Cheney Has Serious Doubt about Obama

Cheney Has Serious Doubt about Obama

August 31st, 2009

FOXNEWS SUNDAY

Calling it a “terrible decision” that undermines national security and devastates CIA morale, former Vice President Dick Cheney slammed the Obama administration’s probe of aggressive interrogation of terrorists.

“It’s an outrageous political act that will do great damage, long-term, to our capacity to be able to have people take on difficult jobs, make difficult decisions, without having to worry about what the next administration is going to say,” Cheney told “FOX News Sunday” in a no-holds-barred interview.

In blunt, unsparing language, Cheney accused President Obama of setting a “terrible precedent” by allowing an “intensely partisan, politicized look back at the prior administration.”

He said the decision by Attorney General Eric Holder to launch a probe into alleged abuse of prisoners under the prior administration “offends the hell out of me,” as he seemed to question Obama’s fitness as commander-in-chief.

“I have serious doubts about his policies,” Cheney told FOX News’ Chris Wallace in Jackson Hole, Wyo. “Serious doubts, especially, about the extent to which he understands and is prepared to do what needs to be done to defend the nation.”

Read More:

Wackjob science czar to appear on David Letterman

Lead Story

Wackjob science czar to appear on David Letterman

By Michelle Malkin  •  August 31, 2009 10:36 AM

According David Letterman’s website, wackjob science czar Dr. John Holdren is scheduled to appear Wednesday night, September 2.

Holdren has been a guest on Letterman before. He visited in April 2008 to ply global warming scare propaganda.

Not a peep from Letterman about Holdren’s spectacularly wrong predictions and irresponsible alarmism.

And we certainly won’t expect a peep from Letterman about Holdren’s extremist musings on forced abortions, mass sterilizations, and undesirables.

Wouldn’t want to be accused of “defamation” by the left-wing blogs, eh, Dave?

Holdren’s office has gotten away with stonewalling questions about the science czar’s promotion of his colleague and mentor, eugenicist Harrison Brown.

These are the questions I asked last month — and which many readers also asked of Holdren’s office to no avail:

1) Does Dr. Holdren disavow the population control extremism of his intellectual mentor and colleague, Harrison Brown or not?

2) Does Dr. Holdren also view the world population as a “pulsating mass of maggots?”

3) Was Dr. Holdren unaware of Harrison Brown’s views when he paid homage to him at the AAAS keynote address in 2007?

Internet investigative blogger Zombie spotlighted copious passages from one of Holdren’s favorite books by Harrison Brown, The Challenge of Man’s Future, which openly advocates a “broad eugenics program” — and also featured Holdren’s own praise for the book:

I should emphasize, therefore, that my contribution is written in what I take to be the spirit in which Harrison wrote The Challenge of Man’s Future—that is, the conviction that it is necessary to dwell on the perils in order to stimulate timely action to avoid or minimize them.

To put too much emphasis on the correctness or incorrectness of particular predictions, however, is to miss the main point of writing usefully about the future. The idea is not to be “right,” but to illuminate the possibilities in a way that both stimulates sensible debate about the sort of future we want and facilitates sound decisions about getting from here to there. This philosophy has informed Harrison Brown’s writing about the human future throughout the four decades in which he has been doing it. Our understanding of the dimensions of the human predicament—and of what might be done to alleviate it—is much the better for his effort.

The mid-twentieth-century revival of Malthus’s insight that no combination of good technology and good management can cope with unlimited population growth on a finite planet (a revival to which Harrison Brown’s 1954 book, The Challenge of Man’s Future, was the most eloquent and comprehensive contribution) is more relevant in the 1980s than ever.

In the spirit in which Harrison Brown wrote The Challenge of Man’s Future some thirty years ago, this chapter has been written as a contribution to the continuing effort to help create that consensus.

Zombie notes:

The first paragraph of this long quote confirms what some of Holdren’s defenders claimed about his statements in Ecoscience — namely that Holdren proposes extreme measures simply as scare tactics. When he says “it is necessary to dwell on the perils in order to stimulate timely action,” it’s his way of saying that we should terrify the populace into going along with his proposals by painting a dire picture of what the alternatives might be. (Global warming, anyone?)

I found the next paragraph particularly amusing, especially his claim that it’s not important to make accurate predictions about the future, but simply to make any predictions at all — the wilder, the better, apparently — to “stimulate debate.” (Global warming, anyone?)

And the rest of the quote is the by-now-familiar groveling by Holdren at the altar of Brown.

Will Letterman crack jokes with Dr. Holdren about “de-development?”

Perhaps they’ll share a laugh about the prospect of “zero economic growth” or Holdren’s views regarding newborn babies not being fully human.

Yep. Late Night With The Population Control Freak and the Perv.

Should be riveting television.

***

I am again reprinting what I reported last month on Holdren and Brown as a reminder of what the science czar refuses to talk about:

Well, I have indeed read one of Holdren’s recent works that reveals his clingy reverence for, and allegiance to, the gurus of population control authoritarianism. He’s just gotten smarter about cloaking it behind global warming hysteria. In 2007, he addressed the American Association for the Advancement of Science conference. Holdren served as AAAS president; the organization posted his full powerpoint presentation (you can download the whole thing here.)

Take a gander at the opening slide that set the tone for his entire speech. Holdren admitted that his “preoccupation” with apocalyptic matters such as “the rates at which people breed” is a lifelong obsession inspired by scientist Harrison Brown:

Who is Harrison Brown? And what’s in “The Challenge of Man’s Future?” Holdren’s hero was a “distinguished member” of the International Eugenics Society. And, lo and behold, Harrison Brown advocated the same population control-freak measures Holdren put forth in Ecoscience.

Surprise:

Harrison Brown, writing to us from the year 1954 in his book, “The Challenge of Man’s Future,” suggests a method that would strike us as a crass violation of the rights mentioned above:

Let us suppose that in a given year the birth rate exceeds the death rate by a certain amount, thus resulting in a population increase. During the following year the number of permitted inseminations is decreased, and the number of permitted abortions is increased, in such a way that the birth rate is lowered by the requisite amount. If the death rate exceeds the birth rate, the number of permitted inseminations would be increased while the number of abortions would be decreased. The number of abortions and artificial inseminations permitted in a given year would be determined completely by the difference between the number of deaths and the number of births in the year previous.

But that wouldn’t be all. If we are to maintain a worldwide sustainable industrial society, we will need to control population across current borders. If we don’t, many members of overpopulated societies will soon be knocking at our doors asking for assistance or even entry.

Brown also suggests that such control over reproduction might be used to slow down the deterioration of the human species. This has occurred in industrial society because humans are no longer subject to natural selection to the same degree that they have been in the past. Those who are healthy and able might be encouraged through incentives to have several offspring, while those who have deficiencies, say, of sight or hearing or mental ability might be discouraged. The problem, he notes, is in deciding what really constitutes “fit” or “unfit” and overcoming our revulsion to such a eugenics scheme. Still, he adds, when one considers the bald evolutionary facts, it behooves human societies, if they want to remain resilient in the face of changing conditions on Earth, to somehow replace nature’s cruel hand in pruning the so-called “unfit” with something less drastic. It’s that or face eventual extinction.

Brown acknowledges that none of this will seem acceptable to the vast majority of his readers. But, he is concerned that unless population stability and other problems are addressed head on, arrangements that are far more restrictive and objectionable than the ones he proposes may be implemented in their place.

Harrison Brown’s book — the book that inspired Obama science czar John Holdren — also infamously likened the world’s growing population to “a pulsating mass of maggots.” Don’t just believe me. Believe your own eyes:

A Time magazine profile of Brown published when his book came out in 1954 reported: “Scientist Brown is not confident that anything can be done, but he insists that population control is the first and essential measure; only by cutting their birth rates drastically can the crowded agricultural countries hope to enjoy the benefits of industrialization.”

If, as the White House claims, Holdren no longer believes that “that determining optimal population is a proper role of government,” then why does he still pay homage to one of the country’s most renowned population control advocates and plug his half-century-old tome advocating better-living-through-engineered-abortions? Don’t just take my word. Believe your own eyes:

***

Commenter Rogue Cheddar on Letterman and Holdren: “So if these two maggots get together, does that constitute a pulsating mass?”

Bracing for Letterman and Holdren’s “Top Ten Methods of Ridding the Planet of Undesirables”…

Another Failed Presidency

Another Failed Presidency

By Geoffrey P. Hunt

Barack Obama is on track to have the most spectacularly failed presidency since Woodrow Wilson.

In the modern era, we’ve seen several failed presidencies–led by Jimmy Carter and LBJ. Failed presidents have one strong common trait– they are repudiated, in the vernacular, spat out. Of course, LBJ wisely took the exit ramp early, avoiding a shove into oncoming traffic by his own party. Richard Nixon indeed resigned in disgrace, yet his reputation as a statesman has been partially restored by his triumphant overture to China.

 

George Bush Jr didn’t fail so much as he was perceived to have been too much of a patrician while being uncomfortable with his more conservative allies. Yet George Bush Sr is still perceived as a man of uncommon decency, loyal to the enduring American character of rugged self-determination, free markets, and generosity. George W will eventually be treated more kindly by historians as one whose potential was squashed by his own compromise of conservative principles, in some ways repeating the mistakes of his father, while ignoring many lessons in executive leadership he should have learned at Harvard Business School.  Of course George W could never quite overcome being dogged from the outset by half of the nation convinced he was electorally illegitimate — thus aiding the resurgence of the liberal wing of the Democratic Party.

 

But, Barack Obama is failing. Failing big.  Failing fast. And failing everywhere: foreign policy, domestic initiatives, and most importantly, in forging connections with the American people. The incomparable Dorothy Rabinowitz in the Wall Street Journal  put her finger on it: He is failing because he has no understanding of the American people, and may indeed loath them. Fred Barnes of the Weekly Standard says he is failing because he has lost control of his message, and is overexposed. Clarice Feldman of American Thinker produced a dispositive commentary showing that Obama is failing because fundamentally he is neither smart nor articulate; his intellectual dishonesty is conspicuous by its audacity and lack of shame.

 

But, there is something more seriously wrong: How could a new president riding in on a wave of unprecedented promise and goodwill have forfeited his tenure and become a lame duck in six months? His poll ratings are in free fall. In generic balloting, the Republicans have now seized a five point advantage. This truly is unbelievable. What’s going on?

 

No narrative. Obama doesn’t have a narrative. No, not a narrative about himself. He has a self-narrative, much of it fabricated, cleverly disguised or written by someone else. But this self-narrative is isolated and doesn’t connect with us.  He doesn’t have an American narrative that draws upon the rest of us. All successful presidents have a narrative about the American character that intersects with their own where they display a command of history and reveal an authenticity at the core of their personality that resonates in a positive endearing way with the majority of Americans. We admire those presidents whose narratives not only touch our own, but who seem stronger, wiser, and smarter than we are. Presidents we admire are aspirational peers, even those whose politics don’t align exactly with our own: Teddy Roosevelt, FDR, Harry Truman, Ike, Reagan.

 

But not this president. It’s not so much that he’s a phony, knows nothing about economics, is historically illiterate, and woefully small minded for the size of the task– all contributory of course.  It’s that he’s not one of us. And whatever he is, his profile is fuzzy and devoid of content, like a cardboard cutout made from delaminated corrugated paper. Moreover, he doesn’t command our respect and is unable to appeal to our own common sense. His notions of right and wrong are repugnant and how things work just don’t add up. They are not existential. His descriptions of the world we live in don’t make sense and don’t correspond with our experience.

 

In the meantime, while we’ve been struggling to take a measurement of this man, he’s dissed just about every one of us–financiers, energy producers, banks, insurance executives, police officers, doctors, nurses, hospital administrators, post office workers, and anybody else who has a non-green job. Expect Obama to lament at his last press conference in 2012: “For those of you I offended, I apologize. For those of you who were not offended, you just didn’t give me enough time; if only I’d had a second term, I could have offended you too.”

 

Mercifully, the Founders at the Constitutional Convention in 1787 devised a useful remedy for such a desperate state–staggered terms for both houses of the legislature and the executive. An equally abominable Congress can get voted out next year. With a new Congress, there’s always hope of legislative gridlock until we vote for president again two short years after that.

 

Yes, small presidents do fail, Barack Obama among them. The coyotes howl but the wagon train keeps rolling along.

Page Printed from: http://www.americanthinker.com/2009/08/another_failed_presidency.html at August 31, 2009 – 11:54:25 AM EDT

Kennedy and the KGB

Kennedy and the KGB

By Paul Kengor

Shortly after the announcement of Ted Kennedy’s death, I had already received several interview requests. I declined them, not wanting to be uncharitable to the man upon his death. Since then, I’ve seen the need to step up and provide some clarification.

The issue is a remarkable 1983 KGB document on Kennedy, which I published in my 2006 book, The Crusader: Ronald Reagan and the Fall of Communism (HarperCollins). The document is a May 14, 1983 memo from KGB head Victor Chebrikov to his boss, the odious Soviet General Secretary Yuri Andropov, designated with the highest classification. It concerns a confidential offer to the Soviet leadership by Senator Kennedy. The target: President Ronald Reagan. (A pdf  file of the original Russian language document and an English translation are available here.)

 

With Kennedy’s death, this stunning revelation is again making the rounds, especially after Rush Limbaugh flagged it in his “Stack of Stuff.” I’m being inundated with emails, asking basically two questions: 1) is the document legitimate; and 2) what does it allege of Senator Kennedy?

 

First off, yes, the document is legitimate. If it were not, I would have never reported it. Over the years, from my book to radio and web interviews, I’ve provided specifics. Briefly summarized, here are the basics:

 

The document was first reported in a February 2, 1992 article in the London Times, titled, “Teddy, the KGB and the top secret file,” by reporter Tim Sebastian. Russian President Boris Yeltsin had opened the Soviet archives. Sebastian discovered the document in the Central Committee archives specifically. When his article appeared in the Times, other on-site researchers dashed to the archives and grabbed their own copy. Those archives have been resealed.

 

The Times merely quoted the document and ran a tiny photo of its heading. Once I got ahold of it later, I published the entire text (English translation) in my book.

 

Importantly, when I published the document, Senator Kennedy’s office didn’t dispute its authenticity, instead ambiguously (and briefly) arguing with its “interpretation.” This was clever. The senator’s office didn’t specify whether this interpretation problem was a matter of my personal misunderstanding of the document or the misunderstanding of the document’s author, Chebrikov. Chebrikov couldn’t be reached for comment; he was dead.

 

So, what was the offer?

 

The subject head, carried under the words, “Special Importance,” read: “Regarding Senator Kennedy’s request to the General Secretary of the Communist Party Y. V. Andropov.” According to the memo, Senator Kennedy was “very troubled” by U.S.-Soviet relations, which Kennedy attributed not to the murderous tyrant running the USSR but to President Reagan. The problem was Reagan’s “belligerence.”

 

This was allegedly made worse by Reagan’s stubbornness. “According to Kennedy,” reported Chebrikov, “the current threat is due to the President’s refusal to engage any modification to his politics.” That refusal, said the memo, was exacerbated by Reagan’s political success, which made the president surer of his course, and more obstinate — and, worst of all, re-electable.

 

On that, the fourth and fifth paragraphs of Chebrikov’s memo got to the thrust of Kennedy’s offer: The senator was apparently clinging to hope that President Reagan’s 1984 reelection bid could be thwarted. Of course, this seemed unlikely, given Reagan’s undeniable popularity. So, where was the president vulnerable?

 

Alas, Kennedy had an answer, and suggestion, for his Soviet friends: In Chebrikov’s words, “The only real threats to Reagan are problems of war and peace and Soviet-American relations. These issues, according to the senator, will without a doubt become the most important of the election campaign.”

 

Therein, Chebrikov got to the heart of the U.S. senator’s offer to the USSR’s general secretary: “Kennedy believes that, given the state of current affairs, and in the interest of peace, it would be prudent and timely to undertake the following steps to counter the militaristic politics of Reagan.”

 

Of these, step one would be for Andropov to invite the senator to Moscow for a personal meeting. Said Chebrikov: “The main purpose of the meeting, according to the senator, would be to arm Soviet officials with explanations regarding problems of nuclear disarmament so they would be better prepared and more convincing during appearances in the USA.”

 

The second step, the KGB head informed Andropov, was a Kennedy strategy to help the Soviets “influence Americans.” Chebrikov explained: “Kennedy believes that in order to influence Americans it would be important to organize in August-September of this year [1983], televised interviews with Y. V. Andropov in the USA.” The media savvy Massachusetts senator recommended to the Soviet dictator that he seek a “direct appeal” to the American people. And, on that, “Kennedy and his friends,” explained Chebrikov, were willing to help, listing Walter Cronkite and Barbara Walters (both listed by name in the memo) as good candidates for sit-down interviews with the dictator.

 

Kennedy concluded that the Soviets needed, in effect, some PR help, given that Reagan was good at “propaganda” (the word used in the memo). The senator wanted them to know he was more than eager to lend a hand.

 

Kennedy wanted the Soviets to saturate the American media during such a visit. Chebrikov said Kennedy could arrange interviews not only for the dictator but for “lower level Soviet officials, particularly from the military,” who “would also have an opportunity to appeal directly to the American people about the peaceful intentions of the USSR.”

 

This was apparently deemed crucial because of the dangerous threat posed not by Andropov’s regime but — in Kennedy’s view — by Ronald Reagan and his administration. It was up to the Kremlin folks to “root out the threat of nuclear war,” “improve Soviet-American relations,” and “define the safety for the world.”

 

Quite contrary to the ludicrous assertions now being made about Ted Kennedy working jovially with Ronald Reagan, Kennedy, in truth, thought Reagan was a trigger-happy buffoon, and said so constantly, with vicious words of caricature and ridicule. The senator felt very differently about Yuri Andropov. As Chebrikov noted in his memo, “Kennedy is very impressed with the activities of Y. V. Andropov and other Soviet leaders.”

 

Alas, the memo concluded with a discussion of Kennedy’s own presidential prospects in 1984, and a note that Kennedy “underscored that he eagerly awaits a reply to his appeal.”

 

What happened next? We will never know. None of the Kennedy admirers and court composers who serve as “journalists” bothered to ask, even with decades available to pose questions, beginning back in January 1992 when the highly reputable London Times broke the story.

 

In 2006, when my book was released, there was a virtual media blackout on coverage of the document, with the exception of conservative media: talk-radio, Rush Limbaugh, some websites, and mention on FoxNews by Brit Hume. Amazingly, I didn’t even get calls from mainstream reporters seeking to shoot down the story. I had prepared in great detail to be grilled on national television, picturing the likes of Katie Couric needling me. I didn’t need to worry.

 

I worked up a detailed op-ed on the document, where I even played devil’s advocate by defending Kennedy, trying to get at his thinking, being as fair as possible. No major newspapers would touch it. The Boston Globe editors refused to acknowledge it or reply to my emails. The editor at the New York Times confessed to being “fascinated” by the piece but conceded that he wouldn’t “be able to get it in.”

 

One editor at a West Coast newspaper, a genuinely fair liberal, considered it carefully. We went back and forth. I was shocked to see that neither the editor nor his staff would do any investigating, not placing a single phone call to Kennedy’s office. In the end, the editor rejected the piece, telling me: “I just can’t believe Kennedy would do something that stupid.”

 

Alas, here we are now, after Kennedy’s death, and I’m reliving the same experience, as no one from the mainstream media has contacted me. Liberal reporters lionized Ted Kennedy in life and have begun the canonization process in death. They are liberal activists first, and journalists second.

 

Finally, a postscript for these liberal Democrat “journalists:” We know they don’t care that Ted Kennedy did this to Ronald Reagan. Fine. Well, how about this? As the Mitrokhin Archives reveal, Senator Kennedy did something similar to President Jimmy Carter in 1980 — his own political flesh and blood.

 

Does that story interest liberal reporters? No. I likewise noted that gem in 2006. I didn’t get a single media inquiry.

 

It will be left to future generations to examine these truths. As for Senator Ted Kennedy’s motivations for doing what he did with the Soviet leadership? Alas, now we can definitively say, he will never tell us. The liberal media protected him, all the way to the grave.

 

Paul Kengor is author of The Crusader: Ronald Reagan and the Fall of Communism (HarperPerennial, 2007) and professor of political science at Grove City College. His latest book is The Judge: William P. Clark, Ronald Reagan’s Top Hand (Ignatius Press, 2007).

Page Printed from: http://www.americanthinker.com/2009/08/kgb_kennedy_the_ted_kennedy_i.html at August 31, 2009 – 11:48:37 AM EDT

Why Americans are Up in Arms

Why Americans are Up in Arms
By: Floyd and Mary Beth Brown
Monday, August 31, 2009

 


Will we allow or freedoms to slip away and vanish?
Leftist elites are up in arms about Americans up in arms. At two recent Obama town hall meetings, men exercising their Second Amendment rights were spotted carrying firearms. While we do not condone threatening the president or anyone else for that matter, these citizens are well within their rights. It is legal to carry a firearm while demonstrating to protect your liberties.

In New Hampshire, William Kostric showed up near a town hall meeting carrying a pistol, and a placard proclaiming, “It is time to water the tree of liberty!” in reference to the famous Thomas Jefferson quotation, “The tree of liberty must be refreshed from time to time with the blood of tyrants and patriots.” Kostric had no intention of hurting the president; he was exercising his rights and making a political statement using the pistol as a visual reminder. When interviewed by Chris Matthews of MSNBC, Kostric said he went to the town hall because he “wanted people to remember the rights that we have, and how quickly we are losing them.” After making this statement, Chris Matthews verbally accosted him and compared him to John Wilkes Booth and other fanatics. Kostric clearly explained that he was not advocating violence, but was practicing his constitutional right to bear arms.

The second incident prompted the media to erroneously pronounce the opponents of Obamacare as racist rednecks. A young man named Chris wore an AR-15 slung over his shoulder with a 9 mm pistol strapped on his hip. Roughly a dozen others were also carrying firearms with Chris outside an Obama appearance in Arizona. Earlier, these individuals coordinated their right to openly carry firearms with the Phoenix Police Department. They deliberately did this to show the country that the Phoenix police are very supportive of their rights to keep and bear arms. The elitist media missed the whole point and went ballistic.

Chris Matthews fretted about assassination attempts, while Contessa Brewer stammered, “there are questions about whether this has racial overtones… I mean here you have a man of color in the presidency and white people showing up with guns.” MSNBC’s pop culture analyst Touré anxiously said, “I’m not going to be surprised if we see somebody get a chance and take a chance and really try to hurt him.” However, these talking heads glossed over a crucial detail: the man carrying the AR-15 was black. They were dishonestly trying to portray the group of gun toting citizens in Arizona as racists. MSNBC cleverly edited the video footage to show only the semi-automatic rifle, hiding the face of its bearer, Chris, an African American.

The liberal media conveniently ignore that in 2000 at one of George W. Bush’s events, Black Panthers demonstrated while carrying firearms. The Black Panthers actually have a history of murder and violence in contrast to the Phoenix demonstrators. The Panthers, just as newsworthy, generated no buzz at the time. They should have been referenced in light of recent events by these talking heads.

These liberal media elites outraged by gun-bearing citizens showing up at Obama events have probably never used a gun in real life. Chris Matthews, Rick Sanchez, Contessa Brewer and the rest who assume guns represent violence don’t likely own a firearm. Most Americans don’t see firearms as a symbol of violence, like our founding fathers, they see them as a tool for personal protection.

The founders recognized the significance and importance of firearms. “Firearms stand next in importance to the constitution itself,” George Washington movingly said. “They are the American people’s liberty teeth and keystone under independence … from the hour the Pilgrims landed to the present day, events, occurrences and tendencies prove that to ensure peace security and happiness, the rifle and pistol are equally indispensable … the very atmosphere of firearms anywhere restrains evil interference — they deserve a place of honor with all that’s good.”

William Kostric and Chris have it right, if we don’t stand and demonstrate peacefully for all of our freedoms, they will quickly slip away and vanish. Remember, it’s much easier to hold onto something, than try and get it back after you’ve lost it.


Floyd and Mary Beth Brown are bestselling authors and speakers. Mary Beth’s latest book is featured at www.condibook.com. Together they maintain a blog at www.2minuteview.com.

The Worst is Yet to Come

The Worst is Yet to Come
By: Vasko Kohlmayer
Monday, August 31, 2009

 


When there will be no one to finance the ultimate bail out.
“Today, we’re pointed in the right direction… While we’ve rescued our economy from catastrophe, we’ve also begun to build a new foundation for growth,” said President Obama recently. 

Unfortunately, the president’s declarations and all the talk about the green shoots by his acolytes in the media are merely wishful thinking. Far from rescuing it, the Bush/Obama stimulus has dealt a damaging blow to the economy, and one which will exert its harmful effects for years to come. We only need to take a quick look at the big picture to see why.

Last year the American economic system experienced major trauma as more and more banks, companies and individuals were brought to the verge of bankruptcy. In most cases their plight was caused by their inability to service their liabilities. Buoyed by the easy availability of cheap credit and loose monetary policy of preceding years, government, commercial entities as well as private persons had taken on unprecedented levels of debt. Paul Craig Roberts, formerly Assistant Secretary of the Treasury in the Reagan Administration, correctly points out that we lived in “a debt economy.” Writing in Journal Sentinel, John Torinus, a banker with experience in leveraged buyouts, described the astonishingly lax mindset that had come to dominate the whole sphere of borrowing: 

The investment banks that crashed and burned were leveraged as high as 35 to 1. Their 3% equity base disappeared in a sinkhole of excessive debt… The excessive leverage went far beyond the investment banks. Homebuyers could get insured or federally backed mortgages with 5% down or sometimes less. They were leveraged 20 to 1 or more. Credit checks were loose. 

The cheap credit – which was made possible by artificially low interest rates – brought on the borrowing frenzy to a feverish pitch. Paul Craig Roberts observes: 

The debt economy caused Americans to leverage their assets. They refinanced their homes and spent the equity. They maxed out numerous credit cards. They worked as many jobs as they could find. Debt expansion and multiple family incomes kept the economy going. 

Toward the end of 2008 the overall debt level – public, commercial and personal – in the American economy was well over $50 trillion. This was three and a half times the size of the country’s total economic output (around $14 trillion) and more than double the debt level of 2000. At over 350 percent, this made ours the most over leveraged economy in history. To put it bluntly, all of us – individuals, businesses and especially government – lived  beyond our means. The American economy was over-leveraged through and through. 

The racket held while the economy boomed. But once it seized, the over-indebtedness became unsustainable and things began falling apart. Describing this process, Nouriel Roubinini, one of America‘s leading financial commentators, wrote in Forbes: 

Americans lived in a “Made-off” and Ponzi bubble economy for a decade or even longer. Madoff is the mirror of the American economy and of its over-leveraged agents: a house of cards of leverage over leverage by households, financial firms and corporations that has now collapsed in a heap. 

Painful as the impending bankruptcies tsunami would have been, it would have ultimately delivered a remedy. In order for an economic system to remain viable, excessive indebtedness must be corrected and those responsible chastised for their misjudgment. It is for this purpose that the market evolved the institution of bankruptcy. Had it been left to unfold unimpeded, the process would have reduced the overall leverage and the economy would have eventually found itself on a sound footing once again. 

The government, however, resolved not to allow the market do its work. In a misguided attempt to avert the necessary pain, it began propping up failing enterprises and individuals with more easy credit and direct cash injections. And even though it was initially advertised as a relatively short-term and targeted effort, the operation has been ongoing for nearly nine months while continually expanding in scope. 

This approach is fundamentally flawed on a number of levels. To begin with, the government’s actions interfere with the market’s corrective forces. But the most obvious problem is that the government simply does not have the money to do this. It is ironic that even before it embarked on its  “rescue” effort, the government itself was already more deeply indebted than the companies it sought to save. With some $65 trillion in total obligations, the federal government was, in fact, the most over-leveraged institution in America. 

The rescue has unsurprisingly turned out to be a singularly expensive undertaking. So much so that the government’s deficit at the end of this fiscal year will exceed the previous record by nearly a factor of four. At some 11 percent of GDP, this is also the highest peacetime deficit in American history when measured as a portion of the overall economy. 

If the government’s strategy – bailing out debt-ridden companies and individuals by enlarging its own astronomical debt – seems misguided, it is. There is an old truism that says you cannot get out of debt by running deeper into debt. And yet this is precisely what the government has been trying to do. This is why its approach will ultimately fail. 

The authors of the latest Comstock Partners special report put their finger on the crux of the matter. Countering the conventional wisdom of the spend-and-stimulate Keynesians, they write: 

We, however, don’t believe that the U.S. massive stimulus programs and money printing can solve a problem of excess debt generation… If this were the answer Argentina would be one of the most prosperous countries in the world. This excess debt actually resulted from the same money printing and easy money that we are now using to alleviate the pain. 

The bailouts reward bad management and irresponsible businesses practices and forestall the remedy the market is trying to administer. Contrary to what we have been told, all those injections of credit and capital do not contain a cure. Instead they are filled with the noxious serum of public debt whose toxic effects are slowly poisoning the whole system. The festering sores of the economic crisis have been only temporarily masked with government made bailout band aids, but those are no thicker than a dollar bill. The sickness will eventually break out again, but next time it will hit with greater intensity. 

Our over-leveraged government can give out those lavish bailouts only because it can still borrow at low interest. But bond investors have been growing increasingly vocal in expressing their doubts about the government’s ability to make good on its debts. It is only a matter of time before they start demanding higher bond yields. When that happens, borrowing will become prohibitively expensive. Saddled with an enormous debt and with no one to advance easy cash, the government will find itself in the same position as the companies it is trying to save today. When that moment finally arrives, there will be no one to finance the ultimate bail out. If you thought that letting a couple of big banks fail would have been bad, wait what happens when the federal government itself goes under. 

Make no mistake: The worst is still yet to come.


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