I pose the question because, so it seems in recent days. Our federal government is setting the salaries of bank executives, hiring and firing CEOs, reshaping boards of directors, and even buying up 72.5% of entire car companies.

Think beyond the massive debt that is being accumulated. Do any of these actions have other consequences in the future?

Historians pinpoint the beginnings of U.S. power at 1811, with the liquidation of the First Bank of the United States, founded by Alexander Hamilton. Amid the winds of the War of 1812, First Bank ignored political pressure and insisted that even British bondholders, from the nation the U.S. was preparing to fight, be paid in full. The debt was paid because that was the law.

This single act reverberated for years. Word got back to Europe that the word of this fledgling country was good, even with enemies. As a result, European capital to finance the great steamships, railroads and other engines of American growth flowed.

…

Scroll to 2009. What’s good for General Motors is no longer what’s good for America. GM and Chrysler faced restructuring in a last-ditch bid to avoid bankruptcy. But unlike 1811′s British lenders, their bondholders have been treated like enemies.

In setting terms of the restructuring as a result of its $30 billion bailout, the U.S. government saw to it that the United Auto Workers got more than their share, shredding the claims of bondholders who normally have first priority.

Chrysler bondholders got 29 cents on the dollar and were pilloried as “vultures” by the very government sworn to uphold the law. And for their $27 billion investment, GM’s 1,200 bondholders, many of them small stakeholders, got an equity stake of just 9%.

By contrast, the UAW, whose only claim is the $20 billion the automaker owes in gold-plated employee benefits, got 20%, with the government ending up with the rest.

This may be a greater barrier to bringing investment back to the US economy than even President Obama’s proposal to double the tax on investment.

» Read the Entire Editorial

Richard Fisher, the President of the Dallas Federal Reserve Bank, started his career working in President Jimmy Carter’s Treasury Department.

Most recently, he’s been one of the loudest voices of concern about “debt monetization” (printing money to finance the federal government’s overspending) and the inflation that will surely result (George Rebane wrote a great post on this topic that is worth reading as well).

His bigger concern these days would seem to be what he calls “the perception of risk” that has been created by the Fed’s purchases of Treasury bonds, mortgage-backed securities and Fannie Mae paper.

Mr. Fisher acknowledges that events in the financial markets last year required some unusual Fed action in the commercial lending market. But he says the longer-term debt, particularly the Treasurys, is making investors nervous. The looming challenge, he says, is to reassure markets that the Fed is not going to be “the handmaiden” to fiscal profligacy. “I think the trick here is to assist the functioning of the private markets without signaling in any way, shape or form that the Federal Reserve will be party to monetizing fiscal largess, deficits or the stimulus program.”

» Read the Entire Article

Photo Credit: Reuters

Spencer just keeps the hits rolling with his latest music video. This one is about his upcoming new baby sister, mom and dad, and his stuffed dog-dog that Grammie and Pop brought him from Alaska!

(Feed and e-mail readers, click through for the video.)

I’ve had the honor of knowing Tom McClintock and considering him a friend for ten years now. I first worked on his 1999 effort to roll back the “temporary” car tax increases that Governor Wilson had proposed during another one of our state budget crises. (Isn’t it interesting how “temporary” tax increases always become permanent?)

Tom just delivered a great speech entitled “The Eve of the American Reawakening” at the Council for National Policy.

His point — that for all of President Bush’s strengths, the “conservatism” that voters rejected in 2008 was not actually conservatism at all — is right on.

To those who say we should put the Reagan era behind us – I have a better idea. Let’s put the Bush era behind us.

To those who say we should redefine our principles, I have a better idea: we don’t need to redefine our principles; we need to return to them.

To those of the Republican establishment, who misled our party for years, who dismantled so much of what Ronald Reagan accomplished and now tell us “the other side has something” and we have nothing. To them I can’t improve upon Cromwell’s words: “You have sat here too long for any good you have been doing; it is not fit that you should sit here any longer. You shall now give way to better men. Now depart and let us have done with you, I say, in the name of God, GO!”

“The other side has something and we have nothing?”

What is the something the other side has – that some say we have to be respectful and mindful of?

Statism. Shortage. Paternalism. That’s their “something” that seems to so overawe and over-impress these scions of a failed party establishment.

Statism, Shortage and Paternalism is what we are told to be mindful and respectful of? I don’t think so.

Their statism is “something” so extreme that the entire national debt accumulated from the first day of the George Washington administration to the very last day of the George W. Bush administration will literally double in the next five years and triple in the next ten.

The tax increases already proposed to support it will rob every family of more than $2,500 from its purchasing power every year. We’re supposed to respect that? The American people don’t respect it. The American people know that you cannot spend your way rich; that you cannot borrow your way out of debt and you cannot tax your way to prosperity. And they know that if you live well beyond your means today, you must of necessity live well BELOW your means in the future. And that’s not a future we want for our children.

» Read the Entire Speech

My RSS feed pinged this morning with another snappy editorial from the publisher/editor of The Union. Don’t let his picture fool you — Jeff Ackerman gets it. (Sorry, Jeff…I couldn’t resist.)

This is worth your time to read.

What really frosts me is the threat they always make, parading teachers and firefighters and cops out, as if to say, “If you don’t give us more money, we’ll release all the murderers into your kids’ classrooms, where there won’t be any teachers or cops to save them and when they burn the school down, there won’t be any firefighters to put out the flames.”

Here’s a better idea: Tell the UC chancellor he doesn’t deserve $400,000 per year and a 100-member staff. Then shut down, or consolidate, half of the state departments and have the state Legislature close every other month.

And for extra measure, not another new law gets passed until there is a balanced budget. Every time they pass a bill, it costs somebody money.

» Read the Entire Piece

Photo Credit: The Union

I’m a few days away from getting my Kindle, and I can’t wait to share my thoughts after trying it out for the first time.

In the mean time, there was an article in the Wall Street Journal several weeks ago that I’ve been meaning to share, titled “How the E-Book Will Change the World.” It’s a very interesting read.

For starters, think about what happened because of the printing press: The ability to duplicate, and make permanent, ideas that were contained in books created a surge in innovation that the world had never seen before. Now, the ability to digitally search millions of books instantly will make finding all that information easier yet again. Expect ideas to proliferate — and innovation to bloom — just as it did in the centuries after Gutenberg.

Think about it. Before too long, you’ll be able to create a kind of shadow version of your entire library, including every book you’ve ever read — as a child, as a teenager, as a college student, as an adult. Every word in that library will be searchable. It is hard to overstate the impact that this kind of shift will have on scholarship. Entirely new forms of discovery will be possible. Imagine a software tool that scans through the bibliographies of the 20 books you’ve read on a specific topic, and comes up with the most-cited work in those bibliographies that you haven’t encountered yet.

» Read the Entire Article

Illustration Credit: WSJ

This weekend, we remember those who have given their lives to protect our freedom. Make sure you thank a veteran for their service this weekend. We owe them a lot.

I’m reposting this from Michael Hyatt’s excellent blog. He got this from the TED (Technology Entertainment and Design) conference.

Here are the ten commandments of presentations:

1. Thou shalt not simply trot out thy usual shtick.
2. Thou shalt dream a great dream, or show forth a wondrous new thing, or share something thou hast never shared before.
3. Thou shalt reveal thy curiosity and thy passion.
4. Thou shalt tell a story.
5. Thou shalt freely comment on the utterances of other speakers for the sake of blessed connection and exquisite controversy.
6. Thou shalt not flaunt thine ego. Be thou vulnerable. Speak of thy failure as well as thy success.
7. Thou shalt not sell from the stage: neither thy company, thy goods, thy writings, nor thy desperate need for funding; lest thou be cast aside into outer darkness.
8. Thou shalt remember all the while: laughter is good.
9. Thou shalt not read thy speech.
10. Thou shalt not steal the time of them that follow thee.

Priceless.

The New York Times article this morning makes my point.

The Los Angeles Superior Court will now close once a month. Dental care at Feather River Hospital in Paradise, near Sacramento, will cease on July 1. The Santa Clarita fireworks show this Fourth of July will be 10 minutes shorter.

These kinds of paragraphs make me wonder…

• Will western civilization end if our superior courts are closed one day a month? What if we closed two or three days a month? I realize it will slow down some legal matters, but this is an example of a spending cut that is workable.
• Why is a hospital providing state-funded dental care in the first place? Have you ever gone to a hospital to get your teeth cleaned? Why can’t people pay for their own dental care and suffer the consequences if they don’t want to?
• Why am I paying for the Santa Clarita fireworks show? In my hometown of Colfax, we learned how to live within our means a long time ago. The City Council couldn’t afford fireworks, so they cut funding to zero. The community got together and raised the money from private donations.

Fortunately, our friends at Saturday Night Live have a new plan that could help the Governor and our state legislators figure this problem out. I think it should be required viewing for every single person involved in federal, state and local government decision making.

(E-mail readers, click through to watch the video.)

I guess I have my own American Idol…

(E-mail readers, click through for the video.)