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Location: granite bay, CA
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Today's History Lesson

"...the Jacksonians proclaimed that 'the world is governed too much'."
 
"The single most important heritage from the revolutionary age was freedom. Individual liberty. That was an American's most prized possession. That is what had to be preserved. That is what was at stake in the 1820s and what had been jeopardized by the corruption of the government following the War of 1812, and that was the essence of Jackson's political leadership of this country after he concluded his military career. There really was no other issue. Everything else - banking, internal improvements, tariffs, even slavery in a strange and peculiar way - was secondary. Individual liberty. That was the basic question."
 
"From colonial days through the Revolution and well into the nineteenth century, Americans believed that those who exercised power were naturally inclined to suppress liberty and that they regularly devised means to limit if not abrogate the rights of the people. They viewed corruption as power's greatest weapon and virtue as freedom's greatest defense. The struggle between liberty and power produced the Revolution... But the dangers to freedom persisted. They persisted as long as power could be concentrated and the operation of government corrupted. The only defense rested upon the virtue of the American people."
 
Robert Remini, "Andrew Jackson, The Course of American Freedom, 1822-1832"
 
 
 
 
 
 
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Hillary Secretary of State?

Jeff Macke just said pish-posh. She's going to the Supremes. That's right, it's going to be Madame Justice Hillary Rodham.
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Investment Thought of the Day

The excellent Fast Money had a feature today noting that this week has seen quite a spate of insider buying among top corporate executives. By itself? Interesting, but not intriguing, I once heard a judge remark.
 
What makes this intriguing, and not merely interesting, is that this comes at the same time as we also witnessed (a) a key reversal in the major averages (Thursday), and (b) epoch-defining hedge fund redemptions. Thus, rather than simply conclude that certain execs got new credit lines, or were instructed by lawyers to make votes of confidence with their checkbooks, this confluence of events suggests a significant tradeable "bottom".
 
I am not sanguine on the medium to long-term prospects for either the stock market or the U.S. economy. Certainly, I'm not encouraged about the short-term prospects for the general economy, either. However, please note that I said "tradeable". Even the worst bear markets have rallies. But be very, very careful out there.
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Mort Kondracke is Too Dumb for New Media

I don't understand how Mort Kondracke can find work. I've heard him at least twice expounding this goofy notion that everything will be fine with BO as president because things will just return to the status quo ante of Good King Billy who, you may recall, waved his magic wand and made everyone prosper (unlike Bad King George, who stole from the poor and gave to his rich friends and Halliburton).
 
This is the sort of kindergarten logic the Left has been using for years to undermine traditional American values. What, the Republican win in 1994 had no impact on 1990s economic growth? Clinton's lowering of the cap gains tax, NAFTA, welfare reform, and declaring the era of big government over (all done with significant Republican, and minimal Democratic, support), meant nothing? All success was due to higher personal income tax rates?
 
We, as conservatives, have to start calling out amiable dunces like Mort on all such instances of myth-making and magical thinking. Make them connect the dots on economic cause-and-effect at least at the high school level, or laugh them off the stage. If Saul Alinsky's tactics (the tactics of the dirtbag) are good for the Left, we're going to have to devise our own, more respectable version. If we can't do this, starting with rejecting the silly and/or insidious premises of the central planners and comand-and-controllers, conservatism's walk in the wilderness is going to last the rest of my lifetime - and I intend to live a few more decades. I remember the 1970s all too well. The more we let the Left re-write history, the more we're going to have to repeat the worst of it (did someone else once say something like this?).
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Quote of the Day

"The slovenliness of our language makes it easier for us to have foolish thoughts." George Orwell.

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Change We Can Believe In

The day Americans hear a Democratic president deliver these words, we'll know we have change we can believe in. "The new Australian Labor government... is... unashamedly pro-market, pro-business, and pro-globalization. That is our policy orientation because we believe it is in the best interests of the working families who trusted us with the responsibility of government." Geez, this guy sounds like one of your grandfather's Democrats, as opposed to one of that crowd of Chicago socialists soon to be infesting Washington.

I wonder if Prime Minister Kevin Rudd has heard of Hauser's Law. If indeed the world is so kind as to offer us a "third way" that actually works (as opposed to simply being a slow boat to socialism), "social justice", leavened by the tax policy discipline suggested by Hauser's Law, would be it. That is, if you want to grow a social safety net (not an unalloyed good in my opinion), do it in the context of a dynamic, growth-oriented economy that fattens government coffers enough to dabble in charity, while providing opportunity for those with the combination of talent and motivation to increase their circumstances without government aid. Pro-market, pro-business, pro-globalization, and ANTI-TAX. To the extent P.M. Rudd follows the prescription he has set out, Australia will be worth watching.
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Today's Reading from U.S. History

In view of Hamilton's expansive interpretation of the Constitution's General Welfare clause, Jefferson
 "...wondered somberly whether Americans still lived under a limited government. He dreaded the powers that would accrue to government under his colleague's loose reading of the Constitution. He grumbled that 'under color of giving bounties for the encouragement of particular manufactures,' Hamilton was trying to insinuate that the "general welfare" clause 'permitted Congress to take everything under their management which they should deem for the public welfare.' For Jefferson, this opened wide the floodgates to government activism."

Ron Chernow, "Alexander Hamilton".
 
 
 
      
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Herbert Hoover, "Wonder Boy"

For reasons no one should be happy to experience, it seems that with each passing day, the sad saga, and the lessons, of President Herbert Hoover, a.k.a. "Wonder Boy", become more relevant. I graduated from college (UCD) in 1982, so it is likely due to this generational circumstance that I was surprised to read recently that Mr. Hoover, from 1948-1964, was a near annual member of the Gallup organization's Ten Most Admired American Men list. Apparently he invented the concept of the "ex-President", and made the most of it. As a self-proclaimed Great Depression aficionado, this is all the more surprising - I thought that all he ever did was cause the Great Depression. That's a heckuva way to become "Most Admired".

The real story, to the extent it can ever be known, is, as they say, more complicated.  Certainly, the notion that Mr. Hoover was indolent, ignorant, or incompetent, or a tool of Wall Street, is categorically false. In fact, the man was hypercompetent, decisive, dynamic, and, if anything, "progressive". The "Wonder Boy" label was derisively applied courtesy Calvin Coolidge, who didn't always appreciate Hoover's peripatetic and reformist nature. Moreover, FDR's 1932 campaign accused him of "leading the country down the path to socialism" with his public works initiatives (this calls to mind Zhou Enlai's quip to Henry Kissinger in 1972 that it was "too early to say" what the consequences were of the French Revolution!). Indeed, New Deal "Brain Trusters" admitted that the New Deal was little more than a continuation of Hoover's initiatives.
 
Furthermore, in marked contrast to our "Wonder Boy" of the moment, Herbert Hoover had real accomplishments on his resume when he entered the White House. A genius engineer, he made a fortune in private enterprise, before rising to the Oval Office on the strength of his handling of the Mississippi River flood disaster of 1927 - not a surprising feat given his bravura performance as coordinator of famine relief efforts both in western Europe during World War I, and Russia in the 1920s, which accomplishments earned him worldwide acclaim as a humanitarian. Clearly, this man was no kind of "accidental" president.

And so, this "Master of the Universe", if ever there was one, was magnificently ill-suited to practice the art of "masterful inaction" (to borrow a phrase from Paul Johnson). Thus the financial panic of 1929 descended into the greatest depression in the history of modern economies. His confusing and contradictory panoply of initiatives (public works, or fiscal tight-fistedness; lower taxes, or Smoot-Hawley) is frighteningly reminiscent of the hyperactivity we see in Washington today. Alas, the lesson of Katrina is: Washington better do something. The lesson of economic history is: it's probably better if Washington does nothing.
 
Economist Thomas Sowell, in his IBD column yesterday, warns against placing thy faith in princes. Economies have been plagued since time immemorial by the folly of the expert: the notion that because one is spectacularly knowledgeable or skillful in some narrow pursuit, such person is expert in everything. I think Herbert Hoover believed - and not without good reason - that he could do anything, and that anything he touched would turn to gold. It always had! I also think that this is the essential conceit of the Obamessiah. His Will shall Triumph over the tides, over the terrorists, and over the economic affairs of billions. Because he wills it, the planet shall heal, and the economy too. I think he would be wise to recall the injunction of another president: "Government isn't the solution to our problems; government is the problem". Now is not the time to make government "cool again".
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Quote of the Day

"The ignorance of Ph.D.s is still ignorance, and high-IQ groupthink is still groupthink, which is the antithesis of real thinking." Thomas Sowell.
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Jeff Macke Rocks

Fast Money rocks generally, but what's amazing is this guy is constantly coming up with this stuff. What does Henry Paulson's office look like? "A Hang on Kitty poster, and a calendar with a new, big red X on the date every morning". 
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What's the Catalyst?

Today the yield on the one-month treasury reached a low of 0.01%, before closing at 0.04%. What's next, send our money to the treasury and pay them to keep it away from us? If this doesn't reflect a vote of no confidence in the direction of economic policy (as the Dow closes at 8282, down 37-odd percent for the year), what would?
 
While on vacation during the summer of 2007, a delighted relative noted that the Dow was nearing an all-time high (which it actually achieved in October). I recall this moment because as I searched my brain for a clever take that would reflect similar optimism, I came up empty. Not that this would be so notable. However, what stuck with me was what my brain told me to say in response: New high? So what? I say sell. What's the catalyst for growth and higher prices? The housing bubble has run it's course, and now we just have to hope it doesn't implode completely. What's going to replace it as a catalyst? The Fed is too worried about inflation to drop rates, we know that. And since the election of 2006, we know there's absolutely zero hope that some brilliant moves in the fiscal arena will pick up the slack. So what's the catalyst to the upside? (Aside: unwisely, I did not put my money where my mouth wanted to be.)
 
It looks to me like this is the question investors are asking today. What's the catalyst? No one knows where that TARP money is going, or why. The Obamessiah's economic program looks like a blueprint for pre-Thatcher Britain. Rescuing GM is going to jump-start the economy? Raising taxes on risk taking? I'm feeling gloomy.
 
 
 
 
 
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Saturday Night Fever-nomics

   Larry Kudlow posted some interesting graphics today (kudlowsmoneypolitics.blogspot.com) to support a thesis I think bears repeating: the recession we are in NEED NOT be terribly severe. Here's his argument in a nutshell: the price of gasoline is collapsing to a more "normal" level (in terms of per capita disposable income); and the credit markets are loosening. Regarding the latter point, the graphic of the 3-month libor tells the story best. The rate had been steady-as-she-goes at about 2.8% until mid-September (and I really should be back at school), when it exploded 200 basis points in a month's time. Now, in only another month, it has collapsed to a 2.175 close this afternoon. Moreover, the 10-year is at 3.75%, and the 6-month is at 0.81%. Larry is right: all of this is great news for everyone who wants a strong economy and a quick return to GDP growth. 

   These data points suggest strongly that the credit markets are returning to rationality. There is little appetite for risk, yet for the moment, there is little fear of inflation. This is all as it should be during a contraction. Low borrowing costs should eventually attract entreprenuerial activity, and a new recovery should begin soon enough. The business cycle was never repealed; when recession hits, the market adjusts, and growth returns (where government doesn't interfere).
 
    Mr. Kudlow ended his piece with the following:
 
         "The bottom line is that we are experiencing short-run pain as excesses are wrung out
           of the
financial system. It's all part of the business cycle. When the dust clears, the 
           mustard seeds of
the next expansion will begin to bloom."
 
   Sadly, I'm afraid that the esteemed Larry the K omitted a key sentence. His conclusion, unfortunately, should have concluded with the following: "If, that is, the new administration doesn't embark on a program of radically expanding government and the deficit, offering up subsidies, bailouts, sops to Big Labor, and otherwise inducing moral hazard and misallocating (very) scarce public resources, ostensibly for the purpose of fixing a problem that is already fixing itself."  
 
   Dear readers, recessions tend to cure themselves, if government doesn't get in the way. In my study of GDP data, I have found that recessions are commonly followed by big snap-back GDP increases. This is the natural order of things. But my fear is that Barry O and his panel of oligarchs (did you see the big color photo and the front page of the WSJ Saturday?), in their zeal to be the "new" FDR, the "new" "Camelot", and the "new" New Deal, will inevitably strangle an economy that was already fixing itself. Then, of course, they'll blame Bush, the tax cuts, Wall Street, "malefactors of great wealth", and probably Ronald Reagan too, before engaging another round of ineffectual money-tossing at political favorites. Just like Barney Frank, they'll blame everyone but themselves. Thus to me, the question isn't IF this program will bring us back to the glory days of stagflation, but how fast. To see how it ends, treat yourself to a Saturday Night Fever rental.
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The Youth Vote

   Hugh Hewitt has been directing a fair amount of attention to the so-called "Youth Vote", as it manifested itself in last week's election. This is not without good reason. It may be the single most striking - and alarming - element of the vote. Data is showing that voters under 30 cascaded for Obama by better than 2-1. While under 30 voters did not turn out in anything near the spectacular proportions some media nitwits predicted, the tremendous margin by which they went socialist (whether wittingly or not) contributed greatly to the election's result. 
   There are, no doubt, many explanations for the tremendous margin among these voters, among them the ridiculous "Reality TV" culture, and, as Hugh points out, the simple fact that minority voters comprised a larger percentage of this cohort than ever before.However, I have an explanation which I think encompasses and overarches most of these. I call it, "The Reagan Paradox (Part 1)".
   The Reagan Paradox holds that the Prosperity and Security that Ronald Reagan created, and which has lasted for a generation, has left so many Americans so spoiled that they are incapable of grasping the dangers of bad policy. For young people in particular, the Generation of Prosperity and Security that President Reagan ushered in, through sound policy, has left them oblivious to the consequences of bad choices. In short, the cost, or price, of fecklessness in their personal lives has been so greatly diminished thanks to Reagan's achievements, that the significance of elections is reduced to the spectacle of a reality TV show, or a rooting interest in a sporting event. 
   I'm afraid these people are (finally) going to get an education during the next four years. I pray that the cost to the nation will not be too high. The bottom line is that we all are going to have to start the hard work of both unmasking the real BO (as opposed to the two-dimensional fantasy they mostly voted for), and connecting the dots between policy and consequences. That latter point is a Reagan legacy we are going to have to redeem.
 
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Welcome!

The Liberal Plantation is where you are when you reach the end of the Road to Serfdom. It's also the title of a series of editorials published in the WSJ way back when in the 20th Century. It's a place for those who have become addicted to government, or otherwise seduced by the sirens of Big Government. I hope this blog will be a chronicle of the efforts of "liberals" (now there's an Orwellism!) to create a class of dependents whose aspirations have been reduced to awaiting, like hungry seals at Marine World, for the scraps left at the government trough after the princes of the political class have fattened themselves. Talk about trickle down!
 
Clearly, the Masters of this Plantation have been successful. They've built quite an army of serfs, ready to pledge their undying loyalty, hoping to get a seat at the kids' table. Having no stake in the country or its future (we'll be examining exit poll data from a demographic perspective I haven't seen examined elsewhere), their life's purpose is now to serve, and subsist. Lest anyone think I've got a much better imagination than I do, I have a newspaper clipping somewhere, from 1988, in which the Duke of Chappaquiddick, in an unguarded moment, spelled it all out. Get as many people as possible either (a) receiving a government check, and/or (b) dependent on government for essential services (health care), and/or (c) not paying any taxes. Twenty years later, I'd say "so far, so good".
 
Thanks for visiting. I'm off to watch The Office.
 
 
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