“The US seems to have gotten the worst of it,” said a French friend this morning. We were taken aback. Everyone knows Europe is in a state of permanent crisis. The US seems solid by comparison, no?
“Now that the Supreme Court has approved Obamacare, you have the same problems we have in Europe, social welfare spending with no limits…plus you have your colossal military spending. You have both ‘bread and circuses,’ just like the ancient Romans. You are doomed.”
Yes, dear reader, we came to the fork in the road after the 9/11 attack. And the government took it!
And now the feds can fork over whoever and whatever they want. No kidding. They just have to think of it as a tax. Here’s the AP’s report on yesterday’s decision:
Health care law survives with Roberts’ help
WASHINGTON (AP) — America’s historic health care overhaul, certain now to touch virtually every citizen’s life, narrowly survived an election-year battle at the Supreme Court Thursday with the improbable help of conservative Chief Justice John Roberts.
But the ruling, by a 5-4 vote, also gave Republicans unexpected ammunition to energize supporters for the fall campaign against President Barack Obama, the bill’s champion and for next year’s vigorous efforts to repeal the law as a new federal tax.
Roberts’ vote, along with those of the court’s four liberal justices, preserved the largest expansion of the nation’s social safety net in more than 45 years, including the hotly debated core requirement that nearly everyone have health insurance or pay a penalty. The aim is to extend coverage to more than 30 million people who now are uninsured.
The question on the table was whether or not the feds could force people to buy health insurance. The supremes decided that ‘yes they could.’ It was just like a tax, they said. And the constitution gives the legislators the right to impose taxes, as they see fit.
Let’s see…how about forcing all blue-eyed people to go outside, take off all their clothes, and give them to homeless people? That would be a tax too. Guess it’s okay.
While the social-welfare state is expanding, so is the police state. Another measure being discussed in Congress would declare the US itself a battlefield or a war zone. This would give the military the right to do what it does without going overseas…and it would give the president the power to direct his kill list towards his domestic enemies.
Then, drones can fly over Kansas or Ohio…and whack whomever the feds want.
But who are they gonna take out? No one…or almost no one…opposes the military agenda in the US. There are no serious terrorists…and no serious challenge to the spending machine. The two candidates for president agree on the essentials — keep the money flowing to the zombie industries…military…education…health…and finance. Oh yes, and occasionally toss a few bucks at an industrial business — like GM — if it has enough unionized employees.
Wait…the US has no serious enemies overseas either. And that doesn’t make the racket any less effective. On the contrary, it helps. With no serious enemies to worry about the military industry can spend its money on any damned thing it wants. Lots of boondoggles. Wide profit margins. Low casualties. What’s not to like?
But where were we?
We were talking about economists. Specifically, we left off yesterday describing how GDP figures are almost completely worthless. They tell you something; but do they tell you anything important? Apparently not.
You cut our lawn. We pay you. We cut your lawn. You pay us. We both have jobs. And we each pay a portion of our earnings to the government. The GDP goes up. Government revenues increase. And economists tell us we are ‘growing.’
Earlier this week, Paul Krugman cited the experience of the US economy in the early ’40s. A burst of federal spending between ’40 and ’42 produced a 20% big lift in output, he says, approvingly. More jobs…more GDP…according to the economists’ measures, things were getting better and better.
Were they really? Of course not. Government was spending money on the military. An economist can’t tell the difference between a Tiger tank and a BMW. But a passenger can. It doesn’t take him long to realize that a tank is no way to travel.
There are times you need to build tanks. But those are not times when you are building wealth and prosperity. Instead, you’re spending wealth in order to protect yourself (theoretically, in practice most wars are rackets…for both sides). That’s what the US was doing in the early ’40s — spending wealth, not building it.
Which just illustrates our point:
If even Nobel prize winning economists cannot tell the difference between building wealth and spending it, what hope is there for the whole profession?
More to come…
Bill Bonner,for The Daily Reckoning
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill's daily reckonings from more than a decade: 1999-2010.
There’s nothing like a good dose of Bill Bonner to start the day. You’re brilliant! thanks.
“Theoretically, in practice most wars are rackets…for both sides.”
In theory, there’s no difference between theory and practice, but in practice there is. – Yogi Berra
Bill – we are doomed as your friend stated. I don’t agree that nearly everyone supports the military agenda. The fact is that the politicians do what their masters tell them, and voters don’t have a say in it. Most Americans are just going along for the ride but if they had their way the military would be reined in.
As far as social spending, majorities support some programs and therefore they all get supported. This country will suffer a historic decline in the near future – there is no stopping it. I believe this thought has crept into most people’s minds and this partly explains why people are tuned out.
How is making people buy insurance from a for-profit private company = “socialism” ???
It is more like fascism, a union of the state with big corporate interests.
Naturally it would be cheaper to have Single Payer Universal Coverage. But that would be “socialism”. We don’t do that here in the States. So we will continue to pay thru the nose for health care.
I think the US has about run out of wealth…
The three conditions needed for fascism :democracy,socialism, and economic calamity. Things are shaping up rather nicely.
Three conditions needed for fascism: democracy, socialism,and economic calamity. Things are shaping up nicely.
Three conditions necessary for fascism: democracy, socialism, and economic calamity. Things are shaping up rather nicely.
Three conditions unnecessary for fascism: democracy, socialism, and economic calamity. Things are shaping up quite nicely.
Three conditions for fascism: democracy, socialism, and economic calamity. Things are shaping up rather nice.
Simply, outstanding. Thank you very much for being a sane voice amidst the cacophony, Bill.
Oh God! I mean really, hardly anyone is paying any attention to the political/economic trouble that just keeps on slapping us on the face (at least here in the US). It’s not real; it can’t be! How is this possible? Government is the answer to everything….isn’t it? It has all become a really bad joke and people like Paul Krugman the perps of such hilarity. Some day Agora will be looked upon as one of the only few organizations filled with sound minds at a time of total insanity. As for now, to take a quote from Firesign Theatre, “We’re all just Bozos on this bus.”
“Another measure being discussed in Congress would declare the US itself a battlefield or a war zone. This would give the military the right to do what it does without going overseas…and it would give the president the power to direct his kill list towards his domestic enemies.”
What are you talking about? That has already happened. It’s called the NDAA!
“Now that the Supreme Court has approved Obamacare, you have the same problems we have in Europe, social welfare spending with no limits….”
Thanks Bill. I need a good laugh.
yeah dick, you’re a dick.
This ruling will have the effect of allowing private companies to impose a “tax” via legislative action.
The next item on the agenda will be long term care insurance and maybe even life insurance.
enjoyed every bit of this article and look forward to more.
Since the invention of the "shareholder rights plan" (i.e. the "poison pill"), most companies are relatively immune to hostile takeovers. But according to Dave Gonigam that could all change thanks to one activist investor. And if you're savvy enough, you may just be able to follow his lead for big gains. Read on...
As the markets have continued to rally over the last several years, more and more people have touted the problem of "income inequality" in the US. But as Jim Mosquera explains, this perceived problem will likely sort itself out with the arrival of one specific market event. Read on...
Almost one year ago, substation telephone cables were maliciously cut in San Jose, CA. In 20 minutes, 17 transformers were knocked out. A year on, similar threats have cropped up. Today, Addison Wiggin explains why these threats are so serious for the safety of the global economy... and shows you one way to play it...
The big problem with declaring bubbles is that it really does you no good. Unless you're attempting to measure and time market moves, you're also blowing hot air. But if you keep watch for negative divergences, you have a much better shot at figuring out big market moves than the latest bubble-busters. Greg Guenthner explains...
Too often investments are made in a vacuum. But as Byron King demonstrates, the global economic crash... easy money... and technological advancements are all interdependent. In particular, that connection has changed the investment calculus in the resource market. Read on to learn how...
Oil isn't the only resource to experience "peaks." Due to a major contraction in gold exploration over the past few years, the mining sector is no longer mining gold at its replacement rate. In other words, the amount of gold above ground is running out. And according to Henry Bonner, it will get worse before it gets better...