of non-public institutions like the Catholic Church and by the ongoing drift of so-called progressivism towards totalitarianism?

With all respect and hoping you and S are doing well,

Sabazio

CHW and Susan G. Komen for the Cure

Catholic Healthcare West dissociates itself from the Catholic Church. No one cares.

Through the powers given to the government by Obamacare, President Obama orders all Catholic institutions — including charities, hospitals and schools — to provide and pay for insurance coverage that includes contraceptives, abortifacient drugs and sterilization procedures. No one cares.

The Susan G. Komen for the Cure foundation dissociates itself from Planned Parenthood. Everyone in the media is outraged. The abortion goons break knees.

No doubt the White House will issue a stream of statements that the Obama Administration is not anti-Catholic. They should be given as much credence as the statements from the White House that the Obama Administration is not anti-Israel.

Totalitarianism is a political system where the state recognizes no limits to its authority and strives to regulate every aspect of public and private life wherever feasible. The reason why Obamacare is so abhorrent is because it seeks to regulate aspects of private life -- for example, the decision whether to fund abortifacient drugs -- that should be the realm of the individual conscience.

Obama mistakenly wants to restore American manufacturing base

Brendan Erne has written a great little column that focuses on just how misguided it is when Obama (or anyone) starts talking about "restoring the manufacturing base in America." Here are the two key sentences from the column:

"According to the U.S. Bureau of Labor Statistics, compensation costs for manufacturing in Taiwan (where Hon Hai is based) were $8.36 per hour in 2010. They were $34.74 in the United States."

That says it all. High tech manufacturing in Silicon Valley is dead and has been dead for 15 years. The reason why is that labor costs in the United States are just too high. So, when Obama starts talking about "restoring the manufacturing base in America," either a.) he is stupid and has no clue about economic reality, or b.) he is merely trying to promote the narrow economic interests of his union supporters, who work largely in the manufacturing sector.

As Erne points out, the history of the United States has been one of progress from agriculture, to manufacturing, to services (which includes software development). For Obama constantly to insist at the dawn of the 21st century that we "restore our manufacturing base" is no different than if Teddy Roosevelt had constantly insisted at the dawn of 20th century that we "restore our agricultural base" and return our workforce to the plantations.

It is simply laughable how utterly out of touch Obama is with the forces operating in the global economy today. He keeps trying to restore a static, union-based workforce compensated by wages for working in manufacturing when the future belongs to a highly mobile, non-unionized workforce compensated by stock options for working, say, in the software industry (take it from someone who just went through his third IPO). Obama, the so-called "Progressive," is stuck in a pro-labor, 1950's, proletariat workers paradigm. That was fine back in the Hippy days when Saul-Alinsky-style radical organizing of the workers was all the rage, but the world has moved on. Obama attacks Mitt Romney for being a vulture capitalist, but all we get from Obama is Krugmanesque Nostalgianomics.

Erne's column should be read in conjunction with my earlier blog post in which I pointed out how misguided the self-avowed socialist Harold Meyerson was when he called for Apple to reopen manufacturing facilities in the United States. As I pointed out in that post, Solyndra was precisely the kind of "high-tech manufacturing" facility that Meyerson and Obama envision. And we can see where that led.

Keynes was right? So what!

Paul Krugman starts off his most recent column with a quote from John Maynard Keynes:

“The boom, not the slump, is the right time for austerity at the Treasury.”

Krugman then goes on to give a rousing defense of Keynesian stimulus. He points out that austerity in Ireland and Greece has only depressed the economies in those countries even more. He finishes by noting that interest rates for US Treasury bonds remain at rock bottom levels, concluding that the markets are telling the United States to borrow and spend even more. Keynes was right, Mr Krugman concludes.

Krugman's quote of Keynes begs the question of whether the Treasury ever has exercised or ever will exercise austerity during boom times.

There is merit to the Keynesian hypothesis: a government that has demonstrated its fiscal probity by running surpluses over many years, a government that is but little burdened with debt, can, it would seem, during periods when the economy is depressed, increase its spending, run a temporary deficit, and thereby increase aggregate demand and stimulate the economy, only to take its foot off the accelerator and return to balancing its budget when the economy improves.

But that is not the situation we find ourselves in today. Rather, our government has never run an extended surplus at any time in the last 30 years and, by the end of his term, Mr Obama will have increased the debt burden by more than any President who came before him. We are now buried under a mountain of debt and entitlement liabilities. And the reason why Treasury rates are so low is certainly not because investors have great confidence in the economic prospects of the United States, but because they are terrified that things are much worse elsewhere and are fleeing to Treasuries as a last resort.

Under such circumstances, continued borrowing and deficit spending no longer stimulates, but instead depresses and undermines the economy. As Kenneth Rogoff and Carmen Reinhart have recently pointed out in their book This Time is Different, countries with significant debt burdens generally tend to follow a lower growth trajectory and to be vulnerable to unforeseen exogenous shocks. It is precisely this vulnerability to unforeseen exogenous shocks that Krugman so cavalierly ignores when he trumpets the fact that the United States continues to be able to borrow at such low interest rates. (Krugman reminds me of a someone who has smoked cigarettes for 30 years, who has recently upped his intake to 3 packs a day, and who says: "Well, I don't have cancer yet, so, obviously, smoking is not harmful to my health.")

As I have pointed out in another blog post, the real situation we find ourselves in is that of the Petro-State, as described by Daniel Yergin in his book The Quest:

When [oil] prices soar, governments are forced by society's rapidly-rising expectations to increase their spending as fast as they can -- more subsidies to hand out, more programs to launch, more big new projects to promote. ... But when world oil prices go down and the nations' revenues fall, governments dare not cut back on spending. Budgets have been funded, programs have been launched, contracts have been let, institutions have been created, people have been hired. Governments are locked into ever-increasing spending. Otherwise they face political and social explosions.

In other words, during boom times there never is any austerity, any setting aside of resources for future periods of economic downturn, any saving for a rainy day. Instead, during boom times politicians ramp up their spending as quickly as the tax dollars flow in. They generously expand social programs and make long term commitments to their political supporters, most notably in the United States, to the public service employee unions. And then, inevitably, when all this overspending on less productive programs inevitably collapses, they voice the Keynesian whine: "We need more stimulus, not austerity, to help us out of our economic slump!" Stimulus, in the form of deficit spending over the last several decades, is, in fact, precisely what has gotten them into the current economic mess. And yet, we are asked to believe that stimulus, in the form of even greater deficit spending, accumulation of even greater debt, is now the way out. Hogwash!

I can do no more than to paraphrase what I have already written:

[T]he problem with the Keynesian approach is not chiefly a theoretical one, but a practical one. There are two sides to the Keynesian coin: short-term stimulus during hard times, and counter-cyclical fiscal tightening during good times. But for the practicioners of modern Keynesianism there never, in fact, comes a time when austerity measures are applied and spending and debt are reined in. Instead, ever expanding government spending and borrowing become a permanent way of life. And what is worse, the government spending is often the kind of spending that has an abysmal return on investment ("crony" or "special interest group" capitalism). The end result of this process is that, as the years roll on, mountains of debt are piled up while the return on the spending funded by that debt becomes less and less. We owe more and more and get less and less in return.

Thus, it does little good, Mr Krugman, to point out that, theoretically, Keynes was right. Permanent deficit spending, along with the accumulation of enormous debt that goes with it, without any counter-cyclical tightening during boom times is, simply put, not Keynesianism anymore. Keynes would be appalled to see his name invoked to defend the kind of out of control deficit spending that Obama and other Democratic politicians are engaging in today.

Keynesianism is a zero-sum game

WSJ reports:

San Francisco on Jan. 1 will become the first big city in the U.S. with a minimum wage topping $10 an hour.

WSJ then quotes Donna Levitt, manager of the city's Office of Labor Standards Enforcement:

"[The increase in the minimum wage] provides some protection for San Francisco's most vulnerable low-wage workers, and it also stimulates our local economy" since workers have more cash to spend locally.

Finally, WSJ quotes Steve Sarver, owner of the San Francisco Soup Co., a restaurant chain with 12 of its 18 locations in the city, who says many of his more than 200 employees earn close to the minimum wage:

"[As a result of the increase in the minimum wage, p]rice increases will have to happen eventually," says Mr. Sarver, who charges roughly $5 for soup servings. "There's no way around it."

What I want to point out here is the ludicrous nature of Ms. Levitt's Keynesian claim that the increase in the minimum wage will "stimulate the local economy." Yes, minimum wage workers will have more cash to spend locally. But, this cash will come from individuals who will be forced to pay higher prices to support the increase and therefore will have proportionately less cash themselves to spend locally. In other words, the increase is a zero-sum game: the City takes from one set of people in order to give to another set of people.

The sad irony is that some of the people from whom the money is taken are likely themselves low wage workers, who frequent the San Francisco Soup Co. because it offers a cheap square meal.

The idiocy of the Keynesians, mindlessly parroting their nonsensical mantras, has no bounds.