Thought For The Day
*
Irony at its best: 290 people get the Swine Flu and everybody wants to wear a mask. Ten million people irrefutably have AIDS and no one wants to wear a condom.
Paul Krugman on the Economy
Op-Ed Columnist for the New York Times
Fifty Herbert Hoovers
December 29, 2008
No modern American president would repeat the fiscal mistake of 1932, in which the federal government tried to balance its budget in the face of a severe recession. The Obama administration will put deficit concerns on hold while it fights the economic crisis. (emphasis added)
But even as Washington tries to rescue the economy, the nation will be reeling from the actions of 50 Herbert Hoovers — state governors who are slashing spending in a time of recession, often at the expense both of their most vulnerable constituents and of the nation’s economic future.
These state-level cutbacks range from small acts of cruelty to giant acts of panic — from cuts in South Carolina’s juvenile justice program, which will force young offenders out of group homes and into prison, to the decision by a committee that manages California state spending to halt all construction outlays for six months.
Now, state governors aren’t stupid (not all of them, anyway). They’re cutting back because they have to — because they’re caught in a fiscal trap. But let’s step back for a moment and contemplate just how crazy it is, from a national point of view, to be cutting public services and public investment right now.
Think about it: is America — not state governments, but the nation as a whole — less able to afford help to troubled teens, medical care for families, or repairs to decaying roads and bridges than it was one or two years ago? Of course not. Our capacity hasn’t been diminished; our workers haven’t lost their skills; our technological know-how is intact. Why can’t we keep doing good things?
It’s true that the economy is currently shrinking. But that’s the result of a slump in private spending. It makes no sense to add to the problem by cutting public spending, too. (emphasis added)
In fact, the true cost of government programs, especially public investment, is much lower now than in more prosperous times. When the economy is booming, public investment competes with the private sector for scarce resources — for skilled construction workers, for capital. But right now many of the workers employed on infrastructure projects would otherwise be unemployed, and the money borrowed to pay for these projects would otherwise sit idle.
And shredding the social safety net at a moment when many more Americans need help isn’t just cruel. It adds to the sense of insecurity that is one important factor driving the economy down.
So why are we doing this to ourselves?
The answer, of course, is that state and local government revenues are plunging along with the economy — and unlike the federal government, lower-level governments can’t borrow their way through the crisis. Partly that’s because these governments, unlike the feds, are subject to balanced-budget rules. But even if they weren’t, running temporary deficits would be difficult. Investors, driven by fear, are refusing to buy anything except federal debt, and those states that can borrow at all are being forced to pay punitive interest rates.
Are governors responsible for their own predicament? To some extent. Arnold Schwarzenegger, in particular, deserves some jeers. He became governor in the first place because voters were outraged over his predecessor’s budget problems, but he did nothing to secure the state’s fiscal future — and he now faces a projected budget deficit bigger than the one that did in Gray Davis.
But even the best-run states are in deep trouble. Anyway, we shouldn’t punish our fellow citizens and our economy to spite a few local politicians.
What can be done? Ted Strickland, the governor of Ohio, is pushing for federal aid to the states (emphasis added) on three fronts: help for the neediest, in the form of funding for food stamps and Medicaid; federal funding of state- and local-level infrastructure projects; and federal aid to education. That sounds right — and if the numbers Mr. Strickland proposes are huge, so is the crisis.
And once the crisis is behind us, we should rethink the way we pay for key public services.
As a nation, we don’t believe that our fellow citizens should go without essential health care. Why, then, does a large share of funding for Medicaid come from state governments, which are forced to cut the program precisely when it’s needed most?
An educated population is a national resource. Why, then, is basic education mainly paid for by local governments, which are forced to neglect the next generation every time the economy hits a rough patch?
And why should investments in infrastructure, which will serve the nation for decades, be at the mercy of short-run fluctuations in local budgets?
That’s for later. The priority right now is to fight off the attack of the 50 Herbert Hoovers, and make sure that the fiscal problems of the states don’t make the economic crisis even worse.
Belt-tightening is required by all, including government.
As recession fears cause the nation to embrace greater state control of the economy and unimaginable federal deficits, one searches in vain for debate worthy of the moment. Where there should be an historic clash of ideas, there is only blind resignation and an amorphous queasiness that we are simply sweeping the slouching beast under the rug.
With faith in the free markets now taking a back seat to fear and expediency, nearly the entire political spectrum agrees that the federal government must spend whatever amount is necessary to stabilize the housing market, bail out financial firms, liquefy the credit markets, create jobs and make the recession as shallow and brief as possible. The few who maintain free-market views have been largely marginalized.
Taking the theories of economist John Maynard Keynes as gospel, our most highly respected contemporary economists imagine a complex world in which economics at the personal, corporate and municipal levels are governed by laws far different from those in effect at the national level.
Individuals, companies or cities with heavy debt and shrinking revenues instinctively know that they must reduce spending, tighten their belts, pay down debt and live within their means. But it is axiomatic in Keynesianism that national governments can create and sustain economic activity by injecting printed money into the financial system. In their view, absent the stimuli of the New Deal and World War II, the Depression would never have ended.
On a gut level, we have a hard time with this concept. There is a vague sense of smoke and mirrors, of something being magically created out of nothing. But economics, we are told, is complicated.
It would be irresponsible in the extreme for an individual to forestall a personal recession by taking out newer, bigger loans when the old loans can't be repaid. However, this is precisely what we are planning on a national level.
I believe these ideas hold sway largely because they promise happy, pain-free solutions. They are the economic equivalent of miracle weight-loss programs that require no dieting or exercise. The theories permit economists to claim mystic wisdom, governments to pretend that they have the power to dispel hardship with the whir of a printing press, and voters to believe that they can have recovery without sacrifice.
As a follower of the Austrian School of economics I believe that market forces apply equally to people and nations. The problems we face collectively are no different from those we face individually. Belt tightening is required by all, including government.
Governments cannot create but merely redirect. When the government spends, the money has to come from somewhere. If the government doesn't have a surplus, then it must come from taxes. If taxes don't go up, then it must come from increased borrowing. If lenders won't lend, then it must come from the printing press, which is where all these bailouts are headed. But each additional dollar printed diminishes the value those already in circulation. Something cannot be effortlessly created from nothing.
Similarly, any jobs or other economic activity created by public-sector expansion merely comes at the expense of jobs lost in the private sector. And if the government chooses to save inefficient jobs in select private industries, more efficient jobs will be lost in others. As more factors of production come under government control, the more inefficient our entire economy becomes. Inefficiency lowers productivity, stifles competitiveness and lowers living standards.
If we look at government market interventions through this pragmatic lens, what can we expect from the coming avalanche of federal activism?
By borrowing more than it can ever pay back, the government will guarantee higher inflation for years to come, thereby diminishing the value of all that Americans have saved and acquired. For now the inflationary tide is being held back by the countervailing pressures of bursting asset bubbles in real estate and stocks, forced liquidations in commodities, and troubled retailers slashing prices to unload excess inventory. But when the dust settles, trillions of new dollars will remain, chasing a diminished supply of goods. We will be left with 1970s-style stagflation, only with a much sharper contraction and significantly higher inflation.
The good news is that economics is not all that complicated. The bad news is that our economy is broken and there is nothing the government can do to fix it. However, the free market does have a cure: it's called a recession, and it's not fun, easy or quick.
But if we put our faith in the power of government to make the pain go away, we will live with the consequences for generations.
Three words read by William Anders aboard the Apollo 8 mission on Christmas Eve 1968.
1968 was our Annus horribilis. It was a year of unrest at the Democratic National Convention. It was the year that saw the assassinations of Robert Kennedy and Martin Luther King Jr. It was a year in which riots and protests were the daily fare on the nightly newscasts. It was a year in which America felt at its lowest point. And America needed a boost.
When the Apollo 8 mission was originally planned the mission was not suppose to go to the moon. It was suppose to be in a low Earth orbit checking out the systems on the Command module and possibly the lunar module if one had been ready by then. Instead the mission was changed and Apollo 8 would be the first manned mission to go to the moon. In itself it would be a very dangerous mission, the first of anything is alway a dangerous mission to accomplish. Because of the nature of the mission and the decision to change it, the true mission was kept a secret from the public until the official announcement on 12 November 1968, less than 40 days before the scheduled launch.
Apollo 8 launched at 7:51:00 a.m. on December 21, 1968. During the flight, three fellow astronauts served on the ground as capsule communicators (usually referred to as "CAPCOMs") on a rotating schedule. The CAPCOMs were the only people who regularly communicated with the crew. Michael Collins was the first CAPCOM on duty and at 2 hours, 27 minutes and 22 seconds after launch radioed, "Apollo 8. You are Go for TLI". This communication signified that Mission Control had given official permission for Apollo 8 to go to the moon. Over the next twelve minutes before the TLI burn, the Apollo 8 crew continued to monitor the spacecraft and the rocket. The S-IVB third stage rocket ignited on time and burned perfectly for 5 minutes and 17 seconds. The burn increased the velocity of Apollo 8 to 35,505 feet per second (10,822 m/s) and the spacecraft's altitude at the end of the burn was 215.4 miles (346.7 km). At this time, the crew also set the record for the highest speed humans had ever traveled.
Five hours after launch, Mission Control sent a command to the S-IVB booster to vent its remaining fuel through its engine bell to change the booster's trajectory. This S-IVB would then pass the Moon and enter into a solar orbit, posing no further hazard to Apollo 8. The S-IVB subsequently went into a 0.99 by 0.92 AU solar orbit with an inclination of 23.47° and a period of 340.80 days.
The Apollo 8 crew were the first humans to pass through the Van Allen radiation belts, which extend up to 15,000 miles (25,000 km) from Earth. Scientists predicted that passing through the belts quickly at the spacecraft's high speed would cause a radiation dosage of no more than a chest X-ray, or 1 milligray (during the course of a year, the average human receives a dose of 2 to 3 mGy). To record the actual radiation dosages, each crew member wore a Personal Radiation Dosimeter that transmitted data to Earth as well as three passive film dosimeters that showed the cumulative radiation experienced by the crew. By the end of the mission, the crew experienced an average radiation dose of 1.6 mGy.
At about 55 hours and 40 minutes into the flight, the crew of Apollo 8 became the first humans to enter the gravitational sphere of influence of another celestial body. At 64 hours into the flight, the crew began to prepare for Lunar Orbit Insertion-1 (LOI-1). This maneuver had to be performed perfectly, and due to orbital mechanics had to be on the far side of the Moon, out of contact with the Earth. After Mission Control was polled for a Go/No Go decision, the crew was told at 68 hours, they were Go and "riding the best bird we can find". At 68 hours and 58 minutes, the spacecraft went behind the Moon and out of radio contact with the Earth.
When the spacecraft came out from behind the Moon for its fourth pass across the front, the crew witnessed an event no one had ever seen — Earthrise. Borman saw the Earth emerging from behind the lunar horizon and called in excitement to the others, taking a black-and-white photo as he did so: Earthrise, seen for the first time by human eyes. In the ensuing scramble Anders took the more famous color photo, later picked by Life magazine as one of its hundred photos of the century.
As they rounded the Moon for the ninth time, the second television transmission began. Borman introduced the crew, followed by each man giving his impression of the lunar surface and what it was like to be orbiting the Moon. Borman described it as being "a vast, lonely, forbidding expanse of nothing." Then, after talking about what they were flying over, Anders said that the crew had a message for all those on Earth. Each man on board read the story of creation from Book of Genesis. Borman finished the broadcast by wishing a Merry Christmas to everyone on Earth. His message appeared to sum up the feelings that all three crewmen had from their vantage point in lunar orbit. Borman said,
"And from the crew of Apollo 8, we close with good night, good luck, and a Merry Christmas to all of you, all of you on the good Earth"
After 10 lunar orbit, Apollo 8 returned to Earth on 27 December 1968. A successful and historic mission.
So on this Christmas Eve, we should remember a historic moment in Human history that took place 40 years ago.
William Anders
"We are now approaching lunar sunrise and, for all the people back on Earth, the crew of Apollo 8 has a message that we would like to send to you. In the beginning God created the heaven and the earth. And the earth was without form, and void; and darkness was upon the face of the deep. And the Spirit of God moved upon the face of the waters. And God said, Let there be light: and there was light. And God saw the light, that it was good: and God divided the light from the darkness."
Jim Lovell
"And God called the light Day, and the darkness he called Night. And the evening and the morning were the first day. And God said, Let there be a firmament in the midst of the waters, and let it divide the waters from the waters. And God made the firmament, and divided the waters which were under the firmament from the waters which were above the firmament: and it was so. And God called the firmament Heaven. And the evening and the morning were the second day."
Frank Borman
"And God said, Let the waters under the heavens be gathered together unto one place, and let the dry land appear: and it was so. And God called the dry land Earth; and the gathering together of the waters called he Seas: and God saw that it was good. And from the crew of Apollo 8, we close with good night, good luck, a Merry Christmas – and God bless all of you, all of you on the good Earth."
It's in the way you dress, the way you boogie down, the way you sign your lifetime unemployment annuity check. You're a man or woman who likes to do things your own way.
And on those special odd-numbered Saturdays when driving is permitted, you want those special vibes from your car to turn you on when you turn it on. It's that personal feeling of a zero-emissions wind at your back and a road meandering ahead with remote possibilities. That’s the kind of feeling you get behind the wheel of the new Pelosi GTxi SS/Rt Sport Edition from Congressional Motors.
All new for 2012, the Pelosi GTxi SS/Rt Sport Edition is now the mandatory American car. It is so advanced, it is a bargain considering the $100 billion an entire Congress spent to design it. Congress started with the reliable 7-way hybrid ethanol-biodiesel-electric-clean coal-wind-solar-pedal power plant behind the original base model Pelosi, but packed it with extra oomph and the sassy styling pizzazz that tells the entire world that 1974 Detroit is back again -- this time with a vengeance.
Congress has subsidized the features you’ve always wanted and taxed away the rest. With its advanced Al Gore-Reid throat V-3 design under the hood pumping out 22 huge thumping, carbon-neutral ponies of Detroit cartilage, you'll never be late again for the Disco or free lunch at the Day Labor Shelter.
Options include your ability to easily engage the pedal drive, or to strap on the optional jumbo mizzenmast, and the GTxi SS/Rt Sport Edition easily exceeds 2016 CAFE mileage standards. At an estimated 268 MPG, that's a savings of nearly $1800 per week in fuel cost over any prior McCain-Lieberman carbon-neutral design.
Even with such remarkably increased performance, Congress didn't skimp on safety. With an 11-point driver and passenger racing harnesses, 15-way airbags, and mandatory hockey ignition-interlock safety helmet, you'll have the security of knowing that you could survive a 45 MPH collision - even if the GTxi SS/Rt were capable of that kind of downhill speed.
But the changes don't stop there. Sporty easy-theft hubcaps, wheels and axles, and an all-new aggressive watermelon-shape design by CM's Chief Stylist Ted Kennedy, the GTxi SS/Rt slices through the wind like a ‘Big Dig’ omnibus spending bill. It even features the latest version of an airtight Kopechne undercarriage designed to keep you and one passenger dry, either in a car wash, or afloat up to 15 minutes in the choppy waters off Nantucket Island or Martha’s Vineyard.
Best of all, the Pelosi GTxi SS/Rt will be available in a rainbow of color choices to match any wardrobe, from Harvest Avocado to French Mustard, a favorite of Michelle Obama. A special high capacity hatchback model holds up to 300 aluminum cans and 64 kilos, not to mention millions of dollars of frozen cash. This means fewer trips by liberals to the Guantanamo-style right-wing interrogation centers. And with the standard 3-speaker Fairness ActoPhonic single-channel FM low-band sound system, you'll never miss a segment of NPR again.
Most importantly, the Pelosi GTxi SS/Rt is assembled right here in the USA from New York Times-leaked Yugo design documents by fully card-checked unionized workers and a cadre of Detroit's famous visionary jet-set CEO’s. Even if you don't own one of these remarkable biodegradable rust-enhancing paperweights, you can enjoy the patriotic satisfaction of supporting the astronomical wages, unlimited benefits, rock-star work hours and NFL-style retirement, open-ballot union elections and Chicago-style political donations that are sure to make the American car industry once again the envy of the world.
Why not buy one!? With an MSRP starting at only $129,999 before taxes or $629,000 out the door, it's a steal (from taxpayers). Don't forget to ask about dealer incentives and manufacturer’s rebates, government tax credits, gender incentives, racial allowances, and wealth redistribution plans applicable to many Shariah-compliant special-interest groups. Easy-pay financing programs are available from the newly reincarnated and taxpayer-funded 2nd iteration of Barnie’s Fannie Mae and Freddie’s Big Mac.
So take the bus you’ve been owed for centuries to your local Congressional Motors dealer today and find out why the Pelosi GTxi SS/Rt Sport Edition is the only car endorsed (for you) by California’s Governor Arnold Schwarzenegger. Only one test drive will convince you that you would have chosen a Ford or GM if you had been given a choice.
The insurance giant AIG has lately become the poster child for corporate risk-taking, mismanagement and greed. Its unimaginably large losses, rooted in insurance it extended to financial companies engaged in subprime mortgage-backed transactions, have destroyed both AIG's corporate reputation and balance sheet.
Indeed, but for the fact that Treasury Secretary Henry Paulson - who during his days running Goldman Sachs had extensive ties to AIG - deemed the insurance firm "too large to fail," the company would surely have gone under by now. Instead, Mr. Paulson gave AIG well over $40 billion of the slush-fund Congress intended to bailout the financial sector (part of a total $150 billion the U.S. has sunk in AIG to date). As a result, you and I and our fellow taxpayers have been saddled with ownership of nearly 80 percent of this once high-flying and now-floundering global insurance enterprise.
Another result of AIG's nationalization is, if anything, even more worrisome."
It turns out that AIG has a subsidiary specializing in "takaful" - insurance products that are purportedly "Shariah-compliant." I say purportedly because - while they have been cynically deemed "pure" (halal) by Shariah advisers that AIG employed for the purpose of making such certifications - the Islamic code expressly prohibits business transactions that involve risk. Consequently, insurance products designed to hedge against risk are inherently "impure" or haram.
Whatever the status of AIG's "takaful" products under Islamic law, the U.S. government now has a vested interest in their financial success. Uncle Sam has become Uncle Shariah.
In so doing, Henry Paulson has acted in a manner that not only appears to smack of a conflict of interest and egregious disregard for the public's fiduciary interests. He also seems to have violated the Constitution.
The First Amendment of the Bill of Rights has long been interpreted as prohibiting the establishment of any national religion or conferring upon one religion a preference over others. By taking a massive stake in a company that explicitly promotes Islam's Shariah law, the U.S. government is acting at odds with both of these revered principles.
Fortunately, an important legal initiative has just been launched aimed at blocking Mr. Paulson and the Federal Reserve Board from engaging in this sort of unconstitutional behavior via Shariah-Compliant Finance (SCF) and other commercial transactions. A lawsuit filed Dec. 15 in U.S. district court in Michigan by an Iraq war veteran named Kevin Murray contends that:
"The Shariah-based Islamic religious practices and activities that the government-owned AIG engages in - activities that are funded and financially supported by American taxpayers, including Plaintiff, who is forced to contribute to them - are antithetical to our Nation's values, customs, and traditions with regard to religious liberty, religious tolerance, and the proscriptions of the First Amendment. These government-funded activities not only convey a message of disfavor of and hostility toward Christians, Jews, and those who do not follow or abide by Islamic law based on the Quran or the teachings of the Prophet Mohammed, but they also embody actual commercial practices which are pervasively sectarian and which disfavor Christians, Jews, and other 'infidels,' including Americans."
The litigation seeks relief in ways that would be far-reaching at a time when the U.S. government has bought not only most of AIG but owns some 20 other financial institutions - and seems intent on encouraging their embrace of Shariah-Compliant Finance. (Notably, in November, Mr. Paulson's fellow Goldman Sachs alumnus and point-man for the financial sector bailout, Assistant Treasury Secretary Neel Kashkari, convened an "Islamic Finance 101" seminar where officials in the "policy community" were propagandized by Harvard University professors and other champions of the SCF industry.)
The court is being asked to rule that, among other things, the defendants' "policy and practice of approving, endorsing, promoting, funding, and supporting Shariah-compliant finance" and "the United States government's ownership interest in and use of taxpayer money to financially support AIG and its Takaful Insurance business, which is pervasively sectarian, violate the Establishment Clause."In addition, Murray v. Paulson seeks a permanent injunction against such practices both with respect to AIG and Shariah-Compliant Finance more generally.
Most Americans remain unaware of the menace posed by Shariah, let alone the extent to which it is being insinuated stealthily into our country. Happily, the latter is the subject of an excellent new book by the acclaimed scholar of Islam, Robert Spencer, entitled, "Stealth Jihad: How Radical Islam is Subverting America Without Guns or Bombs."
Murray v. Paulson therefore provides not just an opportunity for an urgently needed constitutional ruling and injunctive relief with respect to the U.S. government's submission to Shariah. This lawsuit brought on Mr. Murray's behalf by one of the nation's preeminent public interest law firms, the Thomas More Law Center, and by the formidable litigator/Shariah expert David Yerushalmi, who also serves as the Center for Security Policy's general counsel, affords the American people a vital teaching moment:
Official promotion of Shariah law is unconstitutional and, given Shariah's inherently seditious nature (it explicitly requires the violent overthrow of all non-Islamic governments in favor of a global theocracy), acquiescence to its insinuation in this country constitutes a felony offense known as "misprision of treason."
We cannot tolerate and must not permit Uncle Sam's morphing into Uncle Shariah. Prompt action by the courts on Murray v. Paulson may spare us that monstrous transformation.
If "cash is king," then Middle East coffers are irresistibly enticing. During a recent tour of Saudi Arabia and the Gulf states, Deputy Treasury Secretary Robert Kimmitt applauded the "growing role" of Arab banks in the U.S. economy. Treasury is seeking buyers for its newly acquired bailout assets because more than $1 trillion in cash is urgently needed to rescue the largest U.S. banks.
However, cash from the Arabian Gulf comes with a vital string attached: Islamic banking, erroneously viewed as an ancient practice. In fact, Islamic banking is a newly invented institution: "Neither classical nor medieval Islamic civilization featured banks in the modern sense, let alone 'Islamic' banks," notes Timur Kuran, professor of economics and law at the University of Southern California. According to the Dinar Standard, "assets managed by Islamic banks are in excess of $700 billion - predominantly concentrated in the Middle East." Islamic banking took off in the 1970s, but was first concocted by Muslim Brotherhood founder Hassan al-Banna in the 1920s. The stated goal was to penetrate the Western finance system, corrupting it from within in hopes of creating a parallel system to re-establish a global Islamic empire governed by Islamic law (Shariah). Islamic rules of commerce (fiqh al-muamalat) forbid interest (riba) and investing in a prohibited (hara'am) enterprise. They also mandate tithes on wealth (zakat). However, the Koran fails to precisely define these concepts. Imams and ayatollahs differ, for example, on whether riba prohibits all interest or only usurious interest.
While the overhaul of American and Western banking regulations is urgent, Islamic banking cannot be the answer because Muslim clerics - not U.S. laws and regulators - make the rules. In 1969, the Saudis created the Organization of the Islamic Conference (OIC), which is now leading the charge for global expansion of Islamic banking and has established new regulatory, accounting and auditing organizations to govern such banks. Notably, the OIC's charter is to "liberate Jerusalem and Al-Aqsa [mosque] from Zionist occupation."
Not surprisingly, zakat from Islamic banks often funds terrorist groups like the Muslim Brotherhood's Hamas. That organization's agenda was exposed during the Dallas trial of The Holy Land Foundation, a Hamas front group and an American Muslim charity just convicted of terrorism crimes. Evidence of the charity's true purpose included an 18-page "explanatory memorandum" outlining its "strategic goal … that all their work in America is a kind of grand Jihad (holy war) in eliminating and destroying the Western civilization from within."
Sharia financing forbids loans to entities labeled hara'am, such as industries that use alcohol, and to all Israeli businesses The Arab League Council established the boycott against Israel on December 2, 1945, (more than two years before creation of the Jewish state). The boycott prohibits all Arab states, companies and individuals from any financial or trade relations with Israel. Companies worldwide are blacklisted for doing business with Israel, as are companies doing business with boycotted firms. The OIC high commissioner for the boycott of Israel coordinates the efforts of its 57 member states from the Central Boycott Office in Damascus.
In response, the United States made it illegal for individuals or companies to cooperate with the Arab boycott. The law mandates reporting of boycott requests and imposes civil and criminal penalties against boycott participants. Arab boycott requests have risen sharply in tandem with the U.S. financial crisis and the rapid growth of Islamic banking. The Commerce Department's Bureau of Industry and Security reported a 20 percent increase in Arab boycott requests overall from 2005 to 2006, and the Congressional Research Service reported 24 boycott requests to U.S. companies in fiscal 2007 from little Bahrain alone.
On April 5, 2006, Congress unanimously condemned Saudi Arabia for its continued enforcement of the boycott - which violated commitments the Saudis made to the World Trade Organization in 2005. Nonetheless, last August Saudi Arabia and other Gulf states threatened to boycott Nissan, which aired a commercial on Israeli television promoting a fuel-efficient car, and demanded the Japanese carmaker's apology. Not a word from Washington.
Instead, the Treasury Department, hungry for petrodollars, is holding seminars to promote Islamic banking and U.S. taxpayers are footing the bill. This practice must stop. Islamic banking corrupts our financial system, enables the illegal Arab economic boycott of Israel and entangles government with Islam in violation of the First Amendment's Establishment Clause.
Rachel Ehrenfeld and Samuel A. Abady
The Washington Times
December 11, 2008
Rachel Ehrenfeld is director of the American Center for Democracy.
Samuel A. Abady is a civil rights lawyer.
This is not something for litigation. This is something for legislation. Somebody in congress or the Senate needs to propose a new banking law that prohibits US banks or financial institutions from engaging in "discriminatory and religiously biased investment plans". You shouldn't be able to do "white-christian, only lending/investment fund", so too FDIC regulated banks and investment agencies shouldn't be allowed to have "sharia friendly" investment/lending portfolios, that prohibit investments in companies that do business with Female owned, Israel, or Alcohol etc., stemming from a particular relgious racist, dogma. Turn their whole "political correctness" dogma around on them.
I’ve got some good news and some bad news today. The bad news is: A lot of people are going broke. The good news is: They know it now. You see, as long as they were able to borrow money and stay employed, they looked and felt prosperous, even though living paycheck to paycheck is not prosperity. But now, jobs are in jeopardy – those that still have one.
Credit cards are maxed out – those that haven’t been canceled – and the prospects for prosperity next year, real or illusionary, are fading with each new report on our collapsing economy. That’s why so many are now dining at McDonalds, shopping at Wal-Mart and not buying anything they can’t eat or live without. Sure, some are simply being frugal, but most are just trying to survive another month of bills.
That means the Big Three Automakers who have been begging Congress for cash won’t have very many customers next year regardless of what they build, how cheap they sell it for or how much money the government throws at them to keep the assembly lines rolling, which is why thousands upon thousands of new cars are now piling up at ports both here and abroad.
It doesn’t matter if next year’s new cars get 5 mpg or 55 mpg. Nor does it matter if they retail for $10,000 or $110,000. There are Dodge dealers offering two for one trucks on their lots right now, and even at that, they’ve got way more than they can sell.
The fact remains, there’s little or nothing left of the average person’s bank account or borrowing power to buy them with – no more credit, no more cash and, in many cases, no more job.
What part of broke, unemployed and overextended do these CEOs not understand? Building more automobiles with future taxes isn’t going to bring a single new customer into their showrooms.
When I read about Congress considering loans to automakers with money that has yet to be created out of thin air with the Fed’s printing presses, all to be repaid later by whomever is still clinging to a job or some taxable asset, it occurs to me that GM, Ford and Chrysler are doing nothing but justifying their own existence by allowing the paychecks of some to be plundered so they can still get one.
That’s socialism folks – pure and simple – redistributing wealth – and it is not going to save this country from economic ruin. All it’s going to do is create a lot of shiny new cars for homeless people to live in.
This has been a bad week for Team Obama. Since Election Day, these characters have been desperately trying to recast themselves as "centrist," and distance their captain from the cadre of unsavory characters which gave him rise.
The big news was the arrest of one of the team's former coaches, Illinois Gov. Milorad "Rod" Blah-goy-ah-vich, in what is arguably the most impressive case of public corruption since the Clintonistas were in the White House.
I am shocked -- SHOCKED -- to report that Barry Obama's hometown of Chicago is a cesspool of political corruption. At least Bill and Hillary had a chance to hang the White House drapes before their patrons and benefactors began to collect indictments. But then, Obama did promise "change you can believe in."
Before we get to Obama's political patron, Blagojevich, there were also a few "players" on Team Obama, previously benched for bad manners, who were making news this week.
For starters, last Saturday William Ayers, one of Obama's neighbors and key socialist political mentors, re-emerged from his rat hole with another New York Times opinion piece. As you recall, Ayers helped launch Obama's political career from his home near Obama's Hyde Park mansion in Southside Chicago. In addition, he provided the job that Obama later identified as the "primary qualification" for his Illinois State Senate campaign.
Ayers, who on the very morning of 11 September 2001, opined in The Times, "I don't regret setting bombs; I feel we didn't do enough," and would later insist that Americans deserved the attack, now insists, "I was cast in the 'unrepentant terrorist' roll," adding, "Now that the election is over, I want to say as plainly as I can that the character invented to serve this drama wasn't me, not even close."
He admitted, "I co-founded the Weather Underground [which] crossed lines of legality, of propriety and perhaps even of common sense. We did carry out symbolic acts of extreme vandalism directed at monuments to war and racism... But it was not terrorism." So, blowing up government buildings as a means of protest is not terrorism? Perhaps Ayers should have been called as a character witness for Timothy McVeigh in the bombing of the Murrah Federal Building in Oklahoma City.
Second up, Obama's spiritual mentor, Jeremiah Wright, was back in the pulpit last Sunday. Obama describes Wright as a father figure "who I have known for 20 years [who] led me to Christ ... a biblical scholar and well regarded preacher who is known for talking about the social gospel." In other words, a peddler of black supremacist doctrine and the gospel of Marx.
Wright was benched by Team Obama last summer after a video of one of his "social gospel" sermons surfaced, in which he proclaimed, "The government lied about inventing the HIV virus as a means of genocide against people of color. The government gives [black people] drugs, builds bigger prisons, passes a three-strikes law and then wants us to sing 'God Bless America.' No, no, no, g*d d*** America, that's in the Bible for killing innocent people. G*d d*** America for treating our citizens as less than human. G*d d*** America for as long as she acts like she is god and she is supreme."
On the Sunday after 9/11, the Obama family was in church listening to Wright sermonize about how we deserved to be attacked: "We have supported state terrorism against the Palestinians and black South Africans, and now we are indignant because the stuff we have done overseas is now brought right back to our own front yards. America's chickens are coming home to roost."
Last year, Wright awarded anti-Semite Louis Farrakhan his church's highest honor, saying Farrakhan is a man who "truly epitomized greatness," and adding, "When Minister Farrakhan speaks, Black America listens. His depth on analysis when it comes to the racial ills of this nation is astounding and eye opening. He brings a perspective that is helpful and honest."
When Obama was asked about his close association with Wright, he invoked his own version of Bill Clinton's "I didn't inhale" defense, and claimed he never even heard any of those controversial sermons. Perhaps he heard all of them, just not with the ears of a presidential wannabe.
Last Sunday (Pearl Harbor Day), Wright was back at it, insisting, "Any preacher who dares to point out the simple ugly facts ... is demonized as volatile, controversial, incendiary, inflammatory, anti-American and radical."
Obama's mentor is so blinded by his hatred for America that he built his comeback sermon around this distortion of history: "Today is December 7th, the day that this government killed over 80,000 Japanese civilians at Hiroshima in 1941, two days before killing an additional 64,000 Japanese civilians at Nagasaki by dropping nuclear bombs on innocent people."
As I recall from my elementary schooling, the bombing of Hiroshima on 6 August 1945, and Nagasaki three days later, resulted in Japan's surrender -- which was a far better alternative than the invasion of Japan, at a cost of a half million American lives and those of millions of Japanese civilians. Apparently Wright's exegetical interpretation of U.S. history rises to the same standard as his elucidation of Scripture.
All that being said, I am sure that Ayers and Wright are just affable dupes caught up in a big misunderstanding...
Next up: One of Obama's most influential political associates, the aforementioned Gov. Blagojevich, was awakened by a phone call Tuesday morning from an FBI agent who asked him to step outside and surrender to agents waiting at his front door. After asking, "Is this a joke?" and being convinced otherwise, Blagojevich surrendered.
Turns out, Blagojevich was trying to sell Obama's vacated Senate seat to the highest bidder, and it appears that may have been Jesse Jackson Jr., who has a genetic predisposition toward sleazy shakedowns and "pay-to-play" politics.
Lest anyone try to imply otherwise, Obama has close ties to Blagojevich.
Rahm Emanuel, Obama's incoming White House chief of staff, told the New Yorker earlier this year that he and Obama crafted Blagojevich's first gubernatorial campaign. "We participated in a small group that met weekly when Rod was running for governor. We basically laid out the general election, Barack and I..."
On 27 June 2002, then-state Sen. Obama said, "Right now, my main focus is to make sure that we elect Rod Blagojevich as governor." In 2004, then-Gov. Blagojevich returned the favor with his fervent endorsement of Obama for the U.S. Senate and in 2005, Obama endorsed Blagojevich for re-election.
Despite the fact that Obama knew Blagojevich was under investigation for serious corruption issues, he said of Blagojevich, "We've got a governor in Rod Blagojevich who has delivered consistently on behalf of the people of Illinois."
Delivered for a price.
The complaint against Blagojevich outlines what federal prosecutor Patrick Fitzgerald calls a "staggering" trail of corruption, and even ropes in another Obama benefactor, Tony Rezko, whose arrangements concerning Obama's home purchase are now the subject of a criminal investigation. Rezko is "cooperating with authorities."
Fitzgerald is tenacious, and will bulldog this investigation wherever it leads, unless, of course, the president-elect determines after 20 January that Fitzgerald's services are no longer needed.
Obama, in desperate need of his teleprompter, said Wednesday, "I had no contact with the governor what -- or, uhhh -- or his office, uhhh, and so we -- I -- I -- I was not aware of, uh, what was happening. And as I said, uh, it's a sad day for Illinois. Uh, beyond that, I don't think it's appropriate to comment."
"Not appropriate to comment?" How about showing some indignation and moral outrage, or a simple stumble-free assurance that he will support Fitzgerald's investigation going forward, no matter where it leads?
Asked whether any of his aides spoke with Blagojevich, Obama said: "Let me stop you there because it's an ongoing investigation. I think it would be inappropriate for me to, you know, remark on the situation..."
I guess Obama is borrowing a page from Bill Clinton's dictionary. Instead of "It depends on what the meaning of 'is' is," Obama is claiming, "It depends on what the meaning of 'contact' is."
Complicating matters for Obama, on 5 November, KHQA-TV in Quincy, Ill., reported Obama and Blagojevich were about to meet: "Now that Barack Obama will be moving to the White House, his seat in the U.S. Senate representing Illinois will have to be filled. That's one of Obama's first priorities today. He's meeting with Governor Rod Blagojevich this afternoon in Chicago to discuss it." On 8 November, the station confirmed, "Obama met with Governor Rod Blagojevich earlier this week to discuss it. Illinois law states that the governor chooses that replacement."
KHQA has removed the story from their Web site and denies any knowledge such a meeting took place.
Now, I would never suggest that the TV media always get it right, or that they ever get it right. However, there is a problem in regard to another televised interview, this one with Obama's senior advisor David Axelrod.
On 23 November, ABC carried an interview on Chicago's WFLD-TV in which Axelrod claimed matter-of-factly, "I know [Obama] has talked to the governor and there are a whole range of names many of which have surfaced, and I think he has a fondness for a lot of them."
Within minutes of Obama's disclaimer about any such meeting, Alexrod released this statement: "I was mistaken when I told an interviewer last month that the president-elect has spoken directly to Governor Blagojevich about the Senate vacancy. They did not then or at any time discuss the subject."
One of Axelrod's statements is false -- we may never know which one -- but he had no reason to lie the first time.
There is no suggestion in the Blagojevich complaint that Obama was directly involved in any of the shenanigans regarding who would fill his Senate seat, but the words "president-elect" appear 44 times in the indictment.
Like the Clintons, Obama is surely smart enough to have insulated any involvement in this racket with cutouts, disposable emissaries who can take one for the team if necessary. (Expect that player's name to surface soon.) But it is worth noting that the last guy Patrick Fitzgerald successfully prosecuted for perjury in connection with a federal investigation was Scooter Libby, who testified he had "no recollection" of the conversation that got him convicted.
Moreover, Blagojevich knows where all the Chicago political skeletons are hidden, and facing 30 years in the big house, he will certainly cut a deal and lead prosecutors to a few of them -- perhaps even one or two in the president-elect's closet. Of course, some 66 million voters did not care about any of this corruption six weeks ago, and are likely to turn an equally blind eye and deaf ear to it now.
If you’re still skeptical that we’re sinking into America’s Second Great Depression, you don’t have to believe Alan Greenspan, who says we’re already experiencing the worst financial crisis in a hundred years. Nor need you heed the news that the economy just lost a half-million more jobs or that retail sales have just suffered their worst plunge in 35 years. All you have to do is get up from your chair, open the door and take a walk outside.
Nearly everything you see and hear will clue you in to the true plight of our time — one out of 10 households delinquent or foreclosed on their mortgage, one out of 10 using food stamps, four out of 10 upside down on their home equity, eight out of 10 fearful of the future, and rightfully so.
From the manuscripts and reports Dad has left behind, here’s his answer:
“Some people of my generation have fond memories of the family fellowship and sacrifice of the Great Depression, and I do too. But I also cannot forget the numbers or the suffering they implied. In just three short years between the peak of the stock market boom in 1929 and the bottom in 1932, it felt like the entire world was falling apart. The financial bubble burst. Big companies failed. America lost 13 million jobs. Unemployment surged to 25%. American industry cut its production nearly in half. Home construction plunged by more than four-fifths. Deflation — falling prices — drove the value of almost everything into the gutter. Over 5,000 banks failed and ultimately disappeared.
“And yet, despite it all, there was one all-important investment that not only survived, but actually thrived: The United States dollar. Because of deflation, prices fell on virtually everything — commodities, farm land, homes, automobiles, consumer goods, even labor. And because of fear, investors shunned risk, seeking the safety of cash. Result: The dollar’s purchasing power and value surged.”
Now, here we are once again, witnessing with our own eyes in our own generation how financial bubbles are bursting all around us. We see America’s largest companies — Merrill Lynch, General Motors, AIG, Fannie Mae and Citigroup — bankrupt, bailed out or bought out. We have bursting bubbles in housing, commercial real estate, stock markets and commodities. We see busted booms throughout the Americas, Europe and Asia.
Even economies thought to be immune, like China or Australia, are impacted. Even investments said to be safe, like corporate bonds, municipal bonds, certain money markets and large government-sponsored companies, are sinking.
Our leaders themselves are sounding the alarm. Unless they act swiftly, they say, the world as we know it today will fall apart. Thus, to avert what they fear could be the ultimate disaster, the governments of the richest countries have embarked on the most expensive financial rescue operations of all time. The U.S. government alone has spent, lent, committed or guaranteed $7.8 trillion, fourteen times its biggest-ever federal deficit. European governments have jumped in with another $2 trillion; China, $586 billion.
They’re bailing out bankrupt banks, broken brokerage firms, insolvent insurers and any company they deem essential to the economy. They’re pumping resources into mortgage markets, consumer credit markets and stock markets. They’re prodding lenders to lend, consumers to consume and investors to invest. They’re doing everything in their power to prevent a Second Great Depression.
But will they succeed in this endeavor?
A not-so-long time ago, while Dad and I reviewed the historical charts and data, here’s the answer he gave me to a similar question.
“In the 1930s, I was tracking the numbers as they were being released — to figure out what might happen next. I was an analyst and that was my job. That’s why I remember them well.
“Years later, economists like Milton Friedman and my young friend Alan Greenspan looked back at those days to decipher what went wrong. They concluded that it was mostly the government’s fault, especially the Federal Reserve’s. They developed the theory that the next time we’re on the brink of a depression, the government has got to step in and nip it in the bud.
“Bah! Those guys weren’t there back then. When I first went to Wall Street, Friedman was in junior high and Greenspan was in diapers.
“I saw exactly what the Fed was doing in the 1930s: They did everything in their power to stop the panic. They coddled the banks. They pumped in billions of dollars. But it was no use. They eventually figured out they were just throwing good money after bad.
“The real roots of the 1930s bust were in the 1920s boom. That’s when the Fed gave cheap money to the banks like there was no tomorrow. That’s why the banks loaned the money to the brokers, the brokers loaned it to speculators, and the speculation created the stock market bubble. That was the true cause of the Crash and the Depression! Not the government’s ‘inaction’ in the 1930s!
“In 1929, our economy was a house of cards. It didn’t matter which cards we propped up or which ones we let fall. We obviously couldn’t save them all. So no matter what we did, it was going to come down anyway. The longer we denied that reality and tried to fight it, the worse it was for everyone. The sooner we accepted it, the sooner we could get started on a real recovery.”
Today, however, it seems the governments of the world have yet to learn the lesson Dad had learned from real experience. They’re still trying to bail out nearly every major institution and market on the planet. Again, the big question: Will they succeed?
The quick answer: Yes, for a while, perhaps. They can kick the can down the road. They can buy time and postpone the day of reckoning. They can stimulate stock market rallies and even flurries of economic recovery. But that’s not the same as assuming responsibility for our future. It doesn’t resolve the next crisis and the one after that. It does little for you and me; even less for our children or theirs.
The better answer is contained in the white paper Mike Larson and I submitted to the U.S. Congress on September 25: The government bailouts are too little, too late to end the debt crisis; too much, too soon for those who will have to foot the bill.
Even as the government sweeps piles of bad debts under the carpet, mountains of new debts go bad — another flood of mortgages that can’t be paid, a new raft of credit cards falling behind, a new line-up of big companies on the verge of bankruptcy.
Even as the government commits new billions to be spent on financial rescues, trillions in wealth are wiped out in sinking real estate, stocks, bonds and commodities.
Even as the government promises prosperity around the corner, we see more factories closing, more jobs lost.
The primary reason is simple and quite obvious: Our society is addicted to debt.
As long as government could keep the credit flowing — and as long as borrowers could get their regular debt fix — everyone continued to spend to their heart’s content. But now that credit has stopped flowing, the American economy is sinking rapidly into depression.
The Threshold of the Absurd
We saw the first telltale warning of America’s Second Great Depression when a credit crunch hit in full force in August 2007. Banks all over the world announced multibillion losses in subprime (high-risk) mortgages. Investors recoiled in horror. And it looked like the world’s financial markets were about to collapse.
They didn’t, but only because the U.S. Federal Reserve and European central banks intervened. They injected unprecedented amounts of cash into the world’s largest banks; the credit crunch subsided; and everyone breathed a great sigh of relief. But in early 2008, the crunch struck anew — this time in a more virulent and violent form, this time impacting a much wider range of players.
Now, the big question was no longer: Which big Wall Street firm will post the worst losses? It was: Which big firm will be the first to go bankrupt? The answer: Bear Stearns, one of the largest investment banks in the world.
Again, the folks at the Fed intervened. Not only did they finance a giant buyout for Bear Stearns, but for the first time in history, they also decided to lend hundreds of billions to any other major Wall Street firm that needed the money. Again, the crisis subsided temporarily. Again, Wall Street cheered and the authorities won their battle.
But the war continued. Despite all the Fed’s special lending operations, another Wall Street firm — almost three times larger than Bear Stearns — was going down. Its name: Lehman Brothers.
Over a single weekend in mid-September 2008, the Fed Chairman, the Treasury Secretary and other high officials huddled at the New York Fed’s offices in downtown Manhattan. They seriously considered bailing out Lehman, but they ran into two serious hurdles: First, Lehman’s assets were too sick — so diseased, in fact, even the federal government didn’t want to touch them with a ten-foot pole. Second, there was a new sentiment on Wall Street that was previously unheard of. A small, but vocal minority was getting sick and tired of bailouts. “Let them fail,” they said. “Teach those bastards a lesson!” was the new rallying cry.
For the Fed Chairman and Treasury Secretary, it was the long-dreaded day of reckoning. It was the fateful moment in history that demanded a life-or-death decision regarding one of the biggest financial institutions in the world — bigger than General Motors, Ford and Chrysler put together. Should they save it? Or should they let it fail? Their decision: To do something they had never done before. They let Lehman fail.
“Here’s what you’re going to do,” was the basic message from the federal authorities to Lehman’s highest officials. “Tomorrow morning, you’re going to take a trip down to the U.S. Bankruptcy Court at One Bowling Green. You’re going to file for Chapter 11. Then you’re going to fire your staff. And before the end of the day, you’re going to pack up your own boxes and clear out.”
It was the financial earthquake that changed the financial world.
Until that day, nearly everyone assumed that giant firms like Lehman were “too big to fail,” that the government would always step in to save them. That myth was shattered on the late summer weekend when the U.S. government decided to abandon its long tradition of largesse and let Lehman go under.
All over the world, bank lending froze. Borrowing costs went through the roof. Global stock markets collapsed. Corporate bonds tanked. The entire global banking system seemed like it was coming unglued.
“I guess we goofed!” were, in essence, the words of admission heard at the Fed and Treasury. “Now, instead of just a bailout for Lehman, what we’re really going to need is the Mother of All Bailouts — for the entire financial system.” The U.S. government immediately complied, delivering precisely what they asked for — a $700 billion Troubled Asset Relief Program (TARP), rushed through Congress and signed into law by the president in record time.
In addition, the U.S. government has loaned, invested or committed $200 billion to nationalize the world’s two largest mortgage companies, Fannie Mae and Freddie Mac … $25 billion for the Big Three auto manufacturers … $29 billion for Bear Stearns, $150 billion for AIG and $350 billion for Citigroup … $300 billion for the Federal Housing Administration Rescue Bill to refinance bad mortgages … $87 billion to pay back JPMorgan Chase for bad Lehman Brothers trades … $200 billion in loans to banks under the Fed’s Reserve Term Auction Facility (TAF) … $50 billion to support short-term corporate IOUs held by money market mutual funds … $500 billion to rescue various credit markets … $620 billion for industrial nations, including the Bank of Canada, Bank of England, Bank of Japan, National Bank of Denmark, European Central Bank, Bank of Norway, Reserve Bank of Australia, Bank of Sweden and the Swiss National Bank … $120 billion in aid for emerging markets, including the central banks of Brazil, Mexico, South Korea and Singapore … trillions to guarantee the FDIC’s new, expanded bank deposit insurance coverage from $100,000 to $250,000 … plus trillions more for other sweeping guarantees.
Grand total: $7.8 trillion and counting, eleven times more than the hotly debated and widely opposed $700 billion bailout package passed just 66 days ago. And that excludes a new bailout for Detroit in the works, a new $500 billion stimulus package expected early next year, plus hundreds of billions for at least 19 states running out of money for unemployment benefits.
Washington says it’s all for a good cause — to save the world from depression. But it is obviously reaching a level that’s beyond the threshold of the absurd.
Here’s why it will fail …
Reason #1 - Too Much Debt
By mid-year 2008, there were $52 trillion in interest-bearing debts in the United States, including mortgage loans, credit cards, corporate debt, municipal debt and federal debt; the federal government needed about $50 trillion for Social Security, Medicare and other commitments kicking in at a quickening pace; and U.S. commercial banks held another $182.1 trillion in side bets called “derivatives.” Grand total in the U.S. alone: $282 trillion.
The numbers are not directly comparable, but just to give you a sense of the magnitude of the problem, that’s 402 times more than the $700 billion bailout package.
If, along with their big debts, Americans at least had plenty of cash, it would not be such a problem. But, alas, nothing could be further from the truth. Americans have saved less than ever before in history and less than their counterparts in almost every other industrial country on Earth.
Reason #2 - Nobody Wants to Pick Up the Tab
In the rush to spend the trillions of dollars, no one has bothered to seriously consider this simple question: “Who’s going to pay for it all? Where are we going to get all that money?”
With the economy already weak, it certainly isn’t going to come through higher taxes. And with unemployment and welfare expenses surging, cutting the budget wasn’t going to yield very much either. The government had only one choice: To borrow the money.
More big debts!
Sure enough, last month, the U.S. Treasury Department announced that it would have to borrow $550 billion in the fourth quarter, more than the total budget deficit for the entire year. At the same time, Goldman Sachs estimated that the upcoming borrowing needs of the U.S. Treasury would be a shocking $2 trillion — to pay for the bailouts, to finance the existing deficit and to refund debts coming due. That was about four times the size of the entire yearly deficit. This meant that, to raise the money, the government will have shove aside consumers, businesses and other borrowers; hog most of the available credit for itself; and then, to add insult injury, bid up interest rates for everyone. As Mike Larson explained Friday, it’s the biggest bubble of all.
Some people hoped the government’s resources, by some feat of magic, might be unlimited. But the reality is that there is no free lunch, someone has to raise the money and pick up the tab. And as soon as they try to do that, the pain will strike swiftly — in the form of steeper mortgage rates, higher credit card rates or, worse, virtually no credit at all.
Reason #3 - Sinking Confidence
Like in the 1930s, money alone, no matter how lavishly dished out, cannot restore public confidence. While it may buy some reprieve for large banks, it does little to help thousands of smaller banks. While it helps some percentage of consumers some of the time, it cannot help the majority most of the time. That’s why consumer confidence has plunged to the lowest level in recorded history, consumer spending collapsed and Corporate America is responding with huge cutbacks. This story Dad told me about 1930 shows some interesting similarities:
“After the Crash, President Hoover was worried about the sinking U.S. economy. So he called the leaders of major U.S. corporations down to Washington — auto executives from Detroit, steel executives from Pittsburgh, banking executives from New York. He said, in effect:
“‘Gentlemen, when you go back home to your factories and your offices, here’s what I want you to do. I want you to keep all your workers. Don’t lay any off! I want you to keep your factories going. Don’t shut any down! I want you to invest more, spend more, even borrow more if you have to. Just don’t do any cutting. It’s for a good cause — so we can keep this economy going.’
“That may have sounded like a good idea at first. But then the executives went back to their factories and offices and said to their associates: ‘If the president himself had to call us down to Washington to lecture us on how to run our business, then the economy must be in even worse shape than we thought it was.’
“They promptly proceeded to do precisely the opposite of what Hoover had asked: They laid off workers by the thousands. They shut down factories. They slashed spending to the bone. They cut back.”
Now, history is repeating itself, albeit on a much grander scale with a more ambitious government. As before, each new government bailout is initially greeted with some enthusiasm on Wall Street. But as the crowd of wannabe bailout candidates swells, and as people recognize the desperation of authorities to satisfy them all, confidence sinks even further.
Washington tries to encourage consumers and businesses to borrow more, spend more and save less, but they do precisely the opposite.
Washington prods bankers to dish out more credit, but the Fed’s own surveys show that banks all over the country do precisely the opposite, sharply tightening their lending standards.
Government officials give frequent pep talks to inspire investors to take the risk of investing more, but most investors would prefer to slash their risk — or even their wrists.
In each case, folks realize that it was too much borrowing, too much spending and too much risk-taking that got them into so much trouble in the first place. So they just do what comes naturally: They cut back.
Reason #4 - The Vicious Cycle of Debt and Deflation
Debt alone is usually tolerable. People can pile up debts year after year, and as long as borrowers have the income — or as long as they can borrow from Peter to pay Paul — they continue making their payments. Life goes on.
Deflation — falling prices and income — is also not all bad. It makes homes more affordable, college education more achievable, a tank of gas easier to fill.
It’s when the debts and deflation come together that the wheels are set into motion down the path to depression. That’s what happened in the 1930s; and that’s what began to happen this time as well.
In the housing market, Americans abandon their homes or are forced into foreclosure. The foreclosures precipitate distress selling. The distress selling causes price declines. And the price declines, in turn, prompt more people to abandon their homes or let them slide into foreclosure.
On Wall Street, we have a similar cycle: Big companies and banks run out of capital, cannot pay their debts and go bankrupt. The bankruptcies — and the fear of more to come — drive investors to sell their shares, forcing stock prices lower. With lower stock prices, corporations and banks cannot raise capital, and more go bankrupt.
Consumers, small and medium-sized businesses, city and state governments, hospitals and schools, even entire countries are caught up in a similar downward spiral — slashing their spending, laying off workers, dumping assets, losing revenues, and slashing their spending still more.
These vicious cycles are in full motion and gaining momentum. It’s too late for any government to stop them. Now that the speculative bubbles have burst, all the king’s men cannot put them back together again.
The government’s rescue efforts will fail. America’s Second Great Depression will strike swiftly and take no prisoners. You must be ready.
Time to Sell
The government-inspired rally on Wall Street is your signal. It’s now time to sell ALL vulnerable assets that you do not need or you cannot hedge against. That includes …
• Second homes, rental properties and commercial real estate;
• Common and preferred shares, regardless of your profit or loss;
• Corporate and municipal debt of all maturities, regardless of their rating;
• Long-term Treasury bonds and government-guaranteed bonds (including Ginnie Mae, Fannie Mae and Freddie Mac); and
• Collectibles, including art, antiques, rare coins and stamps.
But do not sell the U.S. dollar! Quite the contrary, the U.S. dollar, stashed in short-term Treasury securities, is now your single best safe haven for most of your money.
Due to deflation, the dollar’s purchasing power is improving rapidly with each day that passes. Due to a global flight to quality, the dollar’s exchange rate is rising sharply against nearly every currency in the world. And due to the massive deflation and capital flight still ahead, this massive bull market in the dollar is just beginning!
Indeed, for the long-term future of our country, it is the one, outstanding silver lining of this crisis.
Be Bold AND Prudent
You need not sell your shares indiscriminately regardless of market conditions. Thanks to the government-inspired rally in the stock market, you have a short time window to get out with relatively normal market conditions.
You also need not dump your real estate properties on the market at crazy fire-sale prices. To set your price, just be sure to check prices of actual sales (not bids) that are truly recent (within the last 30 or 60 days) and that are really comparable. Then offer the very best possible discount you can (at least 10%, possibly more) right from the very first day.
But you must not delay. Act boldly and prudently.
If you work with a money manager, before liquidating assets, ask if they have programs specifically designed to hedge and profit in a depression. If not, move your money to one who does. If your realtor or broker is unwilling to help you sell, find one who is. If you find that you or your family are still uncertain, consider Dad’s recommendations:
“One of the greatest blunders people made in the 1930s was to blindly assume that prices were already so low, they couldn’t possibly go any lower. In reality, the value of their real estate, stocks, commodities and virtually every other asset didn’t stop going down at some particular level that appeared to be ‘cheap.’ Nor did it stop falling just because it matched some historical price that was considered low. The end of the price declines came only when buyers, investors and lenders capitulated; when most of the bad debts were liquidated; and when the powerful vicious cycles were exhausted. Until then, huge losses were still possible and you needed to sell. Only AFTER we saw those climactic conditions was it time to buy or hold.”
In America’s Second Great Depression, the same will be true, with one key addition:
The most aggressive buyer, investor and lender of all is Uncle Sam; the decline cannot truly end until he abandons his efforts to stop it.
More than five centuries after the expulsion and forced conversion of Spanish and Portuguese Jewry, the results of a new genetic study might just spur a return of historic proportions to Israel and the Jewish people. In a paper published in the latest issue of the American Journal of Human Genetics, a team of biologists dropped a DNA bombshell, declaring that 20% of the population of Iberia has Sephardic Jewish ancestry.
Since the combined populations of Spain and Portugal exceed 50 million, that means more than 10 million Spaniards and Portuguese are descendants of Jews.
These are not the wild-eyed speculations of a newspaper columnist, but rather cold, hard results straight out of a petri dish in a laboratory. The study, led by Mark Jobling of the University of Leicester in England and Francesc Calafell of the Pompeu Fabra University in Barcelona, analyzed the Y chromosomes of Sephardim in communities where Jews had migrated after the expulsion from Spain in 1492. Their chromosomal signatures were then compared with the Y chromosomes of more than 1,000 men living throughout Spain and Portugal. Since the Y chromosome is passed from father to son, the geneticists were able to measure the two groups up against each other, leading to the remarkable finding that one-fifth of Iberians are of Jewish descent.
This result underlines the extent to which our ancestors suffered so long ago in Spain and Portugal.
From the historical record, we know that as early as 1391, a century before the expulsion of the Jews from Spain, widespread anti-Semitic pogroms swept across the country, leaving thousands dead and many communities devastated. In the decades that followed, there were waves of forced conversions as part of an increasingly hostile and dangerous environment for Jews. This reached a climax in 1492, when King Ferdinand and Queen Isabella gave Spain's remaining Jews a dire choice: convert or leave forever. Large numbers chose exile. American historian Howard Morley Sachar has estimated the number of Spain's Jewish exiles at around 100,000, while Hebrew University's Haim Beinart has put the total at 200,000. Others have spoken of even more.
But untold numbers of forcibly converted Jews, as well as those who voluntarily underwent baptism, remained.
These include, of course, the Anousim (Hebrew for "those who were coerced"), many of whom bravely continued to cling to Jewish practice, covertly passing down their heritage from generation to generation. In recent years, a growing number of Anousim from across Europe, South America and parts of the US have begun to return to Israel and the Jewish people.
But what makes the findings of the genetic study so important is that they attest to the Spanish monarchs' terrible success in subjugating their Jewish subjects and compelling the bulk of those forced to convert to eventually assimilate into the Catholic majority.
For centuries thereafter, the ruthless arm of the Inquisition hunted down and killed suspected "Judaizers" or "secret Jews," ultimately forcing many to abandon the faith to which they had remained so heroically, and secretly, loyal. According to the late historian Cecil Roth, the Inquisition's henchmen murdered more than 30,000 "secret Jews." Some were burned alive in front of cheering crowds, while countless others were condemned for preserving Jewish practices.
It is no wonder, then, that many of them eventually succumbed to despair and seemingly disappeared as Jews.
Until now, that is.
The finding that 20% of the population of Iberia is descended from Jews will likely take Spain and Portugal by storm. The results, as The New York Times put it last Friday, "provide new and explicit evidence of the mass conversions of Sephardic Jews" which took place over 500 years ago on Spanish and Portuguese soil. It is the biological equivalent of the pintele Yid, the eternal and unbreakable Jewish spark that can never be extinguished.
Indeed, it is as if a large mirror were suddenly being held up in front of every Spanish and Portuguese person, forcing them to look at themselves and see the reality of their national, and individual, history.
But even more compelling than what it says about the past is what it might just say about the future. If Israel and the Jewish people undertake a concerted outreach effort toward our genetic brethren in Iberia, it could have a profound impact in a variety of fields, ranging from anti-Semitism in Europe to the future of Jewish demography.
Imagine if just 5% or even 10% of Spanish and Portuguese descendants of Jews were to return to Judaism. It would mean an additional 500,000 to 1 million Jews in the world.
And even if many or most choose not to return, it still behooves us to reach out to them. The very fact that such large numbers of Spaniards and Portuguese have Jewish ancestry could have a significant impact on their attitudes toward Jews and Israel, possibly dampening their anti-Semitism and anti-Israel slant. For when someone discovers they are of Jewish descent, it is likely to create a greater sense of kinship for Jewish causes. Hence, we should seek to promote and cultivate their affinity for Israel and the Jewish people.
Moreover, I believe we have a historical responsibility to reach out to the descendants of the victims of the forced conversions and the Inquisition, and to facilitate their return. Through no fault of their own, their ancestors were cruelly taken from us. Centuries ago, the Catholic Church devoted enormous resources to tearing them away from the Jewish people, and it nearly succeeded.
Our task now should be to show the same level of determination to welcome them back into our midst.
The writer is the founder and chairman of Shavei Israel (http://www.shavei.org/), which assists Anousim in Spain, Portugal and South America to return to the Jewish people.
![nasa-apollo8-dec24-earthrise[1].JPG](http://redstatepatriot.com/nasa-apollo8-dec24-earthrise%5B1%5D.JPG)
