Crippling debt and deficits have lead the global economy to the precipice. Finances of world governments since the financial crisis have dramatically deteriorated and confidence in paper money has reached a new low. Equity markets are crashing while gold (the barometer of trust in paper money) soars.
As we stare into the abyss, President Obama stands ready to address the nation. His speech is likely to extinguish the last vestiges of confidence in a US economic recovery.
What will he say?
Based on prior speeches, Obama will reach low and use the standard class warfare blame game strategy. Rather than accepting the warning from S&P that the US is spending itself into bankruptcy, he will shoot the messenger.
Highlights of the speech will feature the following:
- Blame Standard & Poors
- Blame Congress
- Blame China
- Blame Republicans
- Blame (insert name of anyone except Obama)
The trillions of new debt taken on since the 2008 financial crisis have done nothing except push the US closer to insolvency. The trillions of dollars spent on bailouts, stimulus and support for deadbeat homeowners has simply put another burden on an already weak economy. Will Obama talk reality and propose constructive programs to put our free enterprise economy back on track? Or will he simply propose more of the same - tax “millionaires and billionaires”, spend more, borrow more and hope that things get better?
Based on Obama’s disdain for the free enterprise system and businessmen in general, his remarks could easily result in a total vaporization of confidence in the government’s ability to contain the debt crisis. Obama’s speech could easily turn the contained depression which started in 2008 into an all out economic collapse.
It’s a routine event to be excoriated by your enemies - you laugh it off and consider the source. When harsh criticism comes from your friends, however, it should be a wake up call to reassess positions.
Barrick Obama’s wake up call came when Steve Wynn, CEO of Wynn Resorts recently let loose some very harsh criticism on Obama’s job performance and “weird political philosophy”. Steve Wynn is a giant business presence in Las Vegas and has built and run a large number of casinos including the Wynn, Encore, Golden Nugget and Treasure Island. Wynn’s business skills and determination have resulted in creating thousands of jobs and wealth. Wynn knows business and he knows how to create jobs. He is exactly the type of man who should be consulted for his advice on guiding the country out of depression levels of unemployment.
Unfortunately, the president spends most of his time demonizing wealthy businessmen for a litany of transgressions including not paying enough taxes. The White House’s disdain for free enterprise has not escaped the notice of the country’s job creators. In a conference call to investors, Steve Wynn lamented that businesses are being demoralized and paralyzed due to socialistic government policies.
Wynn said that the “Obama administration is the greatest wet blanket to business and progress and job creation in my lifetime. And I could prove it…I could spend the next three hours giving you examples of all of us in this marketplace that are frightened to death about all the new regulations, our healthcare costs escalate, regulations coming from left and right, and a President that keeps using that word redistribution.”
Wynn also mentioned that he is a Democrat and a friend of Harry Reid, but “I am telling you that the business community in this country is frightened to death of the weird political philosophy of the President of the United States. Until he is gone, everybody is going to be sitting on [his] thumbs”.
Wynn also said that Obama is “responsible for this fear in America. The guy keeps making speeches about redistribution and [the need] to do something to businesses that don’t invest, that are holding too much money. You know, we haven’t heard that kind of talk except from pure socialists. Everybody is afraid of the government and there is no need soft-pedaling it. It is the truth. It is the truth.”
And right on cue, Obama today confirmed Wynn’s worst fears. Although unemployment has been at crisis levels in this country for three years, Obama has ignored the problem other than occasional lip service to the issue. In an announcement proclaiming a new push for job creation today, the President came up woefully short on ideas. The “new job initiatives” announced involve extending unemployment benefits and the social security tax cut, proving Wynn’s contention that Obama, as a socialist, does not understand or embrace free enterprise. More social benefits merely transfers wealth from workers to non workers. These initiatives would be underwritten with borrowed money, deepening the debt crisis. Wynn is correct - until Obama is gone from office, the nation’s economic woes are certain to worsen.
It’s time for a change.
Business Discovers Drawbacks to Government Aid
The banking industry, the insurance industry and finally the auto industry have taken their turn with government money controlled by the Obama administration under the premise that they were all too big to fail. The bankers and insurance executives are finding out how difficult it is to return the TARP money, the auto industry is following suit and will find out that “When you make a deal with the devil, you will always be a junior partner.”
This was recently noted by a dealer News Letter “DealersEdge Editorial“
There is an old saying that is making the rounds among the business pundits these days- “When you make a deal with the devil, you will always be a junior partner.”
First a bit of perspective - Back in the 60s or 70s we can recall a news story of a Russian truck driver who was honored by the Kremlin for recording the highest fuel efficiency when making his deliveries. It seems he was able to alter his driving practices to reduce the consumption of fuel to the extent that he came to the attention of the central planners. He was honored at a Kremlin ceremony. However, he was able to reach this efficiency by taking some extraordinary actions to limit fuel consumption- like turning the engine off when going down hill and not turning it back on until after coming to a complete stop. The question not answered was whether or not he ever delivered anything on time. Such is the unyielding law of untended consequences.
While watching the President in the Rose Garden this week, with the leaders of the Detroit Three in the background, the thought crossed our minds – There is something very wrong with this picture.
Clearly the CEOs of GM and Chrysler are now junior partners in the U.S. auto industry. And while Ford has yet to make that Faustian deal with the White House, they certainly do not want to burn that bridge if their losses continue to eat up all that money they borrowed.
Perhaps the Auto Dealers can see it more clearly as the Obama Administration begins to make more business decisions for the Automobile Manufacturers. The dealers are on the front lines of the market and feel the effects of the manufacturers decisions.
Here’s an additional thought from Thomas Sowell on the matter of the Obama government running private industries:
The presumption that Obama knows how all these industries ought to be operating better than people who have spent lives in those industries, and a general cockiness going back till before he was president, and the fact that he has no experience whatever in managing anything. Only someone who has never had the responsibility for managing anything could believe he could manage just about everything.
A recent poll of Americans under 30 revealed that one third expressed a preference for socialism. The educational and income characteristics of those polled was not detailed so like every poll, the results can be interpreted differently.
I suspect, however, that those polled construed the meaning of socialism to be “sharing the wealth, regardless of effort or abilities”. An income sharing arrangement of this type would, of course, be most strongly embraced by those who have the least wealth, for whatever reason.
Do the poll results imply that one third of Americans under 30 cannot envision themselves being able to achieve success that the free enterprise system allows? To resign oneself to failure at such a young age implies either a belief in a very bleak economic future or a total lack of faith and optimism in one’s own abilities.
Winston Churchill summed it up perfectly when he said,
“The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.”
For some historical perspective on our current problems.
Chicago Tribune - 1934
1934
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