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I am always in favor of helping anyone who needs help.  I am in favor of supporting them until they can get on their feet.  I would prefer this were done privately whereby it would be voluntary giving out of love rather than by force of law.  But even I, a person who opposes big government, have no problem with the NEEDY receiving the help they need, from whatever source until they are able to make it on their own.  And they must be allowed to try to make it on their own.

I have been accused of being cold-hearted, mean-spirited, selfish, self-centered, spiteful, heartless because I call for the government to clean itself up and fly right.  The issue in question last time I was accused related to the welfare programs, the feel good programs.
I find myself hard-pressed to explain a concept that is so natural for me to someone who has never thought along the same lines, but I do it anyway, albeit rather poorly.

Our government has been explanding, probably since time for it began, but has exploded in scope in the last 50 years to the extent it bears little resemblence to my younger days.  Some of that expansion may have been good, but I perceive most of it as bad.

I contend that many people who initially get on welfare do so illegally – I’ve had social workers say they’ve had mothers borrow children from a neighbor to show how many kids she had, I’ve known some who have scammed the system, and I know it is done regularly.  I have no reason to think government actually tries to get anyone off welfare because to do so loses a certain degree of control it will then have over that person.  Welfare is a two headed monster.  It serves both the recipient and the politician.  The victim will, if he votes at all, definitely vote and defend the politician who promised him the moon, especially if he delivers on the promise.  The politician will always promise the moon in order to get the votes.   I’ve heard others tell about when bird food is made available, the birds flock around, and once the bird food is gone, the birds leave too.  As long as it’s there, the birds will stay and eat rather than look for more.
There are people who milk the system, and some believe that is rare.  I don’t. I think  it is horribly abused – and I correctly translate that into abuse of the taxpayer who provides the money to take care of those people.  It isn’t just the “welfare system” – it is all the other “feel good” programs designed to create dependency on government, such as subsidized transit, meals on wheels, senior citizen discounts, Medicare, Medicaid, free clinics, etc.

One example.  I once was director for the senior citizen centers, meals on wheels, and transit for my county.  One woman had been having meals delivered to her home at taxpayer expense for months and one day ran into the center to tell me not to have that day’s meal delivered because she was “going shopping with the girls”.  She ran up the 5 steps to the front door rather than take the ramp.  I stopped her delivered meals that same day as she was obviously not qualified to receive home delivered meals.   She was scamming the system, and everyone who knew it was helping her scam the system.  She is one example of many, many I could list.  If the government could bring itself to actually clean house and straighten out things once in a while I would not be so antagonistic, but that has never been done and will never be done.  Someone somewhere must draw the line – otherwise the scammers and cheaters will destroy the system and people who champiion these government handouts will be sorely upset.

I have to ask myself, as possibly you do, how needy is a person who walks around with ipods and cell phones?  How needy is a person who swills booze all day?  How needy is a person who always seems to have cigarettes?  How needy is a person who drives an expensive car?  How needy is a person who goes to the shop for manicures?  How needy is a person who takes illegal drugs?  How needy is a person who uses the money to have her ears (and other parts) pierced, to have fake nails put on, etc?  How needy is a person who has 3 TVs in their home?  How needy is a person who is so important that they wear a pager?  How needy is a person who wears designer jeans?  How needy is a person who gets free medical care, but ignores the medical advice?

I don’t blame the poor person nearly as much as I blame the government.  Maybe not all citizens, but certainly legislators should understand that tax dollars are finite.  What is so hard to understand about one family going without something so that the their taxes will pay for the exact same thing for some other family?  Do people not understand that when a person works and earns a day’s pay, that pay is HIS, NOT the government’s, and not anyone else’s.  If it is HIS money, how does government have the legal right to FORCE him to give whatever percentage of it the government deems necessary?  This constitutes neither caring nor compassion – this constitutes force to steal from one to give to another, primarily for votes.

Our government is becoming increasingly socialist, to the point that some even ask what is so bad about socialism.  Our government schools aren’t doing such a hot job with education if civics and real history are no longer being taught.  Maybe they are still being taught, but slow students get a passing grade so as to not be made to feel badly.

To those who question conservative’s compassion and caring, I tell them the truth about what I do – hours and hours of volunteering at nursing homes and churches for senior citizens, fund raising for Child Protective Services, financially support 4-H, the high school band, food baskets for Christmas, donations to local charities, churches, and schools.  Perhaps this doesn’t impress the critics, but it isn’t meant to.  Do they assume if there was no government help and I found a family in need that I would cheerfully watch it starve to death?  What goes on in these people’s minds?  Anything?

Am I perfect?  Goodness, NO, I am NOT.  Is the critic perfect?  NO, he is not.

I feel I am compassionate.  Stupid, I am NOT.  Wasteful, I am NOT.  Naive, I am NOT.
I will do anything, go to almost any limit to help someone help himself, but when he expects me to do it all for him, I assume I am being scammed.

GaryNorth

“NO QUESTIONS, SIR!” by Gary North, at http://garynorth.com

Date 9/10/2009


I will now make an assertion:

You have no major questions about the economy, unemployment, retirement, inflation, deflation, depression, the possible collapse of the dollar, real estate, or gold.

Am I wrong? Then call my bluff. Send me a question. I’ll answer it.

If you are asking a career decision question, I will need the following information:

Your age Your location Your occupation Your retirement date Your #1 goal in life Deadline date

Then ask your question. Send you question (25 words or fewer) to this address:

garynorth@garynorth.com

Put the word “QUESTION” in the subject box.

I will answer all of them in future issues of this newsletter.

Back in 2005, I offered this service. For a year, I answered questions every other issue. This helped me find out what topics my readers were interested in. Well, a few of my readers, anyway. One-tenth of one percent of my mailing list sent a question. Yes, one out of 1,000.

Nobody else had any questions.

People do not ask questions. There are three main reasons for this.

1. They are the blind being led into a ditch by the blind.

2. They know the answers, and they don’t want to have them confirmed.

3. They just don’t care.

A SHAKY TRESTLE

Our problem is procrastination. Most of our lives are routine. We do not get too far away from a comfortable routine. Most of the time this routine works.

Some people call this being in a rut. Others call it staying on track. Sometimes the trestle is wobbling.

I have no objection to routines. My routine keeps me on track in my rut. But part of my routine is to look down the tracks to see if there is anything out of the ordinary.

Today, the economy is out of the ordinary. The trestle almost collapsed a year ago.

The question is: Will it collapse next time? Also, when might this next time be?

There are signs that the trestle is missing pillars. Every Friday afternoon, after the stock market closes, the FDIC closes five more banks. Investors shrug it off. “No problem.” Then, the next Friday, five more banks get closed. How long can this go on? Not much longer. The number of closings will increase. A man whose firm buys busted banks says that he expects 1,000 banks to close. (http://www.cnbc.com/id/32581463) “No problem.”

Then there is unemployment. Every month, the number of jobs declines by 200,000 or more. The rate of unemployment jumps. Investors immediately buy more shares. Why? Because they see unemployment as a cost-cutting tactic. Therefore, “corporate earnings will go up soon.” They don’t think that an S&P price-earnings ratio of 129 (August 31) is a danger signal. It has never been this high before. It has never reached 50 before. “No problem.” They think that profits will rise to bring the P/E back to something like 15, which would be a buy-and- hold signal.

Then there is the Federal deficit. It will end up on September 30 in the range of $1.6 trillion. The administration has offered an estimate of $9 trillion between now and 2019, meaning $900 billion a year.

Social Security is officially expected to go into the red in 2017. One Congressman thinks this could happen before the next Presidential election. He is on the House Committee for Financial Services.

http://GaryNorth.com/snip/886.htm

When this happens, the Social Security Trust Fund will have to cash in some of its Treasury bonds in order to get money to send to people on the rolls. The Treasury will have to sell enough debt to the public (including the Federal Reserve System) to cover these transactions.

In 2008, Medicare’s Hospital Trust Fund went negative. It received less money from Medicare taxes than it spent. Thus, it had to sell its nonmarketable Treasury bonds back to the Treasury. Its press release admitted that the program was negative, but it spoke of the Trust Fund as solvent. It is solvent legally. It has government-issued IOU’s in it. But not for long.

The Trustees report that Medicare’s Hospital Insurance (HI) Trust Fund will become insolvent earlier in 2019 than reported last year. HI expenditure growth is estimated to average 7.4 percent each year over the next 10 years, a higher rate than either Gross Domestic Product (GDP) or Consumer Price Index (CPI) growth. This year the HI Trust Fund will spend more than its income, and from 2009 through 2017, about $342 billion will need to be transferred from the Federal treasury to cover beneficiaries’ hospital insurance costs.

That’s a nice, precise figure: $342 billion. The key words are these: “will need to be transferred from the Federal treasury.”

From the empty Federal Treasury.

“We need to act quickly and effectively to address Medicare’s fiscal health, including enacting the steps proposed in the President’s budget, which would postpone the insolvency date of the Part A trust fund for ten years,” said Health and Human Services Secretary Mike Leavitt. “Congress should also act immediately on the smart changes put forward by the Administration after last year’s funding warning, which would allow the program to be modernized and transformed.”

http://GaryNorth.com/snip/887.htm

I love this phrase: “Congress should also act immediately.”

Congress did nothing except run up the general deficit by another $750 billion (minimum) in October. Then it did it again this spring.

The Medicare hospital insurance program is bankrupt, but nobody in government except Ron Paul uses this word to describe government programs.

CALM IN THE EYE OF THE HURRICANE

Most people know little or none of this. They go through their daily routines. They are oblivious. The government has deliberately disguised these matters. The average citizen thinks that someone at the top has a solution. He cannot conceive of the possibility that experts who run the system are making things up as they go along.

Most of the time the system lumbers along. But then, once in a while — such as a year ago — the system grinds to a halt. Then the response is the same: create money and increase the Federal deficit. The average guy thinks this will solve the problem at no cost to him.

It feels like no cost, but the debt level rises. This year, the Federal deficit has added another $17,000 per household. No one seemed to care. Few even noticed.

http://GaryNorth.com/snip/888.htm

As we watch these things going on around us, and when we perceive that those around us perceive none of this, we remain calm. The calm serenity of those around us calms us, as well. We see the trestle ahead. We see the engine disappear from sight. We suspect what is going to happen to us if we don’t get off the train. But no one around us is moving toward the exit. No one even seems to notice.

The problem is, the trestle has wobbled before. It has looked as though the engine has disappeared, but it always reappears on the far side of the trestle. So, we assume that this time it will not go over the edge into the blackness below.

But there are lots of trestles between here and our final destination.

We are calmed by the calm of those around us. They seem to know what they are doing. Yet they didn’t know a year ago. Henry Paulson was frantic. He nationalized the mortgage market on his own authority exactly one year ago. The markets remained calm. Within weeks, the bailouts of the big banks began. Goldman Sach’s rival, Lehman Brothers Holdings, went bust over a weekend. Merrill Lynch was swallowed by Bank of America.

The underlying causes of the problem, namely, toxic assets, have not gone away. There are lots more of them ahead of us: Alt-A mortgages (liars’ loans), option ARMs (folks too poor even to lie loans), and commercial real estate.

The re-sets will hit families that will not be able to qualify for loans. There are no more liar loans available. Lending standards have tightened over the last year and a half. The loans that were easy to get in 2007 and earlier are now ancient history. The re-sets will mean busted loans. They will end. Some of them will not be replaced. No one knows how many.

The lending agencies will not be able to hide these re-set loans. They die on schedule. They must be replaced. They will not be replaced. The lenders will have expired loans on their books.

The lenders have been playing “let’s pretend” with bad loans. They have not reported these loans as being in default. They have pretended that there is hope to get the owners paying again. A re-set mortgage does not offer wiggle room. Unless the regulators change the rules, these loans will have to be written down as soon as the re-set date arrives.

Example: my son-on-law bought a new home in a nice neighborhood. He bought a bank-foreclosed house in a bank- foreclosed development. It was $100,000 less expensive than a few months before. The houses sold fast because the bank priced the houses to sell. Recently, his next-door neighbor lost his job. He moved back to northern Illinois to get a seasonal job. His wife and family stayed behind. Now she has been laid off. This is not a poor neighborhood. It is middle class.

Unemployment climbs relentlessly. This is having fall-out effects on housing. The summer season for selling houses ended in late August. The reports on home sales will turn negative as the percentage of foreclosure sales increases in relation to total sales.

Yet people in the know are calm. The average Joe is calm until the guy across the street loses his job.

THE IMPLICATIONS

Have you sat down with a pencil and paper to outline your situation?

If you were in the market for a new mortgage, what could you present to the lender to prove that you are a low-risk debtor?

If you were in the market for a new job, how much wiggle room would your finances allow you?

Where are you vulnerable? Your job?

Where is your employer vulnerable?

People assume that corporate management knows what it is doing. Then they are amazed when they are told that their services are no longer needed.

Managers don’t warn people whose jobs are at risk. They hold out hope that a turnaround is imminent. They want to believe that it really is imminent. They don’t want to lose anyone because of a premature warning to him that his job is coming to an end. So, they don’t tell a targeted employee until there is just no wiggle room remaining.

Are you seeing this at your firm? Is there a drip- drip-drip phenomenon going on, the way it is with insolvent banks? If there is, what have you done to see to it that your job is safe? Anything new? If not, you should assume that your job is not safe.

What about your company’s market? Is it stabilizing? Talk to someone in sales. That’s where the first signs of recovery will occur.

Here is a strategy you can quietly use to assess your firm’s line of credit. Which bank is its main lender? You need to know. Once you know, check what the bank is paying on time deposits. If it’s 2% or higher, the bank is probably in trouble. It is offering rates way above the federal funds rate of 0.15% that the Federal Reserve is paying on excess reserves. It is buying time at a loss.

That bank is a candidate for an FDIC take-over. The problem then will be this: a new set of managers will be in charge of rolling over old loans. They will examine every business loan on the dead banks’ books. Your firm may be at risk along with the bank that supplies the credit.

The looming decline of commercial real estate threatens local banks. A recent “Wall Street Journal” article shows why.

In contrast to home loans — the majority of which were made by only 10 or so giant institutions — thousands of small and regional banks loaded up on commercial property debt. As a result, commercial real estate troubles would be even more widespread among the financial system than the housing woes. At the present, more than 3,000 banks and savings institutions have more than 300% of their risk-based capital in commercial real-estate loans.

http://GaryNorth.com/snip/889.htm

When these loans go bad, this will force more of these banks out of business. It will be crunch time for local lines of credit.

CONCLUSIONS

Does any of this raise some questions in your mind?

Have you thought through your answers?

If not, why not?

Questions can be asked here of Morality101 via Comment, or

to Author, garynorth@garynorth.com (subject: Questions)

Principled Perspectives.

A is A, and Socialism by any Other Name…

that Obamacare isn’t socialism ignores socialism’s essential nature. Technical definitions aside, socialism is a form of collectivism, the doctrine that holds that the standard of value is the group, to which the individual is subordinate and can be sacrificed on any group whim, as represented by the state. Communism, Nazism, welfare statism, fascism, democracy, and socialism are all manifestations of collectivism. The sacrifice of individual rights under a statist regime is the political essence of collectivism, and that is exactly the nature of Obama’s health care plan.

But to advocate socialism openly and honestly is and always has been a loser in America. After the tyranny, wars, and unprecedented mass murder wrought by the socialist regimes of Soviet Russia, Nazi Germany, Red China, and the many smaller variants of the 20th century, socialism is dead as an intellectual force. That is why the champions of socialized medicine run from the socialist label as from the plague.

As the great Aristotle said; A is A. And socialism is socialism. We are headed toward totalitarian socialism in America, and have been for the past century. Under Obama, the trend is accelerating. But he is an empty suit, simply cashing in on the trend…the collectivists preferred method of American socialization…the back door of fascism. Step by step, through programs such as the Veterans Administration, Medicare, a myriad of government controls and taxes, etc., total government control of medicine (and, in fact, the entire economy) is and has been advancing in America…long before Bush-Obama socialism appeared on the American scene.

The fascist method was explained by a former leader of a major Western nation some time ago:

“The party is all-embracing…” said Adolf Hitler upon taking power, “Each activity and each need of the individual will thereby be regulated by the party as the representative of the general good…This is Socialism- not such trifles as the private possession of the means of production. Of what importance is that if I range men firmly within a discipline they cannot escape. Let them own land or factories as much as they please. The decisive factor is that the State, through the party, is supreme over all, regardless of whether they are owners or workers…Our Socialism goes far deeper…[the people] have entered a new relation…What are ownership and income to that? Why need we trouble to socialize banks and factories? We socialize human beings.” (From Herman Rauschning’s The Voice of Destruction, as quoted in The Ominous Parallels, by Leonard Peikoff, page 231-232.)

We will maintain our illusion of privacy, while the state, through the medical bureaucracy, exercises total control over the medical and business decisions of patients, insurers, and providers alike. Doctors won’t be technical employees of the state (the communist brand of collectivism), at least not initially. But, fascism is socialism…and so is Obamacare…whether Mr. Schwalb, President Obama, or Bill O’Reilly want to call it that or not. Obamacare will “range men firmly within a [health care] discipline they cannot escape.” The medical bureaucracy will be “all-embracing”, and the people will be socialized…sooner (if the democrats have their way) or later (if the current GOP has its way).

The only antipode to collectivism/socialism is individualism/free market capitalism…the system based upon America’s founding principles of unalienable individual rights and textconstitution republican government…long absent from American health care.

continue reading…

founder - Mises.org

founder - Mises.org

by Llewellyn H. Rockwell, Jr.

Just how bad is the current plague of economic fallacy?

Consider the front page of the New York Times today (July 15, 2009):

SEACHANGE IS SET IN A HEALTH PLAN – House Democratic leaders took a big step toward guaranteeing health insurance for most Americans on Tuesday as they unveiled a bill that detailed how they would expand coverage, slow the growth of Medicare, raise taxes on high-income people and penalize employers who do not provide health benefits to their workers.

A BLEAKER PATH FOR WORKERS TO SLOG – In California and a handful of other states, one out of every five people who would like to be working full time is not now doing so. It is a startling sign of the pain that the Great Recession is inflicting, and it is largely missed by the official, oft-repeated statistics on unemployment.

It’s sometimes said that economics is a difficult subject because it requires high-level, abstract thinking, and tracing of cause and effect through several logical steps. And yet, really, how hard can it be to see the contradiction in the above?

Here is the problem. Mandating benefits to employees imposes costs on employment. The would-be worker bears the cost. It makes the worker more expensive to hire. The employer has to pay not only a salary but also a benefit. If you make it more expensive to hire people, fewer people will be hired.

It is no different from eggs at the supermarket. If they are $2 each, you will purchase fewer of them – you will economize. This is nothing but the law of demand: consumers will demand less of a good at a higher price than a lower price. A salary plus benefits amounts to a price that the employer must pay to purchase the work of a laborer. At a higher price, less work will be purchased by the employer.

That means that requiring employers to provide health benefits to employees and potential employees will make the job situation today worse not better. It will intensify the current problem that people want to work more but are having a hard time getting employers to hire them.

The answer is the same in every recessionary environment. The price of labor must fall in order for the surplus of workers to be absorbed into the market. Raising the cost of hiring only further entrenches the problem and creates new forms of unemployment.

There is no real reason to prove these assertions empirically since they flow from the logic of economics. Nonetheless, Richard Vedder and Lowell Gallaway spent years accumulating evidence of the link between full employment and lower labor costs, on the one hand, and higher labor costs and unemployment on the other. What they found in their book Out of Work was that the entire problem (or nearly the entire problem) of unemployment can be explained through the issue of the costs of hiring and employing. In other words, there is no mystery here. Unemployment can be created or solved by the application of policies and laws.

In a free market, however, there is no unemployment that persists that isn’t chosen by the workers themselves. That’s because the price of labor is continually fluctuating based on supply and demand. Everyone who wants to work can work, simply because we live in a world in which there is always work to do. Only artificial interventions can generate the unemployment problem we have today.

Even so, and for reasons that are unknown and can only mystify the learned person, the Congress and the Obama administration keep trying to pretend as if reality doesn’t exist. Here they are imagining that they can just order businesses to give everyone health care and then suddenly health care for all comes into being.

As with all programs, we have to ask: what is the cost? I don’t mean what the cost adds up to in terms of government spending. I mean: what is the social cost of overpricing labor relative to what the market would bear? In this case, there is no way to know in advance, but we can know that fewer people will be hired than otherwise.

And then what happens? Business goes to government hoping for a subsidy or for fully socialized medicine as a way of sloughing off the costs on the whole of society instead of bearing them directly.

Sadly, there is no way that free health care can be granted to all living things with the stroke of a pen. Broadening availability will require that the entire sector be turned over to the private sector, so that it can be controlled through the price system like everything else.

As it is, the imposition of new penalties on business will make them less, not more, likely to hire people, which will thereby intensify the labor problem. It is like trying to cure a drug overdose with the injection of poison. New mandates on business are exactly what we do not need.

In other words, the whole idea is just plain dumb, not to mention incredibly ill-timed. The worst possible time to be imposing new mandates on business of any sort is during a downturn. Make the mandates labor specific and you have a recipe for causing the unemployment rate to land in the double digits and go up from there, higher and higher until the entire economy shuts down.

Presumably, not even Congress and the President would benefit from this result.

Copyright © 2009 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

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