January 01, 2009
I?ll begin with what?s on everybody?s mind?money. Alas, I share none of the optimism of my colleague Tim Worstall, who?s predicted a swift U.S. recovery. The country Tim describes?a land blessed with a free economy, mountains of capital and saving, and a government that leaves well enough alone?sounds like a wonderful place to live in. Unfortunately, the Land of the Free is ruled by a president who, while guarding us against the dangers of ?socialized medicine,? has recently nationalized large portions of the banking, housing, insurance, and auto sectors. The government is working very hard to prevent exactly the kind of economic cleansing we need. What also leads me to believe that a recovery is a long way off is that America is a capitalist power without much, well, capital. Since Americans save next to nothing, consumption and investment have been financed by borrowing, mostly from the Chinese and oil-rich Arabs. And it strikes me as highly unlikely that, much as Baron M?nchausen pulled himself out of the swamp by his own shirt collar, we’ll be able work our way out of debt by taking on more debt.
Speaking of China, it is the Communist power that clearly has the freer economy, and which, I predict, will pull out of the global downturn fastest?and will soon end its dependence on Uncle Sam. 2009 will be the year Beijing de-pegs the RNB from the greenback, allowing it to fly high, and begins to find plenty of new consumers for its country?s products outside the U.S.A. We?ll also soon hear murmurings among national leaders and central bankers, faint at first, then much louder, about dropping the dollar as a reserve currency.
As for America, I suggest you activate your anti-gloom resistance shields if you have them. Sure, the Dow might pop up 20-25% percent, and perennial bulls will talk up the ?recovery??but who cares when gold is trading at $2000 an ounce and the dollar has fallen through the floor.
I think we?ve already heard the death knells of the bull market in stocks (lasting for the lamentable tenure of Allan Greenspan) as well as the bugle calls of a new, even more profitable bull market in commodities, particularly those that can be exported. Following Jim Rogers, I predict we?ll start to see some interesting media stories about industrial farmers buying Masaradis, while former hedge managers are paging through dog-eared copies of Das Kapital at their local hipster coffee shops.
As for politics, Barack Obama still remains a mystery. Steve Sailer concludes his magnificent biography of the man, America?s Half-blood Prince, observing,
[T]he American establishment has been so intellectually enfeebled by political correctness that for two years we?ve all been fed a steady diet of David Axelrod?s implausible campaign concoction starring the author of Dreams from My Father as the Great Race Transcender. All these months, our elites barely mentioned (or even noticed) the subtitle of the ?postracial? candidate?s autobiography: A Story of Race and Inheritance.
And in their obsession with Obama?s post-racial diversity-ness, the media also neglected to take seriously the kind of pomo Marxism Obama clearly has as his intellectual starting point. When tape surfaced of Obama speaking only eight years ago about the Supreme Court?s inability to ?break free from the essential constraints? [of the] Constitution? in order to better ?redistribute? wealth? to ?dispossessed peoples??pretty standard Fanon-esque racialized Marxism?the media assured everyone that he didn?t really mean it. Well?
None of this is to say that Obama doesn’t have it in him to be the kind of non-divisive, non-partisan, anti-Sharpton president of his white supporters? hopes and dreams. For one thing, as Steve points out many times his book, Obama?s likes to imagine that whenever he gets personally promoted, the world has achieved great racial progress. Thus upon being elected, and before having actually done anything, Obama announced, ?Change has come to America!? And Obama was able get on with the work of securing his position with the Powers That Be in Washington, making nice with the Clintonites and even a Clinton. One could hope that throughout the next eight years, Obama could spend countless hours reminding us of the inherent greatness of a country in which a Kenyan goatherd could go to Harvard, have an ?unlikely Romance? with a Kansan anthropologist, and sire the country?s ?first black president? etc. etc.?and then policy-wise, not do much of anything. Sounds good to me!
And perhaps if Obama had been elected, as was Bill Clinton, during one of Greenspan?s asset bubbles?with wealth and contentment flying high?we could have been blessed with a do-nothing, talk-a-lot president. But Obama got elected after all the bubbles have popped, and I thus think he?s gonna be radical, really radical. (And in many ways, it?d be hard for him not to go crazy after Bush and Paulson?s massive interventions in the fall.)
It?s already been made clear that Obama will indulge in some New Deal nostalgia with his big infrastructure development plan?having this dispossessed people dig ditches, that disposed people fill them up again?but I also expect some ?21st century? socialism as well. Look for the collapsed and renationalized Fannie and Freddie to return with a vengeance, with new lending standards that will make the old ones seem draconian. Efforts will be made to ?guarantee? 401Ks (that is, the government will offer the public the privilege of having their investments confiscated) and Obama will transform them into a Ponzi scheme much like social security?with retirees get funded by current workers. And then there?ll be the bailouts. The New York Times will come to Washington, and perhaps some other ?conservative? papers, like the New York Post, will tag along to make the groveling fair and balanced. But all of this will pale besides the spectacle of the Las Vegas hotel owners entering Congress pleading for cash to save this great American industry. 2009 will be the year we deserve?that is, it’ll be a total circus.
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