I think you are confusing "jobs in manufacturing" with "industrial base." You have to look at our productivity - we manufacture far more now then we did 30 years ago.

Read: http://cafehayek.com/2010/07/applaud-productivity.html

Our manufacturing/industrial base is still the largest in the world, still larger then China's. The problem isn't more or less of this job or that industry, the problem is the government trying to direct the economy. If left to itself, people would create and find all kinds of jobs. But too much regulation, to many laws, and too many false incentives have screwed everything up. Who can say if our industrial base is too small? But evidence certainly suggests it is far from non-existent.

Sincerely,

Craig

Treasury Secretary Timothy Geithner and Lawrence Summers, head of the president's National Economic Council, emphasized Wednesday that "without growth now, deficits will rise further and undermine future growth."

France expects its budget deficit to grow to 8 per cent of GDP this year and it intends to reduce that to 3 per cent within three years. The Government has frozen public spending and intends to increase the retirement age and reform the pension system to reduce its debt.

First, Paul Krugman is an economic hack. He's a Keynesian which means he believes spending is what drives an economy, not production. This is wrong. It's a very convenient theory for most politicians and academics - people who benefit significantly from government spending - but it's not reality.

I'm just going to go through some of his B.S., there is too much for one email. I'd be happy to discuss it some other time though. :)

"Greece, on the other hand, is caught in a trap. During the good years, when capital was flooding in, Greek costs and prices got far out of line with the rest of Europe."

First, the flood obviously came through lending. Expanding credit can indeed cause inflation. That is what happened in the 1920's and what cause the Great Depression. But what is really out of line for Greece are their entitlements. In Greece, It's possible to retire and live off the state starting in your early 50's. So many people work for the Greek government, the government doesn't know how many people actually work for them. It's probably close to 25-30% of the population. In the Greek constitution it says that once you get a job for the government, you are guaranteed that job for life - you can't be fired. The cost of government and entitlements are what's far out of line with the rest of Europe.

"If Greece still had its own currency, it could restore competitiveness through devaluation. But since it doesn't, and since leaving the euro is still considered unthinkable, Greece faces years of grinding deflation and low or zero economic growth."

This almost makes me sick to here. Inflation (devaluing your currency) is the worst cure possible. It's like bleeding a sick person. The theory is that devaluing a currency (printing more money) makes your exports cheaper. You can sell more goods, so it must be beneficial. While you may be able to sell more goods, it's only benefiting those who buy the exports - provided they have a stable currency. For the citizens of Greece, the goods they produce for themselves will cost far more, and goods they try and buy from overseas will cost far more as well. Who would want a Greek drachma in exchange for a good, if you knew that you would only be able to purchase half as much with it in a month? If you could find someone willing to take drachma's in exchange, they would demand a higher price due to the risk of accepting currency that is being actively devalued. Likewise, any Greek would take an Australian Dollar over a drachma, they might even give you a deal on the good they are selling. They could actually save it for a rainy day. As for "grinding deflation," if a currency is stable, prices will naturally move lower. As productivity increases, there is more available to society. The greater the supply, the lower the price and the higher the standard of living. Deflation is and always will be a good thing. Finally, the reason they will have low or zero economic growth isn't because of a lack of inflation, it's because they have to pay back their debt. Instead of using the things they produce to benefit themselves, they have to use it to pay off the people they owe. The key is to avoid debt in the first place.

"So the only way to reduce deficits is through savage budget cuts."

Uhg. This is the only moral way to get out of debt. To do so through inflation or default is immoral. It is theft, pure and simple. Let's say you lend me 2 pure gold coins which I will use to purchase a new stereo. Instead of working hard and saving up two gold coins for repayment, maybe three if you're charging me interest, let's say I take the coins you gave me and melt them down. I then find a cheap metal like zink and create 5 smaller round disks. I take the melted gold and cover the disks, and press them into the same shape and size as the original coins. I now have 5 "gold" coins. I give you three, and use the other two to buy my stereo. I have stolen your gold. Heck, maybe if I created 6, I would even have savings. If the price of gold is $1200/oz, anyone who knows what I did is going to want twice as many coins from me in exchange for a good. For a government to do this on purpose to it's people is reprehensible - as is Krugman.

There is so much more I could say. But if I argued every stupid point by this crackpot, I'd be here all day - I'd enjoy myself, but I'd be here all day. :)

Craig]]> Craig Kohtz Fri, 14 May 2010 04:29:43 -0700 http://www.kohtz.org/index.php?wid=891

The goal is not just to crawl out of crisis but ultimately to lead, said Christie in his budget address. "If we make the tough decisions now, we will be one year ahead of 80 percent of the states in the race to economic growth. If we fail to act, we will fall even further behind ... by going first, we can become first."

Can Christie succeed? We will find out on June 30, when the Legislature must pass a budget . But no matter the political price, Christie is determined. "You just have to stand and grit your teeth and know your poll numbers are going to go down - and mine have - but you gotta grit through it because the alternative is unacceptable," he told The Wall Street Journal.

The alternative is unacceptable - words a growing majority of Americans desperately want to hear from their elected officials.

N.J. gov. sets tone for US (via CafeHayek.com)]]> Craig Kohtz Thu, 13 May 2010 08:24:38 -0700 http://www.kohtz.org/index.php?wid=890
Today I read a piece by John Stossel where he quoted Traian Basescu, president of Romania:

The state sector is like a fat man of 200kg sitting on the back of a 50kg little man who is the real economy.

Stossel's article goes on to say about Romania...

...to reduce the pay of state employees by 25 per cent from next month and pensions and unemployment benefits by 15 per cent this year. ...He said the cutbacks would also help reinvigorate an economy that is being crushed by a bloated and inefficient state sector.

And in the U.S.? Projected trillion dollar deficits for the next 10 years with no talk of real reductions by the vast majority of politicians.

If the UK realizes the importance of cutting deficit spending and have the political will to do something about it, why can't we? And why is it that the president of Romania knows more about capitalism and how economies work the our own politicians? ]]> Craig Kohtz Thu, 13 May 2010 05:57:46 -0700 http://www.kohtz.org/index.php?wid=889
The U.S. economy - believe it or not - is not on the verge of recovery. It is on the verge of becoming the next Greece. Our debt situation is not sustainable. By the end of 2010, our public debt will reach 60% of GDP, the point at which economists say a nation is in financial peril. If we actually want to pay people the entitlements we've promised them (social security, health care, etc), we will continue to borrow money and by 2020 our debt will reach 85% of GDP.

The federal government will dramatically raise our taxes instead of decreasing spending. This will result in less money for people to spend on things like travel, concerts, events, hotels and restaurants. Government receipts will fall, and taxes (nationally and in Lincoln) will be raised again and again.

Unless there is a fundamental change in entitlements and in government, the Lincoln Arena will ultimately fail. Not because the arena itself is a bad idea, but because our national economy and our country is on such shaky ground. I see no hope of this changing any time soon.

I know I sound like a grumpy old man with nothing good to say, but until we face the facts that things need to change, it's going to be hard for me to be an optimist.

BTW, gold is at an all time high right now at about $1,240. It's still a good buy.]]> Craig Kohtz Wed, 12 May 2010 05:43:44 -0700 http://www.kohtz.org/index.php?wid=888

"And meanwhile, you're coming of age in a 24/7 media environment that bombards us with all kinds of content and exposes us to all kinds of arguments, some of which don't always rank that high on the truth meter. And with iPods and iPads and Xboxes and PlayStations - none of which I know how to work - information becomes a distraction, a diversion, a form of entertainment, rather than a tool of empowerment, rather than the means of emancipation. So all of this is not only putting pressure on you; it's putting new pressure on our country and on our democracy."

- "Wait - did Obama just diss the iPad?"

Obama thinks that anyone who disagrees with him must be getting their information from a poor source - a source he can't control. Evil technology is what enables dissenters (read "people low on Obama's truth meter") a way to express their opinion outside the media he has more control over. Media that he has been trying to control since day one, like any other politician.

It's very obvious that Obama can't stand disagreement with his version of the "truth." Therefore, the means that allow disagreement to be disseminated must be a problem, even though he admits he has no idea how to use said means.

Obama has no clue. He might as well have replaced "iPods and iPads and Xboxes and PlayStations" with "the internet."

So much for hope and change. ]]> Craig Kohtz Tue, 11 May 2010 03:58:01 -0700 http://www.kohtz.org/index.php?wid=885 Sen Bob Bennett was ousted at the Utah GPO convention, banned from running in next year's election. The reason? He voted for the bailouts.

In his 2004 campaign, Bennett ran no television commercials and won a third term in the general election with 69 percent of the vote.

The 2010 campaign was clearly different. He acknowledged he should have spent more time in Utah the past couple of years letting GOP activists get to know him, but didn't imagine Republicans would be angry enough with Washington to target one of their own.

There is no compromise when it comes to our deficit and corporate welfare. Bailouts exacerbate our financial problems, because these huge banks and corporations have no consequence associated with failure. So they take whatever risks they want. And bailing them out just adds more debt for future generations to pay off.

Politicians like Bob Bennett who claim to be "conservative" are going to destroy this country with debt and big government. Just like it will destroy England, Portugal, Ireland, Italy, Greece and Spain. Actually, Ireland has low taxes and is cutting government spending, so I still have hope for them.

It's time for change. Real change. The GOP neo-conservatives must be rooted out and replaced with people who are more concerned about this country then their jobs. A nearly impossible task, but hopefully one that can be accomplished. ]]> Craig Kohtz Sun, 09 May 2010 08:07:11 -0700 http://www.kohtz.org/index.php?wid=880

"GM is able to repay the taxpayers in full, with interest, ahead of schedule, because more customers are buying vehicles like the Chevrolet Malibu and Buick LaCrosse we build here in Fairfax," said GM Chairman Ed Whitacre during a visit to an auto plant in Fairfax, Kansas on Wednesday.

When I heard that, I was shocked. I thought they were pretty much owned by the government. After a bit of checking, they still are. The are owned by the U.S. and Canada. GM still stands for Government Motors in my book.

In fact, GM still owes $45.3 billion to the U.S. and $8.1 billion to Canada, money it received in exchange for shares in the company.

Grassley: GM Didn't Really Pay U.S. Back
]]> Craig Kohtz Tue, 27 Apr 2010 07:04:17 -0700 http://www.kohtz.org/index.php?wid=879 Cafe Hayek with some past predictions.

Earth Day predictions of 1970. The reason you shouldn't believe Earth Day predictions of 2009. (or 2010)

Here are a few samples... note the "almost unanimously" in the first one. Sound familiar? Also, note the last prediction I quoted... did someone say ice age? ACK!

"Demographers agree almost unanimously on the following grim timetable: by 1975 widespread famines will begin in India; these will spread by 1990 to include all of India, Pakistan, China and the Near East, Africa. By the year 2000, or conceivably sooner, South and Central America will exist under famine conditions....By the year 2000, thirty years from now, the entire world, with the exception of Western Europe, North America, and Australia, will be in famine."
- Peter Gunter, professor, North Texas State University

"We are prospecting for the very last of our resources and using up the nonrenewable things many times faster than we are finding new ones."
- Martin Litton, Sierra Club director

"The world has been chilling sharply for about twenty years. If present trends continue, the world will be about four degrees colder for the global mean temperature in 1990, but eleven degrees colder in the year 2000. This is about twice what it would take to put us into an ice age."
- Kenneth Watt, Ecologist

]]> Craig Kohtz Mon, 26 Apr 2010 19:15:47 -0700 http://www.kohtz.org/index.php?wid=878

Would you provide a $100,000 loan to a company or an individual who;

1. Has personally guaranteed short and long term debt of $1,630,000.
2. Has $100,000 in questionable non liquid balance sheet assets with no savings.
3. Has current income of $240,000 per year, but is currently spending $350,000 per year on his planned and budgeted bills and expenses. The next 5 years of budgets and financial projections that they provide also show expenses and fixed bills exceeding their income by an average of 30% every single year.

An important read: Can I Please Borrow $100,000? Tea Party says... NO!!

]]> Craig Kohtz Mon, 26 Apr 2010 07:27:53 -0700 http://www.kohtz.org/index.php?wid=876
Calling people unpatriotic is a great way to put down those who are against war and aggression, but what about those who are against taxes and big government? It appears the best way to discredit them is to accuse them of being racist bigots or perhaps calling their organization a "hate group." This is the current tactic being used, which can often be seen in the media, to discredit the tea party movement.

I've recently come across several articles that actually try and put these accusations into perspective. The first two are from reason.com, a libertarian magazine I recently discovered. They're were written about 4 or 5 months apart - "Red America, White Power" & "Are Tea Parties Racist?." I highly recommend reading these articles, especially the first one in which the author gives multiple examples of the media accusing the movement of racism.

But in a somewhat more shocking discovery, today I saw an article in which Former Democratic State Party Chairman for the state of New Hampshire, Kathy Sulliva, is accused of actively looking for liberal activists to crash tea parties with racist signs in order to discredit them. It's amazing to what lengths people will go in order to pay more taxes.

No matter what one's feelings are on the subject, I think it's important to remember that the vast majority of people who oppose taxes, big government, war, or whatever else they are against, are normal people with honest concerns. I'll go to a Tea Party rally tonight if I get the chance and that does not make me a racist. I think Obama is just as capable of screwing up this country as George W Bush was, maybe even more so. But it has nothing to do with their race, only their policies.]]> Craig Kohtz Thu, 15 Apr 2010 05:45:09 -0700 http://www.kohtz.org/index.php?wid=875

"But it appears Iran's unemployment rate has reached about 20 percent." (Our U6 is close to this - 16.9%)

[...]

"Iran's economic problems are linked to its extensive use of subsidies - billions of dollars a year - to keep basic necessities such as electricity, gasoline, bread and other food staples far below their true market value." (sounds like health care, tuition, etc - and we do also subsidies necessities)

[...]

"Experts say subsidies could eventually bankrupt the Iranian government, and so this year, a great debate has emerged over subsidies..." (ok... no great debate in America yet so not totally like our economy)

[...]

"Iran has realized that subsidies are very costly, not the way to develop an economy; but they have, I think, used subsidies because they have seen this as the best mechanism, depending on who is in power, in order to get political support," he says. (ding, ding, ding!)

[...]

"In a system like Iran's, there's a great deal of pressure on the political side for the banks to do what they're told to do, and not what they should do as good bankers," he says. "So, yes, Iran's banking system is a mess." (ding, ding, ding! Except here, they work hand in hand more or less.)

[...]

"Ahmadinejad has forced the banks to lend money at artificially low rates of interest." (replace "Ahmadinejad" with "Federal Reserve" and "force" with "allowed")

[...]

"So the banks on the one hand are unable to attract depositors because they can't pay interest enough to match at least the inflation rate," he says. "And at the other end, the money they have lent out they are not able to recoup."

The biggest difference is the 20% inflation Iran is suffering - but are we very far from that reality ourselves?

Iran's Economic Troubles Mount As Sanctions Loom
]]> Craig Kohtz Tue, 06 Apr 2010 06:48:47 -0700 http://www.kohtz.org/index.php?wid=872

"In the case of the Medicare Program, the government estimate was off by over 816%."

"In the case of the Medicare Part A, the government estimate was off by 165%.."

"In the case of the Medicare Home Care Benefit, the government estimate was off by 150%."

"In the case of Social Security pay outs, the government estimate was off by a massive 2,600%."

"In the case of the Medicaid DHS Program, the government estimate was off by 1,600%."

- Capitol Comment 432: How Reliable are the CBO Cost Estimates for Healthcare Reform?

And for those who say that this is so important that cost shouldn't be a factor, see this:



And finally for those who think we live in a free society, you may need to redefine the term "free society":

But the individual mandate extends the commerce clause's power beyond economic activity, to economic inactivity. That is unprecedented. While Congress has used its taxing power to fund Social Security and Medicare, never before has it used its commerce power to mandate that an individual person engage in an economic transaction with a private company. Regulating the auto industry or paying "cash for clunkers" is one thing; making everyone buy a Chevy is quite another. Even during World War II, the federal government did not mandate that individual citizens purchase war bonds.

- Constitutionality of Obamacare

]]> Craig Kohtz Mon, 22 Mar 2010 07:29:26 -0700 http://www.kohtz.org/index.php?wid=871
- Delusional (John Stossel)
]]> Craig Kohtz Wed, 17 Mar 2010 13:51:13 -0700 http://www.kohtz.org/index.php?wid=870 read an article that says the United States has shipped tons of bunker busting bombs to Diego Garcia for use on Iran.

"They are gearing up totally for the destruction of Iran," said Dan Plesch, director of the Centre for International Studies and Diplomacy at the University of London, co-author of a recent study on US preparations for an attack on Iran. "US bombers are ready today to destroy 10,000 targets in Iran in a few hours," he added.

The preparations were being made by the US military, but it would be up to President Obama to make the final decision. He may decide that it would be better for the US to act instead of Israel, Plesch argued.

My fear is that Obama and his administration think more war can get us out of this recession by allowing the government to spend more money, thus stimulating the economy even further.

So I did a little research and found the following article - World War II Did Not End the Great Depression. It's actually quite good. ]]> Craig Kohtz Tue, 16 Mar 2010 06:44:32 -0700 http://www.kohtz.org/index.php?wid=869
Social Security to start cashing Uncle Sam's IOUs]]> Craig Kohtz Mon, 15 Mar 2010 06:41:00 -0700