EU's Sovereign Debt Crisis And The Centralization Of Power Within The EU.

Ireland has recently accepted/forced to accept a 85 billion euro bailout and Portugal, Spain, Italy are falling like dominoes. The debt contagion is spreading throughout the peripheral nations and will eventually make its way to the core. This is a very good video titled "Von Rompuy:Pin-up boy for Eurosceptics" showing a member of the UK Independence Party Nigel Farage's message to the EU president and those that still wish to keep the European Union dream alive: "The dream is up". Farage's rant against the EU points out that current events in the EU could be leading to the end of the EU and if it doesn't then it will lead to people rallying around nationalism and violence because "when you rob people of their democracy and their identity. Then they are left with nationalism and violence".
(Picture) European Union: European Day poster, 2000. Photograph. Encyclopædia Britannica Online. Web. 30 Nov. 2010

(http://www.britannica.com/EBchecked/topic-art/196399/93978/Europe-Day-poster-2000).

And continuing on the ideal that the current events in the EU are leading to the fragmentation of the EU here is a good article from CNBC,

A few weeks ago, I wrote about the possibility of a political breakup of the European Union. Just before Thanksgiving, I wrote— not ironically — about whether a crypto-breakup of Europe might already be underway in the sovereign debt markets.
Today, a new idea that is at least as unsettling: Fragmentation in Europe, not just along national lines, but along class and economic lines as well.

Michael Pettis, a Professor of Finance at Peking University and a frequent writer on international economics wrote in a recent blog post, in reference to Europe's most economically troubled nations:

'Political radicalism in these countries will rise inexorably as a consequence of rising class conflict. As Keynes pointed out as far back as 1922, the process of adjusting the currency and debt will primarily be one of assigning the costs to different economic groups, and this is never an easy or conflict-free exercise.'

This is indeed a frightening scenario. If, as Milton Friedman suggested in 1965 'We are all Keynesians now,' perhaps it is time to think through some of the darker ramifications for Europe.[...] In the United States, we tend to underestimate the significant ideological grip socialism held in Europe for much of the 20th century.[...] While those examples might indeed be outliers, the policies of many European Union nations are influenced by the fundamental structure of their governments: parliamentary democracies.[...] The upside of the parliamentary system is the promise of an intellectual openness to a broader spectrum of political opinion. The downside is the possibility that small parties—and with them fringe movements—can accumulate a share of power disproportionate to their representation in the general population. (In an example from the opposite side of the political spectrum, the broad Swedish left is apoplectic over the rise of a political party alleged to have racist roots.)

In short, due to cultural, historical, and structural factors at play in Europe, it seems impossible to rule out the possibility of social fragmentation along class and economic lines. In certain European intellectual circles, that oft-quoted line from The Communist Manifesto[sic] —that 'The history of all hitherto existing society is the history of class struggles'—is more than just a ancient relic. It's a political truism.

As Farage notes in his speech, hopefully the Euro project will be destroyed by the markets before this happens. Looking at the fact that these PIIGS nations are receiving bailouts, it doesn't seem that the EU leaders are unwilling to let the free market work. There is too much political capital invested in the concept of the EU.
(Picture) European Union. Flag. Encyclopædia Britannica Online. Web. 30 Nov. 2010
(http://www.britannica.com/EBchecked/topic-art/196399/92316/Flag-of-the-European-Union).

A good article from the Ludgwig Von Mises institute states that these debt crises is leading to a centralization of power in the EU,

Finally, the bailout leads to a centralization of power in the European Union. European politicians already indirectly determine the Irish budget. For instance, they tell the Irish government to increase taxes, such as the sales tax. They also put tremendous pressure on the Irish government to abandon its policy of a low corporate-tax rate, a policy that many European politicians regard as 'fiscal dumping."' Here, at last, the Irish government resisted.

In the short run, one may find some positive aspects of the determination of fiscal policies by Brussels or indirectly by Germany. When Germany or Brussels tells Spain, Greece, or Ireland to reduce their deficits, the result for people living in these countries may be a reduced size of the government in the short run. But such centralization of power in the EU will likely prove to be disastrous for liberty in the long run. The European interventionists now claim that because there is one central bank we need one economic policy.

One factor that frequently hampers governments' attempts to increase their power via increases in taxation or regulation is the competition of other governments. If taxes get too high in a country, economic agents will flee to countries with lower tax rates (such as Ireland, with its low corporate tax rate). If economic policy is centralized in the European Union, this limitation on government power is eliminated. European politicians already aim at a harmonization of fiscal policies and talk about benchmarks for tax rates. Once fiscal policies are harmonized, there will be a tendency toward an increase of power in Brussels and then toward an increase of tax rates throughout the eurozone.

The euro might be saved, but at the cost of building a strong, central European state, as national policymaking is transferred to Brussels in exchange for bailouts. The turmoil produced by the euro will then have served as an instrument for the development of a centralized state in Europe.

This article also describes the problem with the concept of the EU project: it created the incentives for small EU nations to run up massive deficits.

This article notes the Ireland bailout is not about Ireland but it is about the European project,

What you need to know about Ireland's economic crisis is that it's not about Ireland: a small country of slightly more than 4 million people and an economy of roughly $200 billion. It's about Europe. For decades, Europe has pursued two great political projects. One is the democratic welfare state, designed to improve economic justice through various social safety nets. The other is European unity, symbolized by the creation in 1999 of a single currency -- the euro -- now used by 16 countries. The fact that both contributed to Ireland's troubles suggests that Europe could be on the brink of a broader crisis.

Ireland's problems are not isolated, and if they portend a wider meltdown, this would mark a dangerous new phase in the global economic turmoil that began in 2007. Europe represents about one-fifth of the world economy, comparable to the U.S. share. If the continent relapsed into recession, worldwide economic nationalism would intensify, as the already-weak global recovery faltered and countries competed for scarce sales. For example: Europe buys about 25 percent of America's exports, which would suffer. Protectionism and predatory behavior would increase.

Europe's problems can easily spread to the rest of the world. America could possibly have a very similar situation to the EU with its individual states. The concept of the Euro is being put before the economic well being of the individual EU nations and the whole European economy.

The events in the EU illustrates how that the concept of socialism is an economic failure and how that it leads to centralization of power among various governmental entities. In the case of the EU, it is the result of the attempts by them to prevent the economic collapse that is the inevitable result of socialism. If the concept of the EU does not end but continues to be pursued, it will lead to a more centralized European governing body that is built on very shaky economic ground that will possibly collapse into a very different system of government. Friedrich Hayek warned that socialist planning leads to situation where "totalitarian powers will get the upper hand",

I have never accused the old socialist parties of deliberately aiming at a totalitarian regime, but' What I have argued in this book[The Road To Serfdom], and what the British experience convinces me even more to be true, is that the unforeseen but inevitable consequences of socialist planning create a state of affairs in which, if the policy is to be pursued, totalitarian forces will get the upper hand. I explicitly stress that 'socialism can be put into practice only by methods of which most socialist disapprove' and even add that in this 'old socialist parties were inhibited by their democratic ideals' and that 'they did not posses the ruthlessness required for the performance of their chosen task'.

As Farage notes in his address to the EU president, democratic principles are being put aside for the purpose of maintaining the EU. From what I gleam from the various commentary that I have heard on business shows like CNBC's "Squawk box", the situation in Europe is leading to an inevitable collapse of the EU system. What system of government will emerge out of the possible future economic collapse of the European socialist model?

MELKOR SPEAKS: Obamacare vs Invasive TSA Searches

Melkor sent me the following to post:

Non-Security related analogy:  although it's being litigated, Obamacare is stating that it is in the people's interest that everyone should have healthcare.  The gov't is implicitly saying this by fining (whether through taxes or otherwise) those who don't get it, thus encouraging us to get it.  We say healthcare is in our interest both from an overt, people should be taken care of, but more importantly, because it's in the general interest for everyone to have healthcare:  It is the uninsured that pose a significant externality upon the majority of people with healthcare since they lack preventative care that would treat most maladies in a more efficient manner.  We are removing this externality by paying for it through Obamacare.  Lets take this one step further, we are saying that it is in society's interest for people to be given regular physicals and check ups, pap smears and prostate examinations, because it makes it net-cheaper for the rest of society but also because we say people should just see a doctor.  Thus, your precious liberals have already stated that they want people to see us naked because it's "whats best for us" and moderates have partially signed on because they think it's whats cheaper.

Security Analogy:  If, by now, you understand what I'm hinting at (that is, the gov't is saying we should have doctors grab us and say cough because we think it's good and also because it might be cheaper for society at large) you are probably yelling, "I can choose not to get the healthcare" (and suffer the fine) or, "I don't have to get the physical or pap smear even if I'm paying for Obama care."  Well, you can not only opt in to whatever search you want by the TSA, but can opt out of the search entirely by seeking an alternative mode of transportation.  The searches that are protected by the constitution are not those that people can opt out of.  You are free from the police taking you and forcibly searching you.  On the other hand, the gov't has already created non negotiable searches in areas that are in the national interest:  Can you opt out of a search when you enter a Court?  What about the National Archives, US Customs & Commerce building, the National Gallery of Art, Military installations?  Can you opt out of being searched when you enter Wall Street or any of the Federal Reserve Banks?  What about when you enter the country?  What about when the gov't forces sensitive industries (Power, telecom, Defense, Urban sanitation/water servicesm, etc) to incur increased costs (mind you, with no compensation) by mandating them to implace security procedures against terrorist and cyber attacks, should the gov't be allowed to hurt these firms this way?  We/not rights extremists/society/America say yes, because we need to internalize the externality of security.  This isn't a new thing and this isn't a pathway to dictatorship.  If Russia does a denial of service attack, if China obtains industrial technology and produces same good without spending on R&D for it, or a plane explodes at a massive international financial installation, we all pay for it even if we aren't hurt/killed by it.  It is better for gov't to intervene in this case and force either a limitation on our rights, a policy mandate, or a tax, in order for the majority to be benefited.  The bill of rights was not intended for externalities of someone's use of their civil rights to infringe on others, it's not a blank check and never was meant to be.

Some News That Point Towards A Future Economic Degringolade.

I am doing a short post on two videos I found interesting about QE 2 and the European economic situation and an interesting poll about Americans' views on the viability of marriage. (The first two videos are worth a watch while the other links aren't as interesting but they are informative.) I came across this interesting animated video from the Ludwig Von Mises Institute's website that is about the recent Federal Reserve decision to purchase 600 billion more dollars of assets which is known as QE 2. It is a short and humorous overview of QE 2.

It looks like there is still a lot of economic and social troubles going on in the EU. This is a good video that is a warning for America to not go down the same socialist economic path that Europe has. Sadly America is headed towards this situation. One question I have with all of these strikes going on over in the EU is when election time comes around for these various nations will these people vote the officials in office who will continue to make the necessary spending cuts and the other hard changes?

And on the subject of the EU, Ireland will possibly be needing a bailout from the EU and the IMF. Ireland is reluctant to receive a bailout as it will threaten their sovereignty and will possibly force them to give up their low corporate tax rate because the other EU nations will not want to be giving Ireland bailout money which will allow Ireland to maintain its low corporate tax rate. Ireland's low tax rate attracts capital and businesses away from other EU nations. I have read that Ireland does not have a lot of natural resources and its low cooperate tax rate is very important to its economy as it is its main way to attract capital which makes up for the nation's lack of natural resources. And according to Financial Times, as a result of Ireland's banking crisis,"'four of the five domestic lenders are set to be state owned, with only Bank of Ireland in the short term likely to remain outside the grasp of state ownership'". From looking at this fact, and what resulted from the similar situation in America, it appears that these various economic problems coalesce economic functions that were once performed by the private sector in to the hands of the government. If being bailed out is something that has to happen and is a good thing, why would Ireland be quick to deny the need for a bailout and reluctant to receive one? It appears as if there are strings that are attached to this bailout money which results in a loss of sovereignty as evident in the concerns being voiced by Ireland. Of course the PIIGS nations probably should lose some of their sovereignty since they are threatening the stability of the greater EU. The only question is if the broader EU governing body will be able to bring about more prudent economic policy to these PIIGS nations and the greater EU. Bailing out these nations don't force the necessary and painful structural changes to occur as they allow for halfway measures to be implemented in the place of the necessary ones which means they have the effect of kicking the can down the road. These troubled nations, PIIGS, are making changes but it is yet to be seen if they are the necessary structural changes or just half way measures, from what I have read and seen from various commentary on business shows the latter scenario appears to be the case especially in the case of Greece. It is evident from the various protest occurring in Greece and even France that the measures so far taken to address these economic problems are very unpopular. If necessary changes were to have happened then these bailouts would not have been needed, but then there would have been a collapse of these economies that would have spread to the greater EU and that would have probably brought about social instability. Hopefully, the EU will be better able to handle such a situation when and if such a situation happens at a later date. Note that America could soon be facing a situation similar to the EU's as many of its states will probably require a bail out in the coming year[s], California being one example. It still appears as if the EU and the world is headed towards a future economic degringolade.

And here is an interesting article for those who think that the stock market is back to where it was in 2008, "Adjusted for inflation (as per the Bureau of Labor Statistics), the Dow would have to reach 13,570 to equal the 'purchasing power' value of Dow 11,000 in 2001. ($1 in 2001 equals $1.23 in 2010.)"

And there was an interesting poll that found that there is an increase in the number of people who thing that marriage is becoming obsolete.

Nearly four in 10 Americans think marriage is becoming obsolete, according to a new survey that reveals changing attitudes on gay marriage, unwed couples and the definition of what a family is.[...]Among the biggest changes in Americans' attitude toward marriage was the number of those who now believe the institution is becoming obsolete. Thirty-nine percent of respondents said they believe that's the case, compared with 28 percent who said that when Time magazine asked the same question in 1978. [...]Some 86 percent of respondents said they consider a single parent and child to be a family, and 80 percent said unmarried couples living together with children are families. Nearly two-thirds (63 percent) said they think a gay or lesbian couple raising a child constitutes a family. But even though a majority (88 percent) think a childless married couple is a family, a similar majority thinks a childless unmarried couple is not.

I found this interesting because the traditional family is the foundation of our society and this one of the reason that those who wish to change our society, mostly the Left, promote anything that will help destroy it: gay marriage, cultural themes that run throughout popular culture like music and that promote single motherhood and that having a kid outside of marriage is acceptable, a government that helps replace the need for a father and the traditional family with welfare, and etc. I was also reading the "Communist Manifesto" where it states that the destruction of the traditional family will be necessary to bring about the Revolution of the Proletariat,

Abolition [Aufhebung] of the family! Even the most radical flare up at this infamous proposal of the Communists. On what foundation is the present family, the bourgeois family, based? On capital, on private gain. In its completely developed form, this family exists only among the bourgeoisie. But this state of things finds its complement in the practical absence of the family among the proletarians, and in public prostitution. The bourgeois family will vanish as a matter of course when its complement vanishes, and both will vanish with the vanishing of capital.

This is a couple of little news bits that I found interesting and relevant. They don't necessarily mean that some future decline in the situation of the world will occur, but they do point one to look in that direction.

Expert Analyst disses Prius

Noted auto and economic super-genius, Cher, weighs in on the utility of a Prius:

“I researched all the hybrid stuff and its pretty much all bulls**t,” Cher said when asked about her vehicle preferences.

Pretty much to the point. QED.

Face, ToeJamm.

Going Green!

Here are a few ways you can "go green" and it will not be a hinderance on your life.


1) Use Winco’s green fabric bags for your groceries (or your favorite grocer’s bags). They only cost $0.88 at Winco. If you notify the cashier that you are using them he/she will deduct $0.18 from your total. I will only need to shop 24.444444 times and they will pay for themselves. I probably shop at Winco around 25 times a year. If you are wondering, “What am I going to do for trash bags?” I would tell you to continue using paper bags because grocery plastic bags are too small for a customary kitchen trash can. I accumulate more bags then necessary to reuse anyway and more than half of them end up as garbage.
2) Recycle your used car oil or have it done at a local oil shop (they recycle).
3) If its yellow let it mellow and if it’s brown flush it down. I piss in my toilet at least twice before I flush it. Patrick can piss like ten times before I have to flush his.
4) Turn your lights off when leaving a room. Try to make it a habit.
5) Turn down your thermostat one little itty bitty degree lower. Chances are you won’t notice.
6) Start a recycling routine. It can be fun with the kids!
7) Bring one of your favorite fabric grocery bags with you when you go on your walk in the city park . There will certainly be some trash to pick up.
8) Buy a Prius!
9) When you chop down a precious Christmas tree be sure to plant two more. This is also a great one with the kids!
10) Try more outdoor entertainment. Hiking, skiing, jogging (not on a treadmill), Frisbee, basketball etc. These activities can be healthy and more refreshing then sitting in front of the boob tube.

Major Success for Obama - Wall Street Journal

via Hot Air: The Wall Street Journal reports

Has there ever been a major economic summit where a U.S. President and his Treasury Secretary were as thoroughly rebuffed as they were at this week's G-20 meeting in Seoul? We can't think of one. President Obama failed to achieve any of his main goals while getting pounded by other world leaders for failing U.S. policies and lagging growth.

That's how the article starts. They don't back off in the rest of the article as they dish out a savage pounding to Obama.  I won't link the myriad articles that say how smart Obama is (without offering any concrete evidence), but if he really is as smart as they say he is, then he must be humiliating himself (as the President of the United States) and his country on purpose.  If that is his purpose: to massively redistribute wealth from wealth producers to wealth consumers in America, and from America to the rest of the world, and destroy America's standing in the world, he's doing a marvelous job. 

More:

The world also rejected Mr. Geithner's high-profile call for a 4% limit on a nation's trade surplus or deficit, which would amount to new political controls on trade and capital flows. This contradicts at least three decades of U.S. policy advice against national barriers to the flow of money and goods. We don't like to see U.S. Treasury Secretaries so completely shot down by the rest of the world, except when they are so clearly misguided.

A major 'Read the whole thing' article.  I don't feel like doing in-depth writing right now.  But, also check out the Hot Air link.  They juxtapose the WSJ article (of course the capitalist pigs hate him) with a similar article criticizing him almost as harshly in the San Franscisco Chronicle.  Good times.  Though not for our country.

Global Warming - "It's Dead for the Foreseeable Future"

Yay!!!  The last nail in the Global Warming Scam is hammered home: 

The closing this week of the Chicago Climate Exchange, which was envisioned to be the key player in the trillion-dollar "cap and trade" market, was the final nail in the coffin of the Obama administration's effort to pass the controversial program meant to combat global warming.

This Carbon trading exchange is a scam that Al Gore was in on the ground floor. To see it fall warms the cockles of my Global Cooling chilled heart.

"When those that voted for the measure in 2009 went home on July 4th after the vote, they met widespread outrage among their constituents," said Nick Loris, an analyst with Heritage Foundation. Conservatives renamed the idea "cap and tax," and they began an assault on the program.

In the last week, following the Nov. 2 Republican takeover of the House of Representatives, the slide became an avalanche. Investors in CCX, including Sandor and former Vice President Al Gore, sold the exchange to a company involved in commodities trading.

Don't cry for the perpetrators, the brains behind it is $90 million richer, and a chief backer is president of the United States:

The Exchange was the brainchild of Richard Sandor, an economist and professor at Northwestern University, and it was modeled after a successful program that was launched in 1990 and helped control acid rain in the Midwest. It was initially funded by a $1.1 million grant from the Joyce Foundation of Chicago, and President Obama was a board member at the time.

It doesn't say how much Al Gore made out of it, but my guess is he's not hurting.

It's bad form to brag and gloat and say "I told you so", but I've been harping on this scam since 2005, in the face of hipsters, leftists, and concerned Conservatives even, so it feels very good to me. Excuse me, I'm going to bask in the glow of shattered statists' dreams for a while.

QE 2 And You.

(This is a long post but it is very pertinent to one's life and is very interesting. At least read the first article linked and the one below by Ayn Rand.) This is very big news and will directly impact YOU not too far in the future by devaluing your dollar and savings by at least 10-20%. If you have a decent sized savings, you had better put it in an inflation protected investment, always a good advice. This is a great article to read to better understand the global monetary system from Mises dot org, it is long but will help you to understand the economy. The economy is slow and the Fed, America's central bank, is worried about deflation. Inflation is around 1.2%, the average rate of inflation is around 3%, and this is below their target rate of around 1.7-2.0 % which means we are experiencing disinflation, the rate of inflation is slowing. According to The Mises Institute, the Fed determines the rate of inflation by looking at the Consumer Price Index CPI which does not include energy or food prices among other things: "Besides nitpicking the construction of CPI data, there is the problem of focusing just on consumer prices in the first place. For example, according to the latest report of the Producer Price Index, in the last year prices for finished goods are up 4.0 percent, the prices for intermediate goods are up 5.6 percent, and prices for crude goods are up a whopping 20.3 percent." One of the reasons all consumer product's prices do not reflect this increase is that businesses are absorbing the cost of higher input costs at the moment as I concluded in this report(I could be wrong on this as I came to this conclusion myself.),

Procter & Gamble Co.'s (PG) fiscal first-quarter earnings fell 6.8% on the sale of its pharmaceuticals business last year, even as the company's margins took a hit from higher commodity costs.
Earnings topped the company's forecast. The consumer-products giant is in the midst of a broad push to grab market share around the world. It has launched products, marketed its offerings more aggressively and offered consumers more promotions. Higher raw material costs, however, are now putting more pressure on manufacturers. P&G competitor Kimberly-Clark Corp. (KMB) earlier this week reported that third-quarter earnings fell 19%, hurt by rising commodities costs.
Raw materials have started to pressure a range of companies from makers of pizza to sellers of paper towels. Pulp costs have been a pressure for Kimberly-Clark, which makes such brands as Kleenex tissues and Scott paper towels. BMO Capital Markets analyst Connie Maneaty noted that prices for a key variety of pulp are off their peak to $975 a metric ton, but still 12% higher than the average of $870 a metric ton from early this year. Kimberly-Clark lowered its 2010 earnings guidance this week, partly because of input cost pressures. P&G also makes a variety of paper products like Charmin toilet paper and Bounty paper towels. Companies like P&G also use a variety of plastics and packaging for the shampoos and lotions they sell. In the three months ended June spot prices for plastic resin were up roughly 20% to 30% from a year earlier, estimates Caris & Co. analyst Linda Bolton Weiser. "We are now seeing those costs flow through," she said. P&G on Wednesday didn't break out the impact of different commodities on its earnings.
Speaking to reporters, Chief Executive Bob McDonald said consumer demand is still "dampened" in the U.S. Some food companies in the U.S. are starting to raise prices, with General Mills (GIS) recently announcing increases on some cereal prices. P&G said it will push to offset commodity price pressures with cost savings rather than price rises, McDonald said. In cases where price increases are necessary, the company will choose to do so through the launch of innovative new products, he said. P&G has been curbing costs to offset the pressure from commodities.
Commodities aren't the only challenge these companies face. While developing markets continue to grow fast, sales on daily consumer goods in developed markets and especially the U.S. have stayed sluggish.

While inflation appears to be lower than what the Fed's target rate is, inflation is higher when counting a broader range of prices. Even though the broader range of prices are higher the Fed wants, they still want to implement a policy to increase inflation to meet its target rate for inflation.

To revive the economy and to meet its target rate for inflation, the Fed has decided to do a second round of quantitative easing, QE 2, to be followed by QE 3 and QE 4 according to Roubini who predicted the financial crisis and is fairly respected as he appears on business news networks and is watched fairly closely. Quantitative easing is where the Fed ties to increase the money supply in an attempt to jump start the economy. "The Federal Reserve will buy an additional $600 billion of Treasuries through June[2011], expanding record stimulus and risking its credibility in a bid to reduce unemployment and avert deflation." To buy back Treasuries, the Fed will be paying money for them. What will the Fed be paying for it with? Today, every dollar the government spends it must borrow over 40 cents of it. The Fed will be buying these Treasuries by printing money. The problem with the economy is not a lack of money out there as consumers, businesses, and banks are sitting on around 2 trillion dollars. This could be one of the reasons that inflation appears to be low, especially when considering the amount of money pumped into the economy during QE 1 which was around 1.7 trillion dollars as a massive amount of money is not circulating in the economy. The reason they are sitting on this money and not spending it is a lack of confidence. So pumping more money into the system doesn't seem to make sense and will only make inflation worse when all of this money that consumers, businesses, and banks are sitting on plus this 600 billion dollars start circulating in the economy. QE 1 and 2 will drastically increase the money supply. This in turn will increase the rate of inflation.

The recent action by the Fed is not making other Nations happy as this will devalue their investment they have made in the dollar by buying America's debt. I heard on CNBC's Squawk Box that the German Central bank called the recent action by the Fed "Clueless". And China is not happy with the Fed's action, "'As long as the world exercises no restraint in issuing global currencies such as the dollar -- and this is not easy -- then the occurrence of another crisis is inevitable, as quite a few wise Westerners lament,' Xia Bin, an advisor to China's central bank wrote in a newspaper managed by the bank."

Rush Limbaugh's take,

RUSH: By the way, folks, it is official. I told you this earlier in the day. I told you to be on the lookout for two things today, and it's not an accident the Fed meeting is today when everybody else is looking at the election returns. 'Federal Reserve to buy an additional $600 billion of long-term Treasuries by the end of the second quarter of next year.' QE2. They're not 'buying' anything. They're printing it. They are printing $600 billion, long-term Treasuries. Well, one of the primary uses of the money will be... (sigh) I don't know how to explain this. Just -- I'm telling you this is true. I can't give you the machinations for it. It's gonna end up invested at Wall Street, it's gonna end up invested in stocks, in businesses to make it look legit and okay. It's made to look like this is helping the economy grow. It's done so that Democrats can say, 'Look, look, our policies are helping the economy.'

Now, normally they run Wall Street down, they hatred, in favor of Main Street. Now all of a sudden they're gonna be looking at Wall Street. 'Look at the Dow Jones Industrial Average! Look at our policies! Look the growth of this economy! It's happening, it's just lagging, but we and our policies are bringing the country back.' That's what this is for. The money will end up in the stock market. You know what I'm gonna do? My job is to make the complex understandable, and I'm gonna do that in this case. I do not have the time here to explain the route that all this takes, but I will. For now, don't doubt me. This money is to do two things, the printed money. End up in the stock market to show growth there, and -- and -- to inflate the currency. That is the secondary purpose here, the beginning of the inflation-deflation cycle.

This is the fastest way to retire debt. When you don't have the ability to earn enough money to pay it off the fastest way is to inflate the currency. So this will allow the Fed and the regime to say that their policies are resulting in deficit reduction and savers. All of a sudden, by the way, you're gonna take it in the shorts here again. The money you've got socked away is gonna become worth less is that the regime can show the world that its policies are growing the government. So it is now official out there. QE2, Quantitative Easing, the printing of the money, is also another way for the Democrats to get control of Wall Street. "What do you mean, Rush? What do you mean?"

Wall Street's a bunch of welfare recipients today. All this money invested in equities, all this money invested in stocks, where's it coming from? It's not coming from John Q. Public. It's coming from Ben Bernanke. It's coming from the Federal Reserve -- and what they give, they can take away. Don't doubt me. That's why, folks, those of us who have been saying it having saying it: Last night [Nov 2] was just the beginning. Last night didn't solve anything. There's a long way to go. That's why don't be depressed. Don't be. Last night was a wipeout. Last night was such a wonderful event to build on. You may interpret what I'm saying as equating where we are to helplessness. I am not at all saying that. Don't misunderstand me. Yes, there are large forces, powerful forces. They don't always win.

This action by the Fed and the overall global economic situaiton is causing people to predict "doom and gloom".The US government does not have enough money to retire its debt so it will try to inflate its way out of it by just printing money. This action has lead to the comparison between America's current situation with that of the Weimar Republic where they tried the exact same thing and which eventually ended up with Hitler. I don't know if these two events can be accurately compared. Glenn Beck thinks that the world's current economic situation is leading to the collapse of the dollar followed by a "new global order". Will this just end up like the Carter years? I don't know. Were people making the same dire predictions during the Carter years as they are now? We had the Carter years and America is still here.

Continuing on the vain of some "new world order" resulting from the current economic situation, this from the 1st article above and first published in 2005,

It is now all too clear that the world has become fed up with the unprecedented inflation, in the United States and throughout the world, that has been sparked by the fluctuating fiat currency era inaugurated in 1973. We are also weary of the extreme volatility and unpredictability of currency exchange rates. This volatility is the consequence of the national fiat-money system, which fragmented the world's money and added artificial political instability to the natural uncertainty in the free-market price system. The Friedmanite dream of fluctuating fiat money lies in ashes, and there is an understandable yearning to return to an international money with fixed exchange rates.

Unfortunately, the classical gold standard lies forgotten, and the ultimate goal of most American and world leaders is the old Keynesian vision of a one-world fiat paper standard, a new currency unit issued by a World Reserve Bank (WRB). Whether the new currency be termed 'the bancor' (offered by Keynes), the 'unita' (proposed by World War II US Treasury official Harry Dexter White), or the "phoenix" (suggested by The Economist) is unimportant. The vital point is that such an international paper currency, while indeed free of balance-of-payments crises (since the WRB could issue as much bancors as it wished and supply them to its country of choice), would provide for an open channel for unlimited world-wide inflation, unchecked by either balance-of-payments crises or by declines in exchange rates.

The WRB would then be the all-powerful determinant of the world's money supply and its national distribution. The WRB could and would subject the world to what it believes will be a wisely-controlled inflation. Unfortunately, there would then be nothing standing in the way of the unimaginably catastrophic economic holocaust of world-wide runaway inflation, nothing, that is, except the dubious capacity of the WRB to fine-tune the world economy.

While a world-wide paper unit and central bank remain the ultimate goal of world's Keynesian-oriented leaders, the more realistic and proximate goal is a return to a glorified Bretton Woods scheme, except this time without the check of any backing in gold. Already the world's major central banks are attempting to 'coordinate' monetary and economic policies, harmonize rates of inflation, and fix exchange rates. The militant drive for a European paper currency issued by a European central bank seems on the verge of success. This goal is being sold to the gullible public by the fallacious claim that a free-trade European Economic Community (EEC) necessarily requires an overarching European bureaucracy, a uniformity of taxation throughout the EEC, and, in particular, a European central bank and paper unit. Once that is achieved, closer coordination with the Federal Reserve and other major central banks will follow immediately. And then, could a World Central Bank be far behind? Short of that ultimate goal, however, we may soon be plunged into yet another Bretton Woods, with all the attendant crises of the balance of payments and Gresham's Law that follow from fixed exchange rates in a world of fiat moneys.

From the entire article above, it does seem like the status quo in the global monetary framework can't last and a "new global monetary" order would seem to solve these problems with the current one. I don't think you can ascribe any nefarious schemes to these developments. Although I do question the foundations that this new system is being set up on, if there is such a thing. Going back on the gold standard does not seem like a possibility as of now.

Another good article about the overall structure of the economy is "Egalitarianism and Inflation" by Ayn Rand. I read this article about two years ago and after taking a macro economic, reading my textbook, and gaining a better understanding of the economy works I found this article to be an accurate description of the how the economy works.

Inflation is a man-made scourge, made possible by the fact that most men do not understand it. It is a crime committed on so large a scale that its size is its protection: the integrating capacity of the victims’ minds breaks down before the magnitude—and the seeming complexity—of the crime, which permits it to be committed openly, in public. For centuries, inflation has been wrecking one country after another, yet men learn nothing, offer no resistance, and perish—not like animals driven to slaughter, but worse: like animals stampeding in search of a butcher. [...]You have all heard of some manipulator who does not work, but lives in luxury by obtaining a loan, which he the repays by obtaining another loan elsewhere, which he repays by obtaining another loan, etc. You know that his policy can’t go on forever, that it catches up with him eventually and he crashes. But what if that manipulator is the government.

Inflation eats up a nations stock seed or capital that makes future production possible.

The overall situation of the U.S. economy according to Senator Gregg,

Sen. Judd Gregg warns that the United States could end up in dire financial straits like Greece's in a few years if it doesn’t cut its deficit and debt — and quickly.

The federal government and state governments are facing massive debts moving forward. States alone are looking at unfunded pension shortfalls for police, emergency, and government workers totaling between $3 trillion and $5 trillion during the next two decades, the Economist magazine reported recently.

'This nation is on a course where if we don’t do something about it, get federal situation, the fiscal policy [under control], we’re Greece. We’re a banana republic,' Gregg told CNBC.

'Our status as a nation is threatened by what we’ve got coming at us in the area of deficit and debt. And it’s only a few more years, at the most, that we have to work with here before the market says, ‘Sorry, your currency is something we cannot continue to defend.'

Senator Gregg is only one of many voices echoing the very same warning. A lot of my posts on the economy details this. The fact is that [IF], the key word is if, America and the world doesn't make a major change in its economic course, there will be a major world economic upheaval in the future. To what extent the upheaval will be and how the world will react to this is up in the air.

The bottom line: the stock market will likely be boosted in the sort term, inflation will be a very serious problem in the not-to-distant future and it already is with the rise in commodity prices, the U.S. Dollar could decline another 20% , and this action is more of the same bad policy that will set up the eventual global economic correction/collapse to be even worse than it otherwise would have been. This new policy is simply trying the very same policy, QE 1 after the economic downturn of 08, that failed earlier. This is BIG news for those that care about their economic future as this will further exacerbate the current global economic situation, and it would do you well to become more educated on this and the overall economic situation so that you can position yourself to succeed in the future. Or you can just ignore it and, uh, fall on your face like everyone else.

2010 Election Review

I think this pretty much sums it up

Picture stolen from Ace.  A huge Republican wave swept over the nation yesterday.  Republicans gained at least 61 House seats (I think there are still ten too close to call), 5 Senate seats including Barack Obama's old seat in Illinois (not counting Scott Brown's pickup in January), and 6 governorships (Democrats lost 7; Rhode Island went Independent).  The most readily apparent statistic is the House pickups.  This is the largest Republican gain in the House in 70 years (1940), and the greatest overall number of Republicans in the house since 1946 (the election after WWII ended and the nation realized it was sick of Roosevelt's New Deal policies).  The 5 Senate pickups were a good, not great haul.  As significant as the House swing and total is, an even more significant statistic is governorships: the total number of Republican Governorships (29) are the most ever, and by lucky chance, it is happening in a Census House District redraw year.  To cap that, Real Clear Politics claims that the Most Significant Statistic is the Republican gains in the statehouses where

With races outstanding in New York, Washington and Oregon, Republicans have flipped at least 14 chambers, and have unified control of 25 state legislatures. They have picked up over five hundred state legislative seats, including over 100 in New Hampshire alone.

and they summarize:

Finally, the GOP will control or have a say in almost all of the states that are gaining or losing seats. Democrats will control Massachusetts, where a Democrat must be eliminated regardless, and perhaps Illinois, which may or may not lose a seat. Meanwhile, Republicans will control over a dozen newly-drawn seats, and chose almost a dozen more seats to be eliminated districts.

Last night's GOP wave devastating for Democrats, but it could not have come at a worse time. If the GOP takes full advantage of this opportunity, it could even expand upon its current Congressional majorities further in 2012.

It's also important to note that it's not just the quantity of the Republican wave, but also the quality.  Because of Tea Party pressure, the Republican lineup was much more conservative than it would have been: Marco Rubio (Florida), Rand Paul (Kentucky), Pat Toomey (Pennsylvania), and Mike Lee (Utah) are all Tea Partiers.  I have no idea how many House members are, and how many candidates not backed by the Tea Party were still compelled to campaign more conservatively. 

So, now we have 3/5 of the governorships in Republican hands, a House Majority of at least 45, and 47 Republican senators.

The Senate was the one area where Republicans thought they could do better, and the Tea Party is part of the problem, if problem it be:

• In Delaware, in the race to fill Joe Biden's old seat, Tea Party candidate Christine O'Donnell beat popular Congressman Mike Castle in the primary, only to lose to Chris Coons in the general election.  Polls showed that Mike Castle would probably have beaten Coons handily, however Mike Castle is a super RINO.
• In Nevada, Democratic Senate Majority Leader Harry Reid was thought to be very vulnerable.  He is one of the most disliked politicians in the country.  The Tea Party candidate, Sharon Angle, won the Republican nomination.  She was known to be a strong fiscal hawk, but unfortunately, she evidentally was a little flaky.  I don't know off the top of my head what was flaky about her.  Anyway, she never really caught on in Nevada, and the neck-and-neck race between two disliked candidates turned out in Reid's favor in the end.  This would have been a very satisfying win, that before the primaries, Republicans thought was very doable.
• In Alaska, Tea Party candidate Joe Miller won the Republican primary against incumbant Senator Lisa Murkowsky.  Alaska is a very Republican state, and everyone thought the Tea Party candidate had the seat in the bag.  But, then Murkowsky decided to run as a write-in candidate.  A winner hasn't yet been declared, but it's clear that semi-RINO Murkowsky is going to win.  This is very mystifying to me.  I don't know what the downside of Joe Miller is.  This is still a Republican win, but not as good of one as we hoped it would be.

The question is, did the Tea Party addition to these races hurt or help Republicans?  Two more wins for Republicans still would not have flipped the Senate, and the Republicans would have diluted conservative strength, particularly Mike Castle in Delaware.  This may be a situation that Jeff likes to see, where losing keeps the brand pure.  I tend to agree with that point of view here, but am not sure.

This points out a shift that has been happening in American politics and greatly accelerated this election cycle: the two main parties are becoming increasingly polarized.  Along with Tea Partiers 'purifying' the Republican brand, 28 of the 54 members of the House who call themselves Blue Dog Democrats (ie conservative) were thrown out of office by Republicans.  When I was younger, both the parties had strong conservative and liberal wings: conservative Dixie Democrats kept their northeastern McGovern liberal brethren in check, and old school Establishment Republicans (the original Civil Rights leaders) kept the fire-breathing nuke-em Goldwater fundamentalists in check.  I'm not sure, but I think being able to see a real difference between the parties is a good thing, though, for better or for worse, the spirit of cooperation and compromise is in tatters.

Now, what's next for Republicans?  Mark Kirk's win in Illinois will be effective immediately, so as of today, there are 42 Republicans in the Senate and Scott Brown is no longer the only vote maintaining a filibuster.  Melkor probably knows more about this than I do, but of the two parts of Congress, at least right now, it's probably better to be in control in the House than in the Senate.  Bills originate in the House.  Republicans can make sure that the bills are to their liking, at least to begin with.  They can throw bills out there that make Democrats define themselves as super liberals to oppose, or force Obama to veto, further defining them.  Since Harry Reid is still the leader of the Senate, Obama can't totally use Congress as a foil like Clinton did with the Republican Congress he was up against after '94.  Republicans will hopefully be able to defund Obamacare, but they won't be able to overthrow it yet.  They will stop Cap 'n' Trade in its tracks, and they should be able to put a significant break on Stimulus spending.  But, they won't be able to take the huge steps that will still be needed to get our financial house in order.  They'll only be able to control further bleeding.

They need to be loudly and proudly doing that or there will definitely be a third party break by the Tea Party in 2012, and after that, as King Louis the something or other said, the deluge.

One additional thing to consider and look forward to is that in a normal year, this wouldn't have been a good year for Republicans in the Senate.  They had to defend a lot more seats than the Democrats.  But, this was such a good year for them that they successfully defended all their seats and had a shot at flipping the Senate.  In 2012, things will be MUCH worse for Democrats regarding who has the most seats to defend.  If feelings are still as amped as they are now,...Red Storm Rising, baby!!!