Lessons from Cyprus

Cyprus is once again in the news. This is time it’s not for the Greeks or the Turks fighting who controls the island country, but because it is broke. Cyprus is an island about the size of Vermont with an economy identical in size. Unfortunately, its debt load is 145% of GDP. It has been a tax haven for tax evaders. It has been a depository for Russian money…mostly laundered…making its banking business way out of proportion to the size of the country and its economy.

Over the past several years, things have gone from bad to worse and Cyprus and its banks are on the verge of collapse. A member of the European Union, Cyprus went to the European Central Bank looking for a bailout. It got an agreement, but in exchange for the bailout the ECB required that the Cypriote Government confiscate 10% of cash deposits in its banks. Overnight the banks closed and remained closed for over a week. When they opened, depositors were only allowed to withdraw 300 Euros/week. It was a disaster.

There is a general consensus that the Cyprus is not so much a country debt situation…but a banking situation. For reasons known only Cyprus and Greece, the Cyprus Banks took all of that Russian money and invested in Greek bonds. Of course the Greek economy was and is on the verge of collapse and its bonds are worth…well…zero!!!! The banks couldn’t come up with the money to pay its depositors and went to they Cypriote government for money and the Cypriote government didn’t have any so they went to the ECB . Voila…he who pays the piper picks the tune. Cyprus confiscated 10% of all deposits in excess of $100,000.00. The saga in Euro land goes on.

This is scary stuff. Can you imagine a government coming in and saying give us 10% of all your accumulated wealth just because? It couldn’t happen here they say. Unfortunately, it does. The Estate Tax is exactly the same thing. Only our government takes 45% of accumulated wealth over $ 5 million of a deceased’s estate. Money that was earned and taxes paid on already.

When it comes to Progressives, there is no end for the desire to take your money. They take from the rich to give to…the rich…and then take from the middle class to give to…government bureaucrats. There is talk in Washington of raising the gasoline tax. There is the estate tax and the income tax. There is talk of a national sales tax and a value added tax. They print more money to devalue the worth of your currency. Many of these are regressive taxes that affect EVERYBODY regardless of income or class.

Cyprus should be a lesson to all of us. People like me keep saying look over there…look to Europe…to see where we are headed. Will that little island have a direct effect on the American economy? For what it’s worth, probably not! But this is a teachable moment. If they can do it there, they can do it here. And here’s a word to the wise: THEY WILL!!!!

A Looming Constitutional Crisis?

Governor Kasich was in Youngstown for the Youngstown-Warren Regional Chamber of Commerce annual awards luncheon. He has had many visits to this area since his election as Northeast Ohio is the base of Ohio’s economic resurgence. Much of the growth is based in the natural gas industry, but much of it isn’t. In fact, 55% of the business growth stems from diversified industries from food processing to computer software development to new techniques in dye making.

In his comments, he contrasted what is happening in states like Ohio, Indiana, Tennessee, Texas, North and South Carolina, and Nevada to job flight from states like New York, Illinois, Massachusetts, California and as of late in the news, Rhode Island which for all intents and purposes is bankrupt. It’s more than a coincidence that the states that are growing are Republican run red states…and the ones on the brink which are the bluest of the blue liberal dominated states.

He pointed specifically to New York which has banned fracking; too bad for New York, but great for Ohio. The anti-fracking zealots who are preaching doom and gloom have shut down an industry in New York that could go a long way in producing needed revenue to support its massive welfare system/nanny state.

This message of economic dichotomy is more and more dominating the news. What is even more frightening is these liberal states keep doing more of the same, digging the hole deeper notwithstanding the businesses deserting these states in droves. Even Bill Maher, that paragon of liberal obnoxiousness, has warned California…and his left wing movement….that they may “lose” him unless the unrelenting assault on wealth is stopped.

Of course a little thing like money has never stopped a virtuous liberal from his appointed rounds. I am sure Governor Brown from California and Governor Cuomo from New York are eyeing states that are fostering economic growth. They will be looking for bail outs as their situations worsen. They will be looking for federal intervention to stop economic flight. It will also cause severe blow back from the successful states which will raise a constitutional battle.

Many of the debtor states have large urban populations. As liberal policies have driven out businesses, they have simultaneously attracted the government dependent class. California tops the list with this problem. The fifth largest economy in the world is broke and getting broker by the day.

To states like California, the Constitution is an impediment. The Senate with two senators from each state notwithstanding a state’s population dampens the influence of states like California. More problematic is the electoral college system which is also state based. As it stands now…California with a declining population will ultimately lose electoral votes to those with an increasing population. A declining population always follows loss of business, and states like New York and California will begin to lose a small degree of influence after the next census. All of this makes it difficult for the debtor states to look to the federal government for a bailout. No state, let alone a red state, will vote to provide funds to another state who has acted fiscally irresponsible.

Look for these states to demand amendments to the Constitution promoting things like elimination of the electoral college and a possible revision of Senate rules. They will do this under the guise of “democracy” when what they actually want is wealth redistribution.

America is NOT a democracy. It is a Republic with representative government and checks and balances to prevent a raid on the treasury by either the masses or a dictator. For warned is for armed…and the country needs to be vigilant against those who would destroy it. And there are plenty of those around who are willing to do it in the name of being “fair”.

Re-Branding Republicans

Mitt Romney reappeared this past weekend with an analysis of his campaign and his feelings on the state of America today. Romney is a good and decent man who ran one of the worst campaigns I can remember, including McCain’s 2008 presidential bid. At least McCain had the financial crisis to blame for his loss. Romney just didn’t have the street smarts or stomach for the type of campaign he needed to defeat Barack Obama.

Since the election, the press has been offering the template that Republicans are in disarray and trying to rebrand themselves. It’s a narrative the press wants the public to believe as preparations are already underway for the 2014 mid-term elections. The Dems want the House back to foist Nancy Pelosi back on a compliant and supplicant public.

Of course, the press fails to tell you that they are propagandists for the Obama administration. NBC chief Washington correspondents such as David Gregory and John Harwood no longer even offer the pretense of objectivity. Harwood appears as the liberal commentator on CNBC while supposedly offering objective reporting of White House activities. David Gregory’s head is so far up Obama’s ass it would take the jaws of life to pull it out. CNN’s Candy Crowley, the objective moderator of the second presidential debate, offered Obama cover when he got into trouble even though she was factually incorrect. CNN said “bad Candy. Don’t do it again.” Wink! Wink!

Republicans can try to rebrand themselves all they want and it will be for naught because the press has made the decision to block the message. Although a portion of the public listens to alternative media for critical news, for the most part Americans are disengaged and take at face value they are getting accurate reporting from the spawn of liberal journalism schools whose professors are rooted in 1960’s radical activism.

Rather than wasting time on trying to get a national message out that will never be delivered, Republicans should focus on state and local elections. Democratic sage Tip O’Neill stated all politics is local. I agree. Both Democrats and Republicans have their fair share of national twits. The real power is in the states, in the cities, in the townships and on the school boards.

One area that Republicans have failed to capitalize on are the appointments to the Boards of Trustees of state universities. Here is where Republicans can watchdog liberal, progressive and outright communist professors lost in the nether world of academia. Republicans control a majority of the state statehouses. Here is an opportunity to create a starting point for monitoring the twaddle that has crept into our state universities. These bastions of higher education scream academic freedom and diversity when in reality they are anything but. The Harvard Kennedy School of Government has twenty five professors and not one….NOT ONE…is a Republican. Of course, Harvard is a private university. But the state colleges aren’t too far behind. Not only do they deny conservative professors, they deny invited conservative speakers. Enough is enough.

All politicians are concerned with the next election. In the short term, Republicans have to lose the idea of whose turn it is to run next. McCain and Romney shows old guard middle of the road types cannot win elections. You know the definite of stupid…doing the same thing over and over again and expecting a different result.

But in the long term, Republicans need to concentrate on getting the conservative message out to the people on the local level...one voter at a time.  They have to become in engaged in the education system.  It can be done. It will just take a little effort.