What Caused the Economic Crises?

see Wall Street Journal October 28, 2009 op/ed piece by Jeremy J. Siegel at http://online.wsj.com/article_email/SB10001424052748703573604574491261905165886-lMyQjAxMDA5MDIwODEyNDgyWj.html#printMode

■ "Neither the rating agencies' mistakes nor the overleveraging by financial firms was the fault of an academic hypothesis."

■ " According to data collected by Prof. Robert Shiller of Yale University, in the 61 years from 1945 through 2006 the maximum cumulative decline in the average price of homes was 2.84% in 1991. If this low volatility of home prices persisted into the future, a mortgage security composed of a nationally diversified portfolio of loans comprising the first 80% of a home's value would have never come close to defaulting. The credit quality of home buyers was secondary because it was thought that underlying collateral—the home—could always cover the principal in the event the homeowner defaulted. These models led credit agencies to rate these subprime mortgages as "investment grade."

■ " But this assessment was faulty. From 2000 through 2006, national home prices rose by 88.7%, far more than the 17.5% gain in the consumer price index or the paltry 1% rise in median household income. Never before have home prices jumped that far ahead of prices and incomes."

■ " As home prices continued to climb and subprime mortgages proliferated, Mr. Greenspan and current Fed Chairman Ben Bernanke were perhaps the only ones influential enough to sound an alarm and soften the oncoming crisis. But they did not. For all the deserved kudos that the central bank received for their management of the crisis after the Lehman bankruptcy, the failure to see these problems building will stand as a permanent blot on the Fed's record."

Why ObamaCare is Unpopular

See Wall Street Journal October 26, 2009 op/ed piece by Arthur C. Brooks at http://online.wsj.com/article/SB10001424052748704335904574495131591949574.html

■ "Americans recoil at policies that strip choices from citizens and pass them to bureaucrats. ObamaCare systematically does so. The current proposals in Congress would effectively limit choice across the entire spectrum of health care: What kind of health insurance citizens can buy, what kind of doctors they can see, what kind of procedures their doctors will perform, what kind of drugs they can take, and what treatment options they may have."

■ "Americans are cold to a health-care system that effectively rewards individuals for waiting to get insurance until they get sick—subsidizing their coverage by taxing those who responsibly carry insurance in good times and bad."

■ "Already, the Census Bureau tells us that 21% of the uninsured are in households earning at least $75,000"

■ "ObamaCare discourages personal ambition. The proposed reforms will institute a set of government mandates, price controls and other strictures that will make highly trained specialists, drug researchers and medical device makers less valued now and in the future. Americans understand that when you take away the incentive to make money while saving lots of lives, the cures, therapies and medical innovations of tomorrow may never be discovered."

■ "An April 2009 survey conducted by the polling firm Ayers, McHenry & Associates for the conservative nonprofit group Resurgent Republic asked respondents which of the following statements about the role of government came closer to their view: (a) "Government policies should promote fairness by narrowing the gap between rich and poor, spreading the wealth, and making sure that economic outcomes are more equal"; or (b) "Government policies should promote opportunity by fostering job growth, encouraging entrepreneurs, and allowing people to keep more of what they earn." Sixty-three percent chose the second option; just 31% chose the first."

■ "The health-care debate is part of a moral struggle currently being played out over the free enterprise system. It will be replayed in every major policy debate in the coming months, from financial regulatory reform to a cap-and-trade system for limiting carbon emissions. The choices will ultimately always come down to competing visions of America's future. Will we strengthen freedom, individual opportunity and enterprise? Or will we expand the role of the state and its power?"

Hoover & Roosevelt Tax Increases Prolonged Depression

Let's make permanent the Bush tax cuts. Let's learn from history. President Obama increasing spending and taxes is not the way to get private employers to create jobs and hire employees.

See September 22, 2009 op/ed piece by Taxes, Depression, and Our Current Troubles by Dr. Arthur B. Laffer at http://online.wsj.com/article/SB10001424052970203440104574402822202944230.html

The sub headline is "Tariffs, rising state and federal taxes, and currency devaluation ruined the 1930s, and they could do the same today."

■ "The damage caused by high taxation during the Great Depression is the real lesson we should learn."
■ "The Smoot-Hawley tariff of June 1930 was the catalyst that got the whole process going. It was the largest single increase in taxes on trade during peacetime and precipitated massive retaliation by foreign governments on U.S. products."
■ "Huge federal and state tax increases in 1932 followed the initial decline in the economy thus doubling down on the impact of Smoot-Hawley."
■ "There were additional large tax increases in 1936 and 1937 that were the proximate cause of the economy's relapse in 1937."
■ "beginning in 1932 the lowest personal income tax rate was raised [under Hoover] to 4% from less than one-half of 1% while the highest rate was raised to 63% from 25%."
■ Under Hoover "The corporate rate was raised to 13.75% from 12%. All sorts of Federal excise taxes too numerous to list were raised as well. The highest inheritance tax rate was also raised in 1932 to 45% from 20% and the gift tax was reinstituted with the highest rate set at 33.5%."
■ "In 1934, during the Roosevelt administration, the highest estate tax rate was raised to 60% from 45% and raised again to 70% in 1935. The highest gift tax rate was raised to 45% in 1934 from 33.5% in 1933 and raised again to 52.5% in 1935. The highest corporate tax rate was raised to 15% in 1936 with a surtax on undistributed profits up to 27%."
■ "In 1936 the highest personal income tax rate was raised yet again to 79% from 63%"
■ "in 1937 a 1% employer and a 1% employee tax was placed on all wages up to $3,000."
■ "In 1929, state and local taxes were 7.2% of GDP and then rose to 8.5%, 9.7% and 12.3% for the years 1930, '31 and '32 respectively."
■ "the Bush tax cuts are set to expire in 2011; and additional taxes to pay for health-care and the proposed cap-and-trade scheme are on the horizon."

Al Gore's First (and Probably Last) Q&A - A Nobel Prize winner takes a few questions

See http://online.wsj.com/article/SB10001424052748704107204574469310880671246.html

October 12, 2009 by JOHN FUND

"Before President Obama won his Nobel Peace Prize, the real signal that the Norwegian Nobel committee had become politicized was its 2007 prize to Al Gore, largely for his global warming film 'An Inconvenient Truth'."

For a public figure, Mr. Gore has been strangely reluctant to answer questions or debate the more controversial parts of his work. But over the weekend, he deigned to take a few questions during a meeting of the Society of Environmental Journalists in Madison, Wisconsin.
Irish documentary filmmaker Phelim McAleer was in the line. A former Financial Times journalist, his new film, "Not Evil, Just Wrong," is a direct refutation of Mr. Gore's thesis and warns that rushing to judgment in combating climate change would threaten the world's poor. When his turn came, Mr. McAleer asked Mr. Gore about a court case in Britain in which a parent had objected to "An Inconvenient Truth" being shown to British schoolchildren because it was largely propaganda, not science.

Mr. Gore swatted away the question by claiming the judge had found in favor of his film. He also briefly addressed one of the objections to his film by scoffing at claims that polar bears weren't an endangered species. Mr. McAleer tried to follow up by pointing out that polar bear populations were increasing, but his microphone was quickly cut off. Organizers insisted that several other people were waiting with questions and they had to move on.

In fact, Mr. Gore didn't answer Mr. McAleer's question and was wrong on the facts. The British court found that An Inconvenient Truth "is a political film" riddled with scientific errors. The judge also held that requiring the film to be shown in schools would be a violation of law, unless accompanied by "guidance" pointing out its errors. The judge concluded that the claimant who objected to the film "substantially won this case by virtue of my finding that, but for the new guidance note, the film would have been distributed in breach of sections 406 and 407 of the 1996 Education Act."

As for polar bears, Mr. McAleer was correct: Surveys show their numbers are increasing.

Mr. McAleer, whose film premiers this weekend, says he's more disappointed in the environmental journalists who give Mr. Gore cover than in the former vice president. Mr. Gore is simply doing what any propagandist with a weak case would do -- avoiding serious debate or exchange. To quote the late William F. Buckley, There is a reason that baloney rejects the grinder'."

President Obama Wobbliness Has Done Incalculable Damage

See http://online.wsj.com/article/SB10001424052748704107204574469561899482856.html

Robert D. Kaplan writing in the Atlantic:

"Even if Obama does end up making the correct decision on Afghanistan strategy (by which I mean adding troops, since counterinsurgency is manpower-intensive), the public agony over his deliberations may already have done incalculable damage. The Afghan people have survived three decades of war by hedging their bets. Now, watching a young and inexperienced American president appear to waiver on his commitment to their country, they are deciding, at the level of both the individual and the mass, whether to make their peace with the Taliban—even as the Taliban itself can only take solace and encouragement from Obama's public agonizing.

Meanwhile, fundamentalist elements of the Pakistani military, opposed to the recent crackdown against local Taliban, are also taking heart from developments in Washington. . . .This is how coups and revolutions get started, by the middle ranks sensing weakness in foreign support for their superiors.
Obama's wobbliness also has a corrosive effect on the Indians and the Iranians. India desperately needs a relatively secular Afghan regime in place to bolster Hindu India's geopolitical position against radical Islamdom, and while the country enjoyed an excellent relationship with Bush, Obama's dithering is making it nervous. And Iran, in observing Washington's indecision, can only feel more secure in its creeping economic annexation of western Afghanistan. "

Laguna Beach Historical Society Program Monday October 19th "Growing Up in Laguna During the Great Depression" by Peter Kaye

See Photo Main Beach Pier destroyed in 1939 by so-called hurricane and photo of Franklin D. Roosevelt in Laguna July 16 1938

The next Laguna Beach Historical Society program will be Monday, October 19th "Growing Up in Laguna During the Great Depression" by Peter Kaye. The program is from 7:30 p.m. to 9:30 p.m. and will be held at the Laguna Beach City Hall Council Chambers which is at 505 Forest Avenue. The public is invited and there is no charge.

Peter Kaye, author of the book Contrarian, will read and expand upon portions of his book Contrarian with special emphasis on President Franklin D. Roosevelt's stopover in Laguna Beach in 1938, the hurricane of 1939 and how Laguna Beach reacted to the Japanese attack on Pearl Harbor on December 7, 1941.

Peter Kaye is former newspaper reporter, television producer and commentator, campaign aide and participant in sixteen national political conventions, Kaye has released Contrarian, a fast-paced memoir detailing his fifty-five years in politics and reporting.

The Laguna Beach Historical Society has a new web site to view historic photographs at www.Laguna-Historical-Society.smugmug.com. For those having treasured historic photographs or printed material, the Historical Society is happy to scan them electronically and return them to the owners. This way there will be a record preserved for future generations without the necessity for the owners to relinquish the item. Viewers are invited to leave comments to help the Society better identify or date the photographs. At the web site, prints can also be purchase; for example an 8” by 10" glossy for $6.97 plus tax and shipping.

Questions on photographs or Laguna Beach history are invited to be sent to info@LagunaHistory.org.

Step back into 1920s Laguna by visiting the Laguna Beach Historical Society Murphy-Smith Bungalow which located at 278 Ocean Avenue and which is opened to the public at no-charge every Friday, Saturday, and Sunday from 1:00 p.m. to 4:00 p.m. Volunteers are needed to greet visitors to the Murphy-Smith Bungalow and should call 939-7257.

Those interested in supporting and joining the Laguna Beach Historical Society should send $15 per individual, $25 per household or $50 per business/organization to 278 Ocean Avenue, Laguna Beach CA 92651. The Laguna Beach Historical Society is a section 501(c)(3) non-profit organization. Tax ID #33-0519882.

French President Ridicules Obama

"Since 2005, Secretary-General, the international community has called on Iran to engage in dialogue. An offer of dialogue was made in 2005… 2006…2007…2008…2009…But what did the international community gain from these offers of dialogue? Nothing. More enriched uranium, more centrifuges, and on top of that, a statement by Iranian leaders proposing to wipe a UN member State off the map."

Nicolas Sarkozy 9/24/09 at UN

Cash for Clunkers Comes Crashing Down

See http://blog.heritage.org/2009/10/02/cash-for-clunkers-comes-crashing-down/

"The dramatic decline in sales reported Thursday by the Big Three automakers suggested the extent to which the stimulus act has propped up the economy. The government’s wildly popular 'Cash for Clunkers' program drove consumer spending to its highest level in eight years in August. But after it ended, so did the growth in auto sales.

General Motors’ sales plunged 36 percent in September compared with August. Ford plummeted 37 percent. Chrysler dove 33 percent.

Cash for clunkers 'was a one-time boost of sales followed by a crater,' said Ben Herzon, an economist at Macroeconomic Advisers. The firm forecast that the program was likely to have no effect as a stimulant for national economic output.”