Tuesday, September 08, 2009

Following the Red Brick Road To LaLaLand

What’s coming at us – at warp speed – down the red-brick road is an economic catastrophe.

Things are really bad when the Chinese, our dept patrons, begin to throw Ben Franklin our way.

According to an article in the British Telegraph, former vice-chairman of the Standing Committee and now head of China's green energy drive Cheng Siwei admires Ben Franklin enough to have read him, which is more than can be said for President Barack Obama’s economic advisers:

“Mr Cheng said the root cause of global imbalances is spending patterns in US (and UK) and China.

“’The US spends tomorrow's money today,’ he said. ‘We Chinese spend today's money tomorrow. That's why we have this financial crisis.’

“Yet the consequences are not symmetric.

“’He who goes borrowing, goes sorrowing,’ said Mr. Cheng.

“It was a quote from US founding father Benjamin Franklin.”

The Chinese problem is that the country’s leaders -- far more persuasive than, say, send’em-a-dead-fish Rahm Emanuel – have not been able to induce frugal Chinese workers to part with their savings. The average Chinese worker, perhaps relying on Ben Franklin’s sage advice, knows that a penny saved is a penny earned, and he saves it.

On this side of the water, Emanuel and his cohorts, which include the president and several suites of czars, are spending hand over fist money they do not even have.

They hope to “borrow” this money, mostly from a Chinese state already heavily invested in US bonds.

What the Chinese rightly fear is the rampant inflation soon to arrive down the red brick road of LaLaLand. Inflation reduces the purchasing value of money, and for this reason the Chinese are understandably nervous, since they are holding a great deal of American debt. Americans on fixed income also ought to be worried, because their devalued dollars will not purchase as much. One can almost hear the Chinese muttering under their breath: Haven’t these guys read anything by Milton Friedman or Fredrick Hayak or Ben Franklin?

The answer is “No.”

The Obama administration assiduously reads its own position papers and possibly books given to the president by the democratically elected dictator of Venezuela, Hugo Chavez. They busy themselves pursing diplomatic relations with such international nut-jobs as the “Dear Leader” of North Korea Kim Jong Il, a dead-broke socialist, and the democratically elected jihadist of Iran Mahmoud Amadinijad, who has just sent to the Obama administration the following unambiguous message: Any discussion involving the creation of nuclear weapons in Iran is now terminated – permanently. Go stuff it!

Not at all sorrowfully, the administration, far outpacing former President George Bush, spends tomorrow’s money today and the day after tomorrow’s money tomorrow.

Here in Connecticut, the democratically elected legislature and Governor Jodi Rell have decided the state does not have a spending problem at all – never did. It has a revenue problem: The state is not spending too much money – never has. It simply has failed to collect enough money. A progressive income tax is the remedy for that failure. We’ve been around this block before.

This time, Rell and Democratic leaders in the legislature, President Pro Tem of the Senate Don Williams and House Speaker Chris Donovan, have decided to patch up the deficit temporarily by adding a progressive feature to the income tax, shifting the payment time line from today to the day after the day after tomorrow and– Are we surprised? -- borrowing money from anyone rash enough to purchase bonds from a state that is, per capita, more deeply in debt than kaput California.

The Democratic spendthrifts in the legislature have not read their Franklin; neither do they heed the example set by Chinese workers or the useful advice offered to them, via Franklin, by anxious Chinese leaders. Neither do they pay attention to polls screaming at them to cut spending. They toil not, neither do they spin. And come next election, they all should be voted out of office and sent to a re-education camp in China to learn the basics of economics.

If an effective resistance to the coming economic apocalypse is not soon set in motion, tomorrow will be here before we know it.

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