Republicans for Obama

Living in an echo chamber can lead to poor decisions.  If you are a Republican, and tuned into Fox News, then you are convinced Barack Obama is OMG the worst president ever!  Since November’s election is going to be a walkover, the Republican primary is what matters.  Never mind those pesky moderates and wishy-washy Mitt Romney.  Now is your time to choose a proper Christian conservative – blissfully unaware that you are actually voting for Obama.

Before you cast that ballot, you might want to check out the competition.  President Obama is widely admired, on the other channels.  He is a fearsome campaigner, and he has built an epic nine-digit war chest.  For the Republican contenders, there is only one statistic that matters – and it’s not endorsements from church groups.

Ron Paul, Extremist

In a recent interview, Jon Huntsman described Ron Paul as “appealing to the extremes” of both parties.  If you have a one-dimensional view of politics, this is the only way to explain Paul’s appeal.  He is liberal on personal freedom, and conservative on government.  Jeremiah’s readers, however, have a two-dimensional view.

Seen this way, Rep. Paul is perfectly consistent – and he has spent years honing his barbs against the real extremists in the other corners.  That’s why he’s incomprehensible for a mainstream politician like Gov. Huntsman.  It’s just too bad we voters must always choose between civil rights and property rights.

Sharp Dressed Man

Independents, minorities, and occupy-wall-streeters have a mental image of what is corrupt in Washington.  The iconic corrupt politician is a fat, sneering, pale doughy white man.

Newt Gingrich is a serial adulterer who made a mint selling influence to the very mortgage bankers who have lately tanked our economy. There is absolutely no chance of Mr. Gingrich defeating Pres. Obama in the general election.

Stop Blaming the Fed

Here’s an interesting point of agreement between the Tea Party and the Occupy movement – both sides want to end the Fed.  The left hates banks and the right hates government intervention, but neither side can present a realistic alternative.  Returning to the gold standard is a fantasy.  As long as we have a fiat currency, we need a central bank to manage it.  England has one, and so do China and Europe.

The Fed’s only job is to manage the money supply, with attention to exchange rates, inflation, and unemployment.  That’s difficult enough.  History will show that Chairman Bernanke averted a depression through correct application of quantitative easing.  Now he is forcing banks to lend, and reducing mortgage rates.  This is good monetary policy.  The problems have come from fiscal policy, for which Congress is responsible.

The movement’s main concern is that moneyed interests have corrupted our leaders in Washington.  That seems like a pretty good argument for keeping the Fed independent, and free from political interference.

Demagogue This!

Demagogue is a good old word, going all the way back to classical Greek politics.  A demagogue is someone who appeals to the ignorance of a mob, and stokes their prejudice with easy answers.  Adolf Hitler was an ace demagogue, as was Julius Caesar.  In America, demagoguery has grown into an art form, and the word has become a verb – as in, “this is no time to demagogue.”

When Al Sharpton shows up, you know you are being demagogued.  It is then time to look around and see if you are part of an ignorant mob.  Regarding the Occupy Wall Street movement, only Herman Cain has had the fortitude to call bullshit.  Even President Obama has kowtowed, “Oh, I understand their frustration.”  The man whose policies contributed most to the economic dislocation of millions, Obama is only too glad to see young people marching against something – anything – but himself.

Leadership involves finding a parade and getting in front of it.

A true leader does not follow Naisbitt’s quip about finding a parade.  The President of the United States should not be seen climbing onto a bandwagon.  If the movement has credible aims, as did the civil rights movement, then that should lead to political action.  If not, the President must condemn it, and send them home.

Stop Blaming Banks

Before any reforms, there must be an accurate diagnosis of what caused the banking crisis.  It was the housing bubble, and there is plenty of blame to go around.

Long ago, Congress decided to promote home ownership (out of all proportion to home ownership in, say, Europe).  They made mortgage interest tax-deductible, which is basically a subsidy to mortgage lenders, and for good measure they created – not one, but two – taxpayer-backed mortgage lenders, FNMA and FRMC.  More recently, Congress started pressuring lenders to lower their credit standards and make mortgages available to ever-riskier borrowers.

Contrary to popular belief, banks are not in business to make bad loans and collect foreclosed property.  They lose a ton of money when that happens.  That’s why all the hassle about credit scores and loan-to-value ratios.  Mortgage originators, on the other hand, don’t care what happens after the sale closes.  The housing bubble produced many fast-buck brokers, but these are not the legendary fat cat bankers.  They are small-time crooks.

Most of the people now having problems with their mortgage payments are presumably honest people who have had some setback.  Many, however, were complicit in foisting bad loans onto the mortgage lenders.  They may have lied about their financial status, or accepted terms that they knew were untenable.  No one should have accepted negative amortization, for instance – borrowers or lenders.

When housing prices stopped going up, the dodgy loans became bad loans and the bad loans choked off the liquidity in the banking system.   Banks must borrow from other banks to survive and, after AIG failed, the interbank loans started to dry up.  Everyone knew that there was a huge exposure to bad debt but, because the mortgages had been securitized and resold, no one knew for sure who was holding it.

So, the bubble burst.  The cascading effect of counterparty risk and vanishing liquidity was exactly like a bank run – those depression-era photos of people lining up outside the banks, only to discover that their savings are gone.  The Federal Reserve had to step in and provide cash, and the FDIC did the hard work of unwinding hundred of banks that weren’t “too big to fail.”  To those that were, the Treasury made the infamous TARP loans.  Otherwise, the financial system would have collapsed – in America and probably around the world.

Avoiding “too big to fail,” in the future, is certainly a good policy goal.  So are bringing back Glass-Steagall, and making Sheila Bair the Treasury Secretary.  The mortgage interest deduction should be scrapped, and Ms. Bair should unwind FNMA and FRMC.  Punitive action against the banks, though – like Dodd-Frank – will simply push one more industry out of America and into China.

Reposted from Occupy Wall Street forum

Occupy Congress

The most important and durable achievement of the movement would be the birth of one or more new political parties.  Americans have puzzled over the movement’s composition and goals.  In Europe, they would be easily recognized as Greens and Socialists.  This group never expected the Republicans to serve their agenda, and now they feel betrayed by the Democrats.  The obvious thing to do is to form a new party.  Two years ago, Jeremiah wrote that the biggest threat to American democracy was the phony dichotomy between Dems and Republicans.

The honest ones should come out of the closet and form a Socialist party.  Since they are ascendant, they can afford to be gracious and leave the “Democrat” brand to the Blue Dogs.

As a centrist, Jeremiah would not vote for the new party, but its existence might liberate him to vote for a reconstituted Democratic Party.  Right now, the protesters are certainly wondering how to effect a “revolution” without necessarily destroying the institutions of American democracy. A new party would do it.  Even if it wins only a few seats in Congress, it would change the system forever.

Fear the Government

Jeremiah is not dead-set against “socialist” programs to redistribute wealth, as long as they are honest, efficient, and well-planned.  See essay on public spending.  Wealth spreaders like President Obama generally have noble intentions – or at least they start that way.  What worries Jeremiah is the expansion of government per se, as a threat to liberty.

The present persecution of Standard & Poor’s is a case in point.  This is open retaliation for their recent downgrade of America’s credit rating.  There can be no mistaking the message.  Or, this one – Congress releasing confidential trading data.

They’re afraid that if they go and speak out like Bernie Marcus or Steve Wynn, that the IRS is going to be on them, the SEC is going to be on them.

When Bernie Marcus made this assertion, he was dismissed as a right-wing crank – and then the SEC went and proved him right.   We are starting to have a really scary government.

See also:  Shrink the Executive

Herman Cain, Businessman

Candy Crowley asked presidential candidate Herman Cain how he could still afford to run, while the better funded Tim Pawlenty had dropped out of the race.  His answer was all business.  We are meeting our polling objectives, Cain said, and we are spending within our budget.  Mr. Cain is not about to go into debt, on the chance of more funding to come.  He gave a brief cost-benefit analysis, contending that his poll statistics are the strongest in the field on a per-dollar basis.

This was breathtaking.  When was the last time you saw a politician display any aptitude for financial math?  Maybe that’s why they can never balance the budget.  They’re mostly lawyers, after all.  Cain worked his way from the bottom to become a CEO and a Federal Reserve Bank Chairman.  He has amazing character, work ethic – and math skills.  He is also not afraid to state his position clearly.

In the CNN interview, Cain rattled off a number of pro-growth policies.  Among the most interesting was a proposal to allow American companies to repatriate foreign income, free of tax.  At $3 trillion, this would dwarf the ARRA fiscal “stimulus” package.  Also, unlike that failed program, this money would go directly into jobs and investment – not pork.

Give Me Liberty

Centrists delight in topics where both left and right are morally inconsistent.  One easy target is the choice of civil rights, like abortion or gun control.  Logically, one would favor “more rights” or “fewer rights,” but not a choice of rights.  Check yourself.  Right now, you’re thinking, “but no, abortion kills a baby” – or else you’re thinking the other thing.  It is, literally, a moral coin toss.

Ben Franklin’s famous observation about security is perhaps a more urgent example.  The left loves to quote Franklin a propos the war on terrorism, and the Patriot Act.  We are so afraid of terrorism that we are willing to grant police-state powers to the government.

Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.

The left has pretty much won this argument, to their credit, but then they turn around and grant the same powers in favor of “economic security.” The freedom to hire, fire, invest and trade – and the attendant risk of going broke – is no less important to America than, say, the right to free expression.

Robbing the rich and giving to the poor may sound like a good idea, especially if you’re poor, but it has a dark side.  If you allow the government to use Gestapo tactics on the rich, sooner or later they will use those same tactics on you.  That’s a fact.  Just ask Trotsky.