Source: http://www.foxnews.com/story/0,2933,510390,00.html
March 24, 2009
The one thing tonight is a question: why?
Why is no one in the media or government speaking out when huge U.N. countries — like China, Russia and France — publicly attack the U.S. dollar and support dropping it as the world's currency?
Maybe it's because most people simply don't understand the consequences of what that would mean for America.
Fortunately, I've been reading up on this for a while now, so let me try to explain it in plain English:
Before World War II, we were on the gold standard. For every dollar we printed, there was a dollar's worth of gold in the vault. After World War II, a bunch of countries got together and said: You know, this whole "putting gold into a vault" thing is really tedious. What do you say we just value gold at $35 an ounce and base our currencies off that?
It was the beginning of the end.
America could now issue paper money as basically IOUs to the world, where each dollar could buy a dollar of gold; gold that didn't have to actually exist.
Now, fast forward to 1971:
After the free spending of the Vietnam War and Great Society, America only had three realistic options: stop the war, stop the Great Society or slow everything down so that we accumulated enough gold to afford it all.
Instead, we chose a fourth option: If you can't win the game, change the rules.
That year, Richard Nixon abolished the fixed price of gold, and, for the first time ever, our printing presses could start running 24/7 without regard to that pesky little thing called collateral.
I'm 45-years-old and when I was growing up this country was the world's biggest lender. But because we left the gold standard, we are now the world's biggest borrowers. If we can't afford something, we just go into our basement and print up some more money.
If you did that, you'd go to jail for counterfeiting — since nothing is backing that money up. Now, finally, our country is going to pay a penalty as well.
After monetizing $2 trillion of debt in the last two weeks alone, our lenders are saying enough is enough. They want out.
As Rupert Murdoch, CEO of FOX News Channel's parent company, recently said: "We are in the m1idst of a phase of history in which nations will be redefined and their futures fundamentally altered."
Call me a suck-up if you want, but I couldn't agree more. Our future is being altered right now, right in front of your eyes. And yet no one seems to care.
Again, I ask you the same question I started with: why?
What do you think? Send your comments to: glennbeck@foxnews.com
— Watch "Glenn Beck" weekdays at 5 p.m. ET on FOX News Channel
Saturday, April 04, 2009
The Incredible Shrinking Dollar
Prominence Of Dollar Must Be Protected
Source: http://www.ibdeditorials.com/IBDArticles.aspx?id=323650210144965
By REP. MICHELE BACHMANN | Posted Friday, April 03, 2009 4:20 PM PT
Secretary Treasury Timothy Geithner has been taking missteps since even before assuming his office, when he was exposed as failing to pay taxes. But his biggest misstep may be his flip-flop on the dominance of the dollar.
During a Financial Services hearing last Tuesday, I asked Secretary Geithner and Federal Reserve Chairman Ben Bernanke if they would denounce any efforts to move toward a global currency. Both officials answered unequivocally that they would, and President Obama gave the nation the same assurance.
Less than 24 hours later at a Council on Foreign Relations event, Geithner stated that he was open to China's proposal to replace the U.S. dollar as the world's dominant currency.
Within hours, the value of the dollar plummeted, Geithner quickly retracted his comments and said the dollar would remain the world's dominant currency.
But, despite attempts to clarify his remarks, his unguarded initial response provides a window into this administration's thought process and into its intentions.
I want to know which answer this administration will stand by. The American people deserve to know if their president will protect our currency.
Frankly, I am wary of Geithner's new promise that the U.S. dollar will in fact remain the world's dominant currency. If Geithner honestly just "misspoke," I am additionally concerned with the series of unintended consequences Geithner's comments continue to have on our markets.
So, I have introduced legislation to ensure that our dollar remains in its place of prominence.
If the Obama administration allows the U.S. dollar to be replaced in the global reserve, demand for the dollar will decrease and so will the value of the dollar.
Americans have already suffered a dramatic reduction of wealth. Replacement of the dollar in the global reserve will further reduce the value of the remaining dollars.
We all recognize the difference between the global reserve currency and the actual currency we use here in the U.S. to buy groceries and pay our bills.
However, we also recognize the ties between the two, and when the Treasury secretary appears to be wavering in his support for the American dollar on the global reserve level, it's a bit unnerving to think about the future of the dollar here at home.
Interestingly, a recent Rasmussen poll shows that nearly half of Americans (49%) think that China's proposal is "designed to weaken the economic power of the United States." And 54% of investors hold that view.
Yet the administration seems oblivious to this motive.
Although Title 31, Sec. 5103, of the U.S. Code prohibits foreign currency from being recognized in the U.S., the president has the power to engage foreign governments in treaties, and the president is principally responsible for the interpretations and implementation of those treaties according to the Constitution.
As a result, it takes a constitutional amendment to ensure that neither the president nor the Treasury could issue or agree that the U.S. will adopt an international currency in compliance with a treaty agreement.
If we surrender the dollar as our standard and commingle the value of a dollar with the value of coinage in Zimbabwe, our money supply will be diluted. Economic liberty and political liberty are inextricably entwined. If we lose control of our economy, we will lose our political freedom, and then we are no longer the exceptional nation we have always been.
It is imperative that we ensure the dominance of the dollar, both as the currency of the United States and on the global reserve level. As we have seen all too frequently, the road to socialism is a slippery slope.
Newsweek declared in February that "we are all socialists now." I say: Not so fast. We can preserve free-market capitalism and American economic liberties. But we must take a stand for them.
My resolution would ensure that the U.S. dollar remains the official currency of the United States and represents to the rest of the world a strong show of support that the dollar remains a cornerstone fixture of the global economy.
Bachmann, who represents Minnesota's 6th Congressional District, sits on the House Financial Services Committee.
Friday, April 03, 2009
Obama's Own Report on GM Says Plan to Build Non-Gas-Burning Car Would Not Save Company By Matt Cover
Source: http://www.cnsnews.com/public/content/article.aspx?RsrcID=46007
April 02, 2009
Chevrolet Volt at Detroit Auto Show, 2009 (AP Photo)
The report’s findings stand in stark contrast with the President’s chief goal for America’s auto industry: leading the world in green car production.
“I am absolutely committed to working with Congress and the auto companies to meet one goal: The United States of America will lead the world in building the next generation of clean cars,” Obama declared Monday at a press conference marking the report’s release.
The GM portion of the report, authored by the President’s Auto Task Force, finds that GM’s restructuring plan is not viable because it is based on economic assumptions that leave too little room for error, should any of the company’s ideas fail.
“In the end, GM’s plan is based on a number of assumptions that will be very challenging to meet,” the report finds, adding “after substantial effort and review, the President’s Designee has concluded that the GM plan, in its current form, is not viable and will need to be restructured substantially.”
Among the assumptions the report finds unrealistic is GM’s plan to place greater emphasis on advanced, ultra-fuel efficient vehicles such as its upcoming Chevrolet Volt, the all-electric car that the report found will not be commercially viable.
“While the Chevy Volt holds promise, it will likely be too expensive to be commercially successful,” the report said. “It is currently projected to be much more expensive than its gasoline-fueled counterparts and will likely need substantial reductions in manufacturing costs in order to become commercially viable.”
In fact, the report found that even if GM can successfully make and sell green cars, it will still not lead to a viable company because it will not be able to make enough money to weather future economic slowdowns.
“Even if the projected plan is achieved, the cash flow forecast is quite modest, leaving the company little margin for error in what will be a very difficult turnaround.”
Another problem the report found was that GM’s current fleet would almost certainly be hindered by any increase in the federal Corporate Average Fuel Economy (CAFÉ) standards.
“GM’s product portfolio is more vulnerable to CAFÉ standard increases than the portfolios of many of its competitors,” the report reads. “Many of its products fail to meet the minimum threshold on fuel economy and rank in the bottom quartile of fuel economy achievement.”
CAFÉ standards are set by Congress and were last raised in 2007, when Congress ordered that they rise from the current 27.5 miles per gallon to 35 miles per gallon in 2020.
While the report cites many well-known causes of GM’s financial woes – such as poorly designed products, shrinking market share, and a bloated brand portfolio – it does not mention GM’s crushing labor costs.
As CNSNews.com has previously reported, hourly workers at GM made an average of $73.26 per hour, almost $30 more per hour than autoworkers make at non-union plants. In fact, modifications to labor contracts are one of the conditions GM was required to meet under the original terms of its December 31, 2008 bailout.
The report acknowledges that GM has failed to successfully renegotiate its labor contracts but strangely does not cite that fact as a reason that GM’s plan is not viable, despite that fact that it was one of the original requirements of a viable plan.
Labor costs are also left out of the administration’s recommendations for returning GM to profitability. The four areas the government will focus on are: sustainable profitability, healthy balance sheets, operational restructuring, and technology leadership (green cars).
Thursday, April 02, 2009
Somebody Please Say, 'April Fools!'
Source: http://www.ibdeditorials.com/IBDArticles.aspx?id=323478087277203
By INVESTOR'S BUSINESS DAILY | Posted Wednesday, April 01, 2009 4:20 PM PT
April 1: We have to admit, we were surprised when the headline "Obama Orders Chevrolet and Dodge Out of Nascar" turned out to be an April Fools' joke. How can it be a joke when today's reality is far more extreme?
Read More: Business & Regulation
Car and Driver has nothing on the federal government. If you think we're exaggerating, just look at some of the recent days' events, each at least as outrageous as the April Fools' joke of Obama ordering Chevy and Dodge to leave Nascar, and maybe more so. They include:
• The government's stimulus efforts, as toted up by Bloomberg.com, so far total $13.8 trillion — roughly equal to our entire GDP for one year, or $45,245 for every man, woman and child.
• A U.S. president with virtually no private-sector experience fires GM CEO Rick Wagoner, a 30-year industry veteran, and forces Chrysler into a shotgun wedding with foreign carmaker Fiat.
• Democratic Rep. Barney Frank, who also has never toiled in the private sector, declares "We own AIG," and advocates sweeping government control over corporate pay and bonuses.
• The Service Employees International Union asks the White House to fire the CEO of Bank of America — and, because organized labor spent more than $100 million to get Barack Obama elected in 2008, it just might get its wish.
• The "New GM," or "Government Motors" as some call it, is told it might have to scrap half its profitable models to build what President Obama calls the "next generation of clean cars" — cars that don't yet exist, and have no proven market demand.
• Further afield, a key adviser to Secretary of State Hillary Clinton hangs up a "no vacancy" sign on the Earth, arguing that the world at 6 billion people is "overpopulated" — echoing the nutty Malthusian comments from a top British official last month that the United Kingdom's population needs to shrink by 30 million.
• Congress declares carbon dioxide, a naturally occurring gas necessary for all life, to be a poison and seeks to regulate it through a "cap-and-trade" system — a costly tax on everyone who uses energy, at a time when the global economy is in recession.
Yes, sadly, we could go on. And on.
Each one of these pernicious tidbits has been dropped upon us just within the past week. We wish somebody could tell us they are all April Fools' jokes. But they aren't. So many things emerging from our government these days are so, well, crazy, that it's hard to keep up with them all. And maybe that's the point.
The recession, the market meltdown, huge job losses, and plunging home sales and prices have left Americans reeling and frightened of the future. In such a fraught state, they're vulnerable to those who seem to have simple, pat answers for the questions of the day. And whatever the question is, the answer will always be the same: More government.
Unfortunately, this is the kind of small-ball socialism that will ring the death knell for American capitalism, if it goes unchecked.
Today, we have the least capable, least accomplished people in the country — our 535 national legislators, abetted by a handful of presidential advisers and Cabinet members — seizing control of the private sector in ways that appear to be a violation of the spirit, if not the letter, of the U.S. Constitution.
And we, the people, are letting them do it. Where's the outrage?
Wednesday, April 01, 2009
Reordering Begins
Source: http://www.ibdeditorials.com/IBDArticles.aspx?id=323390743506745
By INVESTOR'S BUSINESS DAILY | Posted Tuesday, March 31, 2009 4:20 PM PT
Regulation: Democrat-controlled Washington has rebranded the war on terror as an "Overseas Contingency Operation." That conflict, a life-and-death struggle, has been replaced with a war on business.
Read More: Business & Regulation
The House Financial Services Committee, under the direction of Democratic Chairman Barney Frank, isn't content with the White House's proposal to cap the pay of executives beyond those whose companies took bailout cash.
It wants to control the pay of every employee of any financial institution that has "received or receives a capital investment" from the federal government under the Emergency Economic Stabilization Act of 2008, last year's $700 billion bailout.
The Pay for Performance Act of 2009 was approved 38-22 by the Financial Services Committee last week with only two Republicans, Reps. Ed Royce of California and Walter Jones of North Carolina, in support. Should the bill get by Congress — the full House is expected to vote on it this week — and receive the president's signature, it will "prohibit unreasonable and excessive compensation and compensation not based on performance standards."
And who decides what is "unreasonable" and "excessive?" The unelected secretary of the Treasury, in this case Timothy Geithner, who has neither inspired confidence nor demonstrated good judgment during a time of economic turmoil.
That is far too much authority to place in one man's hands, and it is grossly inconsistent with representative government. In our system, government officials are servants of the people and the protectors of their rights, not their masters.
Capping pay has a populist appeal. But it has no practical benefits. What are the incentives for the brightest workers, from the lowest management level to the executive offices, to fix their companies if there is little or no monetary reward for doing so?
Yes, saving a business from bankruptcy or from being liquidated are goals worth working for. But those are small consolations compared to the prize of restoring a company's financial health, reputation and market share.
Americans expect to work under conditions that will reward their achievements. If they can't find that environment here, they will be tempted to go outside our borders.
That wouldn't stimulate the U.S. economy, but we bet the nations that have for decades lost their most brilliant workers to the U.S. and its mostly free market would be happy to get those people back, as well as a good portion of American brainpower looking to escape the iron hand of the U.S. Treasury secretary.
Too many in Washington, driven by wealth envy and their dream of dismantling our capitalist system, have been waiting for a chance to reorder America. With the economy still struggling, they have that opportunity now and they will milk it as radically and as tirelessly as they are able. Supervising pay is merely one of the first waves of change.
What they will produce, if left alone, will not be the leader of global commerce, but an ossified economy run by policymakers and bureaucrats who will make decisions based on politics.
The market process that promotes freedom and has provided the foundation for nearly all human advancement will be regarded as a cruel and archaic notion, favored only by retrogrades who want to turn back the clock.
Capitalism, though, is forward-looking, unlike the war on business, which will yield a world in which we all have to make do with less. Except for, of course, the grand planners behind the reordering. They'll always live by another set of rules.
Tuesday, March 31, 2009
Meet The New Boss
Source: http://www.ibdeditorials.com/IBDArticles.aspx?id=323304791480124
By INVESTOR'S BUSINESS DAILY | Posted Monday, March 30, 2009 4:20 PM PT
Industrial Policy: The U.S. government dictating a major corporation's merger partner and who its CEO should be was unimaginable a year ago. Has industry sold America's free-market soul for bailout money?
Read More: Business & Regulation
A president of the United States orders the chief executive officer of General Motors to resign. The same president is further ordering Chrysler to merge with Fiat, the Italian firm specializing in flimsy cardboard boxes on wheels.
This new reality should send a chill down the spines of all Americans. The federal government has begun to run U.S. companies.
President Obama said Monday, "my team will be working closely with GM to produce a better business plan."
To that confident assertion he added these stern sentiments:
"They must ask themselves: Have they consolidated enough unprofitable brands? Have they cleaned up their balance sheets, or are they still saddled with so much debt that they can't make future investments? Above all, have they created a credible model for how not only to survive, but to succeed in this competitive global market?"
Who is in a better position to know the answers to these questions? Rick Wagoner, the GM CEO for nine years and former GM chief financial officer who has been with the automaker since the late 1970s, even running one of its foreign affiliates in Brazil, and who holds a Harvard Business School MBA?
Or President Obama, a former community activist from the south side of Chicago with a great rhetorical gift?
The president answered that question this week by ordering Wagoner's firing.
Imagine if it were not GM, but your own small business employing a handful of people.
How would you like the country's highest-ranking elected officeholder telling you that he and "my team" know better than you about cleaning up your balance sheets and competing against your rivals? How would you like being ordered by the government to fire the person you hired as manager of your company?
Does an entity that is itself $11 trillion (and climbing) in debt have any right to criticize a private business for owing tens of billions, let alone to claim it can do better running that business?
The same arrogance was heard regarding Chrysler. The president announced that, "we've determined, after careful review, that Chrysler needs a partner to remain viable." Why was Fiat picked? Because the Italian firm "after working closely with my team, has committed to building new fuel-efficient cars and engines right here in the United States."
In other words, its politics are right.
The merger will operate under a deadline with Washington holding a gun to Chrysler's head: "We'll give Chrysler and Fiat 30 days to . . . reach a final agreement," the president said. "But if they and their stakeholders are unable to reach such an agreement, and in the absence of any other viable partnership, we will not be able to justify investing additional tax dollars to keep Chrysler in business."
It should now be clear: Federal bailout funds are a corporate narcotic. Once a company starts taking them, a chemicallike dependence develops. The addict does whatever will bring in more of the drug. Ultimately, like heroin, the short-term euphoria gives way to decreased function for the recipient, even destruction.
More importantly for the American people, letting Uncle Sam become a corporate drug dealer — with taxpayer money the addictive poison being peddled — also places Washington in a position of dictatorial control over the private sector.
Sunday, March 29, 2009
Dems Giving Geithner Time As Pelosi Opens Door to Another Bailout & Stimulus By Elana Schor
Source: http://tpmdc.talkingpointsmemo.com/2009/03/dems-giving-geithner-time-as-pelosi-opens-door-to-another-bailout.php
March 10, 2009
Treasury Secretary Tim Geithner spent two hours behind closed doors last night with House Democrats. He told lawmakers that the economic crunch would get worse before it gets better, either later this year or early next year, while vowing action on small business lending.
What Geithner didn't mention -- but what House Speaker Nancy Pelosi acknowledged today after a forum with several leading economists -- is that more taxpayer money is likely to be needed to shore up foundering banks.
After economist Mark Zandi of Moodys.com told reporters that "another stimulus package is a reasonable probability, given the way things are going" and that "more money for financial stability to shore up the banking system is likely," Pelosi said she agreed with his statement.
But can Democrats find the votes to push through another round of capital for the banks, should the Obama administration ask for one? House Financial Services Committee Chairman Barney Frank (D-MA) said on Thursday that "it's not clear that the political support would be there to" approve another infusion aimed at loosening stalled credit markets, although several Democratic senators said today that they were giving Geithner the benefit of the doubt as he works to handle the conflagrations in the housing markets, credit markets, and bank balance sheets.
"We've got to reinstate people's faith in the system ... I'll give him enough room to do his job," Jon Tester (D-MT), a member of the Senate Banking Committee, said when asked about Geithner's plans to put off broader financial regulation that had been expected by next month.
"I'm confident that they have a sense of the challenges and confident that they're on the right track," Sen. Bob Casey (D-PA) said. "But still, I think, no matter who it is ... there's still going to be some trial and error. There's no one alive in America who knows exactly what to do. There are still going to be some difficult days."
Much of the recent roller-coaster ride in Washington has come as lawmakers watch the stock market, with President Obama likening its ups and downs to a campaign tracking poll -- a remark that drew heated condemnations from Republicans.
Sen. Dianne Feinstein (D-CA) admitted that she was "surprised at the continual drop in the market, in view of the economic stimulus in particular."
But Sen. Ben Nelson (D-NE), a potential thorn in the administration's side on several key issues, gave the Obama team the benefit of the doubt on the markets. Nelson told me that the health of the Dow is not "the indication that the program the secretary's pursuing is successful or not," but rather "a measure" of Geithner's ability to calm the economic waters.
"I'm looking for an alternative," Nelson added, "and the other side's not offering an alternative. So [Geithner's approach] may be the only game in town."
Meanwhile, senior Democrats are doing all that they can to help brighten the nation's economic outlook. The Dow rallied higher after Frank told reporters that he expected the SEC to reinstate the "uptick rule" on short-selling in stocks, and the Financial Services Chairman even threw a bone to conservatives who decry mark-to-market accounting rules. Frank told reporters that
[T]he mark-to-market rule has clearly got to be made better in its workings. There has to be more flexibility in its application. There has to be discretion in what the consequences are.
