Sunday, December 21, 2008

Global Crises

Many other countries around the world have been in the news with ways to help there own economic aid plans. We mostly hear just about own auot makers and banks with their downward spiral. But this hit to auto industry is world wide.

Japan is pumping 10 trillion yen into their economy, Canada is spending another 3 billion, Germany is putting out some of their own money, and Belgium's government has completely collapsed. It is interesting that the only things I ever hear about the economy are from our own backyard. I had never heard about any of these foreign plans until I started doing a little research.

Record low for interest rates

Interest rates were cut again just again just a couple days ago. This 0% interest rate seems to be a desperate move. This means that if the economic situation gets any worse, there is little that Bernanke could do to help remedy the case.

This last ditch effort is aimed to be a jab at the banks and their prime lending rates. Right now the rates are around 4%, so lowering their rates even lower may indeed help stimulate a bit of the economy or at least stop more big companies from failing. But if this does not work, then things could be ad or worse for a long time.

Another bailout

I suppose several of the other recent blogs on this site have touched on the topic of the new auto industry bailout. But I believe that this topic is something that is very important. This topic seems to be one of those topics that everyone has their own opinion about, but I think this second bailout has its own importance. These two big auto makers are an integral part of the US economy. Their downfall would be a huge moral blow to our stock market.

Although I opposed the idea of another bailout, I think it was needed in this particular instance. I hope that a second bailout does not lead to more government aid. But maybe if more bailouts keep coming, I ought to start a business and run it into the ground, and let the government hand over some money to help me with my bad investment.

Saturday, December 20, 2008

Thomas Jefferson Quotes

I was recently sent these quotes in an e-mail. Jefferson seemed to have a really good understanding of government. Many of the things in the struggle for freedom that Jefferson alluded to have become reality in America.

Jefferson in some cases could be called a prophet:

When we get piled upon one another in large cities, as in Europe, we shall become as corrupt as Europe .

The democracy will cease to exist when you take away from those who are willing to work and give to those who would not.

It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.

I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.

My reading of history convinces me that most bad government results from too much government.

No free man shall ever be debarred the use of arms.

The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government.

The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.

To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.

This is a very interesting quote in light of the current financial situation. Thomas Jefferson said this in 1802 :
'I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.

Thursday, December 18, 2008


So when I typed in that title it reminded me about the scene in Braveheart where William Wallace leads the charge and yells FREEDOM!!! He was leading the charge against England, fighting for independence in Scotland.

When we in America think of freedom we often think of our Founding Fathers leading the charge against England for independence. This is a good thing because I think many of the people who founded our country had a pretty good understanding of freedom. However, I find too many people in America who look favorably at the freedom our founding fathers established for us yet think we have that same kind of freedom today. Too many people don't take the time to actually think about true freedom. I see some Americans that use the word freedom the way our government tends to use this word. I find that in some contexts this word is used synonymously with security. This is very dangerous. Because many Americans do not have a concept of freedom they give up their freedoms very readily for protection.

Freedom at it's core is not security but liberty. Security to an extent can create an environment that fosters liberty but in some cases these two concepts can be directly opposed to one another. My concept of liberty comes from the Declaration of Independence and men like John Locke, Thomas Jefferson, Ben Franklin, James Madison, F. A. Hayek. I believe that Noah Webster also defines liberty well in his dictionary. Noah Webster wrote the first American dictionary and has been called the “Father of American Scholarship and Education”. To read his definition you can go to this link:,liberty.

So what do I mean when I say that Americans use the word freedom the way our government tends to use the word? I see people in the U.S. federal government who have justified actions in the name of freedom when more accurately the actions were supposedly done for security reasons. . For instance lets talk about Iraq. First we had intelligence of WMDs in Iraq so that was the justification which was presented for invading. Then when our military invaded and supposedly didn't find these WMDs the justification for the Iraq war was that our military was fighting over there for the freedom of Iraqi citizens and so that we could have another ally for freedom and the "War on Terror". Now I don't know why it was hard to find WMDs or why it wasn't reported if they were found. Saddam Hussein had used some WMDs killing Kurds in a genocide.

Ultimately I don't know what actually went down in Iraq. I tend not to believe most of the things I hear in politics. But here are a couple of interesting questions that need to be addressed and I will end with these. My hope is that Americans will wake up a realize what true freedom is.
If we have the justification to invade Iraq to give Iraqis freedom why are we not intervening in the genocides in Darfur and giving them freedom? Is there something that Iraq has that Darfur does not (i.e. resources)? How can a country spread freedom when freedoms are lost in the country every day? Hopefully these are some good questions to ponder.

Wednesday, December 17, 2008

OPEC Spoke and Nobody Cared

So, yesterday I filled up my tank for $1.39 a gallon. It was a delicious experience to say the least. Filling a tank for under $20... Oh yes, I was going somewhere with this.

OPEC just recently announced that they will be cutting production by 2.2 million barrels per day, a 3% decrease in total oil production (Wall Street Journal). This is an attempt to buffer the price of oil and keep it from falling any further as demand slides with the recession. However, oil traders are unimpressed with this announcement as oil continues to drop in price. This is because this is the third production cut that OPEC has announced since September, which makes the total barrels per day cut somewhere around 4.4 million. These cuts haven't seemed to actually have happened though, further dragging OPEC's reputation through the mud.

This shows a great intangible benefit of Corporations that should never be underestimated, reputation. When a company has a good reputation, people pay attention when they make statements and are more likely to take them as fact. Take Office Depot, for example. Office Depot has been leading the charge for big business to become environmentally friendly. When they posted that they managed a 10.1% absolute reduction to carbon emissions while increasing their square footage by 17000 in a year no one cried foul or scoffed disbelievingly at the study. This can be attributed to the fact that Office Depot has made sure to back up their claims by providing proof of their endeavors. This increases their credibility, making it easier for people to accept things they say.

Now take a look at OPEC, who has nations that greedily safeguard the numbers of their earnings and production levels from even the other nations. With such secrecy it becomes difficult for consumers to take what the corporation says seriously. With their reputation in shambles, any announcement OPEC makes will most likely be met with scoffs and inaction until the consumer actually sees some change in the production levels themselves. As such, even with impressive market share, oil will continue to slide in price until at least Jan. 1, the day that the production cut is supposed to begin.

Friday, December 12, 2008

Capitalism and Distrust

Right now, I am reading a book called The Unthinkable: Who Survives When Disaster Strikes - and Why, which is a really interesting book written by Time reporter Amanda Ripley on (surprise!) what kind of person survives a disaster and why he or she does. In chapter 2, Risk: Gambling in New Orleans, the author makes the point that sometimes disasters turn out worse than they have to because those in danger don't trust the government. She says that our current system of political economy engenders suspicion.

I agree with her that it does, but then we diverge as to why. On page 46, she writes, "A capitalist society with a free press has many things to recommend it. But it is not a place where citizens have overwhelming confidence in authority figures." This is a case of mistaken identity: it is not because of the capitalist elements of our government that we distrust the powers-that-be. Rather, it is in spite of capitalism that citizens are wary.

Today, corrupt politicians receive the most rewards. They are able to steal the most money because they don't control themselves and no one else is apparently going to. I frankly haven't seen how having a free press has kept corrupt politicians from being elected and then reelected.

In a truly capitalist society, if there was any regulation at all, it would be to protect property rights, and no one would be able to use force for anything else. As Hayek once wrote, "It is not who governs but what government is allowed to do that seems to me the essential problem." No matter who is in charge, if they have more power, they are more likely to abuse it, and thus the populous becomes more distrustful. People mistrust the government today not because of capitalism, where people are free, but because we live in a society where those who govern take advantage of their power - and we know it.

Thursday, December 04, 2008

Mars or Bust!

In recent years, space travel has become almost ignorable. I don't know about you, but the last thing I remember hearing about was in September, when China sent three men to perform a spacewalk, and the news was mostly important due to people's worries about national supremacy. Most space missions have become blase, obscure science things that most people don't even notice. To be perfectly honest, I mostly don't care about those myself.

For me, the really thrilling part of space travel is that it might soon be available to normal people, not just goevernment appointees. Earlier this year, Virgin Galactic, the world's first spaceline, introduced the WhiteKnightTwo (originally named SpaceCraftTwo). Tickets cost $200,000 apiece, but more than 30,000 people have already purchased spots, and the first group will hopefully begin hurtling into space in 2010. This is exciting not only for being space tourism, but because of what it could mean for the future. If there is profit to be made developing private spacecraft, who knows how swiftly it could become possible to travel to or even settle on space stations or a terraformed Mars.

Many discussions of libertarianism end with someone saying, "Yeah, that would be awesome, but it's impossible to actually do that." Well, if space is the new frontier, as North America was in the past, it may be possible to actually achieve a libertarian society. The vastness of space would allow people to begin new governments, perhaps in a similar fashion to how the United States was formed, that could attempt to form a more lasting libertarian society. This idea has been speculated about in science fiction for decades, so I don't really want to go there, but it is exhilarating that we may get the chance to experiment for ourselves in the relatively near future.

Update: The first private space-port is now starting construction!

Tuesday, December 02, 2008

Even lower interest rates?

Ben Bernanke the Federal Reserve Chairman has stated that lower interest rates are "certainly feasible." The current interest rate for the Fed is 1, which has only been so low once in the past 50 years. But there's an obvious limit to how low the rate can go, 0...which it is coming closer and closer to. This could help the economy bounce back, but would unlikely be able to do it alone and would need help. Bernanke said there are other ways to help stimulate the economy and help it to recover such as buying "longer-term Treasury or agency securities on the open market in substantial quantities, he said. This might lower rates on these securities, 'thus helping to spur aggregate demand,' Bernanke said". The Fed also announced 2 plans about a week or two ago stating that it would increase the availability and lower the costs of credit card , auto, student and home loans. The Fed also said it would spend over $700 billion purchasing securities and mortgages. I've always wondered where it planned on getting all this money needed to bailout all of the businesses and people. Either way it looks like the economy will be weak well into next year.