"A Conservative Capitalist Offers: Eleven Lessons and a Bonus Lesson for Raising America's YouthBorn and Yet To Be Born"
I wrote this book because I believe a strong country must rest on a solid family unit and that Brokaw's "Greatest Generation" has morphed into "A Confused, Dependent and Compromised Generation." I hope this book will provide a guide to alter this trend.
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 About The Author: After completing his formal education in 1960, Dick Berkowitz began his professional career
as a stockbroker in Atlanta, joining the nation's largest Southeastern Regional NYSE Member
Firm - Courts and Co. becoming a general partner in seven years. Dick subsequently resigned
after Courts merged and he opened an institutional office for Burnham and Company. Twenty
years later, after Drexel Burnham closed its doors, he moved his staff to Oppenheimer in 1990, retiring in 2009
During his business career he served on The President’s Commission on White House
Fellows ’90 – ‘92, The Board of Visitors St John's College ’95 -2001, The Board of Woodrow
Wilson International Center for Scholars '97 - '98, The George Bush for President National
Finance Committee ‘98.
Dick also was a Founding Member Univ of Ga. President’s Club and Chaired Blackburn Park
Master Plan Committee ‘98.
Re-locating to Savannah, where he now lives with Lynn, his wife of 40 years, he continues to manage money for a few clients,
remains active serving on The Board of Visitors of the State of Ga. Museum of Art. He also began The JEA Speaker Series, serves
on The Board of The Savannah Federation Investment Foundation, The Advisory Board of Spine and Sports and more recently
The Board of The Skidaway Island Republican Club - 2012.
Dick Berkowitz also publishes his thoughts on The Middle East, politics and economics which can be found at:www.Dick-Meom.Blogspot.com or Brokerberko.com
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Please Buy My Book - Half The Proceeds Go To "The Wounded Warrior Project!"
You can order a printed book that will be shipped to you. -- The book only costs $10.99.
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E mail from a supporter, dear friend and fellow memo reader: 'I hope you are recuperating nicely and following the doc's instructions. I'm delighted you have a soft copy of your book and I'll stop by tomorrow with a check.
The pictures of Dagny and her family are adorable. She looks like a little doll!
Thanks for your great emails. I am cautiously optimistic. I get so nervous the days of the debates so I'm glad there's just one more. The Mitt who showed up at the first debate is the Mitt we knew in Mass. No one in Mass complained he was wooden - he was regarded as very bright and someone who accomplished what he promised to do. He was very well respected. He left the state in good shape but the current governor has dismantled all of that.
Just 2 more weeks!
J-----"
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Chad is back to haunt us? (See 1 below.)
---Optimal versus terrorist. Either war we lose. (See 2 and 2a below.)
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Has Obama's portrayal of Romney going to war with women backfired?
If there ever was a man who is faithful to his beautiful wife it is Romney. Johnson, Nixon,Carter, Kennedy and yes Old Bill were at war with their wives and others females. In Carter's first autobiography he admitted he would come home after long underwater voyages and was distant and unkind. FDR, Johnson, Kennedy and Clinton had all kind of extra affairs and Nixon and Pat slept in separate bed rooms. Truman was the role model I would cite .
Yet, Obama and his Chicago thugs thought they could mis-characterize Romney as being at war with women and it stuck for a while but that dog ain't hunting any more..
If truth be told women are at war with each other. They have paid a heavy price for the so called liberation they have achieved. They must work, raise a family and in far too many tragic cases do so alone. Their health issues have increased along with high blood pressure and heart attacks and they have been sold a bill of goods by progressives regarding the glass ceiling. They remain trapped in a world that is very harsh but Obama can't dump that on Romney. It has more to do with those women who wanted the life of professionals and yet, all women have paid a price for their success. The benefits have accrued to a disproportionate few and the nation's family structure has suffered and been placed in the cross hairs. So the jury remains out as to the benefits versus the heavy price paid for the freedom achieved. (See 3 below.)
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Debt can be as dangerous as water , ie. you can drown in it. (See 4 below.)
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Were I advising Romney and prepping him for Monday I would ask him to pose this question to the audience. (Sort of a repeat from a prior memo.)
It has become obvious to any rational person the embarrassment of the Libyan assassinations caught the Obama Administration with their pants down and they then proceeded to obfuscate the facts of the situation, ie.initially blaming Romney of paying politics when in fact they were immersed in doing so.
They trotted out Amb. Rice to tie it in to a bad movie now she is no where to be found. Obama hemmed and hawed for several weeks also claiming the trigger was a movie. The Secretary of State took the dive and then rushed off to South America.
Now we have the prospect of an 'Hail Mary" vis a vis Iran whose nuclear casino is locked in a mountain.
Can you bring yourself to believe Obama is capable of telling the truth about any deal struck with the Ayatollahs two weeks before the election.
Stop and think, for the past several elections what Iran does has influenced our voting.
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Obama and The EPA do not want to be the undertaker so keep the body in the deep freeze til after the election. (See 5 below)
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This is the dinner table ad our group believes is effective in bringing the campaign down to the common denominator level. Curious for your thoughts?
One of my friends said the ad was good but too much food on the table. I have to note he is Italian.
One of my grandson's e mailed: " I love it! Nice to see unique political ads"
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I told an Israeli friend of mine, who is a senior officer in the IDF, that if Obama wins I was going to take my wife on a four year freighter cruise. His response: "DO NOT SAIL IN THE DIRECTION OF IRAN. JD"
Great Israeli mordant humor!
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A friend, who is excessively liberal, sent me this . I agree with most of what Pearlstein has written but he fails to address the QE3 matter. If I pumped $40 billion into you checking account each month I bet you would feel more alive as well.
Yes, I agree we are better than others as well but that is like saying a person with one hand is better off than some one who is blind. It is subjective. (See 6 below.)
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Gingrich is not one to mince words. (See 7 below.)
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Dick
-----------------------------------------------------------------------------------------------------------------------1)The Palm Beach County Board of Elections has announced a "printing error" with respect to its absentee ballots (Yes, that Palm Beach County. The Palm Beach County of the hanging chads) See the article linked at the bottom of this email.
Essentially, the "printing error" caused the ballots to be unreadable by the machines. 60,000 absentee ballots were mailed. Some were duplicates. 27,000 have been received already. The solution proposed by the Supervisor of Elections? Open them all as they are received and hand transcribe them to new readable ballots.
So, starting Monday, 24 hand-picked "locals" will start opening the ballots and hand-writing the votes onto new ballots. They will broadcast it on cable TV and supposedly will have persons from both campaigns there. But who will guard the new ballots, which will now no longer be associated with a voter signature, as required by state law. See http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0100-0199/0101/Sections/0101.64.html
You think I'm making this up? You can't make this stuff up. See http://www.palmbeachpost.com/news/news/local-govt-politics/hand-copying-bad-palm-beach-county-absentee-ballot/nShBR/
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2)Optimal Binders Full of Fail
Progressives are not having a good week.
After a debate “victory” for President Obama, which amounted to simply being caffeinated because the bar was set so low after the first debate, his Libya lies are still haunting him. Yes, moderator Candy Crowley saved his bacon in the moment, but she ended up costing him by forcing a reluctant media to continue to cover the story. He may have won the night, but he lost the week because of it.
Had the president simply taken responsibility for his administration’s security failures, apologized, said it would haunt him and shape his actions from that moment forward to ensure it never happened again, this scandal would be done. But narcissists don’t man-up because they can’t admit they’ve made mistakes.
Instead, we had Secretary of State Hillary Clinton accept responsibility the day before the debate, which forced the man in charge to. Thus, five weeks after the murder of Ambassador Chris Stevens and three others, five weeks after lying about denying repeated pleas for more security, five weeks after muddying blame by demonizing an innocent American who made a video – with nowhere else to go and no way to continue to hide behind Hillary’s pantsuit – the president finally took responsibility. Then he lied about having called it a terrorist attack.
That was the story after the debate. So whatever victory he had that night was wiped away by the reality of failed leadership and his callously calling the murder of 4 Americans “not optimal.”
Even debate night, as his media allies did their touchdown dance, polls showed Mitt Romney destroyed the president on every issue.
CNN’s snap poll had Obama with a 46 percent to 39 percent advantage but found people supported Romney’s answers on the issues they cared about most:
On the economy it was Romney, 58-40.
On health care, it was Romney, 49-46.
On taxes, Romney, 51-44.
On the deficit, Romney, 59-36.
On health care, it was Romney, 49-46.
On taxes, Romney, 51-44.
On the deficit, Romney, 59-36.
If that’s what a debate victory looks like for Obama, may he win them all.
As if that wasn’t bad enough, to build on his “win,” the president and his allies set about trying to mock Romney for this “binders of women” comment. And it backfired.
Democrats must think women are stupid enough to think Romney actively seeking out qualified women through collecting three-ring binders of resumes means he’s a sexist. Especially when the Obama administration pays women 18 percent less than men.
But progressives seem to think women can be bought off like a puppy, with free birth control pills as milk bones. The mentality that all you need to do is feed women a can of contraception kibble and they’ll be loyal is the real war on women.
Sandra Flukes of the world aside, most women would like a job and the ability to buy not only their own contraception, but whatever else they want. But progressives see Americans, particularly women and minorities, as special needs children being bullied on the schoolyard of life. They have no faith in the individual’s ability to succeed, to thrive.
But people aspire, women aspire. No amount of handouts can suffocate human nature in everyone.
As the week continued, the desperation grew.
The week of failure culminated in the president reciting the cheesy accusation Mitt Romney suffers from “Romnesia” – the inability to remember past positions. This from the man who promised to cut the deficit in half his first term, who hasn’t signed a budget in more than three years, who called adding $4 trillion to the national debt in eight years “unpatriotic” … then racked up nearly $6 trillion in four years; who promised unemployment at 5.3 percent and delivered 43 straight months of 8 percent or higher. Perhaps he’s suffering from “Obamnesia”?
Considering his campaign got this childish theme from a homophobic leftist who calls Republicans “traitors,” President “New Tone” not only thinks women are stupid, he hopes everyone is.
Just when you thought progressives couldn’t get any dumber – enter MSNBC’s Lawrence O’Donnell.
Mitt Romney’s son, Tagg, was asked how he feels when he hears the president call his father a liar. Tagg had the natural reaction of anyone who loves their father and said he’d like to hit him, but that he’s not going to because that’s how politics is.
O’Donnell, a child of privilege who attended an exclusive private school, then Harvard, put on his best fake Boston accent to challenge Tagg to a fight. It was always clear O’Donnell was a waste of human flesh with desperation for attention and relevance wrapped around him like flies around a horse’s ass. Now it’s clear he’s a cowardly creature comprised of what drops uncontrollably out of the place those flies circle.
Maybe O’Donnell didn’t love his father, and maybe his children don’t love him the way normal people love their families (and who could blame them?), but this was a new level of pathetic even for him.
But just like “binders” and “Romnesia,” desperate times inspire desperate measures.
President Obama, Lawrence O’Donnell and their progressive brethren have nothing to offer and bring nothing to the table but an inability to learn from their failures. They read their own press releases and believe them. They also write them first.
President Obama could have avoided his current situation by simply not being an epic failure as president, but O’Donnell simply isn’t bright enough to have avoided his fate. Let’s hope more voters than not, particularly in swing states such as Ohio, see through this fog of feces from the left and vote against a life of servitude to government.
As the election draws closer, progressive’s lies will grow more desperate. They can’t defend the president’s record, which is why he doesn’t even try; they can’t offer a positive agenda for the future, which is why the president hasn’t even bothered. All they have are childish slogans and pranks that would make junior high school students shake their heads.
The last true thing President Obama said may have been in 2008 when he said, “[I]f you don't have any fresh ideas, then you use stale tactics to scare the voters. If you don't have a record to run on, then you paint your opponent as someone people should run from.” When the “hope” has changed and your word is deemed worthless, it’s no longer “optimal” to do anything but smear.
2a)They Didn’t Riot over This Video
Editor's Note: This column was coauthored by Bob Morrison.
After nearly a month of cringing and getting lost in their own contradictions, the Obama administration is finally clinging to an elliptical mention by the president of “acts of terror” that he claims won’t deter us from doing whatever we are supposed to do in the Mideast. What was it we were supposed to be doing over there?
Oh, supporting democracy, of course. But democracy in a country where “freedom fighters” roar into town shooting their rifles in the air is going to be hard to achieve.
All those celebratory bullets have a nasty way of coming down again. And they can hit local voters as they are lining up to cast their ballots.
Consider the ever-so-discreet caption for a photo of one of our purple-fingered frenzied friends. Against a lurid background of the U.S. Consulate in flames in Benghazi, we see a trim young man in jeans and tee-shirt. He’s holding his rifle menacingly. And Reuters labels him a “protester.” Indeed. He was surely protesting something.
It must have been that nasty U.S.-made video that few even here have seen. As if reading from scripted talking points, speakers from the U.S. Embassy in Cairo to the podium of the UN General Assembly, from the side of Amb. Stevens’s casket to the White House Press Room, have has been blaming that “offensive” video for the riots, the torchings, the embassy takeovers, and, finally, for the murder of Amb. Stevens and his three American colleagues.
It was an offensive video. But it’s interesting to consider the video the street protestors didn’t riot over. More than a year ago, the Israeli satirical group, Latma, produced this video.
The Israelis lampoon the Mullahs of Tehran and the flaccid response of this administration to the existential threat of Iran becoming a nuclear power. There were no recorded riots anywhere in what President Obama obligingly calls “the Muslim world” over this Israeli video.
Why not? Watch the video and note the caricature of the mullah. Note his smirking and mugging for the camera. Note, too, the burka-clad Iranian damsels and their come-hither batting of their eyes. Shouldn’t the Arab Street have rioted over that one?
They didn’t. And the reason they didn’t is because they knew it would do no good. The Israelis don’t quail. They don’t quiver. They don’t quake. And they never cringe.
That’s why they have the Obama administration . Contrast the Obama administration’s official spokespersons—Jay Carney and Victoria Nuland—with this defiant Israeli posture, as evidenced by the Latma video.
Day after day, Carney and Nuland come before the world press and grovel. There is virtually nothing that happens on the Arab Street that makes either of these capital cringers angry. For such a relentlessly pro-abortion administration, it is positively weird to see how often their spokespeople go into a fetal position.
We recall that President Obama went out to Osawatomie, Kansas, last year to channel the spirit of Theodore Roosevelt. Mr. Obama celebrated TR’s embrace of national health care in his famous New Nationalism speech of 100 years before. Many of us admirers of the first Roosevelt think that run-up to his Bull Moose candidacy in 1912 was the greatest error of TR’s life.
Still, Mr, Obama might have been inspired instead by Theodore Roosevelt’s reaction to the seizure of an American Consul in North Africa by Muslim kidnapers. It was 1904 and, like Obama, TR was running for re-election. The hostage-takers, led by a desert bandit called the Raisuli, demanded ransom for the captured American Consul, Ion Perdicaris.
President Roosevelt’s response was terse. “We want Perdicaris alive or the Raisuli dead.”
We got Perdicaris alive. And afterward, TR even won the Nobel Peace Prize. Those were the days when Peace through Strength still echoed throughout the world.
Mr. Obama claimed Amb. Stevens as a friend. Yet as the ambassador’s broken body was being flown home, the president did not convene an emergency meeting of his National Security Council. Instead, he flew to Las Vegas for a fund-raiser. We might say his actions were biblical: “Woe to you, O land, when your king is a child, and your princes feast in the morning!” (Ecclesiastes 10:16)
-----------------------------------------------------------------------------------------------------------------------------------------3)The 'War on Women' Backfires
By Clarice FeldmanOne of the intriguing aspects of this election is how the Democrats' shameless and clueless appeal to women is ending with the vaporization of the historic "gender gap" among voters.
The Lady Parts ConventionFrom the prancing Code Pink vulvas outside the convention venue to the choice of speakers, there was no doubt that the Democrat Convention was aimed at securing the women's vote. Indeed, Balkanizing women and minority voters was then as significant a part of the Obama strategy as securing the electoral votes of Ohio is now to them.
The thinking here apparently was that by highlighting a thirty-year-old law student whining that others should pay her contraceptive costs, emphasizing an unfettered right to abortion, and equal pay for equal work (a convenient code for further feathering trial lawyers nests with dubious claims for parity) and highlighting fluffy issues beloved of the ill-informed, Obama would lock up the women's votes. The Republican "War on Women" was the theme of a convention designed around obscuring the fact that the Democratic standard-bearer had no record to run on, no plan for a second term, and shared the ticket with a crazy person afflicted with logorrhea.
Reality Bites
This week, as Susan Fields observes, it is clear that strategy failed so badly that the long running gap between male and female voters has been practically erased.
The Gallup Poll now shows Mitt Romney trailing the president by only a point among women who are likely to vote in 12 swing states. This follows a Pew Research Center poll taken after the first presidential debate showing that President Obama's 18-point lead among women had shrunk to a tie, 47 percent to 47 percent.
"In every poll, we've seen a major surge among women in favorability for Romney," Democratic pollster Celinda Lake told USA Today after the first debate. These polls find women increasingly concerned with the deficit and debt, just like men. The social issues continue to be more important to women than to men, but these issues no longer dominate the discussion. [snip] In the second debate, Romney looked deeper into the dark side of Obama accounting, finding that 3.5 million more women are living in poverty than before he took charge of the economy. Women understand that an economy with 7.8 percent unemployment, when half of college graduates can't find good jobs, is not good for anyone.
I don't disagree with Fields' assessment that the terrible Obama economy and its effect on women have a lot to do with the shift, but I suggest that there's a great deal more to it.
Bad times tend to focus the mind and wise up all voters, including women. Maybe we really aren't voting for the head of a national PTA, Johnny Appleseed, or for our choice of "American Idol." Perhaps it would be a good idea to elect someone who does understand economics and business.
There may be even more to the shift than that.More Worldly Jobs Make for More Worldly VotersJust as the greater use of contraceptives and availability of abortion have trimmed the left's upcoming generations but not those of more traditional voters, the increased employment of women and not just in those jobs we call "the caring professions," but in jobs where daily they can see at first hand the effects of bad policy on their economic opportunities, seems to me to factor into this.
When you want to hire an employee but the uncertainties about tax planning and the market and your obligations under Obamacare mean you can't, soft appeals to minor extraneous issues fall on deaf ears. When you cannot afford to fill the tank of your car to get to work, pay for your health insurance, or feed your family, while Obama is tossing away more billions on green energy fantasies, ethanol subsidies, or Fluke's birth-control pills, just turn up the heat on your ire. When your savings evaporate, your property is worth less and bonds in Delphi are made worthless to benefit UAW members, your tax bill rises to pay for illegal aliens' social costs, diversity training for doctors, lunchroom monitors checking to see if you packed a healthy enough lunch for your kids. or TSA bullies to pat down the underwear of enfeebled oldsters and crying kids at airports, Obama's offers to provide more government regulation are unpersuasive.Ladies are More Than Their Lady Parts
Then there's the insult of an appeal that assumes that over half the population is so focused on their reproductive parts that nothing else matters much to them. I mean that does seem terribly regressive when you consider it. And it is an equally poor judgment that assumes free contraceptives and no limits on abortion are the choice all women want to make.Plain HypocrisyFinally, there's the blatant hypocrisy of the charge coming from a White House which does not offer equal pay to its women employees and, aside from Valerie Jarrett, has no high-level women staffers. White House megaphones like MSNBC, which pays its women employees half what they pay the males are no better.
There may be even more to the shift than that.More Worldly Jobs Make for More Worldly VotersJust as the greater use of contraceptives and availability of abortion have trimmed the left's upcoming generations but not those of more traditional voters, the increased employment of women and not just in those jobs we call "the caring professions," but in jobs where daily they can see at first hand the effects of bad policy on their economic opportunities, seems to me to factor into this.
When you want to hire an employee but the uncertainties about tax planning and the market and your obligations under Obamacare mean you can't, soft appeals to minor extraneous issues fall on deaf ears. When you cannot afford to fill the tank of your car to get to work, pay for your health insurance, or feed your family, while Obama is tossing away more billions on green energy fantasies, ethanol subsidies, or Fluke's birth-control pills, just turn up the heat on your ire. When your savings evaporate, your property is worth less and bonds in Delphi are made worthless to benefit UAW members, your tax bill rises to pay for illegal aliens' social costs, diversity training for doctors, lunchroom monitors checking to see if you packed a healthy enough lunch for your kids. or TSA bullies to pat down the underwear of enfeebled oldsters and crying kids at airports, Obama's offers to provide more government regulation are unpersuasive.Ladies are More Than Their Lady Parts
Then there's the insult of an appeal that assumes that over half the population is so focused on their reproductive parts that nothing else matters much to them. I mean that does seem terribly regressive when you consider it. And it is an equally poor judgment that assumes free contraceptives and no limits on abortion are the choice all women want to make.Plain HypocrisyFinally, there's the blatant hypocrisy of the charge coming from a White House which does not offer equal pay to its women employees and, aside from Valerie Jarrett, has no high-level women staffers. White House megaphones like MSNBC, which pays its women employees half what they pay the males are no better.
(Of course, honesty compels me to say that anything paid to MSNBC personalities seems akin to a charitable contribution designed to keep these nutters off the streets with begging bowls.)
Decades ago (I think during the short-term run of Ted Kennedy for president) NPR interviewed me on the role of women in politics. It was no secret that Kennedy had no high-level female staffers and treated women horribly, and yet women were flocking to volunteer for him. I said they were nuts to do so.
As long as campaigns could count on the support and free labor of women, they would not see why they had to pay for it or treat them as necessary hires. They would always be "the girls." I still feel that way. While I appreciate that campaigns cannot run without countless volunteers, it might not be a bad idea for women to work only for candidates respectful of women and their abilities. I suggest it's in our interest to send in a contribution if we can afford to. If it's a big enough check, the candidate might actually listen to what you have to say. But if you want to do volunteer work, for heaven's sake don't do it for a candidate who's made clear he doesn't think much of women.
Decades ago (I think during the short-term run of Ted Kennedy for president) NPR interviewed me on the role of women in politics. It was no secret that Kennedy had no high-level female staffers and treated women horribly, and yet women were flocking to volunteer for him. I said they were nuts to do so.
As long as campaigns could count on the support and free labor of women, they would not see why they had to pay for it or treat them as necessary hires. They would always be "the girls." I still feel that way. While I appreciate that campaigns cannot run without countless volunteers, it might not be a bad idea for women to work only for candidates respectful of women and their abilities. I suggest it's in our interest to send in a contribution if we can afford to. If it's a big enough check, the candidate might actually listen to what you have to say. But if you want to do volunteer work, for heaven's sake don't do it for a candidate who's made clear he doesn't think much of women.
In any event, ignore the claim Obama makes to be more concerned for your welfare than Republicans are. Supporting him on that false basis is just thinking with your lady parts.
-------------------------------------------------------------------------------------------------------------------------4)Bad Debt
By Bill BonnerGeorge Osborne, Britain's Conservative Party finance minister-in-waiting, did something extraordinary. We can't remember anything like it: He told the truth.
"We are sinking in a sea of debt," he admitted. And on the very day when France's president, Nicolas Sarkozy, said he would not raise taxes, Osborne said that he would not lower them. In order to lighten Britain's debt, he'd leave Labor's 50% maximum tax rate right where it is.
Voters don't like hearing about debt. Politicians don't like talking about it. And economists don't want to think about it. And in a kind of collective suicide pact, they have all agreed not to worry about it. But debt is at the center of the world's financial troubles.
Paying off debt is like dying. You try to put it off as long as you can. But nobody runs an open tab forever.
In other news… Maine-based luxury yacht maker Hinckley, which has been building boats since 1928, is sinking. The problem is neither technical nor operational. It is philosophical. No one complains about the quality of the boats. Or even the prices (if you have to ask, you can't afford one). The company sailed along nicely until 1997. Then, the private equity hotshots from Boston took the helm.
The old Hinckleys who ran the shop had looked upon debt as though they were looking at a bottle of whiskey. A drink now and then did no harm. But watch out. Too much will sink you. In the 70 years they ran the place, they accumulated only $1 million of debt. But the new owners were dipsomaniacs; they multiplied Hinckley's debt 20 to 40 times. (Exact figures are not available.)
For much of history, failing to repay debt was regarded as not merely a breach of contract, but a crime. People who failed to repay their debts in timely fashion were thought to have stolen from their lenders; they were put in prison. In the Middle Ages even a dead debtor's children could be sent to prison. Now, bankruptcy laws allow individuals and businesses to go to rehab. Then, they can stiff creditors again. Neither sin nor crime, debt is now just a cost of doing business.
But few creditors are as forgiving – or perhaps as forgetful – as those who lend to governments. That is the conclusion of a new book by Carmen Reinhart and Kenneth Rogoff, This Time It's Different. The two professors document the history of eight centuries of "financial folly." What we learn from it is what we already knew: that borrowers are often perfidious, crises are usually insidious, and bankers are morons.
Just five years ago, Ben Bernanke looked out on the calm seas of the Bubble Era. "The Great Moderation," he called it. Bernanke took the credit. It was due to "improved macro-economic policies," he said. In retrospect, he probably should have said it was just luck and left it at that. His macro-economic policies made things worse, encouraging all sectors of the economy to borrow. We know what this did to Hinckley. Riding low in the water, with too much debt heaped on its deck, the yacht maker struggles to stay afloat.
But what's new, ask Reinhart and Rogoff? Always and everywhere, debt leads to trouble. Too much debt caused France to default on its sovereign debt eight times. Spain defaulted six times before 1800 and then another seven times later.
Latin America, as the authors point out, would have been safer for bankers if the printing press had never made its way across the Atlantic. Between hyperinflation, defaults, and banking debacles spread over two centuries, the banana republics scammed the banks out of billions. In the '80s, Nicholas Brady tried to rescue New York bankers with his U.S.-backed "Brady bonds." Readers of these back page columns can guess what happened next. Within a few years, seven of the 17 countries that had undertaken a Brady-type restructuring had as much or more debt than they had before. By 2003, four members of the Brady bunch had once again defaulted and by 2008, Ecuador had defaulted twice.
Even non-existent countries go broke. In 1822, "General Sir" Gregor MacGregor issued bonds from a fictitious country he called Poyais, whose capital city, Saint Joseph, was described by the offering prospectus as having "broad boulevards, colonnaded buildings, and a splendid domed cathedral." The bonds sold at lower yields than those of Chile. But it didn't matter whether the country was real or imagined. All of them defaulted.
As for the present slump, the authors offer no predictions, but some guidelines. In a run-of-the-mill crisis, real housing prices generally go down 36% over a six-year period. GDP, in real terms, per capita typically goes down 9.3% while unemployment rates go up for five years, with a 'normal' increase of about 7 percentage points. But the closest parallel to the present circumstance, which they call 'the Great Contraction,' is the Great Depression of the 1930s – which was much worse. Unemployment in Germany and Denmark rose over 30%. Building activity fell 82% in the United States. Chile saw a 90% collapse in its exports.
Tax revenues fall in an economic slump. Government expenses increase (especially when the authorities are ready to do 'whatever it takes' to stir a recovery). Typically, say Reinhart and Rogoff, public debt increases 86% over a three-year period following a financial calamity. Then come more catastrophes, caused by too much debt in the public sector. Both Britain and America are now running deficits of more than 10% of GDP. Neither has a credible plan for reducing debt or deficits. So stay tuned. Much more trouble lies ahead.
Regards,
Bill Bonner
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5) Obama ‘Punting’ on New EPA Rules Until Post-Election
A new report from Senate Republicans warns that the Obama administration and the EPA are delaying implementation of painful new regulations until after the election.
The report from the Senate Committee on Environment and Public Works’ Minority Staff, “A Look Ahead to EPA Regulations for 2013,” points to a “slew of job-killing EPA regulations that the Obama-EPA has put on hold until after the election but will be on the ‘to-do’ list for 2013.”
“As the economy has continued to falter over the past year, team Obama has been delaying rule after rule that will eliminate American jobs, drive up the price of gas at the pump even more, impose construction bans on local communities, and essentially shut down American oil, natural gas, and coal production. They don’t want this economic pain to hit American families just before the election because it would cost President Obama votes.”
The report goes on to state: “It’s pretty clear that if President Obama secures a second term, the Obama-EPA will have a very busy next four years, moving full speed ahead to implement numerous major rules and regulations that he has delayed or punted due to the upcoming election.
“The radical environmental left may not need to worry, but what about American families, who are working hard in tough economic times, trying to make ends meet?
“As the nation struggles to recover from a lagging economy in the coming year, Americans could also be grappling with a regulatory onslaught from the Obama-EPA that will strangle economic growth, destroy millions of jobs, and dramatically raise the price of goods, the cost of electricity, and the price of gas at the pump.”
The “punted” regulations include:
“This report is a wake-up call on the economic pain that the ‘abusive’ Obama-EPA plans to inflict next year,” said Sen. James Inhofe of Oklahoma, ranking member on the committee.
“It reveals a president who is more concerned about saving his own job than the millions of Americans who are looking for one today.”
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- Steven Pearlstein
- Columnist
Why the economy may be better than you think
This may come as something of a surprise to regular readers of this column, but I’m feeling rather optimistic these days about the U.S. economy.
It’s not that the statistical evidence (lower unemployment rate, a spike in housing starts) is so compelling. Ours remains a weak recovery that looks good largely because it has persisted in the face of political dysfunction, rising oil prices, a looming fiscal contraction and global headwinds. In the short term, the possibility of a quarter or two of near-zero growth cannot be ruled out.
What I tend to focus on, however, are the longer-term structural adjustments and rebalancing in our post-bubble economy that need to occur before a robust and sustainable recovery can begin. And from that perspective, the signs are positive.
For starters, as bad as things may seem here at home, they look even worse just about everywhere else. After years of watching the momentum and the investment capital flowing out of the country, it’s now encouraging to see it begin to flow back our way. Not only is that helping to hold down interest rates and lift stock prices, but there are signs of renewed interest on the part of foreign firms in expanding production and operations in the United States. That translates into more jobs and higher incomes.
A decade ago, places such as China and India seemed to have all the mojo — so much so, in fact, that they wound up with bubble economies of their own. Now, in face of excess capacity and sharply higher operating costs, that excitement has waned, along with the flow of capital and technology. Even the Chinese have decided to get serious about rebalancing, allowing their famously manipulated currency to rise to something closer to its real market value while redirecting some of its trade surplus with the United States from Treasury bonds to direct investments in American companies.
There is a growing realization among investors and global executives that China and India still lack the political and institutional infrastructure necessary for an advanced economy. Another round of reforms will be required before those countries will see a return to the growth rates of the past decade.
Europe is a different story. The bubble years allowed much of Europe to avoid making the kind of structural changes necessary to put its social welfare system on a sustainable fiscal path and reform its labor and product markets. The euro crisis — which is both a banking crisis and a sovereign debt crisis — has forced Europeans to begin addressing those issues. But the noisy process will take years to complete, if for no other reason than it requires Europeans to accept, at least in the short run, a lower standard of living. That Europe will dip back into recession is all but certain.
My optimism about the U.S. economy, however, is not based simply on the woes of others, but also on the restructuring momentum I see here at home.
After an extended period of denial and push back, the financial sector is finally accepting the reality that it had become too big, too risky and too generous with its compensation. Under pressure from shareholders and regulators, big banks are shrinking their leverage and balance sheets, off-loading their hedge fund-like activities, shedding employees and reducing the percentage of net revenue set aside for compensation.
“There’s way too much capacity, and compensation is way too high,” James Gorman, chief executive of Morgan Stanley, recently told the Financial Times.
Last week’s sacking of Citigroup chief executive Vikram Pandit in favor of a more traditional commercial banker was less a commentary on Pandit’s efforts to steer the bailed-out bank back into solvency than it was a strategic statement by outside directors about where the bank needs to go in the future. It’s only a matter of time before Bank of America’s Brian Moynihan meets the same fate.
And while it’s taken years, Wall Street is finally being forced to accept a larger share of the cost of its reckless behavior in the form of billion-dollar court settlements with regulators, shareholders and customers. I’m not so naive as to think these settlements will transform Wall Street’s culture, but the pain in terms of money lost and careers ruined has been sufficient to have tamed it for a while.
Wall Street also hasn’t seen the last of its regulatory challenges. Recently, several of the normally sober and conservative presidents of regional Federal Reserve Banks have spoken publicly about the need to “break up” the big banks while the Fed’s lead official on bank regulation, Governor Dan Tarullo, has suggested a cap on the amount of money big banks can borrow outside of their normal deposits.
Surely, no sector of the U.S. economy is in greater need of structural reform than health care, with its world-beating price tag and mediocre outcomes. That reform is now shifting into high gear. Even before Obamacare has kicked in, many doctors, hospitals and insurers are moving to reorganize the way care is delivered and paid for. In these new “accountable care” organizations, doctors will be on salary and medical records will be electronic, facilitating coordination of care and adherence to best practices.
Health policy experts have been kicking these ideas around for decades, but when you talk to them these days, you get a real sense of excitement that they finally are taking hold. Big, established firms are investing big money to develop staffs and systems, while venture capitalists and private-equity firms are placing significant bets in the hope of getting in on the ground floor. In the short term, this process is likely to generate growth in jobs and income. Longer term, the potential to save money and boost productivity are enormous.
Less far along, but no less inevitable, are the long-awaiting structural reforms to the American system of education. If you’ve been following the news — the teachers strike in Chicago, the brouhaha at the University of Virginia and the steady stream of stories about the debt load of college graduates — you get the clear sense that the debate is no longer over whether the education establishment will be forced to bring down costs and improve educational outcomes. The only debate now is about how and how much.
It’s no longer out of bounds to talk about faculty productivity and accountability, or tying pay or promotion to measurable outcomes. Charter schools are now an accepted part of the mix, and resistance to the use of technology is crumbling. To the delight of some and horror of others, private capital is lining up to invest.
The granddaddy of structural problems, of course, is the federal budget deficit, but even there I’m hopeful that a solution may come sooner than later. Republicans and Democrats had hoped that this year’s would be a “clarifying election”— that the voters would finally decide to back one approach or the other. But with two weeks to go, it looks like the only thing that the voters are willing to clarify is that they don’t back either approach and would prefer that each side compromise.
There is already a bipartisan majority in the Senate prepared to accept that judgment, with a working group quietly crafting such a compromise. And if, as expected, Republicans lose a few seats in the House and fail to take control of the Senate, House Speaker John Boehner, with strong backing from the business community, may be willing to put his political career on the line by delivering 100 Republican votes for a grand budget bargain — one that raises about a trillion dollars in additional revenue over the next decade without raising tax rates.
The Australian foreign minister, Bob Carr, was recently quoted as saying the United States was “one budget deal away from restoring its global preeminence.” It looks pretty much that way to me as well.
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Town Hall Lies, Moderator Bias and the Presidential Race
By Newt Gingrich
President Obama was clearly better in the second debate than in the first.
His supporters can take comfort in his energy, aggressiveness, and determination. He was far stronger than in the first debate.
But although Obama improved stylistically, he was profoundly dishonest on the substance.
Romney was strong but not quite as good as in the first debate. He missed a huge opportunity on Libya, a big opportunity on energy, and several smaller opportunities.
He was also forced to be argumentative and pushy by moderator Candy Crowley’s constant intervention on behalf of Obama.
After two debates in which the moderators were relatively passive and allowed the candidates to decide the pattern and rhythm of the debate, this town hall saw the return of the liberal activist as an interventionist force.
As I have often warned when Republicans tolerate liberal moderators, they are setting up two-on-one contests in which they have to fight their way past both the moderator and the opposing candidate.
Crowley repeatedly intervened to stop Romney from dismantling Obama’s lies on taxes and women’s issues, even though she had given him far less time to speak. Her support of Obama’s false claim that on Sept. 12 he had described the Benghazi attack as terrorism may go down in debate history as an extraordinary propping up of falsehood.
Obama in the Rose Garden called the Libya attacks “senseless violence” and referred generally to “acts of terror,” then spent weeks dodging the truth on Benghazi. Everyone knows this. Within minutes after the debateCrowley acknowledged that of course Romney was “right in the main”: the administration did refuse for weeks to call the acts “terrorism” or to attribute them to “terrorists.”
It is precisely because so many of Obama’s key moments were based on falsehood that we will not know for several more days who really won the town hall meeting.
His lies about Libya were systematic, methodical, and as fully mendacious as his administration has been on this topic for more than a month.
Four Americans, including the first ambassador to die from terrorism in 33 years, were killed and the President of the United States deliberately lied to the American people.
United Nations Ambassador Susan Rice was sent out the Sunday after the attack to lie on five TV shows. Her interviews were explicitly false and misleading. The Obama administration had decided, for whatever reason, that it did not want to admit the Benghazi attacks were a deliberate assault by allies of al Qaeda. The administration was determined to pin the blame on an idiotic movie made by an anti-Muslim extremist.
This was not a temporary act of dishonesty.
Even when the president’s media spokesman was forced to concede there were terrorists behind the Benghazi attack, the president the very same day went back to blaming crowd anger caused by an anti-Muslim film.
Furthermore, President Obama went to the United Nations and six times mentioned the film in his speech to the General Assembly. He did not once call the attacks terrorism.
When asked outright on “The View” and on Univision whether the attacks constituted terrorism, twice he refused to say.
Just look at the timeline of what the administration said surrounding the attacks and it will be very clear that the president’s dishonesty continued last night.
Some enterprising activist is going to put President Obama’s Benghazi falsehoods in the town hall meeting in a YouTube video with all his and his administration’s earlier statements and the depth of their dishonesty will be vividly obvious.
By Saturday this should have happened and then we will see if Obama’s strength in last night’s debate survives the proof of the his dishonesty.
Obama was misleading in his energy answers and the gap between his claims and the fact is entirely to his disadvantage. He said that oil production is at its highest level in 16 years and that they are drilling on more public lands than the previous administration. In fact, annual leasing on federal lands is at a 30 year low. Mitt Romney was correct when he said oil production on federal lands is down 14 percent — and 9 percent for natural gas. The president just flat out lied in this exchange.
Beyond his dishonesty, he will be hurt both by the price of gasoline — $2 a gallon higher than when he became president — and by the degree to which leaders in coal, oil, and gas will reject his claims.
As Romney said to the president in the exchange, “I don’t think anyone really believes that you’re a person who’s going to be pushing for oil and gas and coal.”
Romney may have been at his best in his closing when he kept saying that we do not have to settle for the current performance failures.
In many ways President Obama’s deliberate lying to the American people about terrorism and the death of four Americans may be the greatest Obama failure.
We will see by Saturday if the country has digested the Benghazi falsehoods and rendered judgment.
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