Greek Bonds, Anyone?
The world is getting a little edgy when very few investors are willing to buy Greek bonds — given what they know about Greek politics and productivity. And so the interest rate has soared on ten-year-yields to above 7.5% — a chase-your-tail scenario, in which the bankrupt Greeks will have to increase the interest rate to attract capital, that in turn will go so high that they, the Greeks, will not be able to pay the debt, that again in turn will frighten bond buyers even more, that, of course, will send rates even higher.
California, take note. Some Stanford economists and analysts just refigured the cooked books at the various California public pensions and found a $500 billion shortfall. The state is already broke. Its taxes are the highest in the nation, the flight of its wealthy per week is unsustainable — and its teachers are apparently (please explain this?) furious that their salaries are the highest in the country and their students among the worst. So we either float more bonds, or ask retirees to take a cut or freeze. The latter is not even being discussed.
Who Said You Owed Anything?
Chris Dodd is pushing a multifaceted credit card bill that probably will up rates on all to allow some more deserving to refigure their debts. (I hope not in the fashion that Chris Dodd gets mortgages, or Timothy Geithner pays his FICA, or Barack Obama buys a lot, or Tom Daschle reports limo perks or Charlie Rangel adds up vacation rent). Dodd’s effort is a sort of relish to the administration’s own plan to ensure that some underwater mortgages (note, I said “some”) won’t have to be quite paid off.
I think you get my drift with these examples. If you don’t, just note whom Obama serially demonizes — doctors who lop off too much, insurers who are just too greedy, CEOs of non-government-run companies who jet to the Super bowl, “fat cat” bankers, and so on — and whom he worries far more about: anyone who was forced by the system to take out a debt and is again forced by the system into not paying it back. No wonder the Greeks are scrambling to find ways not to pay back their gargantuan debt.
Trust — How Quaint?
We are not just in a war on those who have capital and loan it to others, but a war on the entire sinews that hold together the modern system of global finance — trust.
Following the Greek explosion, we heard of everything from fraudulent bookkeeping to the German responsibility to pay more reparations for World War II to the dangers of belt-tightening. All were euphemisms for Greeks to find ways of not having to pay back what the government freely borrowed — essentially to pay millions of unionized Greeks at work and in retirement. So where is all the money? Long ago spent on salaries for millions to do little, who now want more from those who do a lot (e.g., Germany)
The New Versailles
The problem is not just the old “big government.” The public is now more focused. They are reifying “government” into millions of public workers and their technocratic overseers: all are far better tenured, salaried, and pensioned than their counterparts in the private sector. They are the new court hordes at Versailles. And we know their numbers have expanded almost geometrically, far faster than both the rate of inflation and population growth — most as rewards for paying off constituents, expanding the block of loyal entitlement-receiving voters, and in general ensuring a sort of pandemic government dependency in which 20 percent of the nation receives almost all of its monthly money from the government and another 20 percent receives a lot of it.
From what the administration announces almost daily, from the radio ads blaring now in the popular culture, and from congressional promising, I think I get the new narrative. “Trust” is an archaic construct established by capitalists to ensnare the more noble poor. When you buy that blue-ray DVD player or plasma TV (saw lots of that today at Best Buy in Fresno), in lieu of a catastrophic insurance plan, and add to it a night out at the Macaroni Grill and the multiplex, it is not all that certain you will have to pay all of that charge back. As you go from one maxed-up credit card to another, there will be a new company waiting to renegotiate your debt, and a demagogic congressperson to explain why you were snookered into doing what you did.
Thank you VDH. Wish I could have stayed in california.
Another well thought out article, Dr. Hanson. And you are drawing much-needed attention to a very real and serious problem. When the government can re-define terms like debt and trust, this is poison poured directly into the lifeblood of the economy. If the government can redefine debts it can effectively allow priveledged groups to violate contract law at will.
Why then, should bankers make risky loans knowing they will very likely be defaulted on and the banks will have no recourse in the law? Because government regulations such as the community reinvestment act will force them to. It seems to me bankers will be caught between the devil and the deep blue sea: If they make loans to certain groups of people, the odds are quite high they will lose the money. If they fail to make loans to those same groups, they will be accused of racism and forced to make the loans anyway.
I wonder how much of the current banking crisis can be traced to such government interference. More generally, the entire economy is built on trust; trust that the government will not debase the currency, trust that contract laws will be honored and enforced, trust that creditors will be able to collect debts. If this is no longer so, it will only be a matter of time until the economy is effectively crippled.
Prof. Hanson,
Spot on and well done. You do neglect however to look at the bright
side of all of this:
1. The EU can allow Greece, Spain and probably Portugal to slide
into the economic abyss. This will signal to the world that they
are serious about the integrity of their currency. As the US Govt.
bails out California, the EU replaces the dollar as the global
currency. Benefit: This solves the present quandry as to where to
put savings to protect against the coming dollar devaluation
(even greater than present) and heavy inflation.
2. Many business friendly countries, including the developing world
with decent infrastructure will benefit from demonized USA companies
transferring there. This in turn enhances shareholder value (via
lower tax rates and lower regulation cost), enriching
shareholders. As you well know, an integral part of what is
coming is tax evasion becoming the new national pastime – Not just
the preserve of Dem politicians. Thus the improved economic
return on investment will be retained.
I can think of many more “global benefits” – unfortunately they
all spell doom and gloom for the US.
As much as would like to make a pun. I won’t. Typo alert @ pub”L”ic sector employee. Feel free to delete this post.
Dr. Hanson
Your description fits all I see. Please address how we thrifty, debt-free retirees with modest savings can best “gird our loins.”
I too wish VDH could forecast the future for us. His understanding of the present, past and our trajectory is phenomenal.
But specifically, the answer to your question is: GO GALT!
““Walking away” is suddenly not defaulting, but a smart move when the house you were betting would go up went down in value. Note that we didn’t have any law suits five years ago against new “greedy” homeowners who woke up each year with thousands of dollars in “equity” that magically appeared out of nowhere.”
Problem with this is, the bankers deliberately were also betting on the housing market, and they also need to be made to lose–made to lose because they are gaming the political system to make the taxpayers take the haircut.
Being able to bail on a mortgage is a kind of bailout, and if the banks get theirs, it a matter of equity–or karma–for other people to get theirs.
You might say it’s wrong and two wrongs don’t make a right–and as far as that goes, you are correct.
But as far as that goes, it doesn’t cover the rebalancing or moral hazard which leaving underwater houses also represents.
The banks need to be forced to take a haircut, they mostly lent stupidly.
You don’t think banks take a hit when mortgage payments are 30, 60, 120 days late?
You don’t think banks take a hit when a house is foreclosed on?
Yeah. Such a hit they got all that bailout money…
If they won’t accept a substantial (10-20%) reduction in the principle of the loans they stupidly made–and they were the professionals, remember–I can’t sweat people walking away from their mortgages, especially in “no-recourse” states.
The banks have little or no consideration for loans they make. In short they loan money they never had. They’re only lending %1 of the money from the FED. The 99% is just created out of thin air when you get the loan. It’s just a number in a computer. The bank isn’t accountable to you, but the %1 from the FED. Stop dreaming and start learning.
Late, no, only when the mortgage is unpaid does the bank lose out. The bank can profit immensely from people falling behind, but managing to recover, due to the penalties and additional interest assessed for late payments.
It’s estimated that the unfunded liability of Social Security and Medicare comes to about $100 trillion….yes trillion with a capital T. That works out to 1.3 million dollars in debt for the typical family of 4.
I’m just waiting for the young, those under 30, to wake up and say “I don’t see my name on that contractual obligation and I’m not paying it!”
The imminent collapse of the socialist Ponzi scheme is upon us.
There are dangers to all this indeed, good professor, but you fail to touch on one of the most important. It’s been said before that you can’t cheat an honest man. In order for the demagogues to succeed they must corrupt public morality. Notice the emphasis always on “rights,” but never a word about duty or obligation. Socialism quickly turns a productive citizenry into nation of thieves, grifters and tax cheats.
No nation can last for long once the citizenry has been corrupted. The karmic debt when it comes due can be as cruel as it is implacable. You’ll recall that when the Goths attacked Rome, the able youth of the city refused to man the walls. The entire population was sold into slavery except for the traitors who arranged the surrender.
You will recall also that the Bolsheviks preached class warfare only to reduce the proletariat to the status of slaves. Millions of ordinary citizens were marched off to die in the labor camps of Siberia. Class warfare has but one aim: divide and conquer.
We will find out soon enough if small “r” republican virtues can withstand the current assault on liberty. Republics throughout history have displayed amazing powers of recuperation and renewal. I’m betting that America still retains a moral citizenry who will reject the seductive offers of the whore called socialism. God save the republic!
“It’s been said before that you can’t cheat an honest man.”
And it’s in that vein I have little trouble with banks which won’t admit their dishonesty–their seduction by historically unreasonable profit, their corruption–in not making large principle reductions being banks which suffer deliberate mortgage defaults; ie, people walking away from underwater loans.
So are you going to fetch water from a well? City water is socialist. Eat your own manure recycled by a garden, because you refuse to use socialist sewage systems? Are you selling your vehicle and riding a horse because roads enable lazy morons to undeservedly get where they’re going too? Are you going to watch if your family is raped and killed because police wastefully serve those who can’t sort out their own affairs? Will you watch you house burn because firemen live on city funds? I know two people who did exactly that. Are you going to fry in a 10,000 degree nuclear fireball because you thought the disarmament treaties weren’t in your financial interest? Are you going to prostitute your kids on the street because collectivist public education clashed with your values, or will you shell out an extra $400 grand for private schools?
Seems you thought this through….
Last I checked, the presence of nuclear weapons prevented America and the Soviet Union from fighting World War III, because it was considered a certainty that as soon as one side began to lose, nuclear weapons would be used. That said, I support New START because we don’t need so many nukes. Still, I would not support any policy that would not allow us to retain enough nuclear weapons to turn the Middle East into a sea of glass. I also believe in arbitrary retaliation, as in, we reserve the right to use nuclear weapons whenever we feel like it.
“in order for the demagogues to succeed they must corrupt public morality”
Already been done. The public has been steeped in Relativism, “White guilt”, Political Correctness and Multiculturalsim for the last half century in sotto voce by teachers who themselves got taught little more than John Dewey, Rousseau and Audio/Visuals.
The end of trust impacts a whole lot more than just the financail sector. Do you (general population) trust congress to do the right thing for the country anymore? With approval rating down in the 14% range I would guess not. Do you (general population) trust the IRS anymore? Do you (general population) trust the banks any more? In fact, do you(general popuation) trust any contract that is written by anybody any more? How about implied contracts like the social order (i.e. you don’t rob me and I won’t rape your daughter)?
Without trust the underpinnings of our society are gone. That is why the crimes by the big banks (ok they were certainly unlawful even if a few billion in bribes to congress made what they were doing legal) are such heinous crimes; that is why the passage of Obamacare (the method by which it passed) is such a heinous crime; and that is why when robbers acting with the color or law (or under legal authority) are such heinous crimes. We all hear of the highwaymen who use old cop cars to pull over their prey even though it does not happen often.
We are back to the late days of the Roman Empire in this case. We now have a situation where increasingly the underclasses are looking to gangs and extended families are the basis for security vs. governmental agencies (or governmental agencies are only viewed as a potential source of income from scams).
This is becoming increasingly similar to the patron system in Rome and/or the initial development stages of feudalism.
This is what the loss of trust does to us.
“Chris Dodd is pushing a multifaceted credit card bill that probably will up rates on all to allow some more deserving to refigure their debts.”
Another one? The last one that raised rates and fees just went into effect.
In all the analysis of the crisis in Greece, I never see any mention of the 2004 Olympics. The economic benefits of staging global sporting events are usually vastly overstated and there hasn’t been a profitable Olympic Games in at least 40 years. Even the LA Olympics weren’t profitable when evaluated through normal accounting methods.
So with this backdrop I often wonder why Rio de Janeiro is staging the next Olympics and South Africa the next soccer World Cup. Both countries will end up holding the bag while the “fat cats” at the IOC and FIFA walk away with the profits.
The Atlanta games made a small profit.
I think I’ve seen this movie before.
This is about the best explained erosion of basic values that had been part of our greatness as a country and people. One has only to realize that our current president and many of his closest associates believe this country’s power has been used for evil purposes – and that this country’s standard of living has been too high and has taken too much from poorer countries. With that believe, a weaker America and a lower standard of living for its citizens is a good thing.
Erosion of basic values is one sure way to achieve this objective in a rather quick fashion.
Barack Obama and his closest people do indeed embrace zero sum economics. Anything benefiting Americans must be damaging the poor and dispossessed of the world. At minimally a subconscious level, Obama does want the United States to fail. We are allegedly the imperialists who have severely damaged the planet and all of its inhabitants.
I don’t trust Obma and his leftist accomplices to do anything other than their best to destroy the country. Again, if Obama hated America and was intent on doing his utmost to ruin it, exactly what, to date, would he have done differently?
Short answer: nothing. It may be too late already, but 2010 is definitely our last chance to halt the tide of destruction without resorting to the last box.
DRAFT VICTOR DAVIS HANSON 2012.
A truly excellent column.
But how are we going to change this?
The electorate is the electorate and I am not sure the current Republican party, even with all the crap going on, has the appeal to win at the national level. This is particularly true with female voters.
This is your best piece yet.
I am amazed that people who wind up broke and insolvent always seem to think it’s not their fault. Perhaps I am Libertarian in my thinking that a man is resoponsible for the outcome of his life, and that all actions taken lead to reactions, both predictable and improbable.
Financial choices used to be bound by a set of rules that all had to play by, and it would seem they are being tossed out mid-game. In my mind what is happening today is the equivalent of covering the basketball court with ice during halftime and only giving the losing team skates. The rules are not so much changed as is the game itself.
This has happened many, many times before and it usually ends pretty sadly. Its bullets or bread at the end and that is where the benign dictator takes over for the good of all. California has not only been taken over by the Socialist/progressive/Marxist but also the financial idiots. Try to fathom the reasoning behind the ruin of the Central Valley, some of the most productive farm land in the world. It once fed most of the United States its vegetables and its now slowly turning into desert from lack of water because of the environazi’s that California is rife with; a 40% unemployment rates and a $31 Billion Dollar industry ruined, just in a decade. California is shot, everyone that can is leaving because of Marxist politics and taxation.
Eat drink and be merry for tomorrow….
The honest worker, the industrious entrepreneur, the saver and the investor, long the enemies of Marxists and idealistic revolutionaries, are now the enemies of our own government. Those who provided for themselves by indusrty and thrift are soon to be stripped bare by the locusts turned loose on them by the government. Unfortunately, it is not only the witless Obama administration but years of pandering polititians who have sold the nations future for their own political gain. Where does one hide from the ravishers? I don’t know.
Author Tom Baugh has some interresting advice along those lines. Not for the weak-minded or the faint-hearted. http://www.starvingthemonkeys.com.
This article points to the growing counter-party risk flowing through the economic system. When first in line GM bondholders are told to get in the back of the line behind unions you know the value of a contract is worth as much as the paper it’s written on. There is a growing disconnect between the assets of the physical world and those of the virtual financial world. Apparently, there is a lot more paper out there than the real assets they represent which become a growing problem when enough people decide to redeem their paper for real assets. Money, bonds, insurance, derivatives…all these things are a claim on the future. Some will be repudiated by government via default, inflation, ignoring laws that are supposed to protect property owners and so on. This make the counter-party risk more evident. It’s going to be interesting watching what happens when the music stops.
Not content to focus simply on killing the economic golden goose, the American progressive left insists on first demonizing and torturing the goose before it is mounted as a trophy.
Sounds like live taxidermy…
Trust is lost because we are no longer trustworthy.
“We have no government armed with power capable of contending with human passions unbridled by morality and religion… Our constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”
John Adams
No matter if California declares bankruptcy, the federal government will be there writing a check. Welcome to the world where everything is to big to fail (GM, Citi, Greece, California etc.). We are on the precipitous and our day of reckoning is coming…
The thing that is so, so disheartening to me is that we need changes in health care, finance, housing and immigration, but the ideas the Dems put out are so wrong.
Michael Kinsley (of all people!) was reprinted in the WSJ as noting that big time inflation (5% a year for 10 years) is the government’s way out of this self-imposed disaster.
Ireland has faced up to its spending problem by cutting (yes, cutting) public employees salaries. Good luck with that in the US!
Dan Henninger pointed out the under 25 unemployment rate of 20%.
James Baker, III spoke to the Commonwealth Club this week and noted how the Reagan Adminsitration focused exclusively on the economy at the beginning. He stated that Obama has not prioritized. I would add he prioritized the wrong thing (health care) and then ignored the will of the people to ram that thing through.
And a minor – but very telling point – about Barack Obama. He claims he is a White Sox fan, but misprounces the name of the team’s old field and can’t name a single favorite player.
He’s no baseball fan. He lied.
Obama is a complete fraud. He’s not very smart at all. Poorly educated. Arrogant. And just in *way* over his head.
The availability and cost of credit is based upon the predictability of repayment. If it is your goal to make credit difficult to obtain and expensive, you would pursue measures such as those being pursued by Senator Dodd.
Nice work, Dr. VDH.
My only quibble is that in the case of mortgages, I think the lenders do deserve some of the blame. I base this on the remarks of people I know in the real estate business.
Kalifornia & Greece are just the latest examples of what happens when you run out of other peoples money
What is it don’t people understand about stealing other people money? Socialism is Communism Light; both are theft.
If this Obamanation continues, I’ll be going Galt, along with everyone else with the means to flee.
When you hear the inevitable “I like the direction the country is going”: producer? robber? guess which one?
Atlas Shrugged; Day 445.
There is no one in this administration reminding Americans to purchase wisely, not to take on debt that they cannot service, and to remember that no government of any size, especially not one as bankrupt as our own, can solve self-created miseries.
Even Jimmy Carter told us to cut up our credit cards at one point.
The reason history is always and everywhere relevant– human nature does not change.
What happens when the owners of capital get tired of this game and refuse to lend? Greece is going to give us the answer.
VDH,
Deficits, especially if used to pay for services or ‘income redistribution’ are simply immoral. It is borrowing from the young to pay for excess consumption. The only borrowing that makes sense is for infrastructure. As for paying for it all, don’t dismiss the VAT so quickly. As a consumption tax, it promotes savings over spending. Up here in Canada, it was introduced to great resistance as a replacement for the manufacturing tax but it was the main factor that allowed the federal government to get its deficits under control and is now recognized as such. It makes much more sense than payroll taxes or the new medical spending (essentially a payroll tax) which kill employment.
We all agree that a VAT (or better yet, the Fair Tax, which eliminates the offsetting transactions) would be a great replacement for the current system, but it would be a horrible idea to add a VAT without repealing the income tax.
“They are the new court hordes at Versailles. And we know their numbers have expanded almost geometrically, far faster than both the rate of inflation and population growth….”
That is a wonderful metaphor, both for “Versailles Central” in Washington, D.C. and the dozens (hundreds?) of “satellite Versailles” at the state and local level. These are those who neither toil nor spin but use political clout to achieve increased patronage from the King’s government. Obama is truly the “Sun King” of this new court surrounded by the dukes, duchesses, counts and barons of Congress, their staffs and clouds of lobbyists. As I recall, success in France in the 17th Century was measured not by what you did but by how you used your court connections to leverage pensions, graft and preferment. Well the more things change…….
“They are the new court hordes at Versailles. And we know their numbers have expanded almost geometrically, far faster than both the rate of inflation and population growth….”
That is a wonderful metaphor, both for “Versailles Central” in Washington, D.C. and the dozens (hundreds?) of “satellite Versailles” at the state and local level. These are those who neither toil nor spin but use political clout to achieve increased patronage from the King’s government. Obama is truly the “Sun King” of this new court surrounded by the dukes, duchesses, counts and barons of Congress, their staffs and clouds of lobbyists. As I recall, success in France in the 17th Century was measured not by what you did but by how you used your court connections to leverage pensions, graft and preferment. Well the more things change…….
Nice gambler/cowboy analogy.
This is off topic…I’m reading The Zimmerman Telegram. I have a new conspiracy theory:
What if Russia, Iran, and Venezuela are conspiring together with oil and drug money to destabilize Mexico and create a front for us down south? What if the drug lords were all being trained to be a Hizbullah type group to threaten our southern border as a diverson so the 3 allies above can do mischief somewhere.
The Mexican government would be like Lebanon. Because our southern neighbors are minority looking they would have media sympathy and could establish themselves for infiltration and drug pushing more than they do now. They might smuggle people to cause man-made disasters.
Maybe it’s historical fiction.
The only thing I object to is the partisan tone of this latest VDH offering. I’m a mere mortal lay person yet I recall cautioning friends to think twice about mutual funds they thought could grow exponentially forever. I wasn’t surprised by the Dot Com crash. I pointed out to the same friends there was no foundation to support exponential grow in California real estate prices during the Bush years. Other “fringe” elements were pointing out the dangers of the derivatives I can’t even begin to comprehend. So how does everyone from Paulson, Greenspan, the local investment broker mortgage broker claim to have been completely blindsided by these crashes? But common sense and logic is not going to spoil the party when everyone is making lots of money. No it isn’t Obama and the dems, Like the old wise old Aunt once said “When the wagon comes, we all goin’ for a ride in it”.
We are starting to see our parties (which are just stable coalitions) move from “left” vs “right” / “liberal” vs “conservative” to Government vs Governed. And the governed are at a distinct disadvantage.
Your Bizzaro World alternative definition of “debt” is spot on.
The Austrian economist Bohm-Bawerk showed in refuting Marx’s labor theory of value that “interest” is a natural result of people’s time preference, i.e., something now is worth more to people than the same thing in the future. But Obama appears to think it is evil. And worse, that even the principal is up for grabs. It seems Obama has more
in common with Robin Hood than Marx.
Cedric (#7) wrote, “The end of trust impacts a whole lot more than just the financail sector…Without trust the underpinnings of our society are gone. // We now have a situation where increasingly the underclasses are looking to gangs and extended families are the basis for security vs. governmental agencies (or governmental agencies are only viewed as a potential source of income from scams).”
Cedric, Israeli historian Martin van Creveld would call what we are seeing the decline of the state as an organizing principle in our lives and culture. Everywhere, our institutions seem broken and are unable/unwilling to respond to the deepest needs of the American people. The same obtains to a greater or lesser degree in other nations. It is truly a crisis of legitimacy of the state and as you note, trust. As we transform into a society where existing national and state insitutions are less and less trustworthy, our loyalties will attach to other things, thus weakening the state further. In other words, a negative feedback loop and eventually, a possible reversion to tribalism. This will be the existential struggle of our time; to reinvent the state as something responsible and able to justly govern us, without killing it off or making a bad situation worse.
You are so correct that our system is underpinned by trust and an implied social contract. Most people, asked who enforces the law, would reply “The police and the courts,” which is true but only to a point. In reality, the people themselves “make” the law by their willingness to live within its bounds. One example: There are not enough police in the entire country, to compel we the people to obey the law once our trust in it is gone. That is why abuse of the system of the kind we are seeing now is so damaging and dangerous to our way of life. Obama and company know that if they can succede in tearing down the scaffolding of American civilization, their chance to replace it with their version of socialist utopia will be that much greater.
As the Chinese proverb has it, “May you live in interesting times…”
Besides that is the matter of jury nullification. If people come to believe that the police, legislature and the courts are threats, rather than protectors, they will be inclined to acquit an accused criminal in every circumstance, not just those concerning specific laws or what they believe to be the misapplication thereof. Imagine juries regularly acquitting admitted tax dodgers, whose explicit defense is, “The Republic cannot survive a situation where 51% of the people can vote themselves money from the other 49%. Until this matter is redressed, I shall not pay the taxes to fund it.”
The Plebes have witlessly continued to vote themselves Bread and Circuses.
And here we are.
Doc-the left and communism have been at war with freedom ever since Antonio Gramsci and the Franklin School in the early 1900s. Most people forget how extremist Woodrow Wilson truly was-the lord did the world a favor bt incapitating Wilson the last 2 years of his presidency(his wife Edith GALT was actually running the country-she was better than he was). The institutions of this country have been under attack for a century. Think of Walter Duranty and his “potemkin village” description of Stalinist Russia, ignoring the MILLIONS Stalin, Beriya, and Yagoda were STARVING to death merely for opposing communism. Even prior to the death camps the purposeful ignoring of Hitler,Mussolini, and militarism rising in Japan. All of these issues came from a lazy and ideologically driven media. Now fast forward to the 1970s-Nixons “crimes” were no different than what FDR and JFK routinely did. Clinton allowed nuclear targeting technology to go to Red China and the media PURPOSELY IGNORED IT-because of ideology. Same with Obama-a LONG track record of QUESTIONABLE associations, legetimate questions about his birth and his citizenship ignored-because of IDEOLOGY. The MEDIA needs to have the swamp drained. THEY have created virtually all of these problems because they REFUSE to do there job, chroniccle events. No, theyd rather DRIVE EVENTS.
(But note we always cut parks, playgrounds, patrol cars, and jails rather than the Assistant III social worker counselor or the Deputy Director of the Migrant Reentry program.)
I hope you in CA don’t cut that new bureaucrat who will be responsible for making sure condoms are used at porn movie shoots. It would be a real shame to lose that guy.
“It is not your fault you can’t meet your mortgage, pay off your credit card, pay your taxes, pay for your college, or buy catastrophic health insurance, and we are going to rewrite the law to make sure we can get you even with all those who did those things to you.”
Destroy personal responsibility. Destroy trust. Continuing to lay the groundwork for the all-encompassing state.
Stories in recent weeks of all those folks asking where the heck their free “healthcare” is, reminiscent of the Obama voters so grateful he’d be taking over their car & rent payments.
This regime really needs to be voted down & out in November 2010 and November 2012, for reasons having to do with the survival of integrity on planet Earth.
I looked at this in PJM some time ago. While I won’t argue the ethical questions, I’ll note that writedowns are a much better thing for both sides than a foreclosure, or a forced bankruptcy. The truth is that both sides of the mortgage lose when the mortgage is written down, and that’s as it should be, because both sides of the transaction assumed risk.
We did away with debtor’s prison, and in the US Constitution instituted bankruptcy, because this was generally recognized.
How can a bank lose something it never had? It only lost it’s extortion racket on some debt slaves. This was all laid out by the Bank of England in the 1800s, while those as yourself echo the same old tired clichéd delusions for three centuries running.
Marvelous now we have 18th century socialists commenting.
They had the value (in money) to loan, fool, or the houses would not have been bought at any price.
the question is are they being made to take the losses they should in a free market, or are they using politics to avoid them. It think it runs about 90% to the second outcome.
There are parts of this country where a fair court of equity would chop 20+% off the principle value of a mortgage, and that would be a fair loss for the bank to take. In agreeing to take that reduction, the mortagee should be unable to discharge their portion of the principle not covered by the home’s value in bankruptcy court–which home the bank may well be welcome to take.
There is nothing new about the behaviors VDH described. Does anyone remember the student loan scandals of a generation ago? Tens of thousands of college graduates were able to walk away from their student loans with no significant penalities (except for a low credit rating for a few years). I had medical school classmates who figured out how to avoid repaying their college and medical school loans (by spending a year in a very poor community and then declaring bankruptcy because their collections were less than their practice expenses).
One of the reasons why we will never see a libertarian society is that, as these examples show, too many people will break their words for financial gain.
“It is not your fault you can’t meet your mortgage, pay off your credit card, pay your taxes, pay for your college, or buy catastrophic health insurance, and we are going to rewrite the law to make sure we can get you even with all those who did those things to you.”
I am looking for a non-politician to support for the presidency in 2012. I have not yet found one person who better demonstrates understanding of the precarious situation we find ourselves in as a nation and the ideas necessary to make significant corrections than Dr. Hanson. I wish I could create a draft blowing in his direction. If only I knew how, I would.
I ask again: When, when, WHEN will the right bring itself to fully inspect the principles of fiat currency, fractional reserve banking, and exponentially-growing federal debt? On the basis of Wilson’s folly all those decades ago we’ve been leveraging ourselves out over the abyss, going into endless servitude not only to debt but to those who possess keys to that debt while we call this evil free enterprise.
It is nothing of the sort – we can see where it has brought us, if we’ll only open our eyes. Major markets are manipulated, booms and crashes constitute our imprisonment, and those working the levers – outside of the usual political fray although aligned with the left’s collectivist politics – remain largely unscrutinized still.
When outfits like FireDogLake and loons like Alan Grayson join the vilified Ron Paul to question the Ponzi scheme known as the US Federal Reserve note-backed, increasingly globalized monetary system then we must realize something is very wrong. Where is the right?
Jefferson was spot on. Rockefeller admitted complicity. The facts of the matter aren’t exactly hidden.
All points are moot until these wholly rotten underpinnings are exposed.
There ya go! I’ve been waiting for the root cause to show itself.
The first Americans, the Indians, had a better sense of survival than the President of the United States does.
Barrack is a complete disgrace.
This is but one symptom of the deadly problem US monetary policy since the Federal Reserve Act. The right has its golden opportunity. Will it take it?
~Paules:
“We will find out soon enough if small “r” republican virtues can withstand the current assault on liberty. Republics throughout history have displayed amazing powers of recuperation and renewal. I’m betting that America still retains a moral citizenry who will reject the seductive offers of the whore called socialism. God save the republic!”
Have we not yet seen enough evidence that a mostly moral citizenry is a memory and that the “whore called socialism” occupies the White House?
How do you go about restoring the constitution after it has been ripped to shreds and burned?
Wish I could share your optimism but my lying eyes prevent me from doing so. I don’t think R’s, big or small will get the work done and I still haven’t found the movement to draft a For America President.
The United States survived a four year civil war ending in 1865. Within one generation, by 1885, the US had established itself as the world’s preeminent commercial and industrial power. The combination of abundant natural resources, native genius, and economic liberty is unbeatable. We need only return to our founding principles.
What we can do about the segment of our population that has been corrupted is a more difficult question. You see the attitudes displayed by our usual band of trolls who have neither an historical perspective nor any firm understanding of the philosophic principles behind limited government and capitalism. The only possible solution for this situation is to disband the nation’s public school system. It’s a tall order that calls for brave and imaginative leadership.
I agree that our current class of professional politicians lacks the conviction to make the necessary changes. The next two electoral cycles will give our republic a chance to purge them. The American people must choose a new generation of leaders based on character over rhetoric and image. There exists a numerical measurement for character: it’s called a credit score. I am not being flippant.
We are all going to a sort of government-induced “debtor’s prison”, when the Health Care baloney, Cap and Trade BS, more insidious “green jobs” nonsense, more regulation, more taxes, more intrusion in to all of our personal lives come down the pike.
The “new Versailles” indeed. For some time now I’ve been thinking Obama should just come right out and say “Apres moi, le deluge”, because that’s exactly what we’re going to get when the bills come due.
Read M. Lewis’ new book “The Big Short”. It doesn’t touch the gov’t role, but you get on the inside of some bright minds who bet the ranch on the subprime bubble bursting. A good read.
Peter Schiff is running for Senate in Conn. Look up his channel on Youtube – he is economically sound and worth support. He talks about what VDH writes here too – trust and economic soundness.
YouTube search ‘Peter Schiif’. I think he deserves a shot.
very interesting article VDH.
I worked in many different countries and find that people in third world countries tend to trust less then we in north america do.
they seem to be less trustworthy too and this puts us at a disadvantage as we don’t expect the deceitfulness that is taken for granted in these nations.
The backbone of Todays Banking system is not Trust, it is the Ability to create money out of Public Debt and then fractionalize deposits made with the make believe money.
If you don’t understand the sentence above educate yourself to what the American Banking system is based on before commenting.
The system isn’t collapsing because people are walking away from mortgages, the system is collapsing because it was never sustainable to begin with. It is a house built on sand, and the Tide must come in eventually. Holding mortgages, or any type of debt in a few years will be economic suicide.
President Nixon removed the USA Dollar from Gold convertability in 1971, and since that day wages and Value have eroded in a single straight line down, it is available on any economic chart. In the meantime the US congress has been playing possum with truly idiotic adventures while its economy edged closer and closer to the abyss.
The EU will replace the US Dollar..?? there is nothing backing the EU but more debt, just like US Economy. The only currency that will come out of this with any value is the Chinese Yuan (RMB) , Backed by Gold and actual hard assets.
While the US is distracted by general political idiocy, China has been investing in its economy, infrastructure, education, mining, hard asset explorations and joint ventures, and its own people.
What is the USA doing..? Nothing. Its congress is led by paper mache figureheads with no understanding of economics or foreign policy, its banking system or how to maintain their own currency. The USA is the Titanic heading toward the Iceberg, led by ignorants from both sides of the aisle.
At the height of the tech bubble; business magazines were filled with articles “celebrating” the greatest wealth transfer in history (from the Greatest Generation to the Baby Boomers & then to their kids). We were fin. fat & happy. The tech bubble was replaced by a real estate bubble which was followed with yet another bubble; all giving the illusion of wealth. The “Govt. Class” has mismanaged this country; But I don’t equate this current administration with the “Sun King”; It’s more in line with the Command & Control Economics of Soviet Russia (Which we know, falls on it’s own weight).
I keep returning to the idea related by #9 Cedric of the beginnings of a feudal system, based on the fealty of ever increasing masses of cronies, and a new privileged class of pseudo royalty. What FDR tried and failed to do, but did only because he didn’t think big enough.
We don’t run the danger of becoming “communist”, because the hackneyed word means nothing, but still serves double duty: it infuriates the responsible because those who aren’t bearing the burden to fund the welfare system are it’s ever increasing beneficiaries. And two, it is used by those same populist utopian liars to taunt the responsible with the interminable pieties of so-called, post modern “social justice”, when it is anything but.
Socialism is the con man, the saintly thief, to empower the new plutocrat kleptocracy.
There’s been plenty of communal living for millennia, in the form of monasteries, either christian, Amish, Shakers, Mennnonite, or bhuddist, and some kibbutzes, and they live frugally with no intent on pursuing wealth per se, but they choose to live that way, and don’t attempt to impose it on those who don’t, or promise it’s imposition to stop “the greedy”, or return the supposed ill-gotten gains of “the wealthy” to their “rightful owner”.
But it is regression, not progress, predicated, as the fuedal system of yore was on the abandonment of the republic and its’ laws, to a democratic free-for-all of envy and re-appropriation of what the other guy you’ve learned to resent has earned, and then paid for by his own fulfillment of that trust placed in him or her.
Your usual marvelous exposition, Dr. Hanson. Yet while it reinforces my uneasiness and concern about the “enevitable disaster” of following the course of California or Greece, it carries no sense of the specifics or such a catastrphy in terms of our economy and our culture. California will be “bailed out” by the Federal Government, but I think that far too little is being explained about the crisis with Greece.
he lesson of the failure of Euro-socialism is apparent: welfare government, without exception, leads to a culture of “entitlement” so deep-rooted that its recipients flatly refuse to accept any cut-backs or “sacrifices” that are proposed in an effort to restore stability. Rather, the beneficiaries of socialist generosity resort to violent “strikes” and the government backs off. Greek workers have been able to retire at age 58, receive pensions so high that,within a short time, they are higher than they ever received on the job, and receive 14 payments a year. Obviously unsustainable, but they take to the streets. The Greek Government, having once again buckled, now asks the EU to come to its rescue.
So what happens if the EU and IMF refuse to give them anything? Printing more paper money does nothing. How does this scenario work out? Zimbabwe can be ignored because it is tiny, and African, and can all be pinned on one despot. What would happen in Greece when the ‘great entitled” received no pension check – all? Would Americans be expected to send millions in charity aid to help the starving Greeks? Would the Geek Army take over the government? Would other Balkan nations take over territory? Would Portugal and Spain pay heed?
Americans need, as many of them determinedly follow an Audacious Socialist Front Man, to have their attention focussed on this graphic example of the invariable and inevitable consequences of Socialist Statism. I hope you will follow through on this theme, as your is one of the strong voices listened to by conservatives.
Thank you, dear Doctor Hanson
… we didn’t have any law suits five years ago against new “greedy” homeowners, like, say, the Buraq Hussayn bin Buraq Hussayn bin Hussayn 0zeroes, who woke up every year with Thousands of Dollars in “equity” that magically appeared out of nowhere on their RICO-racketeering mobster-provided house and land, that had also “magically appeared out of nowhere.”
No one then wished to sue the speculative homeowner that banked rightly on his handy neighborhood terrorists’ and gangsters’ “investment.”
For it is on the way down is where we get the Human Interest stories about greed — and the need to violate the trust of an obligation. It is all sort of analogous to the Old West stereotyped saloon scene, in which the confident would-be card player struts up to the card game, starts losing, and then overturns the table, guns blazing.
Funny but that couple of paragraphs precisely describes the past decade of so of the lives of the both-disbarred-for-cause Buraq Hussayn bin Buraq Hussayn bin Hussayn 0zeroes. Who, after being essentially “gifted” with a Couple-of-Million-Dollar, way above their combined pay-grade, humpy, then lived off ever increasing borrowings against their “equity” in it until they both strutted into our once most-hallowed house, commandeered the card game and the cashiers cages, started losing and then overturned the entire casino and, guns blazing, began the systematic cold-blooded bloody murder of our beloved fraternal republic!
Struth!
Cordially
Brian Richard Allen :.
Lost Angels – Califobambicated 90028
And (Thank You, Dear Lord!) the Very Far Abroad
VDH, I recall something about “clinging to their guns and religion”. Why not when there is nothing left to trust in the government and in fact are under assault by same. Personal relationships, when betrayed, become chaotic, dysfunctional, and toxic. How like our own country. Can we divorce ? Can we just walk away as with the productive California citizens leaving their state ? We can’t all relocate to Costa Rica. If one feels trapped in such relationship then it’s everyone for themselves = spend all you can beg, borrow, and steal, then default, walk away in the night. Leave the debts to your children and neighbors. This is descriptive of the Obama/Marxist direction. . So, if we are all left to our own and don’t cling to religion then we better cling to our second amendment rights. Notice how as trust declines gun ownership increases. Look around, neither the Democrats or the Republicans are going to save you. They are the problem not the solution. Neither are to be trusted and therefore not to be respected. Trust can only be found in your self and if not there – you have nothing and are nothing. A meager step in the right direction would be to vote out all incumbents. We don’t need a national VAT. We need a national lottery to randomly place average citizens in government. Since this will never happen – then cling, cling, cling…….. You are on your own.
Essential vdh
America over the last 60+ years has managed to create an era of incompetence. This incompetence has been made acceptable to a growing number of Americans for many different reasons and causes. Some are fundamental but most resultant of the fundamental subversion.
This subversion of America’s founding principles has been driven essentially by a flawed revolutionary communist/socialist ideology hidden in Utopian language. This flawed revolutionary ideology has left nothing but death and destruction in the world over the last 150 years.
Because of its results, the above ideology has a requirement to deny historical facts–if it is to be believed and effective on current generations of Americans. How would you for example evaluate the results of your children’s education by the teachers union? the performance of General Motors and its union workers?, Detroit and it “AA, PC” corrupt politicians? And Acorn? Jeremiah Wright?
This current era and its consequences and growth are from resultant ideological shifts in America with a growing illogical belief among “weak Americans” that intentions and words are as good as demonstrable results. History can be changed by simple declarative sentences that morph and change depending on the audience–day to day.. This is a result that one could expect from the idiot Freud and most academics but not true Americans. Surely not those people who built America?
This is truly a dangerous subversion. It denies the American need to correct and fight the subversion because like the perfumed scorpion it is not even recognized for what it is. This is a fundamental weakening of America and a destruction of American ability to defend itself from the parasitic enemy from within. Danger, Danger Danger signs go unrecognized—the enemy within is not seen—we are blinded by “false gods”—Utopian words.
We are being dumbed down.
One of the results of the shift away from demonstrable knowledge and results are PC and AA. This is simply class warfare perfumed as a Utopian feel good subversion. Americans divided, who “buy” into this subversion, will not even recognize the incompetence and subversive action of the BHO’s and the eventual destruction of America from within. What can one think about the MSM in this context? They are truly suffering from all of the deadly sins of mankind. They are the most easily manipulated by this Utopian scorpion. They are the shallowest Americans.
The BHO’s are the resultant “Americans” who truly believe in
this subversion and destruction of America from within… They owe their careers to AA and PC—their lives are built on the false foundations of the Utopian subversion. They are “gaming” the system and cynical in its use. AA and PC suppress the appropriate defensive response by American’s who would stop this destruction of America from continuing. What is said about the Tea Party members? true Americans who are just beginning to get involved.
The current president and his cohorts represent the results and this destructive process that Marxist ideology has when it uses Utopian language to replace the American corner stones of individual responsibility, demonstrable knowledge and results.
If one were looking at the world in all its historical reality and truths the founding fathers of America and America would have to be recognized as a new hopeful view of humanity that demonstrably has created the high water mark of human culture to date in the world. It can be destroyed—it is now in the process of being destroyed.
Should America be destroyed simply due to ignorance, greed, and other human weaknesses or do you really believe that it needs to be brought down. Make up your mind. Time is of the essence.
Anyone who walks away from a debt owed his bookie, or his dealer, or his loan shark quickly learns the value of a promise. If we drive legal lenders out of business only illegal ones remain.
The death of borrowers usually dries up demand for credit and the death of credit usually kills any boom. Very depressingly.
i wish you wouldhave a forward on top or bottom of the page.. I would love to send this to 7500 people…all i know……This is a wonderful site and service eandought to be promoted more.
Thank you Thank you Thank you..audrey silverberg
56. stuart williamson
“Americans need, as many of them determinedly follow an Audacious Socialist Front Man, to have their attention focussed on this graphic example of the invariable and inevitable consequences of Socialist Statism.”
To many Americans thinking they are entitled to “free shit” out there. Wait one generation once the credit crunch and lending impacts hit. Baby boomers are such igoistic people.
Speaking as a classics scholar myself, I am forced to point out another silent factor dooming the current system. Immigration.
Floodgates stuck open allowing what are, by any rational measure, alien barbarians to flood into a civil and civilised society can have only one effect: the fall of Rome. And so Rome will fall.
VDH: What troubles me much more is that no one pays the piper for the problems they create in our current society. Our recent and ongoing mortgage problems were caused by a multitude of sins, including the absence of controls over Fannie and Freddie, and yet those who removed what controls that previously existed walk away Scot free. Our politicians who changed those regulatory laws remain as princes who can do no wrong! Those “princes” who now decide to run for re-election might succeed, they will then be almost untouchable.
Walking away from a mortgage now seems as you pointed out, a duty based on today’s morals. Yet, there also seems to be a requirement to insure those run-aways suffer no harm, the rest of us will pay somehow in some way.
Your recent essays touch on many issues, yet will they have the impact of those Cato’s Letters of the 1720s? Are you, Doctor Hanson, the man to bring similar letters to our current day or is that the job of a Rush? Its seems that you are best qualified to do so, a Beck would be mostly ignored, a Rush would be denigrated, a Palin more attuned to other tasks, so IMHO, you could provide a true benefit by producing your own version of Cato’s Letters, to point out where our society is lacking or suffering; not an easy task but perhaps a necessary one.
Cheers, regardless!
Essential vdh
Is is becoming time to think about what the oath of office means to the military: To protect and defend America and the constitution from both foreign and domestic enemies.
If the current administration and those manning it does not qualify as a domestic enemy of America one wonders who does.
Confistication of property and redistribution of the proceeds according to class is now routine. This redistribution by the BHO’s regime of wealth has simply protected the Ivy League educated idiots under AA,and PC–all BHO snycopats who caused the crisis in the first place.