The “Gig” Is Up, Over And Done

Posted on November 28, 2011 by Philip Johnson

“Government is the great fiction by which everybody seeks to live at the expense of everybody else.” Frederic Bastiat (1848), a man of few words yet much wisdom, offers up his definition of government and sums up our circumstances well.

We have watched this way of thinking playing out across Europe and the United States. Decades in the making, the promises made by our ‘benevolent’ governments can no longer be kept. The unholy alliance between men who desire to consume more than they produce (at the expense of others), and the politicos who promise to fulfill that dream in exchange for votes, is nearing its contemporary endpoint.

Many of us have tagged along for the ride – and it has been a good ride. We have lived well beyond our means for more than a generation, enjoying the borrowed fruits of the labors of the more recently born and yet to be born. It’s been a game of winks and nods. We wink, the politicos nod. And we dig ourselves deeper and deeper into the abyss. Consider that if we had a balanced budget at 2011 spending levels, all personal income taxes would have to be double what they are today.

Truth is, there isn’t enough wealth in the world to pay off the debt that has been accumulated by sovereign nations. Actually, there isn’t even enough wealth in the world just to pay off the debt and unfunded liabilities of the U.S. government.

Let’s look at a few numbers to illustrate our current condition. Our public debt is roughly 15 trillion dollars. For 2011, our interest payments on that debt totals about 230 billion dollars, meaning we are financing that debt at an average rate of around 1.5%. Wish I could get that deal. But what happens if that rate moves up? If our rate moved to 2.5%, our interest payments would increase to $380 billion. At 3.5%, they go to $530 billion. You get the general idea. And, lest we forget, we are adding a trillion plus each year in additional debt (deficit spending).

Now, let’s look at Europe. Many Eurozone nations have spent and borrowed like we have. The Greek crisis is well known. A massive welfare state and bloated, powerful public sector unions enjoying early retirements and big payouts have bankrupted Greece. And even the most recent EU bailout plans (including writing down 50% of their public debt) won’t be enough to save Greece. No big story here, Greece has spent most of its modern history in some form of default or another.

Italy, Ireland, Portugal and Spain round out the “PIIGS” of Europe – those countries facing the financial abyss. Spain has 70% public debt to GDP, while the other three are all over 100% to GDP (U.S. is currently at 75%). In recent weeks, we have seen the bonds of Italy and Spain hit the 6 and 7% levels (Portugal is over 12%). To put some perspective on that, if we (the U.S.) were paying 6.5% on our debt, our interest payments in 2011 would amount to $980 billion dollars. Put another way, our interest payments alone would eat up more than five times what the government collects in corporate taxes, or about 80% of what it collects in individual taxes. The interest payment would be our single largest budget category, a larger expenditure than even defense and two wars. But this is what Spain and Italy are facing with their bond rates now. And unlike Greece, their economies are large. Bailing them out isn’t a two or three hundred billion Euro fix. Expanding the field beyond the PIIGS, France is now also feeling the heat – and as of last week, even the more fiscally conservative Germany. French 10-year bonds auctioned at about a 3.7 rate and Germany wasn’t finding buyers at 2.25, a quarter percent higher than the week before. In short, Europe is imploding. And growth in those economies can’t be found, ranging anywhere from -5% to a high of maybe 2%.

Europe’s only answer, other than default, is for the European Central Bank (ECB) to step in, print trillions of Euros, and buy up the individual nation’s debt. But the bank’s charter expressly prohibits it from doing so. And, to date, Angela Merkel (Germany) has vowed they won’t do that. Germany’s collective memory knows what happens when the printing presses are turned on – they remember Weimar (when hyperinflation translated to a wheelbarrow full of currency to buy a loaf of bread). I wish our Federal Reserve Bank had a similar memory.

Should Germany (and thus the ECB) remain steadfast in their resolve to not meaningfully intervene, the capital markets in Europe will lock up soon, much as ours did in 2008 following the Lehman collapse. And without a lender of last resort infusing capital like our Fed did (to the tune of trillions), the great banks of Europe will fall (or be nationalized) one by one as the contagion spreads. Europe’s 500 million people will slide into a depression.

Strangely, because of all this turmoil in Europe, the Dollar, and U.S. Treasuries, have been the safe haven assets investors have been flocking to – further holding down our interest rates. The U.S. has the distinct honor of being the prettiest house on a very ugly block, for now.

But we, too, are nearing that tipping point, despite our reserve currency status and our printing presses running full steam. Collectively, our local, state and federal governments are spending $7 trillion a year; our federal government is running a 10% to GDP deficit ($4 billion a day), and our population is aging and retiring. With 11,800 Boomers retiring each day, they are moving from productive workers and savers to Medicare and Social Security recipients, and sellers of assets (stocks, bonds, 401Ks), rather than buyers. Additionally, we have an anemic economy with 25 million unemployed or under-employed existing on food stamps and unemployment payments, despite $1.3 trillion in deficit spending. And a significant portion of a generation has emerged from, or is soon to emerge from college with few job prospects and massive student loans. Due to these circumstances, most graduates are not forming new households. They are the boomerang generation, returning to their parents’ homes. So while Boomers are retiring and downsizing, the Boomerangs are returning to the nest to lick their wounds and whittle away at their debt. So much for an imminent housing rebound leading us out of ‘recession’.

Further eroding our prospects for growth at home are two additional factors, 1) tight lending by the banks and 2) strangling anti-business policies and attitudes emanating from Washington, D.C.

So where are we today? Housing prices and the Dow stand at their 1999 levels, while food and energy prices have risen substantially, wages have remained flat, and the dollar’s value (buying power) has fallen. Yes, most of us (the 99%?) are regressing economically.

Through this summer we witnessed the failure of Congress to pass a budget deal (we’re in our third year without a Federal budget), and just this week we saw the utter failure of the Super Committee to address our deficits, once again punting on taking any responsible action to right our course. And the Super Committee was only charged with reducing the rate of increase in debt by 10% against the baseline (current trajectory is an increase of about 11 trillion in additional debt over ten years).

Right now the bond vigilantes are focused on the European sovereign debt crisis. Europe is the raging, out of control fire. But once contained (or post-implosion) the attention will turn to the United States. Be prepared for more debt monetization by the Fed and Treasury – QE3 (quantitative easing).

The meltdown at both sides of the Atlantic is imminent. Like a major fault line, the pressure builds and builds until finally it is overwhelmed and the result is a catastrophic earthquake. Should that occur in Europe, the resulting tsunami will reach our shores.

The central bank zombies and politicos may well find and implement another stopgap measure to delay the inevitable recognition of bankruptcy – we have since 2008. But the day of reckoning cannot be denied forever. Frederic Bastiat’s ‘great fiction’ will be exposed to the light of day. We will have to eventually live within our means and dispose of our accumulated debt either by overt default or stealth default the Weimer way (hyperinflation). Standards of living will fall precipitously throughout the western democracies. Draconian budgetary cuts will be made of necessity at every level of government and the impacts will be deeply felt. Taxes will skyrocket.

As I have written before, we still have a small window to affect a more controlled landing. But even beginning that process will take a very different Congress than we have today and a strong President willing to take very bold action. That work was begun in 2010 and must be followed through with similar results in 2012. Should we fail to elect conservative, responsible leadership in both houses of Congress and the Presidency in 2012, the bond vigilantes will surely visit our shores and we will be forced to pay debt service rates that more accurately reflect our risky financial condition.

I cannot predict the fallout of such a scenario. What I do know, though, is that if annual debt service is eating up a trillion dollars (the interest payments at a rate of 6.5%), something will have to give. Consider again that we are talking about extracting $750 billion from other areas of our Federal spending. To put that number in perspective, consider that we currently spend about $700 billion on defense and $800 billion on Medicare and Medicaid. Added together, these three categories would exhaust every payroll and income tax dollar currently collected. That would mean that there would be no funding for federal income supports (earned income tax credits, supplemental security income, food stamps, unemployment insurance, child care and child tax credits, child nutrition, foster care), education, housing, Social Security and more.

Think about the looting, property destruction and violence in London when the British government proposed college tuition increases and other moderate austerity measures. How would our citizens react to the elimination of the safety net expenditures listed above? My guess is it wouldn’t be pretty.

To date, demonstrators here at home (like OWS or the OneNation crowd) seem content to lobby government zombies to do the dirty work and take more from the producers to feed their needs and bellies. But government, under this scenario (more normalized interest rates), will be unable to extract enough from the “haves” to meet the demands of the “have-nots”.  Will they (the have-nots) then choose to take it themselves? Will civil unrest, roaming gangs, and flash mobs become the new norm? And if such ugly possibilities begin to surface (as they have in countless societies in the past), how will our government react? What extreme measures might our leaders take?

I offer all this up only to encourage some heavy thinking about our future, about what may befall our country, and how all this may impact our individual lives and our family’s security. Might the government choose to confiscate all 401Ks and IRAs and replace them with a National Annuity Payment program? Such a plan was floated in the Clinton era. Or perhaps they would enact a one-time wealth tax to stem the bleeding?

Again, I cannot envision what further devastation our government is capable of or willing to do. Your guess is as good as mine. But one way or another our lives will change dramatically within the next few years, or next month, and it seems to me only prudent to plan for and prepare for a different American landscape.

As a final note, I will say I remain very cautiously optimistic that the American people feel and see the impending doom facing us, and may react responsibly and in sufficient numbers at their polling places in 2012. I pray we do. Perhaps with enough honest, constitutionally constrained and literate representatives in government, and a true leader in the White House, we can begin to restore some sanity to governance and fiscal policy – and avoid a total collapse of our system. For now, it is still up to us.

Posted in 2012 Elections, America's Financial House, Entitlements, Inflation and the Fed | Tagged , , , , , , , , , , | Leave a comment

Why “Occupy Wall Street” Matters

Posted on October 16, 2011 by Philip Johnson

Taking it to the streets. What began with dozens of ne’er-do-wells on Constitution Day (September 17th) is now a multi-continent event. With the “Day of Rage” on October 15th we witnessed thousands in the streets across Europe, and thousands more at home. In Rome, the demonstrators assaulted police and private property with bricks and stones, causing police to respond with tear gas and water cannons. Some groups of demonstrators in Germany were masked and carrying clubs – their purpose clearly not a peaceful protest.

In New York, “Occupy Wall Street” morphed into a march on Times Square. Many thousands of students, union members and their ‘paid for protesters’, the unemployed and a smattering of ‘professional demonstrators’, anarchists, and even Ron Paul supporters added their voices to the cause – or causes. And, perhaps not coincidentally, Reverend Al Sharpton and his National Action Network (NAN) held their “Jobs and Justice” rally and march in Washington, D.C. the same day. Co-sponsors and affiliated groups included AFSCME (the government employees union), SEIU, AFL-CIO, Planned Parenthood, and the NEA (the powerful teachers union), among others.

The media has been frenzied for weeks, each laboring to put a label on the demonstrators and trying to discern their message and future direction. But the crowds and their varied interests and causes seem to confound definition.

However, the seeds of OWS, brainchild of AdBusters, a Vancouver based not for profit activist group, were sown months ago by founders Kalle Lasn and Bill Schmalz.

But to what purpose or end did they make this call to action? Looking to their foundation’s mission statement is perhaps instructive:

“We are a global network of artists, activists, writers, pranksters, students, educators and entrepreneurs who want to advance the new social activist movement of the information age. Our aim is to topple existing power structures and forge a major shift in the way we will live in the 21st century.”    (AdBusters Media Foundation, emphasis mine)

AdBusters was founded in 1989 and boasts a circulation of 120,000 for its bi-monthly magazine. Its international editions span Australia, Sweden, France, Norway and Japan. Community organizers going global, I guess. But these are serious, creative, thoughtful people who have gained a significant following both in North America and abroad.

That last sentence no doubt caught your attention as it did mine, “Our aim is to topple existing power structures and forge a major shift in the way we live in the 21st century”. To me, it sounded a lot like Mr. Obama’s pre-inaugural warning (or promise), “We are five days away from fundamentally transforming the United States…”

Statements like these give me pause. Toppling existing power structures or fundamentally transforming a nation seem to line up well with the Occupy Wall Street messaging.

Over the past several weeks I have watched hours of livestream video, seen many “occupiers on the street” interviews, and have read countless tweets sent to and from protesters in New York and elsewhere. Together they have forged a montage of revolution in the making – an anti-capitalist rebellion. And while their numbers are not yet significant, their reach and influence is becoming so as the media laps up every action and nuance.

The 99%, as they call themselves, have at least one common theme, their hatred and distrust of the big banks and brokerages. Many among them extend these feelings to multi-national corporations and the rich (the 1%), in general, and some to the corporate/government cronyism.

What brought each individual to New York and elsewhere, though, spans the ridiculous to the sublime. Many are university students or graduates calling for forgiveness of their student loans. Many there are demanding jobs, or a “living wage”, or an end to foreclosures, or free anything and everything. And there are those who just want to stick it to the rich, either through higher taxes or through confiscation. And some are there because they just don’t know where else to turn.

It is a shame really, that because so many of the participants are such ultra fringe, that some reasonable complaints and cases of real suffering are lost due to the messaging and messengers. We are indeed in a world of hurt in this country. The OWS crowd view capitalism, big banks, and corporate greed as the cause. Unfortunately, we are what we teach. For decades, our students have been fed a steady stream of Progressive thought. From grade school through the universities, we are beginning to see that a different set of values and a corrupted view of our history and principles is being taught and cemented in the minds of our youth.

This worldview is supported by much of the media and the Progressive leadership in Washington, D.C., not least our own President. When you consider each of the protesters concerns or complaints, it is easy to find examples of the same sentiments from Mr. Obama. Bank-bashing, talk of corporate greed, the haves and the have-nots, the millionaires and billionaires not paying their “fair share”, and a desire for equality of outcomes. With a presidency that began with a worldwide apology tour, Mr. Obama has railed against almost every major industry in the United States, faulting big pharma, big oil, big insurance, big banks and others for our economic malaise. With his redistributionist philosophy and anti-capitalist rhetoric, is it any wonder that these people are now in the streets echoing this mantra?

Many others in academia, government and media have added their voices to the chorus. The aforementioned Reverend Sharpton made this statement on Tom Joyner’s Morning Show, “We cannot sleep through the revolution…because those students, those young people that started a movement that’s now spread over the country are right about the distribution of wealth and the 1% controlling the country.”

MSNBC analyst Donny Deutsch recently spoke about the “clarifying moment” of the 1960s movement and “its most stirring image” – Kent State. He almost seemed to yearn for “a climax moment of class warfare somehow played out on screen that articulates the clash.”

Illinois State Representative Jesse Jackson, Jr. in a press interview this week called on the President to “declare a national emergency” and “take extra-constitutional action administratively” and have the Federal Government directly hire the 15 million unemployed at an average salary of $40,000. He also called on the President to erase state and local government debt.

Arun Gupta, Editor of New York’s Indypendent News, a part of IMC, was interviewed this week at OWS and was asked about the Occupied Wall Street Journal, the newspaper that quickly appeared on the streets of New York. His answer as to how it came into being – it was a group effort, a coming together of Naomi Klein (linked to AdBusters), Code Pink, Michael Moore and Anonymous, among others. Gupta’s organization, IMC, has been a beneficiary over the years from George Soros’ Tides Foundation and Open Society Institute ($376,000 in grants). His characterization of the movement – “this is a social media revolution…global capitalism is the problem”.

Seemingly echoing the thoughts of Jesse Jackson, Jr., Mr. Obama , speaking of his frustration with Congress and his “Jobs Bill”, said this, “But we’re not going to wait for Congress…I’ve instructed (jobs council members)…to scour every corner and identify all those areas where we can act administratively without additional Congressional authority, and just get it done.”

And then there is Van Jones, president of the “Rebuild the Dream” group, and former White House Green Jobs Czar, who has put together a coalition of more than 70 progressive, union, and socialist organizations. Their goals mirror FDR’s infamous Second Bill of Rights. Van Jones appears near daily on one or another liberal talk show expressing his support and solidarity with those occupying Wall Street and speaking of his “Progressive fight back”.

Similar expressions of support and solidarity with the cause have been heard from Nancy Pelosi, Joe Biden, Debbie Wasserman Schultz (head of the DNC) and many other Democrat legislators, all yearning for their version of the Tea Party.

It is clear to see that all the “usual suspects” are circling the wagons with the OWS crowd. Coupling these far flung groups and organizations, pundits, politicians and union leaders, I am reminded of the Madison, Wisconsin movement earlier this year, only on a much grander scale. Notably and thankfully, to date, both the OWS protesters and the police have shown restraint and violent behavior and property damage have been minimal.  I pray it remains that way. Make no mistake, though, the likes of Donny Deutsch are many, pining for that “climax moment”, that Kent State event,  to stir the masses and define the movement.

Occupy Wall Street is the culmination of a deteriorating economy, widespread fear and frustration, and a convoluted and misunderstood or mischaracterized cause and effect view. This movement is sure to have some legs with the widespread support of the aforementioned parties and a potent, progressive media endeared to the causes.

On one thing I agree with Donny Deutsch. He has wrapped up the OWS group cause as leading to a call for corporate social responsibility – a nice sounding term. But behind it, effectively he is seeking a socialist/fascist political system that will hold major businesses under the thumb of the Federal Government, governing hiring, wage, and employment practices.

In recent weeks and months, we have witnessed the NLRB dictating to Boeing (our largest exporter), we have seen Dick Durbin on the Senate floor calling on Bank of America customers to run on the bank, and we have heard the relentless class warfare rhetoric from our President. Is there any doubt as to the direction we are moving as a country?

Nikolai Lenin, founder of modern Communism, told us long ago, “give me your children for four years, and the seed I plant will never be uprooted.”  Supported by our liberal media and dumb-downed by our schools, our children and young adults have bought the socialist view hook, line and sinker. They have been weaned on “The Story of Stuff” and “the Rainbow Fish”, then steered in our institutions of “higher learning” by the likes of Bill Ayres, Bernadine Dorn, Frances Fox Piven and Ward Churchill. Lenin only required four years. Remember the Nazi youth? We have given over our children for a generation or more.

As I wrote earlier, we are what we teach. Occupy Wall Street is simply the latest manifestation of our education system, our failure to teach our American history, values and principles. The underpinnings of our civilization have been lost. Our Founders knew their experiment in self-government and individual liberty could only exist with a moral and educated people. We are failing on both counts.

We see the results in the lack of personal responsibility, the moral degradation in our society, the decay of the traditional family unit, and the gangrenous infection that has gripped the government/big business complex.

The Occupy Wall Street crowd has rightly identified some of the symptoms of our decaying society. Now we need to attack, with vengeance, the real disease.

I am saddened by what I see occurring in our country and by the stresses and heartaches felt by so many families and individuals across America. Many feel helpless, hopeless and angry. Few families in America have been left untouched. For those who, through no fault of their own, have lost jobs or homes, or have seen their savings devastated, one cannot help but be moved. There are some demonstrating on Wall Street that fall into this group, and their frustration and anger is warranted, though partly misdirected.

If the jobs, debt, and economic crisis weren’t enough to face, we also clearly have an enormous deficit in education and values. These deficits are evident with many protesters on Wall Street, and for that matter, in the halls of Congress. There is no understanding of very basic economics, no understanding of business – how it works and the benefits that accrue to all through their success. Our core values of faith, family, hard work and personal responsibility have been undermined, forgotten or ignored.

Occupy Wall Street may be a small, forgotten footnote a decade from now, or it may turn out to be the tipping point for America, defining our next generations. Which it will be, I can’t foretell. But as with the rise of the Tea Party and 9/12 movement, and now OWS, it is clear America is grappling with a momentous decision. Will we restore the Founders vision of America or will we fully embrace the Progressive/Socialist vision? Again, no crystal ball. But I will pray for the former.

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Occupy Wall Street, Van Jones & Obama 2012

Posted on October 5, 2011 by Philip Johnson

It is a tale of two Americas. Obama’s opaque alternate re-election campaign is going on in New York and now Chicago, Los Angeles – and coming soon to a town near you. Occupy Wall Street, which has attracted everyone from Susan Sarandon, Michael Moore and Frances Fox Piven to many Ron Paulers, has tapped into many populist frustrations and sources of anger. Truth told, most Americans would likely agree with at least one of their gripes. Who likes corruption, unemployment, falling wages, the Federal Reserve Bank or bailouts?

I have been following the organizers’ websites for the past several months to get a handle on what it’s all about. I also cast a net over the “usual suspects”, those groups that would likely support such an action. Generally, one only has to copy a list of the logos belonging to the groups supportive of Barack Obama’s 2008/2012 election bids and you have the list. For a refresher, you can go to Van Jones group – Rebuild the American Dream (rebuildthedream.com), scroll down and see the players. For those unfamiliar, Van Jones was Mr. Obama’s former Green Jobs Czar and an avowed communist. He has been closely associated with STORM (Standing Together to Organize a Revolutionary Movement), Green for All, Center for American Progress and many other socialist and progressive organizations, and has emerged as a key leader across the environmental, social and economic justice causes. This man is smart, creative and charismatic and one to watch. He is currently in Washington, D.C. as the keynote speaker for their multi-day Rebuild the American Dream forum. Look for their associated groups joining with the Occupy Wall Street protesters. According to Van Jones, “October is going to be the turning point when it comes to the Progressive fight back.”

To add another twist to Occupy Wall Street, the hacker group Anonymous had promised to “erase NYSE from the Internet” on October 10th, and then today denied the plan. Unfortunately, this group has demonstrated many times its ability to shut down major networks. Whichever is the case, I imagine bankers and brokers in New York and elsewhere are feeling rather uneasy.

Coming full circle back to the administration and Democratic leadership, we have these two tidbits earlier this week. Dick Durbin on the floor of the Senate calling on Bank of America customers to vote with their feet and close their BofA accounts over the bank’s announcement to charge a $5.00 a month fee for their debit cards (a direct result of the Durbin Amendment to Dodd-Frank, price-fixing the fee banks charge merchants for debit card swipes, reducing them from $0.44 to $0.21 to $0.24). Bank run, anyone? The same day President Obama made the following statement during an interview with George Stephanopoulos. Obama was asked if the government can stop banks from imposing a new debit card fee on their customers.

“Well, you can stop it because … if you say to the banks, ‘you don’t have some inherent right just to — you know, get a certain amount of profit if your customers are being mistreated. That you have to treat them fairly and transparently.’

So what are the protesters and supportive groups after with their Occupy Wall Street actions? Their website has now released their demand list. Let’s take a look:

Demand one: Restoration of the living wage. This demand can only be met by ending “Freetrade” by re-imposing trade tariffs on all imported goods entering the American market to level the playing field for domestic family farming and domestic manufacturing as most nations that are dumping cheap products onto the American market have radical wage and environmental regulation advantages. Another policy that must be instituted is raise the minimum wage to twenty dollars an hr.

Demand two: Institute a universal single payer healthcare system. To do this all private insurers must be banned from the healthcare market as their only effect on the health of patients is to take money away from doctors, nurses and hospitals preventing them from doing their jobs and hand that money to wall st. investors.

Demand three: Guaranteed living wage income regardless of employment.

Demand four: Free college education.

Demand five: Begin a fast track process to bring the fossil fuel economy to an end while at the same bringing the alternative energy economy up to energy demand.

Demand six: One trillion dollars in infrastructure (Water, Sewer, Rail, Roads and Bridges and Electrical Grid) spending now.

Demand seven: One trillion dollars in ecological restoration planting forests, reestablishing wetlands and the natural flow of river systems and decommissioning of all of America’s nuclear power plants.

Demand eight: Racial and gender equal rights amendment.

Demand nine: Open borders migration. anyone can travel anywhere to work and live.

Demand ten: Bring American elections up to international standards of a paper ballot precinct counted and recounted in front of an independent and party observers system.

Demand eleven: Immediate across the board debt forgiveness for all. Debt forgiveness of sovereign debt, commercial loans, home mortgages, home equity loans, credit card debt, student loans and personal loans now! All debt must be stricken from the “Books.” World Bank Loans to all Nations, Bank to Bank Debt and all Bonds and Margin Call Debt in the stock market including all Derivatives or Credit Default Swaps, all 65 trillion dollars of them must also be stricken from the “Books.” And I don’t mean debt that is in default, I mean all debt on the entire planet period.

Demand twelve: Outlaw all credit reporting agencies.

Demand thirteen: Allow all workers to sign a ballot at any time during a union organizing campaign or at any time that represents their yeah or nay to having a union represent them in collective bargaining or to form a union.

These demands will create so many jobs it will be completely impossible to fill them without an open borders policy. (occupywallst.org)

We are indeed living in interesting times. Mr. Obama is crisscrossing the country energizing his base playing his class warfare game to sell his “Jobs Plan”, while subtly feeding the Occupy Wall Street groups with his denigration of the banks and Wall Street types, his “tax the evil rich” fairness message, and his excoriation of all things carbon.

The President seems to be moving toward a campaign theme of “values”, essentially a watered down version of Roosevelt’s Second Bill of Rights, mirroring many of Occupy Wall Street’s demands. Note, too, that many of these same goals are in line with Rebuild the American Dream, the AFL-CIO, SEIU and many others.

Obama’s apparent campaign strategy is likely a good one, offering a clear counterpoint to the Tea Party movement and tapping into the widespread discontent in the country. These opposing views represent the two Americas. One can only hope that Americans will have the opportunity to make their choices known at the ballot box in November 2012, rather than have it determined on the streets of New York and elsewhere.

So far, Van Jones is calling for these efforts to remain peaceful. Let’s hope at least that lead will be followed. We have seen similar demonstrations in Greece, London and elsewhere get very ugly.

Times are indeed tough with one out of four adult males either unemployed or underemployed. And with the schizophrenia coming out of Washington, the collapsing European Union and the slowing Chinese economy the political and economic landscapes are bound to get significantly worse over the next twelve months.

We are all after “change we can believe in”. We can only “hope” that change is for the better. Stay tuned.

Posted in 2012 Elections, Business vs. Government, Entitlements, The Federal Budget, Unions | Tagged , , , , , , , , , | 2 Comments

Can Herman Cain Win?

Posted on October 2, 2011 by Philip Johnson

Florida sent a shockwave through the political scene this past week when nearly 1,000 Florida GOP delegates chose Herman Cain as their standard-bearer. Cain received 37% of the delegates versus Perry at 15% and Romney at 14%. And contrary to many pundits’ spin that this was a protest vote against Perry, it appears from the Florida delegates themselves, that their votes reflected the belief that Herman Cain is the real deal.

Coupling the Florida results with several strong debate performances recently, Herman Cain has catapulted his campaign into the top tier nationally, according to the latest polls. But is Herman Cain just another “flavor of the week” as some politicos suggest?

We all know early polling means little. We saw that in 2008 with Rudy Giuliani and Fred Thompson. In this nomination cycle we have witnessed the rise and fall of Donald Trump (thankfully), Michele Bachmann, and to a lesser extent, Rick Perry. So what is it about Herman Cain that may spare him a similar fate?

Mr. Cain brings to the table a mix of attributes no one else in the field does.

First, his story and lifetime of achievement personifies the American dream.

Second, Cain gets what America is all about – the Founders vision of freedom and opportunity for all, and though in different terms, communicates his passion for, and understanding of, America perhaps as well as Reagan did. His optimism and can-do attitude shine through when he speaks of his vision of America.

Third, his business resume demonstrates his oft used, self-description as a problem solver. In each of his business roles, he has quickly identified what the problems were, then addressed and overcame them. And these were Main Street enterprises – it doesn’t get more Main Street than coke, burgers and pizza. His analytical, operational and leadership skills have all been challenged and proven more than ample.

Fourth, and perhaps at the top of the list, is Herman Cain’s persona. He is engaging, thoughtful, confident, real, approachable and even-keeled. He is a happy guy. In short, people relate to Herman Cain and find him very likeable.

I had the good fortune to meet, listen to and talk with Herman about a year ago at an Americans for Prosperity dinner. Four of the eight people at my table hadn’t heard of Herman before that evening. Everyone at our table (and much of the room) came away wanting to learn more about him. And all were impressed with the man.

The Florida results and his recent rise in the national polls reflect what I witnessed last year at that dinner. If you hear this man out, the man and the message resonate. It is easy to picture him as President.

But can he win the nomination? There are two vulnerabilities Mr. Cain must overcome – one, he has never held public office and, two, a perception of weakness on foreign policy issues.

As to the first, Herman’s response has been “how’s that government experience thing working out for you lately”. A great one-liner, but the real question remains. Is experience in elected office, in public governance, a necessary prerequisite for a successful presidency? Personally, I would argue that experience in the public sector is a plus, particularly as a governor or a cabinet member. Both bring to bear executive and governmental workings experience. But I would also point to Mr. Cain’s history with the Navy (as a civilian), as Chairman of the Board of Directors of the Federal Reserve Bank of Kansas City, his tenure as head of the National Restaurant Association, and his stellar business record. Together they paint a very well rounded education and experience set.

Relative to foreign policy, Herman has demonstrated clear, principle-driven thinking in the abstract. But he will need to make himself fluent in a variety of hot spot issues. I expect he will do just that.

What you see is what you get with Herman Cain. He speaks from the heart. He isn’t one mired in political correctness, which is refreshing. He has laid out bold plans with his “9-9-9” tax policy. He has been similarly bold in his thinking regarding Education reforms and the EPA (start over).

Herman Cain still may stumble on the trail and kill his chances for the nomination. Many a political fortune has been lost as a result of one pivotal utterance. Barring that, though, Herman Cain has the stuff President’s are (or should be) made of – a commanding presence, a quick mind, a principled approach to life, wide ranging experience, a clear communicator and a proven track record of problem solving.

Mitt Romney has convincingly made the case to many that substantial private sector experience and success should be at the top of the list in terms of choosing our next President. We have all seen the damage that occurs without such understanding and experience. We are a nation of business and our economic woes will likely be the voters number one concern next November. Too, the whole Main Street versus Wall Street arguments will likely still loom large. Romney’s business experience is seen as tied more to Wall Street than Main Street.

Mitt may find he has made the case for Herman Cain.

And, in answer to the question can Herman Cain win – you betcha.

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Twist And Shout!

Posted on September 22, 2011 by Philip Johnson

Well, “Helicopter Ben”, Chairman of the Federal Reserve, announced the widely anticipated Operation Twist. In short, Bernanke is going long. The Fed is buying some $400 billion in longer term bonds and selling a similar amount of shorter term Treasuries. His goal, I gather, is to pressure long-term rates to fall, flattening the yield curve.

I gather this move is supposed to be a boost for housing. Clearly, lower mortgage rates do make housing more affordable, but with 30-year rates already in the decades-low 4% neighborhood, should we expect any material effect on housing demand? Seems unlikely to be much of an incentive.

The markets didn’t seem to be very pleased as the Dow dropped, closing down more than 2% – look for a similar downward move today.

I have written much over the past year about the state of global financial markets – it is a house of cards and the wind is building.

The FOMC statement indicated significant downward economic risk. The International Monetary Fund has been similarly negative this week. And our old friend, spooky dude George Soros sees a very real potential of three smaller European Union nations going into default. Hard to disagree with his assessment. The finances of the PIIGS (Portugal, Ireland, Italy, Greece and Spain) are like the San Andreas Fault – pressure has been building for decades and a release of that pressure is long overdue. Something will give, sooner rather than later.

One would hope that the United States could take a lesson from Europe and realize we are next, unless fundamental changes are made in spending, tax policy and entitlements in short order. Unfortunately, we are unlikely to see any meaningful action coming out of Congress. And the President is in full partisan campaign mode, sharpening his class warfare rhetoric, his tax “fairness” plans, and his “jobs” stimulus program. What’s another half trillion added to our $15,000,000,000,000 debt? Oops, sorry, I forgot he said it is all paid for. No, we are stuck until November 2012. We’ll just have to hope the ratings agencies and, more importantly, the markets, will give us that window to get our act together.

Meanwhile, we are producing zero jobs and near zero growth while spending nearly twice our current revenues. The Euro Zone is imploding, slipping into recession, and China is heading for a hard landing, facing slowing manufacturing activity, significant inflation, and its own banking issues. Can you spell financial contagion and demand evaporation?

The financial collapse of 2008 may be seen in history as just the warning shot before the big battle. The world is staring the great correction in the face, and it is upon us. No matter how many Central Banker frequent flyer miles are racked up, their quiver, as I’ve said before, is empty, as are their respective treasuries. How it will all unfold I don’t have a clue, but unfold it will, and many more trillions in wealth will evaporate. Time to buy Hong Kong dollars.

For me the most frightening aspect of all this is how people generally respond to fear and uncertainty. They look to anyone who says they have a solution, and are all too ready to trade in their freedom for security. I think the 2008 Presidential elections reflected an undercurrent of this penchant. Tyranny is borne of such fears.

So Greece will finally default, hopefully in an orderly way. European banks will continue their slide as they finally realize the bond losses. Credit will freeze up in Europe. Other sovereign defaults will likely follow as will bank failures and consolidations. Global demand for goods will fall.

Maybe George Soros will get closer to his dream of One World Order.

Well, at least we will see lower gas prices – one ray of sunshine in an otherwise stormy forecast.

The truth is, we (the U.S. and Europe) have enjoyed a fifty-year credit expansion, and the attendant asset bubbles. Several of these bubbles have burst. The sovereign debt bubble and the dollar bubble remain in the wings.

The profligate deficit spending and unpaid for entitlement programs are, as we know, unsustainable. As one economist stated years ago, when something can’t continue, it will stop. It is up to us to either put on the brakes ourselves, to maintain at least some control, or we can sit back and ignore the realities facing us, and watch the immutable laws of money pull the emergency brake.

Posted in America's Financial House | 1 Comment

Investing In America – The Enterprise

Posted on September 16, 2011 by Philip Johnson

If America was a company listed on the New York Stock Exchange, would you buy its stock?

When you look to invest in a company you look to its business model and say, does this make sense? Will it work? How do their products or services stack up? You may consider the brand. Is it solid gold or a bit tarnished? You look to its competitors and evaluate whether Company A can execute better than Companies B, C and D. You analyze its balance sheet. Is the company financially sound? And you scrutinize the management. Do they understand the business that they are in? Do they have the skill sets, the experience, and the vision to lead the company forward successfully? Do they understand the company’s history and culture?

America as an enterprise has several stakeholder sets. The states are stakeholders. Companies domiciled or doing business in the U.S. are stakeholders. And, of course, the most important stakeholders are its 300 million plus citizens.

So, as a citizen-stakeholder, how do feel about this enterprise? Would you buy more stock in America or sell it short?

Bernie Marcus, a co-founder of Home Depot, was on CNBC this morning. He was discussing the current CEO (Frank Blake) and his approach to the business. One interesting thing Mr. Marcus mentioned was that Mr. Blake’s evaluation of the company confirmed that the founders had essentially gotten it right. Their business model was good, their focus on the customer was right, and the culture within the company engendered tremendous employee performance and loyalty. In short, Home Depot was delivering for its customers, shareholders and employees. Operating from this vantage point, Mr. Blake focused his efforts on improving processes and maximizing its inherent strengths.

Mr. Blake is a smart guy. He is a man that would look at a wheel and know that a change in its shape – say to an oval or a square – wouldn’t improve its function, namely rolling smoothly and efficiently down the road.

So, back to our analogy of America as an enterprise. America’s product, as founded, was insuring individual liberty. Our Founders engineered a system to enable its citizens to live freely – to protect each person’s rights to life, liberty and property. And what a business plan it was. Over time, it became the richest entity in the world and the envy of the world. And people from every corner of the globe sought to cross our shores to realize their own dreams of self-determination. America was the magnet for millions who yearned for freedom or fortune.

The goal of America, of its Founders, was not to be the most powerful or prosperous nation in the world. Their goal was simply to allow men to live free and be secure in their person and property. The power and prosperity were just the natural outcome of a free and unfettered people realizing their personal aspirations. Plant an acorn and get an Oak.

America indeed benefited from a well thought out business plan – and secondly from leadership that understood their role as caretakers and protectors of that grand plan. Well, at least until the meddlesome Woodrow Wilson arrived on the scene – followed later by Franklin Roosevelt, Lyndon Johnson and now Barack Obama. Yes, leadership does matter.

Despite the misguided policies of Wilson, Roosevelt and Johnson, America continued to function well – though time bombs were ticking away.

The American brand was revered. This was the place to live, this was the place to start and build a business, this was the place to follow your faith, this was the place to “be all you can be”. And the stamp “Made in America” was the gold standard worldwide. Our products reflected our pride and happiness.

So what has become of this great “American enterprise” heritage? We have lost our way. We have forgotten (and rewritten) our history. We have strayed from our business plan – our Constitution.

Remember our product was freedom. And we have tinkered with that product to the point where it barely resembles the original. And our current CEO doesn’t seem to care for the original. In his words, he wanted to ”fundamentally transform” America. And he believes, as do all Progressives, that the Constitution is a document of negative rights. He believed the Warren Court didn’t go far enough, that they should have addressed social justice – redistributionist policies. This CEO and his management team need to be fired.

Our core “product” has been ignored. Now the company thinks it’s in the insurance business, the car business, the green energy business, the housing and mortgage business, the food and grocery business, the airline security business, the retirement planning business, and the health care business, to name a few.

And along the way the Federal Government has infused itself into virtually every facet of our lives, our property, and our businesses. We are being smothered, demoralized and dispirited. Our businesses are being strangled with regulation, taxes and an uneven playing field with moveable rules.

What America needs now is a venture capital firm to step in and redirect this enterprise to its core values and strengths, and shed the rest. To reassert its core product – freedom – and put it back on the pedestal it deserves.

I’ll take Steve Jobs and Apple. You can keep Solyndra.

Posted in America's Financial House, Business vs. Government | 1 Comment

America In Decline – It’s Now Official

Posted on August 6, 2011 by Philip Johnson

After the markets closed on Friday, Standard & Poor’s made the widely expected and appropriate announcement that they were lowering the credit rating of the United States to AA+ and sustained its negative future outlook.

No big surprise. If my family had an income of $100,000 and spent $142,000 year after year, borrowing the difference, I wouldn’t expect to maintain an 820 credit score. Pretty basic stuff. And if the credit agencies had the manpower to monitor my wife and me and surmised that my income stream outlook was at best flat, that we had no intention of moderating our spending or borrowing, and had a few kids ready to enter college in the near term, that credit bureau would shred every credit card I possessed.

That’s where the U.S. is today. Growth in GDP is essentially flat, spending continues on the rise, and “the college bound kids” are the baby boomers retiring and entering the Medicare and Social Security rolls at a 10,000 a day clip.

So S&P looked at the landscape and said the U.S. is less credit worthy. Duh. And that AA+ won’t last long – future downgrades will be in the offing unless the fiscal policy gridlock breaks. I don’t see that happening anytime before the seating of the 45th president in January 2013 – I hope I’m wrong.

Unprecedented has become an all too familiar word in the past few years. Unprecedented spending, debt, bailouts, regulations, market interventions – you name it, we’ve done it. If you developed a road map showing you how to crash an economy, stranglehold business, and dishearten a people, we have followed it at every turn.

We are in a great correction that will be long lasting – even if we begin making some good decisions.

First, the American consumer is de-leveraging and will continue to do so for several more years. And their aversion to debt will likely take on post depression era thinking, becoming a generational outlook. That is a good thing for American families, though will be a continued drag on an economy dependent on debt-funded consumer spending.

Second, housing will go nowhere fast. There is somewhere between 4 and 6 million homes sitting in shadow inventory – a large percentage of which will find their way into the foreclosure process. This overhang will continue to depress home prices for the foreseeable future. As a result, the construction trades and the associated materials producers will remain at severely depressed levels.

Third, big ticket items such as autos, appliances, furniture and the like will stay soft as fear and uncertainty cause consumers to delay purchases, adding to the headwinds of tight credit markets and a credit averse consumer mood.

Fourth, state and local governments will continue to shed jobs and spending as the Federal government supports wane and as tax receipts slow – less economic activity rolling downhill.

Fifth, interest rates are sure to rise over time. Higher rates make debt more expensive, affecting family, business and government expenses alike. At the Federal level, our brilliant money managers have us predominantly in short term instruments, despite historically low long-term rates. So, as we roll over our debt, our interest expense could quickly become a huge drag on our budget.

Sixth, business is in no mood to invest in this country. Once you look beyond the administration’s business friends – the crony capitalists like GE, GM or Google – you find all those business leaders, from companies large and small, that fear for the very lives of their enterprises. Listen to Steve Wynn – and he’s a Democrat. This government is so business unfriendly and has created so much uncertainty that sitting on the sidelines and expanding liquidity are the only appropriate responses. And until sanity is restored in Washington, D.C. this trend will continue. So don’t look for a growing GDP or accelerated hiring anytime soon. Unemployment will worsen and the attendant strain of more unemployed no longer paying taxes or spending, and instead drawing jobless benefits, food stamps and the like will further swamp Federal, State and local budgets.

The only silver lining I see is that large and mid cap companies are lean and their balance sheets are in excellent shape. If at some future date a friendlier environment exists in the U.S., these players will be ready to respond.

So will our outlook change? Is a political, and thus economic, sea change ahead? On that question, I vacillate from day to day, and sometimes hour by hour. I could argue either side easily. I do believe there are a growing number of people awakening to our desperate situation and that hold traditional American values of self-determination, self-reliance and personal liberty. And many have found their voices in the political forums. Still, the majority of the American people suffer from a lack of understanding of who we are and what made us special as a country and a people. We now have 51% of the people paying no income taxes, and a similar number who in fact receive money from the Federal government, providing all or part of their means of survival. The tipping point has arrived. Will these folks vote to receive less or more dollars and giveaways from the government? I think that answer is pretty clear.

So, there is the dilemma in a nutshell. We have a dysfunctional, ideologically polarized government. We have nearly insurmountable economic headwinds (mostly government imposed). We have an economically illiterate people and we have a moocher class now in the majority. We have a class warfare, anti-business, anti- free market, anti-American values president dividing us daily. And fear and uncertainty reign supreme. In all, it paints a bleak portrait of our nation and its future prospects.

As Maggie Thatcher said, “the only problem with socialism is that eventually you run out of other people’s money.” In our case, we have not only run out of our money, but also our kids and grandkids future money. Not to mention those who hold our nation’s mortgage – the Chinese, Japanese, Saudis and others.

I’m not smart enough to figure out the endgame of all this. I think we can safely surmise that the days ahead will be tougher than what we have experienced over the past few years – much tougher in fact. I think we can also surmise with some certainty that as the pain and fear increase, that people will get angrier. And that anger will play out in increasingly bad ways.

In the meantime, for today, search your soul and decide who you are and what you value. Consider what impact a deepening correction may have on your family and how well prepared you are to weather that possibility. Hold your family close and support each other as best you can. Talk about what’s going on with your kids. Let them know what you are doing to deal with potential challenges and share your plans with them to allay their fears. If you haven’t already, get to know your neighbors. The more difficult the times, the more we need to hang on to and rely on those close to us – friends, family, church and neighbors.

We have as a country encountered enormous challenges in the past and survived. I hope and pray we can once again find the strength of purpose to chart a new course out of these reef laden seas.

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Our Cowardly Senate

Posted on July 22, 2011 by Philip Johnson

In a message to the House of Representatives on December 3, 1793, George Washington offered the following advice:

“No pecuniary consideration is more urgent than the regular redemption and discharge of the public debt; on none can delay be more injurious, or an economy of time more valuable.”

It is a shame he didn’t also address the Senate.

Just a few minutes ago the Senate passed a measure – with 51 votes – to table the Cut, Cap and Balance proposal passed earlier by the House. As I write this I am listening to the speeches on the Senate floor. More talk of increasing taxes on the ‘millionaires and billionaires’, more talk of throwing Grandma off the cliff, and more talk of poor people not having access to high speed internet (I don’t either). Yes, this is our Senate today, and I could not be more ashamed nor disturbed at their complete lack of courage or conscience. WE are the ones going off a cliff and it is the Senate and an uninformed, unengaged electorate that is pushing us off the edge.

Every one of those Senators voting today in favor of tabling debate on CCB should be targeted for a primary challenge and removed from public office as they come up for re-election. They are not patriots. They are not statesmen. They are simply opportunistic leeches swilling at the public trough.

This morning we had a glimmer of hope of changing the direction in Washington. Of changing the way the nation’s business was to be conducted moving forward. We had a chance to assuage the credit ratings agencies and the markets, and to plot a more responsible path back to fiscal sanity. Those hopes have been crushed by Harry Reid and his looting friends.

Every citizen in the United States owes more than $46,000 to the US Treasury – their share of the national debt. Moreover, each taxpayer’s share of the unfunded liabilities exceeds one million dollars. What is it about these numbers that the Senate and our ever-campaigning President don’t understand?

I know, our problem is that the ‘millionaires and billionaires’ don’t pay their fair share. I guess I have it wrong. I look at the numbers and see that the top 1% of taxpayers (AGI over $364,657) paid more in taxes (39.4% of all federal income taxes) than the bottom 95%. Apparently that’s not enough. I wonder what is?

And, of course, the other problem is that evil CEOs are flying around in their playthings, those corporate jets, and getting special tax treatment to boot. Never mind that it was the President and Ms. Pelosi that included those measures in the Porkulus bill in 2009, providing accelerated depreciation allowances to combat a beleaguered, union dominated jet industry.

Or the problem could be the special loopholes the energy companies receive. Nope, they get the same depletion allowances as all other industries where it applies.

I am disgusted with this government and very fearful for our country’s future. The Senate just flushed he country down the toilet. I hope Mr. Reid is proud.

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In Celebration of Independence Day

Posted on July 1, 2011 by Philip Johnson

July 4, 1776

While the birth of our nation followed several years later with the signing of the Articles of Confederation (1781), and still later the Constitution of the United States (September 17, 1787), the fourth of July is our country’s most coveted day – Independence Day. The day we recognize as the signing date of the Declaration of Independence from the Kingdom of Great Britain. With the stroke of the quill, and in John Hancock’s case, a flourish, thirteen small colonies declared their separation from the most powerful nation on earth, their former sovereign.

Interestingly, though, it was in fact July 2nd when the Second Continental Congress legally separated from the crown when it approved a resolution of independence. That resolution was brought forth by Richard Henry Lee of Virginia. I lived in Leesburg, Virginia (his namesake) for several years, so I thought I would mention his contribution.

The day after the resolution passed, John Adams wrote a letter to his wife, Abigail, which included this prescient and almost accurate passage,

“The second day of July, 1776, will be the most memorable epoch in the history of America. I am apt to believe that it will be celebrated by succeeding generations as the great anniversary festival. It ought to be commemorated as the day of deliverance, by solemn acts of devotion to God Almighty. It ought to be solemnized with pomp and parade, with shows, games, sports, guns, bells, bonfires, and illuminations, from one end of this continent to the other, from this time forward forever more.”

Think of that statement. These men were about to officially face down the enormous military might of an empire – with a ragtag army, virtually untrained militiamen and scarce resources. It had been just over a year since Congress had appointed George Washington as General and Commander in Chief of the Continental Army (June 15, 1775). And the day before that it had authorized the formation of 10 companies of riflemen from Maryland, Pennsylvania and Virginia. This was the birthday of the Army and Army Infantry. And now, a year later, on July 3rd, John Adams expresses to his love Abigail, his faith and confidence that they will indeed be victorious – that what was born on July 2nd would live on and prosper. Tell me these men were not extraordinary.

So, this weekend we will, for the 235th time, celebrate this ‘most memorable epoch‘. Those men pledged their lives, their fortunes and their sacred honor to each other and the cause of freedom. They were giants among men. And the seed they planted that day has grown into the greatest, most prosperous nation in the world.

In all the world, over all the time man has walked upright, only 5% of humanity has ever known freedom. And never before had there been a nation that was borne of an idea – of natural rights – and designed from the ground up to protect those rights. To honor the individual. To form a government with the express purpose of insuring the freedom and liberty of its citizens forever.

And now, two hundred and thirty-five years later, we continue to tinker with the gift these men bestowed on us – in the name of progress. Elena Kagan would barely recognize the Declaration of Independence at her confirmation hearings. She didn’t recognize the integral nature of the founding document – the explanation of who we are. And now she sits on the highest court of the land. Franklin Delano Roosevelt envisioned a Second Bill of Rights that embodied the antithesis of the American spirit. And last year we crossed a point where the majority of the American people exist, at least partially, on the government dole. We’ve come a long way, baby.

Next to Washington and Lincoln, my third favorite president is Calvin Coolidge. The last truly anti-progressive president until Ronald Reagan. He was also the last president who wrote all his own speeches. I think he best expressed the legacy we have been given in a speech he delivered on the occasion of the 150th anniversary of the Declaration of Independence:

“About the Declaration there is a finality that is exceedingly restful.  It is often asserted that the world has made a great deal of progress since 1776, that we have had new thoughts and new experiences which have given us a great advance over the people of that day, and that we may therefore very well discard their conclusions for something more modern. But that reasoning cannot be applied to this great charter.  If all men are created equal, that is final.  If they are endowed with inalienable rights, that is final.  If governments derive their just powers from the consent of the governed, that is final.  No advance, no progress can be made beyond these propositions.  If anyone wishes to deny their truth or their soundness, the only direction in which he can proceed historically is not forward, but backward toward the time when there was no equality, no rights of the individual, no rule of the people.  Those who wish to proceed in that direction can not lay claim to progress.  They are reactionary.  Their ideas are not more modern, but more ancient, than those of the Revolutionary fathers.”

Is Calvin Coolidge your hero now, too? Simple, succinct, to the point – it could almost fit on a tweet, yet speaks volumes.

I hope and pray that as we all enjoy these next few days, at a time when we face a crisis of identity in this country, that we reflect on President Coolidge’s sage words and honor the genius of our Founders. Their genius was indeed timeless. We have all been blessed with a divine gift – the freedom to be who we want to be. To live our lives as we see fit.

The Founders pledged and risked all to grant us the freedom we hold. Don’t we owe it to them, to ourselves, and to our posterity to preserve that gift ‘from this time forward forever more’?

Happy Independence Day!

In liberty, Phil

July 2, 2011

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A Look Down the Road in Obama’s America

Posted on June 29, 2011 by Philip Johnson

This morning all eyes were on Greece as its legislative body voted to approve austerity measures demanded in order to receive its next international bailout. The measures passed. Next will be a vote on actual implementation.

Meanwhile in the streets, it was riotous. Bricks and rocks being thrown, graffiti scarring the square, tear gas filling the air, and a few buildings set on fire for good measure. I have to wonder what the early Greeks would think of their country today. Theirs was the proud birthplace of freedom, of representative government. Today it is a socialist cesspool. And a failed state. Not dead and buried yet – the impending bailout likely affords Greece another year on life support while the banks, insurers and hedge funds shelter themselves for the inevitable crash.

That’s a long lead in to a discussion of America’s future, but it is a telling predictor. And it’s not the only one. We have seen similar behavior on the streets of London when their Parliament instituted austerity measures – like cutting back on higher education subsidies. Violence and destruction ensued. Touch ‘entitlements’ and the mobs hit the streets. And these are not the peaceful demonstrations of Dr. King. These mobs are populated by the leeches on society – the moocher and looter class. They feel all the government giveaways are their right, and they are more than willing to set afire a city or accost a Bobbie to keep their ‘rights’.

But we all know such civil unrest could not occur within our shores. We’re different. Surely Americans wouldn’t react to budget cuts or financial stress that way, would they?

My first reflection would be Madison, Wisconsin just a few months ago. Legislators crossing state lines to hide out. Teachers and other union members occupying and destroying their beautiful capitol building. Vitriol and hatred on display daily on our television screens.

Or consider the flash mobs terrorizing the Miracle Mile in Chicago, time and time again storming into stores, grabbing what they can and dispersing. A similar event occurred in Philadelphia last week, with another teenage flash mob accosting and beating people on Broad Street – in broad daylight.

We are Greece. We are Great Britain. We are France. Woodrow Wilson set us on this course nearly a century ago, and brother, we put the pedal to the metal on November 4, 2008 when we elected and then installed a socialist in the White House. Yes, we have aspired (or many have) to be more like Europe for decades and we (they) got their wish.

According to Mr. Geithner, our esteemed Treasury Secretary, we will go into default in 34 days if congress fails to raise the debt limit. So what will congress and the president do? Frankly, I don’t have a clue. Mr. Obama had a press conference today and trotted out his usual suspects to close the budget gap – tax the ‘millionaires and billionaires’, close the ‘loopholes’ on the oil companies, ‘invest’ in green jobs, or bullet trains to nowhere – well, you know the drill. He then trotted out all the horrible things that will happen should we actually address the problem and go back to, oh say, 2008 spending levels? Heaven forbid, the sky would surely fall.

Point is, this administration, and its supporters in Congress, are in total denial of the economic realities we face today as a country. Or worse, they know what they are doing. For them, government is always the solution, not the problem. For them, more government means more power and more control – over you and me. And they are not inclined to give up a dollar or an ounce of power – even to save our nation. For even in failed states, the elites generally survive – and often thrive.

Did the Politburo appear underfed? How many pairs of shoes did Imelda Marcos possess? How many billions do these Middle Eastern and African tyrants have squirreled away in Swiss banks? No, the tyrants and elites seem to do just fine amidst the rubble and crumbs they leave to the populace.

My fear, of course, is that the deficit and debt crisis facing us will be, like Greece, just kicked down the road a bit. Our representatives will fail us. Oh, maybe they’ll nibble around the edges and then talk about their victories in reducing our spending by a trillion or two (over ten years!). They’ll talk about the hard fight they fought for us. But in the end, they will leave us on a trajectory toward near certain financial Armageddon.

This administration has demonstrated in every way, at every turn, its disdain for business, its disdain for profits, its disdain of capitalism, its disdain for Congress, and its disdain for the Constitution. We have a pathological narcissist occupying the White House and he is determined to have his way and fundamentally transform this nation. And he’s clearly getting his way. The Chicago way. Of course Chicago and Illinois are both on the verge of collapse as well.

This is a man who has not submitted a budget for two years. A man who offered no meaningful help or direction through the healthcare debates. A man who punted to Nancy Pelosi on the ‘porkulus’ package. A man who distances himself from the actual work, or even providing leadership. He seeks to snipe from the gallery, offering nothing of substance to the fray of the day, and sees himself riding in to save the day as the clock strikes midnight – much as he did in December on the tax issues. Or a beer summit. This man is supposed to be President of the United States. Almost makes me yearn for the days of Jimmy Carter, at least he was engaged.

So whatever the outcome of this budget crisis, our economic malaise will continue (yes, I am assuming no meaningful ideological change in direction). More citizens will be unemployed over time, benefits will run out for the job seekers, cash strapped states and municipalities will be forced to continue their cuts in services and benefits – including police, and already strained households and small businesses will run out of options to stay afloat.

As these strains play out, the moochers and the looters will emerge in force. It will be them, not the truly needy. The truly needy are quiet and grateful – to require assistance was not their choice. It is the moochers and looters, the parasites, who hit the streets, who deface property, who loot, who resort to random violence. For life and property mean little to them. And this is the future we face, the future we have allowed to unfold. Think post-Katrina.

And Mr. Obama’s friends will be there too, if not in person, certainly in spirit. Bill Ayers, George Soros, Richard Trumka, Van Jones, Code Pink, Center for American Progress, MoveOn, Media Matters, Michael Moore, Sean Penn, STORM, Green for All, and Frances Piven of Cloward-Piven fame – to name a few. Miss Frances (Piven) will be there to celebrate the fruition of the strategy they embarked on in 1966 – overwhelming the welfare state and collapsing the capitalist system.

And off on the sidewalk watching, dumbstruck, will be all the hangers-on that had been duped into the messages of social justice, wealth redistribution, ‘fairness’, anti-Capitalism, and environmental justice. And they will see what the outcomes are of their beliefs, and the price of their willingness to trade liberty for a false security, or to right an imagined wrong.

Does this have to be our future? I pray not with every fiber of my being, but at this point in time, I believe we have maybe a thirty-seventy chance of averting it. But only if one, our representatives do meaningfully address our fiscal situation in the next month and, two, we throw out this president and achieve a 60 plus majority in the Senate in 2012. The former to buy us time in the bond markets until 2012, and the latter – a strong, conservative control of both branches of government – to begin unwinding and reversing this dangerous course we’re on. As Thomas Jefferson said,

“A government big enough to give you everything you want, is big enough to take everything you have.”

Buckle up, it’s going to be a very bumpy ride.

And be politically incorrect – get on your knees and pray for our country. We need all the help we can muster.

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