Obama Superior to McCain at Presidential Persuasion

The greatest power held by a President is his or her ability to persuade.  That was the premise of late author Richard E. Neustadt, written in his 1960’s book, Presidential Power.

Neustadt opined that a president only has the power to persuade both the public and congress to enact his vision for America through legislation. Without which, a president may be doomed for failure.

When the public is inspired, we expect congress to respond.  And they should, because according to the mandates of our constitution, they’re duty is to represent us, not their own self-interest.

That concept seems to have been lost.

When congress fails to respond, the President, in order to be effective, is required to inspire public sentiment, allowing the energy he creates to influence congressional acts.

Partisanship aside, which presidential candidate has this gift?

Contrary to the “lack of leadership” label bestowed upon him by republicans, Barack Obama possesses a striking power to persuade the public, similar to that of JFK.

Drawing thousands of supporters and curiosity seekers to his public appearances, Obama commands attention.  Under a democratic-controlled congress, there may be no need to promote his vision beyond that.  The director may simply use his gift to introduce the congressional choir’s next song on the program to his audience.

That arrangement, however, will backfire on the Democrats if their agenda is skewed too far to the left.  Moderation always wins.

Despite enviable personal courage, any chance for John McCain to persuade the public is automatically cancelled out by his republican affiliation.

Unjustified wars, more wealth continuously heaved upon the rich, and an economy pointed to disaster, are repugnant to Americans and their ideals. Nobody is really listening to his proclamations.

Instead, at his rallies, his faithful are screaming at him for reform. But they’ve come to realize, that despite their efforts, he doesn’t hear them.

McCain’s perceived disconnect with our generation, even with the addition of young Sarah Palin to the ticket, relegates him to second trombone.

His tired policies are uninspiring to this generation thirsting for innovation and raised in the age of the pervasive power of electronic social networking.

Who wants to pay big money to see the tired Rolling Stones just one more time?

Despite the persuasion of political partisanship, this time, presidential persuasion trumps, because this election represents the political establishment’s final ride on their merry-go-round.  The public has declared that it will no longer allow it to operate on their festival grounds.

Once Obama’s plan for America smacks those awakened by the groundswell of unintended constitutionalists, an inspired third party will inevitably emerge to lead this generation, and put the final kibosh on the politics of our two floundering political parties, no matter who bears its standard with all of the qualities to persuade.

That day is coming. Obama and his Democrats are unknowingly taking us down that path to the final chapter of tired politics, as we know it.

Entertainment News

Officials Finish at Fossett Site As Storm Nears

Bush: Bailout Is Not a Quick Fix for the Economy

The Perfect Storm Shows Congressional Ignorance

The financial bailout proposal is both an educational experience and a revelation of the quality of your representatives.

Clear all of the political smoke and take heed: If you ever wanted a lesson in representative government and see first hand how our representatives handle a crisis, pay close attention because you’re witnessing the process during the most opportune time as a voter.

Constitutionally, the process begins with the president exercising his limited authority by proposing a solution to this financial crisis based upon input from his advisors and cabinet members.

Using his limited presidential power to persuade, Bush takes to the air by televising his plea to the public, albeit filled with unsubstantiated scare tactics, all in an effort to convince citizens to demand immediate action by their representatives.

But, that didn’t work.

Congress, regulated by the constitution and under the growing suspicion and outrage emerging from the public, performed its constitutional duty and took its time to contemplate Secretary Paulson’s proposal, and summarily rejected it by expanding the proposal from 3 pages to 110.

That bill failed, and the economy, despite the pleas from the administration that the sky is falling, is still limping along.

The constitution is working, but our representatives aren’t.

What we’re witnessing is a house full of representatives, under the leadership of Nancy Pelosi, scrambling around and illustrating their incompetence by pointing fingers at each other because they do not know what to do.

What a perfect storm– a major crisis and an upcoming election all rolled into one.

Pay attention, John Q. Public. It’s not the presidential election that is important here, it’s your representative’s behavior and their ability to show all of us, once and for all, if they have what it takes to hold office.

If not, it’s your constitutional right to vote the incompetent ones out this November.

Economic Turbulence

Here is an article that I wrote on December 8, 2007 regarding the imminent ecomonic crisis:

Everyone should prepare to withstand imminent economic turbulence in 2008.

Without being an economist, I feel confident in making this assertion just by looking at very simple, but huge indicators that anyone can witness and evaluate.

Our country is involved in an expensive war in the Middle East that costs billions of dollars. Our current administration is looking to expand the war. The invoice for the war will certainly be presented to the nation soon, which means the burden to fund war operations rests exclusively with taxpayers.

The size of government is growing, and elected officials are legislating guaranteed pay raises and benefits every single year for themselves and bureaucrats. Government employee salaries alone are increasing by a rate of at least 3% each year.

Those increases are being subsidized innocuously through, for example, the imposition of higher licensing fees, cigarette taxes and other creative taxing methods that fly under the radar of most taxpayers.

Small business retailers are finding it difficult to make ends meet. Next time, as you drive down Main Street in your community, take note of the number of retail vacancies that are slowly beginning to pop-up in shopping centers and strip malls.

Gasoline prices fluctuate every week by a margin of 10 to 15 cents per gallon. And, in case you haven’t noticed, utility companies are requesting and obtaining rate increases from your local public service commissions.

Housing values are slowly, but surely declining, meaning that your nest egg- the equity you’ve accumulated in your home- is beginning to disappear right before your very eyes.

What does this all mean?

Your margin of discretionary income is beginning to narrow exponentially, and you will be required to make up the difference by tapping into your savings and emergency funds.

Once those funds are tapped out, financial trouble begins.

Take the time to review and adjust your spending habits and the reliability of your source of income. Pay attention to your what your local and state representatives are doing to increase government spending.

Be cognizant of the fact that, as you’re taking steps to reduce your financial burden, others are taking steps to increase it.

Ron Paul: My Answer to the President

Ron Paul posted this article recently regarding our government’s plan to bail out Wall Street:

The financial meltdown the economists of the Austrian School predicted has arrived.

We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy – all the capital misallocation, all the malinvestment – and prevent the market’s attempt to re-establish rational pricing of houses and other assets.

Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I’d only be repeating what I’ve been saying over and over – not just for the past several days, but for years and even decades.

Still, at least a few observations are necessary.

The president assures us that his administration “is working with Congress to address the root cause behind much of the instability in our markets.” Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?

We are told that “low interest rates” led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments – investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.

Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or “wildcat capitalism” (as if we actually have a pure free market!).

Speaking about Fannie Mae and Freddie Mac, the president said: “Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk.”

Doesn’t that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn’t that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn’t the federal government shown that the “many” who “believed they were guaranteed by the federal government” were in fact correct?

Then come the scare tactics. If we don’t give dictatorial powers to the Treasury Secretary “the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet.” Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.

It’s the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.

The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.

F.A. Hayek won the Nobel Prize for showing how central banks’ manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day – and which are being proposed, just as destructively, in our own:

Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.

To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection – a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end… It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.

The only thing we learn from history, I am afraid, is that we do not learn from history.

The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?

Oh, and did you notice that the bailout is now being called a “rescue plan”? I guess “bailout” wasn’t sitting too well with the American people.

The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you’re supposed to have a voice in all this actually seems to annoy them.

I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects – the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.

H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.

In liberty,

Ron Paul

Ron Paul on Economic Bailouts

Ron Paul’s statement regarding the current economic crisis:

“Many Americans today are asking themselves how the economy got to be in such a bad spot.

For years they thought the economy was booming, growth was up, job numbers and productivity were increasing. Yet now we find ourselves in what is shaping up to be one of the most severe economic downturns since the Great Depression.

Unfortunately, the government’s preferred solution to the crisis is the very thing that got us into this mess in the first place: government intervention.

Ever since the 1930s, the federal government has involved itself deeply in housing policy and developed numerous programs to encourage homebuilding and homeownership.

Government-sponsored enterprises Fannie Mae and Freddie Mac were able to obtain a monopoly position in the mortgage market, especially the mortgage-backed securities market, because of the advantages bestowed upon them by the federal government.

Laws passed by Congress such as the Community Reinvestment Act required banks to make loans to previously underserved segments of their communities, thus forcing banks to lend to people who normally would be rejected as bad credit risks.

These governmental measures, combined with the Federal Reserve’s loose monetary policy, led to an unsustainable housing boom. The key measure by which the Fed caused this boom was through the manipulation of interest rates, and the open market operations that accompany this lowering.

Because the boom comes about from an increase in the supply of money and not from demand from consumers, the result is malinvestment, a misallocation of resources into sectors in which there is insufficient demand.

In this case, this manifested itself in overbuilding in real estate. When builders realize they have overbuilt and have too many houses to sell, too many apartments to rent, or too much commercial real estate to lease, they seek to recoup as much of their money as possible, even if it means lowering prices drastically.

This lowering of prices brings the economy back into balance, equalizing supply and demand. This economic adjustment means, however that there are some winners — in this case, those who can again find affordable housing without the need for creative mortgage products, and some losers — builders and other sectors connected to real estate that suffer setbacks.

The government doesn’t like this, however, and undertakes measures to keep prices artificially inflated. This was why the Great Depression was as long and drawn out in this country as it was.

I am afraid that policymakers today have not learned the lesson that prices must adjust to economic reality. The bailout of Fannie and Freddie, the purchase of AIG, and the latest multi-hundred billion dollar Treasury scheme all have one thing in common: They seek to prevent the liquidation of bad debt and worthless assets at market prices, and instead try to prop up those markets and keep those assets trading at prices far in excess of what any buyer would be willing to pay.

Additionally, the government’s actions encourage moral hazard of the worst sort. Now that the precedent has been set, the likelihood of financial institutions to engage in riskier investment schemes is increased, because they now know that an investment position so overextended as to threaten the stability of the financial system will result in a government bailout and purchase of worthless, illiquid assets.

Using trillions of dollars of taxpayer money to purchase illusory short-term security, the government is actually ensuring even greater instability in the financial system in the long term.

The solution to the problem is to end government meddling in the market. Government intervention leads to distortions in the market, and government reacts to each distortion by enacting new laws and regulations, which create their own distortions, and so on ad infinitum.

It is time this process is put to an end. But the government cannot just sit back idly and let the bust occur. It must actively roll back stifling laws and regulations that allowed the boom to form in the first place.

The government must divorce itself of the albatross of Fannie and Freddie, balance and drastically decrease the size of the federal budget, and reduce onerous regulations on banks and credit unions that lead to structural rigidity in the financial sector.

Until the big-government apologists realize the error of their ways, and until vocal free-market advocates act in a manner which buttresses their rhetoric, I am afraid we are headed for a rough ride.”