Double Dip...The Shrinking Economy

I have stated several times since the election the economy is headed for a rough road.  I thought there would be a period of time of very low growth, then a southerly dip into a major recession in 2014.

I was wrong.  The rough patch is here now with Keynesian economists being caught with their pants down as last quarter showed a contraction of 1/10^th of percent in the economy when a modest expansion was expected.  How could that be?  The stock market is at all time high!!!!

 Let’s start with the stock market being close to 14,000 in a time of stagnant growth and high unemployment.  The stock market is based on profits, not economic growth.  Corporations are doing well.  They are flush with cash.  They have downsized and reached equilibrium.  Businesses can make money in any kind of an environment once they have adjusted to it.  Add to that the Fed has been pumping money into the economy, and that money has landed in corporate coffers, all’s right with the world.  Add to that companies are seeing the light at the end of the tunnel with health care.  They understand the rules and now no longer will hire full time employees, and they have an out once the insurance exchanges are set up.  They have already figured out it is cheaper to pay the fine for not providing employee health care than to provide employee health care.  For bottom line figures, things are looking good.

The flip side of that is the worker.  Although consumer spending was up this same past quarter in which the economy contracted, consumer spending is a relative term, and in relative terms, it wasn’t so hot.  Workers are now looking at tenuous job security.  There have been major defense spending cuts with more coming. The coal industry has shut down.  The EPA want to regulate fracking.  Social security taxes went up January 1, and folks have less money to spend with take home being decreased by several thousand dollars as a result of the “tax” increase.  Health care rumors abound.  Who is going to lose their health care?   Interest rates are low, but folks can’t get loans to buy houses.  For a family of four, income has decreased by as much as $4,000.00/year over the past four years.  Although housing has rebounded this past quarter, it has been a selective rebound in major cities and anemic at best. Nobody knows how much foreclosure overhang is still in the system. 

Regulations are being pumped out of Washington like running water; thousands upon thousands of pages regulating everything under the sun…but mostly health care and banking.  Nobody knows now, and won’t know for several years the effect of these regulations.  The result is employer pulling in their horns with a wait and see attitude.  Why hire anyone?

And then there is the bogeyman hiding in the shadows: Obamacare 2014.  It will hit our fragile economy like a ton of bricks.  It will take several years of economic adjustment as health care costs shift from employer to the individual as regulated by the IRS through the insurance exchanges.  Folks haven’t figured it out yet, and when they do, it will make the last recession look like a walk in the park.    It will land squarely on the shoulders of the middle class. At the same time all that money pumped into the economy by the Fed…hoarded in banks and corporations…finally leaks into the general economic system and inflation rears its ugly head.  It is not going to be pretty.  Inflation is the back door tax on the middle class and poor...you know....raising taxes without raising taxes. 

Always beware when experts say this time it is different.  Here’s a rule for life:  it is NEVER different.  Basic rules of economics can be perverted and twisted in theory all sorts of different ways.  In real life, they never change. I hope and pray I am wrong.  I would like nothing better than to write two years from now that I was an ass on January 30, 2013.  But I think I am right.  

Clinton's Gun Control Warning

By Rick Ungar

Reprinted from Forbes Magazine.  Link here to original article

 

Speaking at a private gathering of top Democratic contributors on Saturday, President Bill Clinton delivered a warning to anti-gun advocates as they once again embark on the perilous journey towards gun control.

The message?

Guns hold a particular, emotional place of importance in many American rural states and, for that reason, simply dismissing those who support the pro-gun argument is counterproductive to making any strides in solving the problem of gun violence.

“Do not patronize the passionate supporters of your opponents by looking down your nose at them,” said Clinton. “A lot of these people live in a world very different from the world lived in by the people proposing these things. I know because I come from this world.”

As is so often the case these days, Clinton has it exactly right.

By placing the perils of cultural disrespect and the evil of supposed moral superiority on the table, President Clinton has not only cut right to the heart of why we cannot have rational discussion of gun violence in America but identifies a polluting factor that exceeds even the damaging tactics and narratives furthered by the NRA.

Nobody takes kindly to being disrespected.

For that reason, Clinton’ s warning, while directly addressing the inherent danger in being dismissive of cultural differences between Americans who come from different regions and backgrounds, highlights the profound difficulties that attach to our current President’s ability to lead the charge towards achieving legislative success for his proposals designed to control gun violence in American.

People of good intent—and yes, there are millions of gun owners who are people of good intent—can listen to an opposing point of view and contemplate the value of a rational argument when the perspective is presented with respect. Conversely, when even a sensible suggestion is offered by one who assumes a position of moral superiority and cultural disdain, it is a pretty good bet that any useful point that might be proposed will fall on exceedingly deaf ears.

And that is why there is simply no forgetting that it was Candidate Barack Obama, during the 2008 presidential campaign, who engaged in precisely that which Clinton now warns against. Of course, I’m referring to the speech given before a gathering of Democratic contributors in San Francisco where then Senator Barack Obama insulted millions of gun owners—and rural gun owners at that—when noting that rural voters “get bitter” and “they cling to their guns or religion.”

If you’ve forgotten the speech, you can listen to it here.

While one can make a case that President Obama’s intent was neither to offend nor show cultural disrespect for rural gun owners when his words are placed in the full context of his speech, it really doesn’t matter when considering that the President now seeks to lead on the topic of gun control.

There are generations of sensitivities and defensive walls that have been constructed and nurtured by the cultural disrespect exhibited by those who do not understand nor appreciate the importance of guns in various parts of the country. Unfortunately, Obama’s words played right into these sensitivities. Indeed, the President’s ‘off the cuff’ remark to a group of supporters who, in all likelihood, shared a disrespect for rural gun owners, may have permanently waived Obama’s opportunity to take on the leadership role in any effort to engage a meaningful discussion on guns.

One simply cannot disrespect an entire culture and then seek to be the one to convince these very same people of the righteousness of making large changes to that culture in the name of the public good.

Words matter—which it is why it is profoundly unfortunate that the words uttered by President Obama may be decisive in this latest effort to find a rational gun policy that works for Americans of all cultural backgrounds, unless the President takes steps to make this right.

While it may completely elude the President as to why it is so important to millions of Americans that they possess a military style weapon—I know that it eludes me—one’s own lack of appreciation cannot, and should not, be the basis for dismissing, or looking down on, the interests of those who view gun ownership as a right of citizenship and an important part of the culture that so many Americans cherish.

This is not to say that I do not appreciate the President’s difficulty on the subject.

My own background is such that I simply cannot grasp why so many people want these high-powered weapons in their home. However, just because the President doesn’t get it…or I don’t get it…or you don’t get it…doesn’t make it wrong. Millions of Americans who are continuing a tradition that is important to them cannot be deemed “wrong” when they are breaking no laws nor harming any individual in the pursuit of what matters to them—no matter why it matters to them.

If President Obama—or anyone else—wants to make the case that certain weapons have no place in society or that high capacity magazines present more risk than reward, such an advocate must come to the discussion respecting the cultural imperatives of those who are inclined to disagree or they must expect to face total defeat in the effort to persuade those who disagree to come to another conclusion.

President Obama should listen closely to the words of his predecessor and very seriously consider directly addressing his 2008 statement. He should be willing to show up before a group of pro-gun Americans in the heart of rural America and make his case with respect for the traditions of those who would disagree with him and a strong argument as to why his ideas are important to the nation.

To simply pretend that he never said what he said or imagine that millions of good Americans are not harboring the memories of the insult as they react to the latest effort to accomplish gun control, is, to say the least, counterproductive.

I want the President to succeed in his effort to rid society of weapons and accessories that are causing so much pain and suffering. But I recognize that this can only happen when a large number of those who see it differently are convinced that it is worth parting with an important piece of their own personal history and culture in order to make the nation better.

As President Clinton has made clear, this cannot happen without showing the traditions and viewpoints of so many Americans the respect they deserve.

The simple reality is that the President has but one avenue to success in his effort to make a dent in gun violence. With a House of Representatives controlled by Republicans, and no shortage of elected Democrats uncomfortable with stirring the hornet’s nest of discontent that comes with challenging the gun culture, Obama’s only hope rests with his ability to take his case directly to the people—and that includes the millions of Americans he once insulted.

That conversation will never be possible until the President directly confronts his 2008 remarks and attempts to convince all Americans that he has learned a few things about cultural respect. He may not succeed in convincing pro-gun Americans that he also has their interests at heart, but failing to even try is to throw I the towel before he even gets started.

THE RIGHT TO SHOOT TYRANTS, NOT DEER by Judge Andrew Napolitano

Reprinted from the Washington Times

The right of the people to keep and bear arms is an extension of the natural right to self-defense and a hallmark of personal sovereignty. It is specifically insulated from governmental interference by the Constitution and has historically been the linchpin of resistance to tyranny. Yet the progressives in both political parties stand ready to use the coercive power of the government to interfere with the exercise of that right by law-abiding persons because of the gross abuse of that right by some crazies in our midst.

When Thomas Jefferson wrote in the Declaration of Independence that we are endowed by our Creator with certain unalienable rights, he was marrying the nation at its birth to the ancient principles of the natural law that have animated the Judeo-Christian tradition in the West. Those principles have operated as a brake on all governments that recognize them by enunciating the concept of natural rights.

As we have been created in the image and likeness of God the Father, we are perfectly free just as He is. Thus, the natural law teaches that our freedoms are pre-political and come from our humanity and not from the government. As our humanity is ultimately divine in origin, the government, even by majority vote, cannot morally take natural rights away from us. A natural right is an area of individual human behavior — like thought, speech, worship, travel, self-defense, privacy, ownership and use of property, consensual personal intimacy — immune from government interference and for the exercise of which we don’t need the government’s permission.

The essence of humanity is freedom. Government — whether voted in peacefully or thrust upon us by force — is essentially the negation of freedom. Throughout the history of the world, people have achieved freedom when those in power have begrudgingly given it up. From the assassination of Julius Caesar to King John’s forced signing of the Magna Carta, from the English Civil War to the triumph of the allies at the end of World War II, from the fall of communism to the Arab Spring, governments have permitted so-called nobles and everyday folk to exercise more personal freedom as a result of their demands for it and their fighting for it. This constitutes power permitting liberty.

The American experience was the opposite. Here, each human being is sovereign, as the colonists were after the Revolution. Here, the delegation to the government of some sovereignty — the personal dominion over self — by each American permitted the government to have limited power in order to safeguard the liberties we retained. Stated differently, Americans gave up some limited personal freedom to the new government so it could have the authority and resources to protect the freedoms we retained. Individuals are sovereign in America, not the government. This constitutes liberty permitting power.

Yet we did not give up any natural rights; rather, we retained them. It is the choice of every individual whether to give them up. Neither our neighbors nor the government can make those choices for us, because we are all without the moral or legal authority to interfere with anyone else’s natural rights. Since the government derives all of its powers from the consent of the governed, and since we each lack the power to interfere with the natural rights of another, how could the government lawfully have that power? It doesn’t. Were this not so, our rights would not be natural; they would be subject to the government’s whims.

To assure that no government would infringe the natural rights of anyone here, the Founders incorporated Jefferson’s thesis underlying the Declaration into the Constitution and, with respect to self-defense, into the Second Amendment. As recently as two years ago, the Supreme Court recognized this when it held that the right to keep and bear arms in one’s home is a pre-political individual right that only sovereign Americans can surrender and that the government cannot take from us, absent our individual waiver.

There have been practical historical reasons for the near universal historical acceptance of the individual possession of this right. The dictators and monsters of the 20th century — from Stalin to Hitler, from Castro to Pol Pot, from Mao to Assad — have disarmed their people. Only because some of those people resisted the disarming were all eventually enabled to fight the dictators for freedom. Sometimes they lost. Sometimes they won.

The principal reason the colonists won the American Revolution is that they possessed weapons equivalent in power and precision to those of the British government. If the colonists had been limited to crossbows that they had registered with the king's government in London, while the British troops used gunpowder when they fought us here, George Washington and Thomas Jefferson would have been captured and hanged.

We also defeated the king’s soldiers because they didn’t know who among us was armed, because there was no requirement of a permission slip from the government in order to exercise the right to self-defense. (Imagine the howls of protest if permission were required as a precondition to exercising the freedom of speech.) Today, the limitations on the power and precision of the guns we can lawfully own not only violate our natural right to self-defense and our personal sovereignties, they assure that a tyrant can more easily disarm and overcome us.

The historical reality of the Second Amendment’s protection of the right to keep and bear arms is not that it protects the right to shoot deer. It protects the right to shoot tyrants, and it protects the right to shoot at them effectively, with the same instruments they would use upon us. If the Jews in the Warsaw ghetto had had the firepower and ammunition that the Nazis had, some of Poland might have stayed free and more persons would have survived the Holocaust.

Most people in government reject natural rights and personal sovereignty. Most people in government believe that the exercise of everyone’s rights is subject to the will of those in the government. Most people in government believe that they can write any law and regulate any behavior, not subject to the natural law, not subject to the sovereignty of individuals, not cognizant of history’s tyrants, but subject only to what they can get away with.

Did you empower the government to impair the freedom of us all because of the mania and terror of a few?

Andrew P. Napolitano, a former judge of the Superior Court of New Jersey, is the senior judicial analyst at Fox News Channel. He is author of “It Is Dangerous to Be Right When the Government Is Wrong: The Case for Personal Freedom” (Thomas Nelson, 2011).

Online Banking: Benefit with Danger

My Opinion column is usually written as an editorial in the third person with little personalization. Can’t do that this time around because I truly feel this is an important issue.

The computer age is a marvelous age. I am a self taught computer guy starting years and years ago with a “word processor” then moving to computers then moving to dial up access then moving to cable access then moving to wireless then moving to smartphones and tablets. In the process I have taken advantage of all the digital age has to offer including emails, instant messaging, texting, and online banking, including online payments starting with allowing companies to withdraw money from my checking account, and now using my bank to make direct payments to those I wish to pay.

Online banking is great. I am using it more and more now paying most of my bills on line. I keep a payee list on the bank site and go down the list twice each month. I use QuickBooks as my check register. Because I use an old version of QuickBooks I can’t connect my bank directly to QuickBooks, but it will happen sometime this year when I upgrade my QuickBooks program. When I make a payment through my bank it will automatically post to QuickBooks. For now I do double entries.

My bank is PNC. Each time I go to its online site to do banking, it tells me that I can receive my bills electronically through the bank and eliminate the paper statements that I get in the mail. I tried it with some of the utilities while maintaining the paper statements “in addition to” and it worked alright.

Now comes the bad news. On more than one occasion over the past few months I could not access my account online. The PNC website was inaccessible. This is a MAJOR problem for those of us who pay our bills on line. If, for example, my Mastercard payment is due January 8, I would tell the bank on January 7 to pay Mastercard the next day…and voila…it happens. But when the website goes down, how do I pay Mastercard?

Most recently, this problem developed over New Year's Day. The PNC site went down. In the past when this has happened, it lasted only a few hours, but this time it lasted several days…and I had bills to pay. I called the local branch, and they didn’t know it was happening. I called the 800 number, and it requires three different passwords to get to a customer service representative, and I only had two because I don’t use ATM machines. Finally I went on line, and found out from a general Google search that the PNC site was indeed down for some of us, and on the discussion boards I found an alternative route into the site. It was slow at best, but any port in a storm.

After the fact, I got two emails from PNC telling me that their security system indicated that there was a cyber attack on PNC and other banks, and in the process of putting up defenses against the cyber attack, they inadvertently blocked out many of its legit customers. It recommended we go to our branches for assistance or do transactions over the telephone…with those three passwords I don't have and long wait periods. About an hour later, I got a promotional email from PNC telling me I can eliminate paper bills by allowing my creditors to sent statements electronically to PNC. The bank, in turn, would provide me notice when I log onto their site to pay my bills.

After I regained online access, I printed out my statements from PNC and reconciled my QuickBooks program to the penny. I made sure that there were no automatic withdrawals from my PNC account and double checked that I receive paper copies of all my bills either at the office or home.

The moral to this story is very clear. We are just one power outage or one cyber attack from being back in the Stone Age. We have become so reliant on the internet for commerce that it won’t take a whole lot to bring this nation to a grinding halt notwithstanding whatever good faith efforts are made to prevent it. Minimally, look at what happened with Hurricane Sandy…and that was "just" a natural disaster. Think about a terrorist assault on our electric grid or banking system. This is scary stuff.

PNC is a great bank and it does a really good job. Their customer service, at least at their banks, is outstanding although their telephone support needs work. And the online banking service PNC provides is terrific.

But that doesn’t mean we shouldn’t be prudent. Keep some cash at home. Keep a separate set of books that does not rely on internet access. Keep a supply of checks, envelopes and stamps to pay bills via mail if necessary. Get paper bills sent to your home no matter how attractive paperless billing may seem.

We live in wonderful times filled with marvels those of us my age could never imagine. On the other hand, we live in dangerous times. Discretion is always the better part of valor. I just may keep doing those double entries.