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Governments should not use their offensive cyber capabilities to change the amounts held in financial accounts or otherwise manipulate financial systems….

Think back over the past 3 years…. 

Hmmmm.

 

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In a discussion about global warming, one John Galt gave this piece of enlightenment….  this is dug up here for historical reasons and it is well worth remembering the arguments of the  past as we now investigate such problems as raising taxes, protecting social security, and increasing labor participation against the same faulty reason….

It is a walk down memory lane, accompanied by knowing we were right on the issue of global warming, and Republicans were very, very, very, very, very,  very…. wrong….

 

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by John Galt  July 17, 2009.

Dear  Frieda:

All of your claims are wrong and you know it or your an idiot.

Global temperatures peaked in 1998, a fact that contradicts the assertion that man’s continued pumping of carbon dioxide into the atmosphere is making the planet hotter. This was not predicted by the climate models that say we’re headed for a warm period.

Nor can anthropogenic global warming be explained when introduced into the argument is the fact that 1934, when far fewer carbon-spewing machines existed than we have today, is the hottest year on record.

Global warming alarmists invested heavily in convincing everyone that 1998 was the hottest year and 2006 the third warmest. After correcting for faulty data, NASA had to backtrack.

At the same time NASA made the correction, it also reported that six of the top 10 hottest years are from a period before 90% of the 20th century growth in carbon emissions occurred

Researchers at the U.S. National Snow and Ice Data Center admitted that “sensor drift” in the satellite monitors used to measure sea ice caused them to underestimate the extent of Arctic sea ice by 193,000 square miles. That’s a significant area roughly the size of California.

In a column titled “In 2008, a 100 Percent Chance of Alarm,” New York Times columnist John Tierney exposes the Chicken Littles for what they are — opportunists and alarmists who in this new year “will bring you image after frightening image of natural havoc linked to global warming.” Inconvenient truths and scientific fact will be ignored.

A case in point cited by Tierney was when Arctic sea ice last year hit the lowest level ever recorded by satellites. It was hardly a blip in Earth’s geological history, but Tierney noted how “it was big news and heralded as a sign that the whole planet was warming.”

Less dramatic and newsworthy was the announcement that the same satellites also recorded that the Antarctic sea ice had reached the highest level ever. But then, polar bears allegedly drowning and icebergs breaking away are good theater.

We’re told the Larsen B ice shelf on the western side of Antarctica is collapsing. It is warming and has been for decades. But it comprises just 2% of a continent that otherwise is cooling.

In the same week Gore received his Nobel Peace Prize, the respected scientific journal Nature published a paper you probably didn’t hear much about. It concluded that global warming had a minimal effect on hurricanes.

In fact, after Katrina, hurricane watchers have had trouble getting as far as the letter “K”.

“The last couple of years have humbled the seasonal hurricane forecasters,” says Max Mayfield, a former director of the National Hurricane Center in Miami. The 2007 season was the third calmest since 1966. In 2006 not a single hurricane made landfall in the U.S.

As for temperature, Tierney reports how British meteorologists made headlines predicting that the buildup of greenhouse gases would make 2007 the hottest year on record. After 2007 was actually lower than any year since 2001, the BBC still proclaimed: “2007 Data Confirms Warming Trend.”

That must be why in January 2007 some $1.42 billion worth of California produce was lost to a disastrous five-day freeze. A few months earlier Gov. Schwarzenegger signed the California Global Warming Solutions Act of 2006 designed to, uh, help cool the climate.

In 2007, Australia experienced its coolest June ever. The city of Townsville underwent its longest period of continuously cold weather since 1941. Johannesburg, South Africa, had the first significant snowfall in a quarter-century.

But for greenies, it doesn’t matter what the weather actually is or what the data actually show. It’s all caused by global warming. As Canadian Greenpeace rep Steven Guilbeault explained in 2005: “Global warming can mean colder; it can mean drier; it can mean wetter; that’s what we’re dealing with.”

Let me make this as simple as possible. Greenhouse gases makes up 2% of our total atmosphere. Of that 2%, 3.62% is CO2 and of that 3.4% is caused by man, yes only 3.4% of all CO2 is man made, the rest is made by nature. Man made CO2 makes up .000024% of the atmosphere.

If they were this wrong on global warming, can they possibly be right on anything?   Can someone tell me why we even listen to them anymore when they whine?

For the most awesome replies…. it is here….. 

We knew this but it  is now being published… and so it is in the news.

The world is getting warmer… and we can now predict our climate by looking at map at 300 miles south and guessing what our weather will be from that…

Just as plate tectonics and  Darwin’s origin of the species were able to lay the groundwork of reason  for explaining puzzling observations, this simplifies what to expect from global warming rather startlingly.

Texas is now  what we alway thought of when we considered the weather of Mexico; Oklahoma is now West Texas; Kansas is now Oklahoma; Nebraska is now Kansas; South Dakota is now Nebraska, North Dakota is now South Dakota: Southern Manitoba is now North Dakota…..

If  West Texas had 3 days of rain, now Oklahoma is getting 3 days of rain;  If it snowed 12  times in South Dakota, it is now doing the same in North Dakota… and so on.

So, to predict our heat, rain, winters, etc, our guide would be North Carolina.  Longer growing seasons,  some winters with no snow, hot summers…

However due to Global warming, the East Coast has a caveat.  An anomaly so to speak  and actually some relief from the North Carolina summer heat we would normally expect….

With the unprecedented melting of the Arctic and Greenland icecaps dumping its excess into the Labrador Current, that cold water drops South hugging the East Coast shoreline all the way down to North Carolina’s Outer Banks where it finally becomes neutralized…   Therefore even though we have hotter air masses, the colder ocean temperatures creates a buffer against Global warming off the entire northeastern US.

Europe, Japan, and Alaska all experience  the same mitigating effect, although with both Greenland and the Arctic Icecaps melting into the Labrador, the US East Coast gets a stronger volume of cold water.  Call it our icy shower effect….

Once melting stops and the currents dry up, we return to the North Carolina scenario of the twentieth century….

Cold Water in Summer Hugs Delaware's Shore  xoxoxo
Chart Courtesy of NOAA

So, we in Delaware really get the best climate on the East Coast.    Warm winters, little or no snow, and cool breezy summers….. as well as a longer growing period, and… less dependence on fossil fuels for winter heating.

Gee, global warming isn’t so bad for Delaware after all….  Oh, the rising seas?  There you go again… Why did you have to spoil the rosy picture I was painting?

 

In recent years I have intervened in several cases involving Delmarva Power‘s rate increase requests filed before the Public Service Commission. The process  is cumbersome and complex; it requires resources and time that is not always available to me. Unfortunately without me, the public, the ratepayers, and my constituents interests have been inadequately represented in these proceedings.  My obligation and responsibility as an elected representative is to ensure some fairness in both the discussions and decisions rendered.

The most recent filing in which I have intervened is identified as PSC Docket # 11-528  and involves a request for rate increases which includes recovery of depreciation values by Delmarva for obsolete meters that have been replaced with “smart-meters” for Delmarva residential customers.  I, as the people’s representative,  objected to any ratepayer funding for any new technology costs such as advanced metering purchase and installation…  simply because… the economic benefit from these devices rests solely with the utility. I have adamantly opposed any recovery of “lost” depreciation for any obsolete equipment that is removed from service especially since there has been no substantiated breakdown of any economic loss to the utility!  And, absolutely no justification for any single ratepayer to subsidize this company’s loss.  Please read the most excellent News Journal article in the business section of Sunday’s (Oct. 21st) paper for its startling exposure.

The odd request by this utility has caused me to defend all ratepayers against  a system that has major flaws which can obstruct honest and fair due process. One identifiable flaw has been the palpable lack of enthusiasm from those entities required by law to represent the consumer! This leaves the average ratepayer at a huge disadvantage.

During the “evidentiary hearing”  I was given the privilege to represent ratepayers and to cross examine the witnesses from DP&L, PSC staff and the Public Advocates office.  I expended great effort to determine how the $25 million in  lost depreciation value  was calculated.  I asked how this numerical value was determined.., particularly when noted  that the average age of a discarded meter was 22 years yet the total life-expectancy was only 30 years.  Over 73% of the life-expectancy had already been consumed and that legally  should be prorated into any calculation. I also requested  the original equipment costs of 22 years ago.

Objections to my cross-examination were raised by both the attorneys’ for Delmarva Power and the Public Advocates office. They wrongly asserted that it was already in evidence admitted. Although my queries were made in a legitimate attempt to ascertain vital information, the objections were sustained by the Hearing Officer. I also asked for the amount of recovered equipment costs garnered from ratepayers over that 22 year span and the amount recovered during that time-span from “depreciation” tax credit recovery and I was rebuffed with the same objections. 

To date there is no valid, statistical accumulation of numbers which justify any $25 million recovery of lost depreciation revenue owed to Delmarva Power…  Its ratepayers have already paid many times over the cost  of those meters in the prior 22 years.  Many times. The approval process has too many flaws and all of them must be addressed by me, and my colleagues, in Dover beginning this upcoming January.  Trust me.  I will be working to assure corrective action is moving forward.

The harm in allowing Delmarva to recover unproven and unsubstantiated expenses from the ratepayers is a matter of immediate concern and should be denied by the PSC Commissioners. Any action short of total relief from this asking amounts to an abdication of the government’s obligation to ensure fairness for its citizens.

Sincerely:
John Kowalko

A fourth Texas high-tech startup that received taxpayer money through Gov. Rick Perry’s signature economic development fund has filed for bankruptcy, pushing the total losses in the $194 million portfolio beyond what the state says the fund has earned.

The collapse of bioenergy producer Terrabon Inc., which was awarded $2.75 million in 2010 and was backed by large Perry political donors, raises the question of whether the state’s Emerging Technology Fund that began in 2006 is now worth less than what taxpayers have put into it.

Just like Solyndra, the culprit is Obama’s aggressive and extensive natural gas drilling occurring domestically, that has drop natural gas prices so green energy can’t compete.

Rick Perry, who accused Obama of cronyism over Solyndra, is now guilty of the exact same himself. I wonder if next we find Rick Jensen started up a green energy company using money from his beer distributor friends? 🙂

Tomorrow House Bill 86 goes before John Kowalko’s committee:… The House Energy Committee….

House Bill 86 wants to roll back Delaware’s participation in the Regional Greenhouse Gas Initiative… According to Delmarva Power itself, the above Greenhouse Gas Initiative WILL save you and I, the power-bill payers, at a minimum, and this is their grudgingly acceded scaled back total, … a minimum of $1.8 to $4.3 billion dollars over the next ten years!

What? Who in their “effin” right mind would fight against saving Delawareans (and others) $1.8 to $4.3 billion dollars?

The Ceasar Rodney Institute, … that’s who…

They say the Regional Gas Initiative costs every Delaware resident $500.

Hmmm. Let’s go shopping… Oops Tommy got there first.

“In fact, during the last three auctions of carbon-dioxide emission allowances under RGGI, the market price has been less than $2 per ton of CO2. That corresponds to about 0.2 cents per kilowatt-hour for electricity produced from coal and about 0.1 cents per kilowatt-hour for electricity from natural gas. These are about 1 percent of the retail cost of electricity — about 15 cents per kilowatt-hour from Delmarva Power for residential customers — adding less than $1 a month to a typical home electricity bill”...

Ok, (thanks Tommy for the heavy lifting)…. let me see if we hear this correctly? According to the Ceasar Rodney Institute, The Regional Greenhouse Gas Initiative will cost me $500 more a year; the actual data shows it costs $1 more a month or $12 dollars a year in my price of electricity, but according to Delmarva Power, it will save us all between $1.8 to $4.3 billion dollars?.. Hmmm .. hard choice: Cost of $12 dollars on one hand; savings of $1.8 billion on the other hand… Cost of $12 dollars on one hand; savings of $1.8 billion on the other hand.. Hmm, that is a tough choice; Cost of $12 dollars on one hand; savings of $1.8 billion on the other hand….

It’s too easy; there’s got to be a trick… How much per Delaware resident will that $1.8 to $4.3 billion yield? 🙂 Ah, I think I’m on to those liberal tricks now….

WHAT? The Regional Greenhouse Gas Initiative will save every Delaware Resident between $2000 and $4750 dollars? You mean this Peterman Bill, House Bill 86 will cost me, a Delaware resident at the minimum, $2000 minus $12 dollars, and at the maximum $4750 minus $12 dollars? It will cost me? I will lose all of that money if this bill goes forward?

Who on earth would propose such a ridiculous piece of legislation, one that could potentially cost me $4738 dollars? ARE THEY NUTS?

Yes, they are the Ceasar Rodney Institute, and yes, I’m afraid they are nuts… Well, not really, .. They are doing their best to persuade this legislation to inch forward in order to transfer real money from out of your pockets, into the pockets of THEIR benefactors…… So no; they’re not nuts. They’re sneaky…

The Ceasar Rodney Institute is a shell organization that is really part of the State Policy Network which is really part of the Ruth and Lovett Peters Foundation whose deep pockets fund the Heritage and Cato Institutes as well. The State Policy Network was started by businessman and Reagan administration insider, Thomas Roe, who himself served on the Heritage Foundation Board of Trustee for two decades.

The Ceasar Rodney Insititue is basically the local office of the Adolf Coors, Jacqueline Hume, Ruth and Lovett Peters [ phonetically pronounced RUTH ANN LOVE EAT PETERS], Castle Rock Foundation, Bradley Foundation,.. SPN uses THEIR contributions to dole out annual grants to member groups, ranging from a few thousand dollars to $260,000, according to 2009 records… The 2010’s records will be out shortly, and with the $4 billion spent to get the Tea Party into Congress, it should be quite interesting. You know, that sort of explains the craziness of the Tea Party candidates. They got hired by big business; if they can’t produce for their boss, they’ll probably lose their job… Of course they don’t care about public opinion! They have to focus on making their bosses happy, or since these creeps are never happy, they are focused on trying to keep from getting fired!

So lets see what’s really going on here….

People with tremendous amounts of wealth, understandably who want to keep it, spend lavish amounts of money, hire people to write papers, to cozy up in legislative offices, to argue the case that there should be not rules applied to the wealthy…. Rules are for unruly masses. Wealth makes it’s own law… People should be “free” to do what ever they want, “free” from government, “free” from public opinion, “free” from any taxes whatsoever….

History has actually had times like that.. They were called the Dark Ages… The only limit to your power was if someone more powerful killed you first. Anyone who has read accounts (there are few) from that time, would certainly never wish to return… Civilization simply stopped for 900 years… Today one can find similar conditions to what these Libertarian minded people wish upon us, in countries like Angola, Chad, Paraguay, Bhutan, Burma,… basically a ruling class that is insulated from the poverty shared by the entire population…

Since it is very hard to convince people to voluntarily return to times like these, these organizations like the Caesar Rodney Institute, argue instead, … topics like: the dissolution of labor unions will improve the education of our school children; or that since the economy is in peril, we need to fire government employees to make it better; or that money saved from firing people, then given right back to the wealthy as a tax cut, will create millions of jobs; or that solar and wind power will raise energy prices through the roof, whereas coal and gas will keep them low; or that invading Libya which produces a pinprick of 1.3 million barrels of oil a day, is cause for gasoline at the pump to approach $5.00 a gallon; or that the Regional Greenhouse Gas Initiative will cost $500 dollars a year to every Delaware resident…..

How do they get away with it? By being the only voice in the room. You and I have to work to pay our bills, we have to take care of our families, we hardly have time to lift up a phone to leave a voice message to our legislator, who according to John Kowalko, would probably rather hear from us 100 times more than listen to the sycophants sent to lick their ass… But we, just don’t have the time….

But with billions at their disposal, these groups can spin off papers and call them research (who’s going to double-check? The News Journal??? ), they can walk over to legislative hall, and take members out to shoot some pool over some ice cold Adolf Coors Lite in a frosted mug, they can sit upstairs in the local Senate and House Chambers and probably make more than you and I put together….

MR POTTER: You see, if you shoot pool with some employee here, you can come and borrow money. What does that get us? A discontented, lazy rabble instead of a thrifty working class. And all because a few starry-eyed dreamers like Peter Bailey stir them up and fill their heads with a lot of impossible ideas. Now, I say . . .

So…. You see, it’s not “truth” their dispensing. Their motive is to cover up the truth…. In reality, they are nothing but hired hands, sent to confuse, puzzle, obfuscate, muddle, disrupt, and delay the inevitable… you know, like those 1970’s spokespeople for the cigarette companies? How many years did they save before the inevitable finally caught up? Twenty? Thirty? How many lives were lost because of that delaying action? 10 million? 20 million?

So when these guys say you will pay $500 more for this initiative when you really could be saving $4750, you know something is up!

That’s what’s going on here…

The 3rd Battalion, 5th Marine Regiment say they cut diesel consumption in their generators from 20 gallons a day to 2.5 gallons a day, according to a Marine report.

Thanks to flexible solar panels, the sun can help run military equipment — and it may even cut down on casualties.

“Our generators typically use more than 20 gallons of fuel a day. We are down to 2.5 gallons a day,” said Doty, 3rd Squad Leader, with1st Platoon, ‘I’ Company, and Fulton, Mo., native. “The system works amazing. By saving fuel for generators, it has cut back on the number of convoys, meaning less opportunity for one of our vehicles to hit an IED.”

Marines who used the technology say it helps in three main ways:

  1. Fewer Supply Convoys — With less need for fuel and batteries, fewer trucks are exposed to possible attacks on the road.
  2. Quieter Is Safer — Units that rely on diesel generators to keep equipment running at night could go quiet while running on batteries, making them harder for the enemy to find.
  3. Efficiency — The foldable solar blankets are light and don’t take up much space. That should help patrols’ mobility, and save space for other supplies — like ammunition, as one sergeant says.

The recent tests showed that using alternative energy on military missions has both tactical and environmental benefits. And in both the Virginia and the Afghanistan tests, Marines praised the panels for being durable, light and simple — kind of the trifecta for field gear.

Contrary to those Republicans still wanting to throw away huge subsidies to Big Oil, employing this technology on top of every house in America, would go a long way to bettering every single American’s life and put more money in his/her pocket.

Semper Fi.

Video and Transcript

Coons: Yes I think climate change is real, I think human activity has contributed significantly to it, and I think that the short and long term consequences of failing to act both by United States and many of the other industrial nations of the world could be tragic. I would act to make sure we make appropriate progress in reducing our emissions and in moving our economy to one that has less of a long term negative environmental impact. But I also believe we have to balance that, that obligation to act in the long term interest of our community, our country and our children, with not, in the short term shackling American businesses and American industry, because if our major competitors around the world do not make comparable steps, we could simply deepen the recession and put American companies at a greater disadvantage, So I would move to end what I think is the impasse on cap and trade or on climate change and vote for us to move forward. but I’d be sensitive and move to try to amend the legislation that’s up in the Senate in a way that doesn’t disadvantage American businesses..

Carney: Climate change is real I think the science on that is pretty clear and well accepted, so the challenge for us is what are we going to do about it. Obviously the first step is to come up with global agreements, it’s one of those very difficult problems that is many years out in the future but we have to start doing things today:. with global agreements , national policy, and individual action. I agree with our senate candidate with respect to the framework for that. particularly keeping our eye on the ball with respect to businesses here and their impact on employment and that’s why I strongly support investments in tax credits and incentives for green energy technology, particularly for establishing manufacturing facilities here in the United states and in the state of Delaware. We have tremendous opportunity, but we are falling behind. We are falling behind the Chinese, we’re falling behind the Europeans, because we are not making that commitment that we need.

Urquhart: Climate has been changing; it has been changing for eons, getting colder, getting warmer. Right now, we’re in a period where science says we are getting colder. I don’t think there is any settled science according to David Legates, the Delaware State climatologist, there is no relationship that is documented between human activity and climate change, as is say right now it is getting colder. But the essential issue is what, what can we do something about. I mean, I support the reduction of pollutants like mercury and things like that, but carbon dioxide it not a pollutant…We have a Cap ant Trade bill that will cost Delawareans each about $2000 a year if it passes. It has massive penalties in it and it doesn’t affect the rest of the world. It simply is another bailout of billionaires; its a bailout for Goldman Sachs, for Al Gore, and for lots of people who are exploiting it. But those businesses will move to China; the jet stream brings carbon dioxide this direction just as well, and until we address this globally, there isn’t a solution, and we shouldn’t penalize American jobs…

Compare and Contrast:

Is their a current Global warming crises that is the result of human activity?

Coons: Yes…. Carney: Yes…. Urquhart: No….

Will you act to reduce Carbon Dioxide?

Coons: Yes…. Carney: Yes…. Urquhart: No….

Will you support incentives to move America to cleaner, greener energy?

Coons: Yes…. Carney: Yes…. Urquhart: No….

Will you support Cap and Trade as it is in the Senate?

Coons: No…. Carney: No…. Urquhart: No….

Do you support Global Agreements to control global pollution?

Coons: Yes…. Carney: Yes…. Urquhart: Yes….

Is carbon dioxide a pollutant?

Coons: Yes…. Carney: Yes…. Urquhart: No….

Fact Check…

Your choice on this issue will depend on whether believe what you see: that Global warming is real, or believe what someone wants you to believe so they can still keep receiving their paycheck… Here is reality…

Urquhart's Downfall:  basing policy on false premises
Courtesy of NASA

If you believe in thermometers, global warming is real. If you don’t, only you can subscribe to the notion that Al Gore made it up and it has nothing, nothing to do with the constant removal of carbon from inside the earth and belching it back out into the atmosphere…

Urquhart emphatically says the world is getting colder…. And this was just day’s after the news that we have just experience the 2nd hottest summer ever!

Here is real data with accomplishing grafts.

Data from 1891 till now
Courtesy of NOAA

Imagine pulling up to your private home and seeing thick black smoke pouring out of the roof of your house… Chris Coons is standing outside, and tells you “your house is on fire and you should call 911.” John Carney rushes over and tells you “your house is on fire, and hands you his phone.” Urquhart strolls up and tells you to “wait, there is no conclusive proof yet that your house is on fire. In fact, what you are seeing is condensation… because your house is actually getting cooler… He tells you David Legates said so.” You then get a call from your old Realtor that says someone with a hard to pronounce name, just put a super low bid roughly 10% of its worth, on your property…

Would you trust a broker who didn’t pay attention to the stock market? No?
Would you trust your child’s education to a teacher who couldn’t read? No?
Would you trust your life to a doctor who practiced witchcraft? No?
Would you trust a scientist who made up results out of nothing? No?

Then how can we trust someone to do what is right, when they won’t look at facts?
How can we trust to be represented by our leadership when they lie to our face?
How can we put someone into office who refuses to accept the truth?

Bottom line: you can’t.

If you weren’t aware of the overall plan to fix the economy, Delaware Liberal posted it here….

It contains President Obama’s speech in full…

For my own benefit, I cross referenced his speech which I copied and pasted below, with links to appropriate chapters of the kavipsian Economic Theory that correspond to each topic… Chapters in which the very ideas our president expressed, are illuminated in startling detail.

A reader wishing more depth, can now delve deeper to find the argument underlying the pronouncements made by our Commander in Chief….

I’ll refrain from making any other enlightening comments, other than simply saying…”enjoy”…..

It has now been twelve weeks since my administration began. And I think even our critics would agree that at the very least, we’ve been busy. In just under three months, we have responded to an extraordinary set of economic challenges with extraordinary action – action that has been unprecedented in both its scale and its speed.

I know that some have accused us of taking on too much at once. Others believe we haven’t done enough. And many Americans are simply wondering how all of our different programs and policies fit together in a single, overarching strategy that will move this economy from recession to recovery and ultimately to prosperity.

So today, I want to step back for a moment and explain our strategy as clearly as I can. I want to talk about what we’ve done, why we’ve done it, and what we have left to do. I want to update you on the progress we’ve made, and be honest about the pitfalls that may lie ahead.

And most of all, I want every American to know that each action we take and each policy we pursue is driven by a larger vision of America’s future – a future where sustained economic growth creates good jobs and rising incomes; a future where prosperity is fueled not by excessive debt, reckless speculation, and fleeing profit, but is instead built by skilled, productive workers; by sound investments that will spread opportunity at home and allow this nation to lead the world in the technologies, innovations, and discoveries that will shape the 21st century. That is the America I see. That is the future I know we can have.

To understand how we get there, we first need to understand how we got here.

Recessions are not uncommon. Markets and economies naturally ebb and flow, as we have seen many times in our history. But this recession is different. This recession was not caused by a normal downturn in the business cycle. It was caused by a perfect storm of irresponsibility and poor decision-making that stretched from Wall Street to Washington to Main Street.

As has been widely reported, it started in the housing market. During the course of the decade, the formula for buying a house changed: instead of saving their pennies to buy their dream house, many Americans found they could take out loans that by traditional standards their incomes just could not support. Others were tricked into signing these subprime loans by lenders who were trying to make a quick profit. And the reason these loans were so readily available was that Wall Street saw big profits to be made. Investment banks would buy and package together these questionable mortgages into securities, arguing that by pooling the mortgages, the risks had been reduced. And credit agencies that are supposed to help investors determine the soundness of various investments stamped the securities with their safest rating when they should have been labeled “Buyer Beware.”

No one really knew what the actual value of these securities were, but since the housing market was booming and prices were rising, banks and investors kept buying and selling them, always passing off the risk to someone else for a greater profit without having to take any of the responsibility. Banks took on more debt than they could handle. The government-chartered companies Fannie Mae and Freddie Mac, whose traditional mandate was to help support traditional mortgages, decided to get in on the action by buying and holding billions of dollars of these securities. AIG, the biggest insurer in the world, decided to make profits by selling billions of dollars of complicated financial instruments that supposedly insured these securities. Everybody was making record profits – except the wealth created was real only on paper. And as the bubble grew, there was almost no accountability or oversight from anyone in Washington.

Then the housing bubble burst. Home prices fell. People began defaulting on their subprime mortgages. The value of all those loans and securities plummeted. Banks and investors couldn’t find anyone to buy them. Greed gave way to fear. Investors pulled their money out of the market. Large financial institutions that didn’t have enough money on hand to pay off all their obligations collapsed. Other banks held on tight to the money they did have and simply stopped lending.

This is when the crisis spread from Wall Street to Main Street. After all, the ability to get a loan is how you finance the purchase of everything from a home to a car to a college education. It’s how stores stock their shelves, farms buy equipment, and businesses make payroll. So when banks stopped lending money, businesses started laying off workers. When laid off workers had less money to spend, businesses were forced to lay off even more workers. When people couldn’t get car loans, a bad situation at the auto companies became even worse. When people couldn’t get home loans, the crisis in the housing market only deepened. Because the infected securities were being traded worldwide and other nations also had weak regulations, this recession soon became global. And when other nations can’t afford to buy our goods, it slows our economy even further.

This is the situation we confronted on the day we took office. And so our most urgent task has been to clear away the wreckage, repair the immediate damage to the economy, and do everything we can to prevent a larger collapse. And since the problems we face are all working off each other to feed a vicious economic downturn, we’ve had no choice but to attack all fronts of our economic crisis at once.

The first step was to fight a severe shortage of demand in the economy. The Federal Reserve did this by dramatically lowering interest rates last year in order to boost investment. And my administration and Congress boosted demand by passing the largest recovery plan in our nation’s history. It’s a plan that is already in the process of saving or creating 3.5 million jobs over the next two years. It is putting money directly in people’s pockets with a tax cut for 95% of working families that is now showing up in paychecks across America. And to cushion the blow of this recession, we also provided extended unemployment benefits and continued health care coverage to Americans who have lost their jobs through no fault of their own.

Now, some have argued that this recovery plan is a case of irresponsible government spending; that it is somehow to blame for our long-term deficit projections, and that the federal government should be cutting instead of increasing spending right now. So let me tackle this argument head on.

To begin with, economists on both the left and right agree that the last thing a government should do in the middle of a recession is to cut back on spending. You see, when this recession began, many families sat around their kitchen table and tried to figure out where they could cut back. So do many businesses. That is a completely responsible and understandable reaction. But if every family in America cuts back, then no one is spending any money, which means there are more layoffs, and the economy gets even worse. That’s why the government has to step in and temporarily boost spending in order to stimulate demand. And that’s exactly what we’re doing right now.

Second of all, I absolutely agree that our long-term deficit is a major problem that we have to fix. But the fact is that this recovery plan represents only a tiny fraction of that long-term deficit. As I will discuss in a moment, the key to dealing with our deficit and debt is to get a handle on out-of-control health care costs – not to stand idly by as the economy goes into free fall.

So the recovery plan has been the first step in confronting this economic crisis. The second step has been to heal our financial system so that credit is once again flowing to the businesses and families who rely on it.

The heart of this financial crisis is that too many banks and other financial institutions simply stopped lending money. In a climate of fear, banks were unable to replace their losses by raising new capital on their own, and they were unwilling to lend the money they did have because they were afraid that no one would pay it back. It is for this reason that the last administration used the Troubled Asset Relief Program, or TARP, to provide these banks with temporary financial assistance in order to get them lending again.

Now, I don’t agree with some of the ways the TARP program was managed, but I do agree with the broader rationale that we must provide banks with the capital and the confidence necessary to start lending again. That is the purpose of the stress tests that will soon tell us how much additional capital will be needed to support lending at our largest banks. Ideally, these needs will be met by private investors. But where this is not possible, and banks require substantial additional resources from the government, we will hold accountable those responsible, force the necessary adjustments, provide the support to clean up their balance sheets, and assure the continuity of a strong, viable institution that can serve our people and our economy.

Of course, there are some who argue that the government should stand back and simply let these banks fail – especially since in many cases it was their bad decisions that helped create the crisis in the first place. But whether we like it or not, history has repeatedly shown that when nations do not take early and aggressive action to get credit flowing again, they have crises that last years and years instead of months and months – years of low growth, low job creation, and low investment that cost those nations far more than a course of bold, upfront action. And although there are a lot of Americans who understandably think that government money would be better spent going directly to families and businesses instead of banks – “where’s our bailout?,” they ask – the truth is that a dollar of capital in a bank can actually result in eight or ten dollars of loans to families and businesses, a multiplier effect that can ultimately lead to a faster pace of economic growth.

On the other hand, there have been some who don’t dispute that we need to shore up the banking system, but suggest that we have been too timid in how we go about it. They say that the federal government should have already preemptively stepped in and taken over major financial institutions the way that the FDIC currently intervenes in smaller banks, and that our failure to do so is yet another example of Washington coddling Wall Street. So let me be clear – the reason we have not taken this step has nothing to do with any ideological or political judgment we’ve made about government involvement in banks, and it’s certainly not because of any concern we have for the management and shareholders whose actions have helped cause this mess.

Rather, it is because we believe that preemptive government takeovers are likely to end up costing taxpayers even more in the end, and because it is more likely to undermine than to create confidence. Governments should practice the same principle as doctors: first do no harm. So rest assured – we will do whatever is necessary to get credit flowing again, but we will do so in ways that minimize risks to taxpayers and to the broader economy. To that end, in addition to the program to provide capital to the banks, we have launched a plan that will pair government resources with private investment in order to clear away the old loans and securities – the so-called toxic assets – that are also preventing our banks from lending money.

Now, what we’ve also learned during this crisis is that our banks aren’t the only institutions affected by these toxic assets that are clogging the financial system. A.I.G., for example, is not a bank. And yet because it chose to insure trillions of dollars worth of risky assets, its failure could threaten the entire financial system and freeze lending even further. This is why, as frustrating as it is – and I promise you, nobody is more frustrated than me – we’ve had to provide support for A.I.G. It’s also why we need new legal authority so that we have the power to intervene in such financial institutions, just like a bankruptcy court does with businesses that hit hard times, so that we can restructure these businesses in an orderly way that does not induce panic – and can restructure inappropriate bonus contracts without creating a perception that government can just change compensation rules on a whim.

This is also why we’re moving aggressively to unfreeze markets and jumpstart lending outside the banking system, where more than half of all lending in America actually takes place. To do this, we’ve started a program that will increase guarantees for small business loans and unlock the market for auto loans and student loans. And to stabilize the housing market, we’ve launched a plan that will save up to four million responsible homeowners from foreclosure and help many millions more re-finance.

In a few weeks, we will also reassess the state of Chrysler and General Motors, two companies with an important place in our history and a large footprint in our economy – but two companies that have also fallen on hard times.

Late last year, the companies were given transitional loans by the previous administration to tide them over as they worked to develop viable business plans. But the plans they developed fell short, and so we have given them some additional time to work these complex issues through. We owed that, not to the executives whose bad bets contributed to the weakening of their companies, but to the hundreds of thousands of workers whose livelihoods hang in the balance.

It is our fervent hope that in the coming weeks, Chrysler will find a viable business partner and that GM will develop a business plan that will put it on a path to profitability without endless support from the American taxpayer. In the meantime, we are taking steps to spur demand for American cars and provide relief to autoworkers and their communities. And we will continue to reaffirm this nation’s commitment to a 21st century American auto industry that creates new jobs and builds the fuel-efficient cars and trucks that will carry us toward a clean energy future.

Finally, to coordinate a global response to this global recession, I went to the meeting of the G20 nations in London the other week. Each nation has undertaken significant stimulus to spur demand. All agreed to pursue tougher regulatory reforms. We also agreed to triple the lending capacity of the International Monetary Fund, an international financial institution supported by all the major economies, and provide direct assistance to developing nations and vulnerable populations – because America’s success depends on whether other nations have the ability to buy what we sell. We pledged to avoid the trade barriers and protectionism that hurts us all in the end. And we decided to meet again in the fall to gauge our progress and take additional steps if necessary.

So all of these actions – the Recovery Act, the bank capitalization program, the housing plan, the strengthening of the non-bank credit market, the auto plan, and our work at the G20 – have been necessary pieces of the recovery puzzle. They have been designed to increase aggregate demand, get credit flowing again to families and businesses, and help them ride out the storm. And taken together, these actions are starting to generate signs of economic progress. Because of our recovery plan, schools and police departments have cancelled planned layoffs. Clean energy companies and construction companies are re-hiring workers to build everything from energy efficient windows to new roads and highways. Our housing plan has helped lead to a spike in the number of homeowners who are taking advantage of historically-low mortgage rates by refinancing, which is like putting a $2,000 tax cut in your in pocket. Our program to support the market for auto loans and student loans has started to unfreeze this market and securitize more of this lending in the last few weeks. And small businesses are seeing a jump in loan activity for the first time in months.

This is all welcome and encouraging news, but it does not mean that hard times are over. 2009 will continue to be a difficult year for America’s economy. The severity of this recession will cause more job loss, more foreclosures, and more pain before it ends. The market will continue to rise and fall. Credit is still not flowing nearly as easily as it should. The process for restructuring AIG and the auto companies will involve difficult and sometimes unpopular choices. All of this means that there is much more work to be done. And all of this means that you can continue to expect an unrelenting, unyielding, day-by-day effort from this administration to fight for economic recovery on all fronts.

But even as we continue to clear away the wreckage and address the immediate crisis, it is my firm belief that our next task is to make sure such a crisis never happens again. Even as we clean up balance sheets and get credit flowing; even as people start spending and business start hiring – we have to realize that we cannot go back to the bubble and bust economy that led us to this point.

It is simply not sustainable to have a 21st century financial system that is governed by 20th century rules and regulations that allowed the recklessness of a few to threaten the entire economy. It is not sustainable to have an economy where in one year, 40% of our corporate profits came from a financial sector that was based too much on inflated home prices, maxed out credit cards, overleveraged banks and overvalued assets; or an economy where the incomes of the top 1% have skyrocketed while the typical working household has seen their income decline by nearly $2,000.

For even as too many were chasing ever-bigger bonuses and short-term profits over the last decade, we continued to neglect the long-term threats to our prosperity: the crushing burden that the rising cost of health care is placing on families and businesses; the failure of our education system to prepare our workers for a new age; the progress that other nations are making on clean energy industries and technologies while we remain addicted to foreign oil; the growing debt that we’re passing on to our children. And even after we emerge from the current recession, these challenges will still represent major obstacles that stand in the way of our success in the 21st century.

There is a parable at the end of the Sermon on the Mount that tells the story of two men. The first built his house on a pile of sand, and it was destroyed as soon as the storm hit. But the second is known as the wise man, for when “…the rain descended, and the floods came, and the winds blew, and beat upon that house…it fell not: for it was founded upon a rock.”

We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock. We must lay a new foundation for growth and prosperity – a foundation that will move us from an era of borrow and spend to one where we save and invest; where we consume less at home and send more exports abroad.

It’s a foundation built upon five pillars that will grow our economy and make this new century another American century: new rules for Wall Street that will reward drive and innovation; new investments in education that will make our workforce more skilled and competitive; new investments in renewable energy and technology that will create new jobs and industries; new investments in health care that will cut costs for families and businesses; and new savings in our federal budget that will bring down the debt for future generations. That is the new foundation we must build. That must be our future – and my Administration’s policies are designed to achieve that future.

The first step we will take to build this foundation is to reform the outdated rules and regulations that allowed this crisis to happen in the first place. It is time to lay down tough new rules of the road for Wall Street to ensure that we never find ourselves here again. Rules that punish short-cuts and abuse. Rules that tie someone’s pay to their actual job performance. Rules that protect typical American families when they buy a home, get a credit card or invest in a 401k. We have already begun to work with Congress to shape this new regulatory framework – and I expect a bill to arrive on my desk for signature before the year is out.

The second pillar of this new foundation is an education system that finally prepares our workers for a 21st century economy. In the 20th century, the GI Bill sent a generation to college, and for decades, we led the world in education and economic growth. But in this new economy, we trail the world’s leaders in graduation rates and achievement. That is why we have set a goal that will greatly enhance our ability to compete for the high-wage, high-tech jobs of the 21st century: by 2020, America will once more have the highest proportion of college graduates in the world.

To meet that goal, we have already dramatically expanded early childhood education. We are investing in innovative programs that have proven to help schools meet high standards and close achievement gaps. We are creating new rewards tied to teacher performance and new pathways for advancement. I have asked every American to commit to at least one year or more of higher education or career training, and we have provided tax credits to make a college education more affordable for every American.

The third pillar of this new foundation is to harness the renewable energy that can create millions of new jobs and new industries. We all know that the country that harnesses this energy will lead the 21st century. Yet we have allowed other countries to outpace us on this race to the future.

Well, I do not accept a future where the jobs and industries of tomorrow take root beyond our borders. It is time for America to lead again.

The investments we made in the Recovery Act will double this nation’s supply of renewable energy in the next three years. And we are putting Americans to work making our homes and buildings more efficient so that we can save billions on our energy bills and grow our economy at the same time.

But the only way to truly spark this transformation is through a gradual, market-based cap on carbon pollution, so that clean energy is the profitable kind of energy. Some have argued that we shouldn’t attempt such a transition until the economy recovers, and they are right that we have to take the costs of transition into account. But we can no longer delay putting a framework for a clean energy economy in place. If businesses and entrepreneurs know today that we are closing this carbon pollution loophole, they will start investing in clean energy now. And pretty soon, we’ll see more companies constructing solar panels, and workers building wind turbines, and car companies manufacturing fuel-efficient cars. Investors will put some money into a new energy technology, and a small business will open to start selling it. That’s how we can grow this economy, enhance our security, and protect our planet at the same time.

The fourth pillar of the new foundation is a 21st century health care system where families, businesses, and government budgets aren’t dragged down by skyrocketing insurance premiums.

One and a half million Americans could lose their homes this year just because of a medical crisis. Major American corporations are struggling to compete with their foreign counterparts, and small businesses are closing their doors. We cannot allow the cost of health care to strangle our economy any longer.

That’s why our Recovery Act will invest in electronic health records with strict privacy standards that will save money and lives. We’ve also made the largest investment ever in preventive care, because that is one of the best ways to keep costs under control. And included in the budgets that just passed Congress is an historic commitment to reform that will finally make quality health care affordable for every American. So I look forward to working with both parties in Congress to make this reform a reality in the coming months.

Fixing our health care system will certainly require resources, but in my budget, we’ve made a commitment to fully pay for reform without increasing the deficit, and we’ve identified specific savings that will make the health care system more efficient and reduce costs for us all.

In fact, we have undertaken an unprecedented effort to find this kind of savings in every corner of the budget, because the final pillar in building our new foundation is restoring fiscal discipline once this economy recovers. Already, we have identified two trillion dollars in deficit-reductions over the next decade. We have announced procurement reform that will greatly reduce no-bid contracts and save the government $40 billion. Secretary Gates recently announced a courageous set of reforms that go right at the hundreds of billions of dollars in waste and cost overruns that have bloated our defense budget without making America safer. We will end education programs that don’t work, and root out waste, fraud, and abuse in our Medicare program.

Altogether, this budget will reduce discretionary spending for domestic programs as share of the economy by more than 10% over the next decade to the lowest level since we began keeping records nearly half a century ago. And as we continue to go through the federal budget line by line, we will be announcing additional savings, secured by eliminating and consolidating programs we don’t need so that we can make room for the things we do need.

Now, I realize that for some, this isn’t enough. I know there is a criticism out there that my administration has somehow been spending with reckless abandon, pushing a liberal social agenda while mortgaging our children’s future.

Well let me make three points.

First, as I said earlier, the worst thing that we could do in a recession this severe is to try to cut government spending at the same time as families and businesses around the world are cutting back on their spending. So as serious as our deficit and debt problems are – and they are very serious – major efforts to deal with them have to focus on the medium and long-term budget picture.

Second, in tackling the deficit issue, we simply cannot sacrifice the long-term investments that we so desperately need to generate long-term prosperity. Just as a cash-strapped family may cut back on luxuries but will insist on spending money to get their children through college, so we as a country have to make current choices with an eye on the future. If we don’t invest now in renewable energy or a skilled workforce or a more affordable health care system, this economy simply won’t grow at the pace it needs to in two or five or ten years down the road. If we don’t lay this new foundation, it won’t be long before we are right back where we are today. And I can assure you that chronically slow growth will not help our long-term budget situation.

Third, the problem with our deficit and debt is not new. It has been building dramatically over the past eight years, largely because big tax cuts combined with increased spending on two wars and the increased costs of government health care programs. This structural gap in our budget, between the amount of money coming in and the amount going out, will only get worse as Baby Boomers age, and will in fact lead us down an unsustainable path. But let’s not kid ourselves and suggest that we can do it by trimming a few earmarks or cutting the budget for the National Endowment for the Arts. Along with defense and interest on the national debt, the biggest costs in our budget are entitlement programs like Medicare, Medicaid, and Social Security that get more and more expensive every year. So if we want to get serious about fiscal discipline – and I do – then we are going to not only have to trim waste out of our discretionary budget, a process we have already begun – but we will also have to get serious about entitlement reform.

Nothing will be more important to this goal than passing health care reform that brings down costs across the system, including in Medicare and Medicaid. Make no mistake: health care reform is entitlement reform. That’s not just my opinion – that was the conclusion of a wide range of participants at the Fiscal Responsibility Summit we held at the White House in February, and that’s one of the reasons why I firmly believe we need to get health care reform done this year.

Once we tackle rising health care costs, we must also work to put Social Security on firmer footing. It is time for both parties to come together and find a way to keep the promise of a sound retirement for future generations. And we should restore a sense of fairness and balance to our tax code by shutting down corporate loopholes and ensuring that everyone pays what they owe.

All of these efforts will require tough choices and compromises. But the difficulties can’t serve as an excuse for inaction. Not anymore.

This brings up one final point I’d like to make today. I’ve talked a lot about the fundamental weakness in our economy that led us to this day of reckoning. But we also arrived here because of a fundamental weakness in our political system.

For too long, too many in Washington put off hard decisions for some other time on some other day. There’s been a tendency to score political points instead of rolling up sleeves to solve real problems. There is also an impatience that characterizes this town – an attention span that has only grown shorter with the twenty-four hour news cycle, and insists on instant gratification in the form of immediate results or higher poll numbers. When a crisis hits, there’s all too often a lurch from shock to trance, with everyone responding to the tempest of the moment until the furor has died away and the media coverage has moved on, instead of confronting the major challenges that will shape our future in a sustained and focused way.

This can’t be one of those times. The challenges are too great. The stakes are too high. I know how difficult it is for Members of Congress in both parties to grapple with some of the big decisions we face right now. It’s more than most congresses and most presidents have to deal with in a lifetime.

But we have been called to govern in extraordinary times. And that requires an extraordinary sense of responsibility – to ourselves, to the men and women who sent us here, and to the many generations whose lives will be affected for good or for ill because of what we do here.

There is no doubt that times are still tough. By no means are we out of the woods just yet. But from where we stand, for the very first time, we are beginning to see glimmers of hope. And beyond that, way off in the distance, we can see a vision of an America’s future that is far different than our troubled economic past. It’s an America teeming with new industry and commerce; humming with new energy and discoveries that light the world once more. A place where anyone from anywhere with a good idea or the will to work can live the dream they’ve heard so much about.

It is that house upon the rock. Proud, sturdy, and unwavering in the face of the greatest storm. We will not finish it in one year or even many, but if we use this moment to lay that new foundation; if we come together and begin the hard work of rebuilding; if we persist and persevere against the disappointments and setbacks that will surely lie ahead, then I have no doubt that this house will stand and the dream of our founders will live on in our time. Thank you, God Bless you, and may God Bless the United States of America.

A bridge to the future, if collapsed, takes you no where… –kavips

This chapter looks at rebuilding our infrastructure. We have highway problems, energy problems, educational problems, as well as health problems, environmental problems, and social problems. Can rebuilding our infrastructure be a tool to begin the mending process?

Up to now very little has been spent on maintaining our highways. Most highway money was earmarked for new growth.. It was as if no one gave consideration of the fact that maintenance of what we already had up and running was a cost that needed budgeted in.. After all, what political points are ever given for repairing a road before it goes bad? (Damn it, why are they tearing up good highway, costing me twenty five minutes in each direction?) But with the August 1, 2007 collapse of the Interstate 35 Bridge in Minneapolis, we see what happens when highway infrastructure is ignored.

For example in the United States alone, 25% of our bridges are deficient. In Delaware, 15.4 % of our bridges are either functionally or structurally deficient, which is actually good when compared to our fellow small state Rhode Island with 52.9% of its bridges deficient. As one travels back and forth, one crosses an unknown number of tiny bridges; of these, one out of four is deficient. How would you like to be on the I 95 bridge across the Susquehanna… when its time came to fall?….. or perhaps driving across the Chesapeake Bay Bridge between Kent Island and Annapolis? Thinking “one out of four” may raise your apprehension rate the next time you find yourself traveling unknowingly across a potential deathtrap…

The need to improve our infrastructure is obviously there. So if we have the labor available, how will we pay for the construction and repairs with our treasury bottomed out?

That depends on whether bonds still had any worth, meaning whether or not anyone still had any interest in buying them… Normally bonds are sold at a low interest rate, and the money taken in is used for construction. The notes are paid back in regular payments. But if there is no demand for, or more money out there with which to buy the notes, who will fund the infrastructure investment?

Today the bottom line is that the money will have to come from the Treasury. Being broke, that also means the Treasury will no choice but to print more money in order to accommodate the economy’s need. As more money starts chasing fewer goods, inflation looks at us dead center down it’s barrel. Unfortunately we are in such dire straits, that we have no choice but risk the chance of inflation just to keep the next Great Depression at bay….

The same scenario applies to our efforts to revamp our educational system. Now estimated to require between 45 to 50 billion (how much was AIG’s bailout?) the infrastructure of our schools systems faces the same challenge of acquiring minimum funding, as does that of rebuilding our highway system.. Up until August of this year it could still have been done. Now due to insufficient funds, this accomplishment is unlikely. But if we choose to go forward, we will have to do so again funded by printed money with inflation drawing another bead upon the target on our own purchasing power..

Even today, there is enough work to employ every man, woman and child in America if we can find the resources to pay for them doing so… Work such as environmentally cleaning up Superfund Sites, energetically laying new transmission lines, socially integrating our square pegs into round holes, educationally teaching problem readers to become literate, or simply maintaining hospice care over those citizens who cannot survive long enough to see America turn its corner; yes, work can be found…

But the underlying question still remains as to how we will be able to fund the privilege of keeping America employed… and at whose expense? If we were unable to solve these problems during the past 8 years of plenty, how will we deal with them during a time of shortage?

Fortunately, we are not the first group of people in our lifetimes to rebuild our world around us… Three examples of what can be accomplished, are found in three post war states who after war’s end, found themselves under American influence. That would be Germany, Japan, and South Korea. These are the models we need to turn to. Someway and somehow they bounced back from complete devastation to becoming the the second, third, and fourteenth largest economies behind that of the United States…

At war’s end, there were very poor resources to spread around. Everything possible needed fixed at once. But with a small amount of seed money provided by the Marshall plan, a major currency adjustment, and a release from price controls, the German population pulled themselves up and today have roaring economies better than do any of our allies of that past conflict. (It doesn’t seem fair.)

History shows us that for two years after the war, while post war punitive policies were kept in place, all of the occupied countries’ economies decreased. The Soviet sector opted to maintain those policies and their economy continued to suffer accordingly until German Reunification in 1990. However in the western Allied sector, starting in 1948 with the abolition of price controls and most post war rationing, along with the devaluation of their currency designed to shrink the amount (by 93% contraction) of the money in circulation, their economy took off; lost days decreased by half, and industrial production climbed within six months by 50%. Both nations were blessed with the post war abundance of skilled cheap labor; therefore both nations were able to increase the flow of money into and around their country.

Rising to the challenge imposed upon them by history, all three countries had able leadership which was effective in communicating this to each countries’ populations: … that their time and effort were to be properly considered as an investment. Their rewards would not be reaped immediately, …but would someday be magnificent. Their leadership was also effective in communicating that timing was critical. If they did not begin immediately… their nation’s dreams would never materialize. It was their competent leadership that marshaled the populations of both WWII nations back to work “on the cheap” and that…. the bottom line, is how both counties bounced back. Not dictatorially, but economically. One should note that both of the two occupied economies fared much better than our Allies, who received far more Marshall Plan aid than did the conquered nations, and who did not have to pay for war repatriations as did both of the war-torn countries.

From here I pulled this little piece of history, showing the progressiveness that forced the German economy forward…..

Colonel:“How dare you relax our rationing system, when there is a widespread food shortage?”

Erhard:“But, Herr Oberst. I have not relaxed rationing; I have abolished it! Henceforth, the only rationing ticket the people will need will be the deutschemark. And they will work hard to get these deutschemarks, just wait and see.”

That they did.

Obviously sitting in our armchairs looking forward, we too understand that we will face the specter of inflation. It MUST come with the copious amounts of money we are currently and anticipated soon to be printing. However as does any nation in a war, our country does what is needed. Currently and just like it was after WWII, the US right now is the only global entity strong enough to expand its money supply fast enough to put most of its citizens back to work. As we begin earning extra spendable income, our demand increases; when that demand pushes up prices, more and more entrepreneurs race to fill in the vacuum of goods… bringing them back down. Greed is good.

As for actual rebuilding of infrastructure, postwar Japan offers a slightly different model. In Japan we meshed the government, banking system, and large industrial players to fund, construct, and grow their infrastructure during the sixties. The local banks, backed by the government of Japan, used a system of overloaning. This policy is one which the Bank of Japan guarantees all loans issued by city banks to their industrial conglomerates. Because there was a shortage of capital in Japan at the time, industrial conglomerates borrowed beyond their capacity to repay, often beyond their own net worth, thereby causing city banks in turn to over borrow from the Bank of Japan. This gave the national Bank of Japan complete control over all dependent local banks until the loans were repaid.

The primary difference between the Japan of then and America today, is that today, the money is still not being lent out by those banks receiving Federal assistance. Instead, today’s over loaning is being wasted on the buying up of other banks; today that mass infusion of capital is being used to consolidate the financial industry, instead of financing large projects that actually put citizens to work, and in turn funnel money back through the economy.

The question remains. Does rebuilding our infrastructure get us back on our feet?

Yes and no. The economic impact on the local level at the location where the federally funded project is being built, is huge. But it is a localized effect. For an economic turnaround to be effective, infrastructure building must occur simultaneously in almost every town or village across the United States. If funded solely by the federal government, that significant cost would appear prohibitive. But if instead of being funded solely by the Federal Government, it is done as did the Japanese during their infrastructural rebuild, (where all local banks simultaneously financed local projects close to their locations), much more capital becomes available. If we place our bets on the option that local banks WILL lend out the money, if we guarantee that they lose none of the amount lent out,…. then that outcome could start some infrastructure development in the very near future somewhere near every community’s small bank, no matter where it may be located.

So if as a nation, we choose this plan, and we attempt the Japanese-tried approach, the question next arises over which infrastructural improvements will return the largest investment? The consensus seems to be that Energy, Education, and Technological advancement lead the pack.

As we now all know, even during prosperous times our nation gives up a large percentage of its income to other overseas nations just for oil. By simply keeping that dollar amount in the United States we could provide our economy a substantial boost. Furthermore, manufacturing and exporting new technology which help frees the rest of the world from their dependence on oil, would certainly assist us in turning the trade balance back in our favor. Both of these lines of thought converge to point out this: the increase of our energy independency could become the primary viaduct which could bring America back into prominence.

As for increasing our energy independency, there are several options for doing so. One, is to create new sources. Here is one startling fact: there is enough potential wind power in North Dakota alone to cover 25% of America’s energy needs. The problem is getting it to where it needs to be used. Building transmission lines from America’s heartland out to its extremities, where its largest users are, should be a first priority. For one, it actually uses the free market plan and opens markets to a cheaper supplier of that required product. Two, transmission costs are a significant portion of the energy costs we pay for electrical energy today. Three, poorly outdated transmission grids eat up a lot of energy that could instead be used to power America.

Likewise building transmission lines from our local shores to major metropolitan areas, provides those city areas with cheaper electricity from off shore wind, thereby increasing the likelihood that more wind power generating companies will set up off-shore. The larger the wind farms are off shore, the better our economy will weather that upcoming Depression that appears to be looming off our horizon… And if hydrogen is one day destined to become our replacement fuel, then locating their manufacturing plants in close proximity to offshore wind farms, in order to capitalize on a wind farm’s free excess energy during non peak hours….. could certainly help build an industrial base to back up the tourist economies of rural shoreline counties.,.

Directly related to the new technology of wind power, would be the need to construct electrical storage facilities in areas that have no jobs. Western Pennsylvania and West Virginia would be ideal localities to build closed circuit water generators that use free excess wind power during non-peak times to pump water up a hill to reservoirs on top, from which water can then be released during peak times, flowing downhill turning a series of giant generators as it falls to the valley floor. These massive projects would put large numbers of Americans to work in those areas desperately needing new development.

But these three investment strategies are all dependent on the knowledge that wind driven energy will be a big player in the years to come. No one will make such an major investment in a climate of doubt. The Federal government over the next few years … has to make that clear.

For other hard hit areas, an investment in solar power out in America’s Southwest can do the same. A conglomerate of local banks issuing out loans, guaranteed by the Federal Banking System, should have sufficient resources necessary to begin the immediate construction of a series of large solar farms in that area. With such an investment to attract large numbers of employees to that area hardest hit by the housing crises, local banks could with the Federal bank’s support., begin paying workers who in turn would help out the local banks by buying back some of those foreclosed mortgages at market prices…

But unquestionably, the largest saving can be made by simply conserving more energy in our homes and businesses. Just re-insulating every home in America, can save the cost of its installation within a year. According to the Department of Energy, re-insulating a home can save between 5% and 22% of its energy costs per year. At their estimated energy cost of $1500 a year (seems low, doesn’t it), the range would be from $75 dollars to $300 dollars a year. So paying someone a bounty of $75 dollars for each house, just to infra-red, then re-caulk it’s leaky windows and insulate it’s doors, would see its return within one year on every dwelling visited. Paying someone to go through a city’s public housing could save that city government tremendous amounts of money which could be better spent putting its citizens back to work.

Educational infrastructure is likewise needed. Our nation’s schools for the most part, have not been updated on a grand scale since they were originally built for the influx of baby boomers … What is more important than structural additions to existing buildings, is a revamping of the educational process itself.

America needs to regain their technological prowess… Our educational system ranks behind most of Europe and civilized Asia. One Duke study concluded that 137,437 engineering graduated in the United States, compared to 112,000 for India and 351,537 for China. Of course the quality of those foreign engineers are open to debate. But still, with lopsided numbers like that, it is obvious that over time…. we lose the technological war. Today… whoever is driving the global need for technology… drives the global economy.

Putting additional parents or motivators inside of class rooms, increasing allocations for science supplies (simply dropping sodium into water turns most students on to science as well as instantly explains the clarity of the periodic table), and increasing the social status of the “geeks” in teenage classrooms, are just some of the ways we can rebuild our educational infrastructural needs, without large investments of cash… Where we most often complain that the educational system is broken and in dire need of fixing, at the core of the problem is broken down people. Whether it is administrators, teachers, school board members, parents, or the students themselves, what we have throughout our education system is a group of talented, but leaderless individuals. All are spinning their wheels independently in their effort of trying to find some type of traction in improving education. Often within the same schools, different partners are spinning in opposite ways.

What American education needs is a grand goal, one that is set nationally and bought into by all of its people. Once again, America needs to be challenged. At its forefront it needs a leader capable and willing to stake his reputation on meeting and achieving that goal.. And most importantly, that challenge needs to me made without any financial strings attached. You know: the usual “we need to invest $$$ in …….”. Instead, what is needed by our incoming leadership is to voice a measurable goal such as this one for example: that says by 2015 we will as a nation, turn out as many engineers as does China….. (Goal reaching against a competitor worked for reaching the moon). Perhaps to achieve it, some additional funding may be necessary. But what is more important, is that is sends a real signal to students that fun and games as they have been portrayed on children’s TV, can no longer be tolerated within our high schools. Every young person now has the survivalist duty to apply themselves to the best of their ability, for the honor of their country in whatever the direction their talents lead them… (With proper leadership, this can be done fairly cheaply: it takes just one big speech.)

The long term return on this cheap investment is that by 2020, our engineers should be in the field working at top notch organizations, benefit them and us from their training and expertise…. The longer we wait… the further behind China and India we find ourselves… We are already talking twelve years from now before we can get any return on both ours, and our student’s investment….

Likewise, tying in with improvement of our educational output, is our need to advance ourselves further along the road of technological innovation, ie. creating new patients. For which ever nation builds the most savvy technical gadgets, that is the country from whom all others will want to buy…

But in today’s economical climate one must realize that a risky investment on some new technological device, untested in the market place, will have difficulty finding financiers. Once again, the Federal government, if it is spending its resources elsewhere, has the option of only printing more money to pay for this investment, assuming that private lenders are too scared to lend. Therefore as mentioned above, as in the post-WWII-Japanese model where the small city banks overloan to businesses and corporations allowing them to invest in research and development, if these loans are themselves guaranteed by the national bank, private lending can fulfill the need.

A very strong incentive to promote new research and development by corporations, would be to allow all such expenses devoted to the creation of new products, to become tax deductible under the newer higher rates that will be forthcoming shortly. Every bit of money spent on research and development, is our nation’s best investment. Innovative new products lead to the quickest economic turnaround as those new developed ideas soon become commercially viable…

Other areas where infrastructure can also be propped up by an infusion of small loans made by city banks which are then guaranteed by the Federal Reserve, are in the areas of environmental protection, health care, social services. Western forest fire fighting companies, environmental detoxification companies, and tree reforestation companies, could begin putting people to work.

It could work like this. A company such as Guardian, on call for disaster, receives a payroll loan from a small bank guaranteed by the Federal Government to keep itself afloat until money comes in from charging an oil tanking firm for the mess they made… Most of that loan money is used to buy necessary additional equipment, which puts someone to work in the manufacturing plant where that piece of equipment came ….. As work eventually comes in, the Federally guaranteed loan is paid back to banks… In this and most cases, no direct Federal investment is required. They just stand behind the guarantee.

In the health care industry, private companies providing hospice care, watching over psychiatric patients, creating new MRI’s, handling billing requests and follow up from insurance claims, can now receive a private loan from a small bank guaranteed by the Federal Government to carry them over until their money returns. Needing new equipment keeps a job at the plant where that piece was manufactured…

Companies specializing in assisting the poor, handicapped, impoverished, hungry, homeless, can also stay afloat by these private loans over lent by their banks, but guaranteed by the Federal Government. When the money returns from their clients, the loans are paid off.

In each of these areas, existing goods and services are maintained. The businesses don’t fold. Here is a different way of looking at it. This Keynesian jolt of economic activity is metaphorically like starting a heart of a human being temporarily stopped in cardiac arrest. At that time, all the systems are in place to work…. the heart just needs pressed to get started….. Our economy is like that. Inattention to the core of our economic problem, which is money not flowing out of banks, will lead to the same result to us as it would to a patient who does not get his heart restarted….

So this chapter can be summed up this way. The Federal Reserve is given responsibility for making sure that all projects having a viable chance of success, receive funding from, and eventually pay back… the small local banks making those loans. The Fed just guarantees the loans won’t fail….

Those out going loans should be focused on projects giving us our biggest bang for our money. Those areas providing the best return on their investment, are in the areas of energy, education, and technological advancement……

Instead of direct investment, the use of Federal guarantees in these three areas, coupled with the Federal Reserve’s monitoring the effects of inflation, are one way our nation can capitalize on its current hardship, and pull itself out through our effort, grit, and tenacity….