Something I have often wondered about is the passivity of Americans, the willingness to put up with great abuse from government without so much as a whimper. Not just at the Federal level, but at all levels. Government is corrupt, self-serving and ineffective. Infrastructure is primitive – and crumbling, schools are a disaster area, customs and immigration are the rudest in the world, cops and security are worse, high on testosterone, bailouts and government spending go to bribers and unions. I could go on, but it just upsets me. Anyway, here is a decent piece on the subject of passivity. Right or wrong, it is a start on thinking about something important.

Why are Americans passive as millions lose their homes, their jobs, their families, their hopes of justice, and the American dream?

Why do Americans remain disorganized at home while their European and Asian counterparts flood into the streets and strike in militant, organized protest? Why do others believe in their potential to reclaim their lives while we do not?

What happened is a result of at least five major, interrelated forces. One is a transformation of American morality, and with it the loss of belief that the social and political realms could be shaped by morality, ethics, and secular spirituality. Another is an economic depression. A third is a transformation of the family, which has been the foundation of American emotional life. A fourth is the decimation of Americans’ social participation in all areas, from bridge clubs and PTAs to political parties. A fifth is the tranquilizing and numbing of the American population with psychotropic medications.

As an example, Rasmussen polling finds that Americans understand that Keynesian economics is idiotic and a simple matter of self-serving politicians helping themselves to their money while destroying the economy.

While influential 20th Century economist John Maynard Keynes would say it’s best to increase deficit spending in tough economic times, only 11% of American adults agree and think the nation needs to increase its deficit spending at this time. A new Rasmussen Reports national telephone survey finds that 70% disagree and say it would be better to cut the deficit.

In fact, 59% think Keynes had it backwards and that increasing the deficit at this time would hurt the economy rather than help.

To help the economy, most Americans (56%) believe that cutting the deficit is the way to go.

Eighty-three percent (83%) of Americans, in fact, say the size of the federal budget deficit is due more to the unwillingness of politicians to cut government spending than to the reluctance of taxpayers to pay more in taxes.

Yet, other than a few tea partiers, where is the public rage? I tell you, there is some private rage right here when I see this sort of abuse:

Though highly unusual, the methods San Luis Obispo County’s two top sheriff officials have adopted to double and even triple their incomes are entirely legal.

In an interesting twist, San Luis Obispo County Under Sheriff Steve Bolts is taking home between $640,000 and $772,000 this year in retirement benefits and an hourly salary, while his boss, Sheriff Pat Hedges, takes home $340,000, according to calculations based on dates provided by Bolts.

Unfortunately, these DROP plans are everywhere and this kind of abuse of the taxpayer is routine. No wonder California government is bankrupt. These payouts, authorized by union-corrupted politicians, are killing it, but there is just bovine acceptance. I’m just afraid that things will have to get really, really bad before this comes to a head. But if we keep going the way we are, they will.

Looks like the worm may be turning as it is becoming ever clearer that the economy continues to deteriorate, despit the continued administration of Keynesian punishment. Richard Russell, the doyen of newsletter writers, is apparently now calling for Dow 1,000. I confess that even out-bears me. Or would that be bears me out? Better than being carried out. Or would that be borne out? Sorry. Got carried away.

Commodities taking some serious punishment, although on the heels of a nasty short squeeze. Hopefully will have better numbers to report next month.

Relative performance is based on a relative return fund, FMAGX, an absolute return fund, HSGFX, and, newly added, “the Fed,” CPI-U price inflation as driven by public enemy number one, the Federal Reserve. Inception refers to reporting on the blog, and is based on the close of 2005.
1/31 portfolio.

Here is a good example of the fundamental problem, as the administration throws away $2.1 million for nothing.

President Barack Obama is spending $2.1 million to help Suntech Power Holdings Co. build a solar- panel plant in Arizona. It will hire 70 Americans to assemble components made by Suntech’s 11,000 Chinese workers.

…

“The cost of manufacturing here is too expensive compared to Asia,” said Guy Chaffin, chief executive officer of Elite Search International, a Roseville, California-based executive search firm that has found employees for Tempe, Arizona-based First Solar and Solar Millennium AG. “As far as a flood of good jobs coming to the U.S., we’re not seeing it.”

The U.S. is simply not competitive. It is running on its credit cards.

What’s worse, it is wasting the money it is putting on its credit cards on consumption, when it could be borrowing to invest. When it finally figure that it needs investment, it won’t be able to borrow anymore. It is violating rule one – when you’re in a hole, stop digging.

Speaking of digging, Bloomberg’s Caroline Baum writes, on the subject of Obama’s “job-creating” initiatives:

The only thing missing from the energy-cleansing, rural- community-assisting, climate-change-mitigating, health-food- promoting blueprint is money for pyramid building. In Chapter 10, Section VI of “The General Theory of Employment, Interest, and Money,” John Maynard Keynes advocated building pyramids as a cure for unemployment.

In fact, “Two pyramids, two masses for the dead, are twice as good as one,” he wrote in his 1936 treatise.

How hard is it to see the absurdity in that statement?

It is true that hiring people to produce unneeded and unwanted goods and services boosts employment. But it is pure waste. It is neither enjoyment or investment. It simply manipulates the numbers into a false picture of the economy. Which of course is being extensively done these days. Productivity growth is reported, but is simply the result of incorrect accounting for the impact of imports, as if those 70 workers were producing the output of the 11,000 Chinese. Employment is misrepresented by the birth/death adjustment, which we will learn tomorrow added more than 800 thousand jobs in the year through last March which simply never existed. Since then the same model, estimating jobs in new small businesses, has added nearly a million more jobs, which clearly don’t exist either. The administration certainly doesn’t want honesty, because that would further exacerbate the building rage. But it is like setting the mileage back on a used car. It doesn’t make the car less worn or more reliable.

It is also clear the the government’s biggest Ponzi scheme, Social Security, is coming unglued. It will be cash-negative for the first time this year, meaning that it will start to be a drain on the beleaguered Treasury, rather than a source of funds. Look for panic in the next year or two.

ADP payrolls came in at -22,000 this morning, indicating that employment is more or less flat on a seasonally adjusted basis. Who knows where the government’s report will come in, there are more adjustments than data content in it.

This modest improvement in the employment picture has been achieved at the cost of massive federal government deficits, and the budget just rolled out shows no relief in the future, even with an improbably optimistic forecast of future economic growth. The federal deficit is running over 10% of GDP. What this really means is that the underlying economy is so weak that over 10% of spending has to be supported by borrowing. Needless to say, that isn’t sustainable. What’s more, tax collections are weakening and are well below the Treasury forecast so the number in the plan is a better than best case scenario.

But the drumbeat for more spending continues to echo in Washington,whose  denizens will do anything to avoid short term pain. Doubtless it will continue to do so. Economists, led by the Fed, continue to insist on their Keynesian idiocy where saving, in their view, should be a capital offense. Consume everything, is their mantra. Meantime the Tea Party momentum continues to build.

Democrat and House Majority Whip Tom Clyburn:

“We’re not going to save our way out of this recession,” the majority whip added. “We’ve got to spend our way out of this recession, and I think most economists know that.”

Yes, they do “know” that. The problem is, they’re wrong. The U.S. is suffering from the results of decades of underinvestment.

It’s not what you don’t know that gets you. It is what you know that just isn’t so.