Diary (10): "Time Horizons"

Posted on April 25, 2009

Diary (10) Time Horizons

April 25, 2009

I find myself wondering about "time horizons". How far do people look ahead? Do they expect Mr Obama’s policies to solve the problems within weeks? Months? A year? Three?
A careful look at the statements of the man himself confuses an observer with their ambiguity. Nonetheless, in his defense, I will say he has often and repeatedly warned that this is a long road ahead. Good, at least that part is honest.
But: How long is long?
I find it striking that there has been repeated reference made to President Franklin D.Roosevelt and his "New Deal" of the nineteen-thirties. Mr Obama himself recently raised eyebrows with a statement to the effect that the debate over FDR’s policies is "over", and that it has been settled in favor of FDR. A strange statement perhaps. Ironically perhaps, we owe America’s "Freedom of Information Act" to a fellow Democrat, the late congressman John Moss (D.,CA).
Without his efforts, it is arguable whether a great many documents would have surfaced. Tons of archives have been made available, giving Historians decades worth of painstaking work. The many questions, after seven decades, still loom large:
1) did FDR’s policies of the ‘New Deal’ and massive government deficit spending help America out of the Great depression? Or did they hinder America’s recovery?
2) Was the attack on Pearl Harbor a surprise to FDR? Was it a surprise to his top military and policy advisors?
3) Did FDR deliberately provoke Japan? By choking off their oil supplies and critical raw materials, and sailing destroyers close to her coast?
4) Did FDR deliberately mislead the American people? Because he knew the Gallup polls and the Neutrality Act overwhelmingly showed Americans did not wish to repeat the horror of World War One?
5) Why were the commanders at Pearl Harbor, General Short and Admiral Kimmel, (vilified during their lives as being responsible for America’s bloodiest defeat), posthumously publicly exonerated by Congress of any and all responsibility?
Was that the smoking gun?
Was this the correction of a screaming injustice, a stain on the integrity of American Justice?
6) Can we, the people, trust what our Government tells us?

The list goes. The point is, that 70 years later, new information is still being dug up. Books are still being written.
And if anything, the divide is wider. (No, the debate is FAR from over, Mr Obama)
On the one side, we have those who hail President Franklin D.Roosevelt as one of the three greatest presidents ever. Up there, along with Abraham Lincoln and George Washington. A man whose benevolent shadow and legacy loom large over today’s Democratic party. The stuff of inspiration for today’s "New New Deal". The guiding genius.
On the other side, you have informed, rational, well read people who stare in amazement at the growing (ignored) mountain of evidence that FDR was a bumbling ignoramus. A manipulator, with a feeble grasp of Economics, little interest in History or reading, and low personal and family integrity. Whose policies towards Stalin were hopelessly naive and uninformed, and whose betrayal of the free East European peoples was as unnecessary as it was callous. A man who sat down at Yalta with Stalin, to carve up the post World War two world, without some of his cabinet ministers, but with some key advisers who turned out later to be confirmed Communist spies…
On the subject of "time horizons", you will now maybe see my point: People today, in April 2009, might be wise to stretch their time horizons out much, much further into the future. The verdict on Mr Obama’s policies, will not be rendered in six months, or a year, or in three years time. If it is, prematurely, delivered, then it will almost certainly be erroneous. Regardless of a positive or a negative judgment. Will authors still be writing books on Mr Obama and the ‘New New Deal’ and angry denunciations in the year 2080? With alternative viewpoints praising Mr Obama as one of the greatest FOUR presidents ever, alongside FDR, Washington and Lincoln? I leave you to answer that question…
What will the questions be? I’ll take a stab at it.
1) Did the bailout money go into the right pockets? Really? Or did clever business and finance moguls, allied with savvy investors, dupe the government, at the expense of the tax payer?
2) How come, after all the bailout monies, that lending to private businesses and individuals remained as tight as ever? Was Big Government’s insatiable demand for money crowding out the small private and small business borrowers?
3) Were Mr Obama and his advisers truthful with the American people? When they said their policies would create three and a half million jobs, were they basing this on solid economic fact? Or wishful thinking? How do you actually measure that? What methodology do you use? Is it even possible?
4) Did government make-work crowd out much more efficient private sector enterprise? In other words, for all the jobs they created, did they destroy as many more?
5) Was "Change we can believe in" a genuine departure from the old, or just a clever catch phrase? And a recipe maybe for book sales?
6) Can we, the people, trust what our Government tells us?

I have read statements to the effect that government and national finance is totally different from household finance. That we humble mortals cannot possibly be expected to understand it, unless, (like all our politicians),we have advanced University qualifications in Economics, History, Law, and Nuclear Physics. The splitting of the atom is elementary compared with understanding how difficult it is to run the country. Right?
Hm. I beg to differ. Yes, you can get awfully complicated, and the counter cyclical Keynesian intervention theories do not make for light reading. Milton Friedman does not limit his monetary vocabulary to two syllable words.
But as for the basic principles? I am inclined to see a great deal of comparison between the Federal Budget ‘Black Hole’ and your very own household budget. If we decide, in our humble household, to throw caution to the wind, and spend-spend-spend on our credit cards, then, indeed, Life is good, for at least a while. That new car? Oh, yes! A fresh paint job on the house? Oh, yes! Private schools for the children? Oh, yes! Additional medical insurance? Certainly! Life insurance policies? Absolutely!
In this manner, it is not too hard to kid ourselves that Life has become much better. The expenditure of credit card debt, recognized at the outset as perhaps not-too-clever, can be rationalized away. Look at the good! The new clothes for the children! Their better education! The extra medical coverage!
But if we then adjust our time horizons, we all know that the credit line WILL run out. Uh-oh. Now what? The household ‘bail out funds’ will be used up. And we all know, that however long the period of initial joy was, the dizzying period of enhanced pseudo-prosperity, that repaying that debt will take much, much longer. The joy for our little household might last a year. Or two. Or Three.
But the pain of debt and card repayments may last twenty years.

Is that not exactly what we face for the USA? Already I read that the bail out funds are substantially used up. Only $160 Billion is remaining out of $730 Billion? That was a dizzy first one hundred days! And how long will it take for us to repay that spectacular bull ride through the proverbial China shop? Twenty years? Thirty? Fifty?

I would not be surprised to see a stock market rally within the next eighteen months. I for one have bought more ‘Apache Oil’ stock.
That rally may even temporarily take on its own dizzying steam, and be labeled by TV pundits as a "Bull Market". I can see it now: beaming TV commentators of a REgressive political disposition (I refuse to call them PROgressives) praising government policies. With sighs of relief, and confident I-told-you-so smirks of satisfaction. Mr Obama and the Democrats have solved the Second Great Depression. All hail the Great Leader!
The small minority of critics will be disparaged, as poor losers, an ungrateful, spiteful, unbelieving band of right wing zealots. Out of touch with the times, unpatriotic -of course- and narrow minded.
After all, doesn’t the house look good in the new paint, don’t the children look spiffy in their new clothes, and doesn’t the additional medical insurance prove the responsibility of the household spending plan?
Alas. The years tick by. The principal borrowed shows little sign of going down much, if at all. The interest payments fall due inevitably, remorselessly, with a dull thud.
Where now, America?
Do you really need an advanced degree in Economics, History and Nuclear Physics to see this coming?

I have been waiting for one more development. I forecast it will come. In the late nineteen thirties, there arose a school of thought, that became very much in vogue at FDR’s white house. The academics who proposed this were wined and dined, and for a period of time their influence on FDR’s deficit spending policies became pivotal. This school of thought proposed that deficit spending by a government really didn’t matter. After all, we were really only lending this money to ourselves!
(try telling that one to the Chinese and the Arabs, and the European lenders, and just about everybody else who is willing to go on forever paying hard cash to buy into Obama’s soaring idealism)
The rush to print more dollar bills became a torrent…
But what happens when more and more bits of paper labeled "one hundred US dollars" start chasing static amounts of goods and services? Ask the Germans who remember the nineteen twenties. Or those who remember double digit inflation under Bill Clinton.
And where is our moral stature? When Hillary Clinton is making grovelling whoopee with overseas creditors, (everybody smile for the Camera!) some of whom have a dubious history on human rights? Please buy our Treasury Bonds, we really need your money, oh, and please be nice to Tibet and Taiwan? Or else we will be forced to borrow more money off you, to slap you with….!? Oh, and please stop messing with our Navy vessels in international waters, its’ just not NICE, ya know?
(All Smile….!)

Time horizons.
Not six months. Not a year. Not three years.
Decades.
Fasten your seat belts, it’s going to be a bumpy ride.

Francis Meyrick
(c)

Last edited by Francis Meyrick on April 25, 2009, 1:53 pm


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