Archive for September, 2012

Mitt Romney Rewound

Politicians often give their best speeches on their way out the door. It has something to do with having nothing to lose. In 2009, George W. Bush finally said – and this time with passion – what I had wanted to hear for three years.

I was never overly impressed with Mitt Romney in the 2008 Republican primary. Then he gave his concession speech on February 7, 2008. I wondered where that candidate had been all along. I hope he shows up in the debate this week. The italicized lines below are from that speech:

On America’s place in the world:

Unless America changes course, we could become the France of the 21st century. Still a great nation, but not the leader of the world, not the superpower. And to me that’s unthinkable. The best ally peace has ever known and will ever know is a strong America.

Europe’s severe economic woes since 2008 make this point even more apropos. Ongoing misbehavior in the Middle East does, too.

The greatest challenge facing America is the threat of radical, violent jihad. They find the idea of human equality to be equally offensive. They hate everything we believe about freedom just as we hate everything they believe about radical jihad.

It’s not about dueling YouTube videos. It’s about a fundamental hatred of our way of life. Such hatred must be met with strength, not appeasement.

On domestic policy:

Welfare programs created a culture of poverty in our country. Some people think we won that battle when we reformed welfare. But the liberals haven’t given up. At every turn, they tried to substitute government largess for individual responsibility.

Dependency is death to initiative, risk-taking and opportunity. Dependency is culture killing. It’s a drug. We’ve got to fight it like the poison it is.

The Obama Administration’s recent attempt to unilaterally weaken welfare requirements is the latest case in point.

On culture:

The attack on faith and religion is no less relentless. And tolerance for pornography, even celebration of it, and sexual promiscuity, combined with the twisted incentives of government welfare, have led to today’s grim realities: 68 percent of African-American kids born out of wedlock, 45 percent of Hispanic kids, 25 percent of white kids.

How much harder it is for these kids to succeed in school and in life? A nation built on the principles of the founding fathers cannot long stand when its children are raised without fathers in the home.

Childhood obesity is a problem, but it’s not a root problem. Romney understands causes, not just symptoms. Others simply medicate symptoms while placating causes.

On government spending:

Entitlements make up 60 percent of federal spending today. By [2016] they will total 70 percent. Any conservative plan for the future has to include entitlement reform that solves the problem, not just acknowledges it.

And to think this was said $6 trillion in debt ago, before the near-billion dollar stimulus bill or Obamacare. Romney’s selection of running mate Paul Ryan demonstrates his commitment to actually solving the problem, not just acknowledging it.

On government regulation:

Most politicians don’t understand the connection between our ability to compete and our national wealth and the wealth of our families. They act as if money just happens.

But every dollar represents a good or service that’s been produced in the private sector. If you depress the private sector you depress the well-being of all Americans. That’s exactly what happens with high taxes, over-regulation, tort windfalls, mandates, and overfed, overspending government.

Spoken like a man who knows the value of a dollar, probably because he has earned one – or two (hundred million).

Kevin Thompson writes weekly for The Boerne Star in the Texas hill country. He can be reached at kevin@kwt.info.

Printing Money for Dummies

Our central bank decided last week to fabricate more dollars in order to buy more securities in order to induce banks to lend money and consumers to buy homes so that businesses will hire more people and put more spendable money into more pockets.

That’s a run-on. And a put-off to sound money advocates. Here’s why, taking it one clause at a time.

“Our central bank (i.e., the Federal Reserve Bank) decided last week to fabricate more dollars…”

Central banks don’t create wealth. They imagine it. Peter Pan style. It’s the equivalent of logging into my bank account online and “editing” my account balance. Upwards.

This fabrication is colloquially called “printing money.” Its more esoteric name is “quantitative easing.” The Fed has tried it twice since the financial crisis of 2008. Neither instance exactly pulled us from the economic doldrums. Last week, the Fed voted to try it again. Why not? The definition of insanity might have changed! And inflation is so 1970s!

“…in order to buy more securities…”

In this case, mortgage-backed securities. The previous fabrications also purchased U.S. Treasury bonds. Either way, the objective is to create artificial demand so that prices will increase (more dollars chasing the same number of goods). If prices of securities and bonds increase, their yields decrease, making them less appealing to banks and investors.

“…in order to induce banks to lend money and consumers to buy homes…”

If yields (i.e., rates of return) decrease, banks and investors seek other investments. For banks, that means loans to businesses and consumers. For investors, that may mean purchasing corporate bonds, which is essentially lending to companies so they can achieve greater results.

And if rates on mortgage-backed securities are low, homeowners are paying less interest and are thereby able to afford more home and/or have more discretionary dollars with which to stimulate the economy.

The rub: banks have not been slow in making loans because their investment alternatives are so good. Rates on securities and bonds have been quite low for some time. Banks haven’t been making loans because there are limited qualified borrowers, i.e., those with a strong credit history, reasonable levels of existing debt, proven historical income and un-pledged assets.

And consumers have not been slow in buying homes because interest rates are too high. They are actually at historic lows, like in the 3’s. Consumers aren’t buying homes because they don’t meet the aforementioned credit requirements.

“…so that businesses will hire more people and put more spendable money into more pockets.”

Well-run businesses are not borrowing for new investment and hiring in part because they don’t have a clear vision of the economic landscape. A divided congress and a tax and spend president are as much to blame as the Fed on this issue.

Why would a business invest in a project that will likely give a 20% return if it doesn’t know how much of that 20% the government will take? That’s the plight of business leaders as the Bush tax cuts are set to expire January 1. They would prefer never to hire than to hire and then fire.

Moreover, if the Fed keeps saying it will keep interest rates extraordinarily low for several more years (as it did last week), what motivates a business to act now? There are simply no missed opportunity costs associated with waiting. If anything, the Fed should inch rates up to create the appearance of momentum. After all, there’s not much difference between 0.25% and 0.50%.

The Bernanke Fed has more degrees than a Fahrenheit thermometer, but its actions seem to defy the commonest of knowledge.

Kevin Thompson writes weekly for The Boerne Star in the Texas hill country. He can be reached at kevin@kwt.info.

The DNA of the DNC

When Fleetwood Mac’s “Don’t Stop Thinking About Tomorrow” played and balloons dropped following Bill Clinton’s 1992 Democrat convention speech, I was tempted to get on board.

And for a few seconds last week, while U2’s “City of Blinding Lights” escorted Barack Obama to the podium, I thought, “He’s got this.”

Emotions make up the DNA of the DNC. Dems have a knack for the dramatic. They strum heart strings. Their 2012 convention theme could have been, “Democrats, Friend of Victims”.

President Obama plays the victim well. His perpetrators: racists, capitalists, ethnocentrists. If you don’t support him, you’re bigoted, selfish or hard-hearted; you side with corporations over regular people, notwithstanding that corporations are staffed and owned by regular people. A victim president is a perfect candidate for the sympathy vote.

The sympathy vote can be explained like this: Reasonable people watch for four years a mortal bearing weight, pressure. A man having to be mostly on and mostly responsible for the ills of the world. If those people perceive him a decent man, they will vote to let him keep his job.

One could argue the sympathy vote gave George W. Bush four more years in 2004. It wasn’t as much a factor for George H.W. in 1992 because the sympathy vote is largely a byproduct of a nascent and incessant news industry. The modern news media has turned the presidency into a reality TV show.

Viewers naturally have pity on reality show contestants. None of us wants to be fired by Donald Trump or weighed in our underwear. Since Mr. Obama seems relatively normal compared to his reality competition, some Average Joes and Real Housewives will give him the benefit of the doubt. If he survives in November, this will be the reason.

It will not be these reasons:

1. The 4.5 million jobs his minions say he has created. (Even if this statistic were true, it would be far too few for the 20-plus million unemployed and the millions more underemployed or dormant.)

2. The 6 trillion dollars in debt he has added to our collective balance sheet with minimal assets to show for it.

3. The budget-busting, Medicare-raiding healthcare entitlement that he had to force through a Congress his own party controlled.

4. The way he alienated his opposition and highlighted class divisions.

On the other hand, if he loses, he will lose because:

1. He was spending while we were cutting.

2. He talked healthcare while we talked economy.

3. He spoke of alternative energy while we drove to work on $3.50 gas.

4. He made his own rules rather than enforcing Congress’.

5. He promoted gay rights while we were just trying to feed our families.

The Democrats’ convention last week essentially boiled to this: Barack loves you. That’s why he did these unpopular things. It felt like watching Barney: Barney loves you. Give Barney a hug. Vote for Barney.

The irony: Barney has built a more successful enterprise than Barack. The president wouldn’t disagree. He can’t. Therefore, he describes his first term as a loss leader. A necessity to get people in the door, on board.

My sense is the majority of Americans don’t want to pay double for the freebies of a few. I predict America will bring to a full stop the train it slowed in 2010 when it gave Republicans the House.

Kevin Thompson writes weekly for The Boerne Star in the Texas Hill Country. Follow him at www.kwt.info.


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