Morning Joe 4/19/2011 -- S&P warning

The Morning Joe crew wasted much of the first part of the show - the crew does some things very well, but free style comedy is not one of them. I think they are a little too wrapped up in their personal relationships and inside jokes that just don't translate to the audience.

The crew did finally settle on a topic -- the news that S&P has a negative longterm outlook on America's credit worthiness. The controversy among the group was that the administration dismissed the warning as political. Joe Scarborough took the position that the administration should have "used" the report to get the message across to Republicans that defense cuts are necesssary as well as taxes on the rich.

Mark Halperin and Mika felt like Obama played it well and that Obama is serious about cutting and understands the debt problem. Chris Hayes from the Nation mag came on the show and he stated that S&P is a discredited outfit and no one should listen to what they say. Hayes also said that the warning the adminsitration should look for is higher interest rates, and that now it makes good economic sense for government to borrow and spend because interest rates are so low. No one on Morning Joe called Hayes a moron, but they should have -- obviously the Morning Joe crew didn't understand the idiocy of Hayes' position.

After accusing S&P of missing the banking/mortgage crisis, which was caused in large part because the Fed kept interest rates artificially low, Hayes turns right around and urges government to borrow and spend more money on "investment" schemes because interest rates are low. Apparently, no one on Morning Joe understands the nature of the debt problem. Obama and the Democrats want to borrow and spend more money, and they don't show any willingness to tackle entitlements, and they continously go back to taxing the rich. So, the Democrats want to take more money out of the private sector along with more borrowed money and spend it on government stimulus, but they are willing to cut defense spending.

Democrats had an opportunity to cut defense spending when they had the majority, but they expanded the operation in Afghanistan -- now, Obama has entered Libya and is spending hundreds of millions more with no plan to exit soon. Why Halperin thinks Obama is serious about cutting spending, I don't know. Why Joe Scarborough thinks that Republicans should agree to raise taxes that will be sucked down a black hole, I don't know. Why Hayes thinks government should borrow and spend more because interest rates are low, I don't know. It's absolutely incredible -- and the most amazing thing is that the New Republicans and the Tea Party will get demonized.

Unemployment benefits as stimulation

I'm not an economist, but I just can't see how unemployment benefits are stimulative. If we are taking money from the private sector and running it through government so that it can be sent out to people who are unemployed, this adds costs to government that the private sector has to pay for -- plus, we're in debt so the money actually has to be borrowed which means the private sector is on the hook for the interest. So far, no new new wealth has been created -- there has only been increased costs to the private sector.

So, the unemployment recipient receives the check, realizing that the benefits will run out at some point, so she is careful how she spends it, but does spend it in the the private sector which, again, has costs of servicing the transactions. Still no new wealth has been created -- there are just costs involved in taking money out of the private sector and putting it back in. The private sector sells their goods and services at a profit, but are the profits greater than the costs of servicing the benefits and cost of interest on the debt? I guess you could say that by giving unemployment benefits to people, it props up demand and prevents the private sector from shedding more jobs. But, if real unemployment is at 20%, this means these people are not producing anything -- if government benefits are propping up demand, we then have a problem of more demand than supply, and from what I've learned this causes inflation, which makes our dollars worth less. 

We're now seeing inflation in food prices and the price of gas, which will lead to higher prices all the way around. Unemployment benefits might be the humane thing to do in a recession, but I don't see where it is stimulative at all. So, when we extend unemployment benefits, if I'm right, we're adding to our debt and reducing the value of our dollars -- this means it's costing the private sector, not stimulating it. It might make us feel better about unemployment to think that the benefits are stimulating the economy, but I think we should be doing everything possible to increase employment and accept that unemployment is not good for anything except those in government jobs dealing with unemployment benefits -- I'm just saying.

I have an idea -- remove all the regulatory obstructions to drilling for oil and natural gas, and the building of nuclear plants -- this ought to create a great deal of work, help lower energy costs and boost economic activity.

Bush tax cut compromise

On Morning Joe this morning the issue of the Bush tax cut compromise was bandied about, and, of course, Joe Scarborough tried to have it 4 different ways. There's a mental defect among many moderates and liberals, and even some conservatives think this way, that by not taking more money from taxpayers this is the same as adding to the debt. Scarborough and Mika talked about how extending the tax rates will add hundreds of billions to the deficit. These rates have been in effect for 10 years and congress has spent what they've spent during this time, way over what they've collected in revenues. Now they are counting the money they could have gotten if they could have raised taxes as part of the deficit and long term debt. It's like if I spent 10 times more than I made for 10 years, then I didn't get an expected raise because the company couldn't afford it -- so, I say "Oh hell, now I'm going to be further in debt because this damn company I work for didn't increase my pay and my spending is at this level!"

Even if I had received the raise in pay, if my spending habits are to spend 10 times my income, it's obvious that spending is my problem.

Another idea among liberals and moderates is that anyone making over a million dollars a year ought to be taxed higher just because they won't miss it, and that "excessive" money they make won't help the economy if it's left in the hands of the people who make the money -- that, somehow, if that "excess" money is taken by government, which spends far more than they take in (and so far the government spending has not stimulated the economy), that the government will do something with the money more stimulative than the people who made it. In other words, if this "excess" money made by "millioniares and billionaires" is taken out of the private sector and placed in the hands of government, the money will be put to better use. This is the same government that is trillions in debt. So, you have "millionaires and billionaires" who have created all this wealth versus government which is trillions in debt, yet the liberals and moderates want government to take the created wealth of the "millionaires and billionaires" to...what? Waste? Spend, then go further into debt?

This controversy is all about political imagery -- it's government's campaign to push a class war, to denigrate wealth-creators and frame them as the cause of our problems. Like I've said before, the political means are no longer working -- it's the economic means which are on the ascendancy, and this is a good thing.

Update on Tuesday, December 7, 2010 at 09:07AM by M. Farmer

To further clarify this issue to show how ridiculous the choices have become, it needs to be pointed out that those "millioniares and billionaires" who have created "excess" wealth don't keep this "excess" in a vault -- they invest it in the private economy, much of it going to stocks in companies they think are good companies which will contribute to the economy, and in most cases this is true -- the "millionaires and billionaires" didn't make their "excess" money by being stupid.

If you hit the lottery jackpot and started receiving 3 millon a year on a $30 million pot, would you want government advice on how to invest that money? If you felt really patriotic for a second too long and gave the money to government to help the nation, do you think you would wind up regretting that decision when it disappeared in a second of government spending? Will the "excess" money created by "millionaires and billionaires" be better off invested in the private economy, or will be it be better used by government?

Is there really any doubt?

What the public needs to understand about infrastructure

http://www.downsizinggovernment.org/why-not-private-infrastructure

There are alternatives to government doing everything -- viable alternatives which will save money and avoid sending our debt down to our grandchildren to pay.

The cat is out of the bag -- the private sector can do these things, and do them better. Don't let union/government collusion hijack out future. Please?

Unemployment, illegal immigration and government waste

http://www.msnbc.msn.com/id/38034014/ns/business-stocks_and_economy/

The reports are not good for employment or the unemployed who've been receiving benefits. If congress stalemates on extended benefits, there could be an increase in American citizens accepting lower pay work, but will they be able to compete with illegal immigrants? And, if they can't, is this going to cause more tension regarding the illegal immigration issue? Likely so.

If congress can find enough waste to cut, they can justify extended unemployment benefits, but is this good in the long run. The longer people can draw unemployment the less the urgency will be to find any job available and accept lower wages. Either way, the prospects don't look promising for the economy.

America is running into a wall of debt that weakens the usual government/Keynesian remedies for increased unemployment. Until we deal with the fundamental problems, nothing is likely to improve. The prospect of increased taxes, higher healthcare costs for employees and more regulation has frightened companies and caused stagnation. A full-bore campaign to implement free market principles, and a pledge from government to leave the economy alone, is vitally needed in order to turn the economy around. As I've written here many times, with the shaky global economy, if America once again became the haven for a free market, we'd attract investment from all over the world, but it will require gaurantees of a hands-off government policy and extremely low taxes. It will require a campaign promoting America as a free market haven. This is not likely to happen any time soon.