Now it is also pretty obvious that much of the gas you burn in your car is used in overcoming the inertia represented by the sizable mass of your vehicle at a full stop. So it stands to reason that if you did not come to a full stop where possible, you would use much less fuel. And if everyone did this, we could save millions of barrels of crude oil annually. Therefore we would send many fewer dollars abroad annually to people who want to kill us. It therefore seems that we should, as a matter of policy and law, treat all stop signs as slow down signs where possible.

Some may object that this would increase the number of accidents. It might. But I think people are smart enough that they will stop at intersections that pose a danger but can keep some of their momentum at intersections where there is clearly no other car or bike or pedestrian approaching. In any event, police departments could be trained not to issue rolling stop citations unless the motorist actually presented a danger to someone else.

In a market economy, it is not the responsibility of the government to provide jobs (a statement with which nearly everyone agrees, freaks from places like moveon.org notwithstanding). It is the responsibility of the government to provide an environment in which the people of the country can go about their business, which will collaterally result in creating jobs. So the government takes care of the national defense and provides an impartial system for the adjudication of disputes, which in our country is predicated on applying the same set of rules to similarly situated people similarly (unless you are a demunist, in which case the rules get applied depending on whether you are in one of their identified support groups or not, the nub of identity politics). This is something that statists, redistributionists and collectivists like Barack Obama and his Demunistic brethren fail to understand. The more they do to create jobs, the less likely it is that we will have sustainable job growth. They are destroyers. They destroy. If they really wanted to see jobs created, the best thing they can do is get the government the hell out of the way.

These are two of the most powerful Demunists and Commocrats in Washington, Waxman, Chair of the House Energy Committe, and Nancy Pelosi, Speaker of the House of Representatives.  Waxman is from Beverly Hills, 90210 country, California.  Pelosi is from San Francisco.  Obviously their state is governed so well, that we should use it as a pattern for the country.  Oh, wait, their state issues IOUs to pay people that banks will not even accept.  Their state is bankrupt as a result of Demunistic and Commocratic, stars in your eyes,, blinders-on, incapable of thinking of the consequences  mismanagement.

Here is the language of Obama’s chief political advisor, David Axelrod:  “Ultimately, this is not about a process.  It’s about results.”  In other words, in words reminiscent of Stalin-era communism, “The ends justify the means.”

Or take the language of Nancy Pelosi speaking about the need to reduce carbon output on her spring 2009 trip to China.  “Every aspect of our lives must be subject to inventory.”  How do you do that?  You send jackbooted ACORN “community organizers” around to gather the GPS coordinates for your home in the process of gathering census data, so they know where you live.

Or take the Cap and Trade bill sponsored by Henry Waxman.  Before you can sell your home, you will have to prove to government auditors that you have made it energy-efficient.  What will they do if you haven’t?  Maybe fine you?  Maybe take a lien on your home?  I do not know.

I have argued that when fascism comes to America, it will come from the Left, not the Right (see Liberal Fascism).  So it is.

As is became clear in the spring of 2009 that things had stabilized somewhat, the implications of extraordinary money creation by the Fed, along with a ridiculously wasteful US stimulus spending bill and a less wasteful Chinese stimulus plan started to become clear and markets reacted.  Ten year treasury yields have just about doubled in 6 months.  Crude oil prices have more than doubled.   Even Corn prices have risen 55%  despite the decimation of the chimerical ethanol industry.  Such price moves have happened in most commodities as it has become clear that there is a rising long term risk of inflation.

The Fed’s position has been made more difficult by an $800 Billion “stimulus plan” that will be mostly wasted and pending Demunist legislation that promises wartime deficits as far as the eye can see.  But an independent Fed has to be the entity that backstops the system by defending the dollar.  And the only way it can do this is by convincing markets that it will not let the situation get out of hand.  Unfortunately, a guy with the nickname “Helicopter Ben” is most unlikely to be counted on to do so.  As a result we will likely face a dollar crisis, with the result that debt yields will rise massively, as will the cost of all commodities.  As a matter of policy, should the cost be bourne by those who use commodities, notably oil and gas?  This would probably suit the Demunists and Commocrats as it helps their drive to go green.  It is a steep price to pay though and could lead to world unrest.  It also shifts massive amounts of wealth to really bad people all over the world; the Saudis, Putin’s Russia, Chavez in Venezuela, Iran and so forth.  It would be better if the Fed showed some mettle and kept a lid on commodity prices by raising rates, even if only a little.  They may even find that it helps keep long rates in line to help the housing market, even if it costs banks a little as it flattens the Yield Curve a bit.  The bottom line is that authorities cannot create a painless economy, no matter what democratic keynesians say.  The sooner the pain is felt, the better off the world will be in the long run.

If the Fed would only get some balls, we could silence the noise coming from the worlds leading autocracies about dropping the dollar as the world’s reserve currency.  Sadly I would bet that this will not happen.  The world will lose the dollar on Obama’s and the Demunist’s watch.

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While people like Paul Krugman will say that the causes of the credit crisis involve many actors, and liberals point the finger at Wall Street and greedy bankers, it is instructive to remember exactly what the problem is.

The genesis of the problem is simply that millions of really LARGE loans were made to people who cannot or will not repay them.  This is not like people not paying their unsecured credit cards.   The dollar amounts involved there are small.  This is about default rates on mortgage loans going from the 1-3% range to the 15-30% range on loans whose average size is in the hundreds of thousands of dollars each.  Because the dollar amounts are so absolutely huge, they represent multiples of the capital reserves of the banking system, hence posing systemic risk.

This problem has been and will continue to be used as justification by those with other regulatory agendas to impose all kinds of burdensome and unnecessary regulations on activities from banking to trading.  Note however that the entire mess could have been avoided with but 2 simple rules relating to mortgage underwriting.

First, the lender should be reasonably sure that the normal anticipated monthly mortgage payment represents some reasonable fraction of income.  This is the Debt Service Ratio test.   Second, the amount loaned must represent no more than some maximum percentage of the appraised value of the property.  This could be as high as 90%, but probably not much higher.

Had these two simple rules been required by regulators of mortgage originators, we would not have the credit crisis we have today, even with securitisation and all the rest of it.  So be wary when you hear government say we need to regulate this, that and the other thing.  We only need 2 simple rules.

The tired policies of the past are precisely the kind of ideas with which Obama is going to try to saddle us;  statist ideas whose implementation will still be impeding the growth of our economy when my children’s children’s children start to vote or the great American experiment has finally come to an end, crushed by the burden’s of promises blithely made and obligations flippantly incurred in the distant past, our near future.

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I have been meaning to write about this for about 5 years, but the installment of the Obama administration with what should be a compliant Congress is as good a time as any.  In the sweep of history as viewed from the scale of years to a few decades, we are about 8 to 10 years into a swing away from increasing levels of freedom globally and toward greater statism, or state control of economies and of people’s personal lives.

While there are a few notable exceptions like China which maintained momentum toward greater market orientation, most instances from Asia to Latin America have been swinging the other way.  Like markets, these things do not go in a straight line, but oscillate, sometimes waxing, sometimes waning.

At close scales the change from waxing to waning (if plotted as a curve this would be when the slope of the curve went from positive to negative, not the inflection point from more positive to less positive, ie the change in convexity) is chaotic, messy and jagged, but if you zoom out sufficiently far, it becomes smoother.  I place the changeover in late 1998 with the election of Hugo Chavez in Venezuela.

Prior to 1999, it was clear that there was something magical happening in the world.  The first sign was perestroika in the late 1980s, then the fall of the Berlin Wall in 1989 and the coup in Moscow in 1991.  In 1994 the Uruguay Round of GATT talks concluded, setting the stage for expanded world trade.  In 1995, the Internet became available to a large part of the public.  Large numbers of countries in Eastern Europe, Asia and Latin America were adopting western democratic institutions and opening their economies along market lines.  By 1998 the Internet was a phenomenon, energy was cheap and productivity was galloping forward.  You could find music in any genre from classical to hard core by  any artist on services like Napster and Audiogalaxy.  Open source software blossomed; multitasking operating systems allowed computing to become mainstream.  Prices of things seemed to fall as labor was globalized and living standards around the world brought more people out of poverty than ever before.  It seemed anything was possible as the world headed into the millenium.

Some warning signs had already started to appear.  Late in 1998 Hugo Chavez was elected in Venezuela and started down the path of his self-styled Bolivarian socialist revolution.  At the end of 1999, Putin became President of Russia.  Early in 2000 the asset bubble in technology and other stocks burst.  The major labels put an end to open access to music when Napster was forced to shut down.   The RIAA started suing people for sharing music.  9/11 happened.

After a brief recession, it seemed as if things were going to get back on track.  Home ownership and home prices rose to incredible levels as the stock mania was transmuted by the Fed and a world awash in wealth into the housing bubble.  Commodities began an incredible 6 year bull run in late 2002.  Saddam fell in 2003.  Prices continued falling as manufacturing and service labor was rationalized.  However the forces of statism were resurging and eclipsing the brief flowering of freedom.

Russia jailed Mikhail Khodorkovsky in late 2003.   It was this that really set Crude Oil prices on fire.  Russia also reinstated the practice of sponsoring the murder of political critics.  Russia has returned to a state in which elections are held but they are pretty meaningless as the outcome is known in advance and largely controlled by the party in power, methods that Hugo Chavez and others in Latin America are now also seeking to employ.  More states in Latin America have also turned left;  Bolivia, Argentina, even Brazil.  Other states have also become less free in the last 8 years such as Zimbabwe and Burma (Myanmar).

Now with the bursting of the housing and commodities bubbles and the implosion of the world financial system, even America has elected a congress and a president who are more sympathetic to statism than it has had since Reagan beat Jimmy Carter in 1980.  On the Sunday talk shows this weekend, I heard some idiot (probably Stiglitz) say with relief how the nightmare of the last 25 years has finally come to an end.  Yes.  The ‘nightmare’ that was the greatest period of global wealth creation ever known has finally come to an end.  The question is, is this really the end?  Will the curve of freedom (change) continue below the abscissa?  Or is this a downstroke that will soon reverse?  In other words, will we discard the lessons of history and embrace increasing state control over every aspect of political and economic life?  Or will we remember, pull ourselves together, and return to the path of progress we were on?

So if we are going to provide a “bridge loan” to one or more of the Big 3, then why would we not provide taxpayer underwritten “bridge loans” for every single other business in the country that can reasonably claim that financial and consumer market conditions are making business difficult?

A bridge loan is usually a facility that a business aquires in the course of a major transaction that is used until some other more permanent form of financing supplants it.  What is the financing that is going to supplant the assistance being requested in this case?  These are broken businesses.  There is nothing on the other side.  These are Bridge Loans to Nowhere.

The unstated reason that Congress is going to great lengths to provide taxpayer dollars to unbelievably poorly run private businesses is that if these businesses fail, the UAW and other auto workers unions will lose their union contracts.  So this is really a UAW bailout package.  Make no mistake, there would still be a great deal of employment.  Someone would use the assets of the automakers to make cars in America.  So when you hear gasps at the 3 million jobs that would be lost if we do nothing, that is a misdirection.

Count on Congress to do the wrong thing in this as in nearly every other thing they do.

Then there is The Daley dynasty in Chicago.  And of course the Governor of Illinois is the son of a Democratic party power family, as the Secretary of State is a daughter of another such luminary.    Of course the Bush family has governors and Presidents all over the place.  We almost got the wife of Slick Willy at the head of the Democratic ticket, though Obama somehow beat her out.  I am sure voters will reward their daughter Chelsea should she choose to run in a few years.  Kennedys of course have their pick of government positions.

America would be better off if there were fewer repeats and retreads.  The Supreme Court killed the term limits movement, and will deserve much of the blame when America does finally fade as a world power a century or two from now.  Again, there is a reason that this tends to happen.  People need to make decisions on limited information and with limited time to do so.  So anything that makes them more comfortable that they know the people up for positions makes them more likely to be chosen.  It is like a structural monopoly in business.  It is the same network effect Taleb talks about in The Black Swan.  And it is for that reason that a structural solution like term limits is necessary;  to protect us from the natural tendency to settle for what is known and comfortable – to force fresh blood into the system.

A politician like Bloomberg who willfully ignores this dynamic disqualifies themselves from leadership by that decision alone.

Pack a lunch and walk or bike over to the nearest park with the kids.  Clean the house.  Just do not do anything that requires the use of fuel.  Do not drive anywhere.  Do not drive to work or use public transportation.  Stay home and enjoy the day.

This is the only way to really say “Hey W, STOP buying oil on the open market to fill up the SPR, which is already 97% full.”  Or, “Hey W, ethanol madates!?  Hmm. Looks like that is a bad idea.”  Or, “Hey Saudi Arabian mysoginists, you will have to wait another day to sell us those 8 million barrels of oil.”  Or, “Hey idiots in Congress, maybe we ought to start looking to see what energy resources we have off the coasts or in Alaska.”

So make the decision to stay home, and pass the idea along to your friends.  People CAN make a difference.