Saving Will Save Us

Those who speak with me on a regular basis about economic issues know that I have been skeptical about this V-shaped recovery in the making. On many occassions I've made a point to say that either cascading inflation will rip through the economy or we will descend back into economic contraction.

On the fiscal front, I remain doubtful that drolls of money passed out to open hands will provide substatial means for recovery. The problem, the very epicenter of the economic crisis was the asset bubble inflating the housing market. Nothing in the fiscal stimulus has done anything to address that problem. Some of the systemic risk may be mitigated, but nothing has been done to amend the real-estate depression.

All we've done is attempt to stimulate consumer spending. Now if that attempt is met with success (which is debatable), even if we can get people to spend more and banks to lend more, I submit to you this is no means for sustainable economic growth. Consumers buying products is the end result of a healthy, productive economy. By contrast, the origin of a healthy consumer economy is savings. Saving and investment allows for any firm (large or small) to develop new and better products, more efficient means of producing them, and new technology to streamline their efforts. The end result is either higher quality of goods and services, more cost effective products, or some combination of both. And that is precisely what drives consumer spending. Hence, consumer spending is a byproduct, a result of a healthy economy.

In essence, the whole system is turned on its head. How did this happen, you ask? The economic realty that saving and investing drives growth, not consumer spending, has been willingly ignored for various political reasons. Politicians and bureaucrats always need reasons to buy votes and pander to their electorate. Why waste time in an economic downturn? It is popular to give hand outs, freebies, and "stimulus" to people. Hell, I'll bet it polls pretty well compared to the alternative of saving, investing, patiently awaiting a return on invested capital.

If the political class can fool people into believing that if we all just spent more money we can save the economy, they are then able to spend their stimulus, and get all the votes money can buy. And so their power grows with a bought-and-paid-for voting bloc (along with the size of Congress' credit card bill). The ultimate problem with pegging economic hopes on consumerism is that consumer spending will always ebb and flow. Inevitably faulty desicions, natural disasters, wars, etc. will cause periods of economic growth and contraction. However, these periods don't have to be so dramatic and painful to bear. When times are tough, people stop spending. And if the life-blood of the economy is consumer spending, cardiac-arrest ensues. Thus when consumer spending is considered the driving economic factor, the highs will be very high but the lows will be...well look at the past recession.

What if people were encouraged by their political leaders (via tax breaks, public address, etc.) to save during times of growth instead of spend, get a credit card, spend again, leverage again, spend some more? In my little fantasy, if a natural contraction occurs, people will have a large cushion to absorb the loss of income. Thus, the economy wouldn't end up wretching in pain at hte loss of income. But in today's "cash-for-clunkers" world, you get a tax break for spending! It's a sad world we live in.

This messy situation an unfortunate reality of the politicized nature of our economy. When the government is so powerfully injected into private enterprise (whether by means of regulation, stimulus, tax gimmicks, corporate welfare, the list goes on) it's difficult to see an economy growing on a sustainable trajectory. Hopefully, people will start to wake up to the shilly-shallying going on in D.C. (perhaps they already are) and we can end this ridiculous Keynesian central-planning.

And in my opinion, among the first things to go should be this idea that consumer spending makes the economy grow. We can just do away with that. Saving provides capital, capital enables ingenuity, and thus the economy grows. Saving will save us from this fine mess we're in.

Rep. Paul Ryan Explains "Financial Reform"

“We didn’t catch this last problem, what makes you think more of the same regulators are going to catch it next time” - Rep. Paul Ryan (R-WI)

For any readers wondering what's wrong with the financial "reform" package currently debated in Congress, this is a clear, concise, and directed breakdown of the legislation. I'm really starting to like this Paul Ryan guy. I've been watching him for awhile now and he's smart as a whip. It's rare to see a Representative so well versed in finance/economics.

Milton Friedman's Intellectual Kung Fu

Behold, the argument for capitalism 40 years ago and yet to be refuted.



Keanu Reeves only dreams of having the clarity of thought requisite to such outstanding arguments as presented by Mr. Friedman in the following video clip. Am I alone in visualizing the intellectual beatdown dished out here? I was just waiting for Friedman to tell Donahue, "Now, go fetch me a switch and we'll whip that ignorance right out of you"

As demonstrated in the video, I find it facsinating that capitalists having been taking central-planning types (socialists, facists, leftists, etc) behind the woodshed for 40 years, we're still having the same debate about economics today.

My only hypothesis is that Marxist ideology is more emotionally satisfying than the reality of the human condition. Free minds and free markets are a difficult concept to appreciate in a vacuum. However, the historical generation of wealth and welfare in a free market when compared to the unending misery cultivated by totalitarian societies seems to serve as a confirmation in my opinion.

Sex and the Holy City

Sitting on a Cairo-bound jet and flipping through the “Gay and Lesbian Travelers" section of my Lonely Planet: The Middle East guide, I spotted a pleasant did-you-know: “while homosexuality is not actually illegal according to Egypt’s penal code, arrests on the charge of ‘debauchery and contempt of religion’ do occur.” In other words, homosexuality may be punishable by death in Islamist Gaza and Iran, but it’s accepted with a wink (or a pursed-lip nod of props if you’re the penetrator) in Egypt.

Nevertheless, when a fashionable young Egyptian man offered my friend and me the 30 mile ride from the airport to downtown Cairo for free, one might have forgiven us for thinking it more Arab hospitality than Arab homosexuality. But one email subject-lined “HOT” later would prove it to be the latter. And a week in Egypt would bring several more advances.

It is impossible not to conclude after visiting Egypt, Jordan, and the West Bank that sexual frustration controls lives in the Middle East. Egyptians explained the Islamic culture of shame to us: romantic relationships outside of marriage or familial supervision stain the woman’s family name. Men must court fathers to get to daughters.

In my favorite Arab pop song, “Habib Hayati,” Mustafa Amar addresses his lover with masculine grammar, to avoid sounding too direct. In Cairo, almost all women cover their hair and avoid eye contact with men on the street. Women pray in the back of the mosque, to avoid “tempting” the men. The only time Muslim girls spoke to us, Muslim men looked on with disdain. “Are you Muslim?” one man asked.

Of course, there will always be undaunted Don Juans. 25 year-old Muhammad told us he aims to have five wives. But this just makes it harder for the rest of the guys. As in all Islamic societies, getting a good, Allah-fearing woman is a jihad in itself. Harmless alternatives like homosexuality, or evils like child abuse and rape, become appealing.

What a world of difference a walk from the sexual apartheid of Jerusalem’s Muslim Quarter to the bars and clubs of its Jewish New City makes (excepting the ultra-orthodox Jews, like the rabbi that told us God is punishing America for its sexually diseased women). Lady Gaga’s “bluffin’ with my muffin” replaces the tarzanish call to prayer. Long hair and tight jeans replace the hijab.

This sexual liberation is what Islamism’s fore-father, Sayyid Qutb, hated most when he visited 1950s America: “A girl looks at you, appearing as if she were an enchanting nymph or an escaped mermaid, but as she approaches, you sense only the screaming instinct inside her, and you can smell her burning body, not the scent of perfume but flesh, only flesh. Tasty flesh, truly, but flesh nonetheless.” Sounds like a bachelor’s party gone wrong. Qutb’s – and Islam’s – aversion to having sex like bunny rabbits raises an important question. “What’s wrong with rabbits?” as Charles asks in D.H. Lawrence’s Lady Chattlerley’s Lover, the controversial novel censored in Britain from 1928 to 1960 for its sex factor. “Are they any worse than a neurotic, revolutionary humanity, full of nervous hate?” And then the question of sexual frustration, to which Charles puts it mildly: “starved sex interferes with me.”

Indeed, that sexual starvation brings out the neurotic evil in humanity is the premise of people blaming celibacy for the rape of children by Catholic priests. In the past month alone, child rape accusations have been made against Catholic priests in Brazil, Germany, Switzerland, Austria, Ireland and Wisconsin, where up to 200 deaf children were allegedly raped. Pick your pundit by the toe: The Huffington Post’s David Love says that while “people are entitled to their own expressions of faith,” – how generous of him – there are values inherent to Catholicism, such as “the environment of secrecy and sexual repression,” and the “vow of celibacy” that encourage sex abuse in Catholic communities. “And it always comes back to sexuality, doesn't it?” he concludes.

But flashback to the “Allah is great” killing rampage of US Army Major Nidal Hassan, who couldn’t get enough of the enchanting nymphs at the Texas strip clubs. Seems none of these mermaids had a screaming instinct strong enough to convince them to settle down in a hijab and let Hassan fulfill the Koran’s matrimonial command: “Women are your fields: go, then, into your fields whence you please.” Indeed, such open reign in married Islamic life makes single life all the more unbearable: most suicide bombers are single. There’s only one time a month married Muslims need abstain: “Keep aloof from women during their menstrual periods,” Muhammad advises (he wasn’t just whistling Dixie).

Yet for Mr. “it always comes back to sexuality” Love, Hassan’s massacre comes back to “the effects of war, and the problems of violence and PTSD.” “[S]o why should the Muslim community shoulder a burden that does not bear their name?” Love asks, even as he tells Catholics to shoulder the sex abuse burden.

Even if we imagined that Palestinian women in burkas didn’t get bone disease from sun deficiency, or that hijabs didn’t force Iranian women to get facial surgery to perfect the 4-inch diameter circle that is their only chance to attract a man; or that it’s OK that Sweden leads Europe by far in rapes – a plurality committed by Muslim immigrants. Even then, Muslims would still have to shoulder their own child abuse burden.

In Islam, sexual maturity is equated with menstruation, not mental maturity. Muhammad, for example, had sex with 9 year old Ayesha. So while Scotland Yard is alarmed to find a pattern of child pornography on the computers of Islamist terror cells in Britain, it has its precedent. The hospitalization of an 11 year-old bride last week for genital injuries, and the sexual assault that turned deadly for another 13 year-old Yemeni girl earlier in the week, were business as usual. About eight Yemeni girls die each day due to child marriage – usually when giving birth. And sex aside, even US schools are happy to accommodate the 18-hour daily fasts of children during Ramadan. “It’s not abuse, it’s Islam!” the thinking goes.

Give the Church its due humiliation for its “no child’s behind left” agenda, as one pundit puts it. But don’t think for a minute that if Islam had the centralization, hierarchy, paper trail, financial liability of dioceses, and liberal critics like the Church has, it would have a better record. For when it comes to sexual repression, the Islamic Middle East outdoes the Roman Catholic Church. St. Augustine said “Lord, give me chastity and continence, but not yet.” Until Allah similarly obliges Muslims, the granting of the former will continue to be the undoing of the latter.

(Photos by Founders' Porch!)

Being a conservative really hurts!

At least it does for this couple. The pony-tail bearing assailiant's hairstyle of choice is a dead giveaway: clearly a liberal activist... maybe even a community organizer of some type.