Monday, May 5, 2008

Borrowing from Hu to Pay Abdullah

As if we needed any further evidence of the financial foolishness of our nation: it's coming to people's attention that the forthcoming "rebate checks" that were approved several months ago by suspiciously cooperative politicians, in order to stimulate the economy, will in fact be going to OPEC to pay for higher fuel costs (or, indirectly, to farmers who, in turn, buy fertilizers and pesticides that are made primarily of fossil fuels). In the midst of a "war against terror," our government is sending cash to its citizenry that will be used to further enrich the autocrats of the Middle East, especially to that nation that provided the dominant number of footsoldiers who flew the planes into the buildings of New York and Washington. Do we suppose that none of our largesse will find its way to outfits like bin Laden's?

No less ironic is the fact that the Federal government will go further into debt to finance this little boondoggle for our Middle Eastern friends, primarily borrowing the funds from the Chinese and other Asian nations. Coming or going, we continue the one time gigantic firesale of America to nations that do not mean us well.

My favorite little tidbit from the Bloomberg story linked above: OPEC and WalMart will be in competition for the rebate dollars. But here again we fool ourselves if we think this is a real competition. WalMart buys the dominant amount of its products from China, who in turn purchases resins for the massive quantities of plastics it manufactures from - yes, you guessed it - OPEC. Either way, it's a win-win for the Saudis and the Chinese and an absolute disaster for our children, upon whom we'll be saddling the debt from our continued profligacy and adding to the pile of discardable plastic while burning through the remaining cheap energy that we'll be purchasing with the largesse from the government. Where's the outrage? We're too busy shopping to notice.


Anonymous said...

I see a lot of problems with this post. Where to begin:

1) There is no connection between gas prices and rebate checks. Besides, the Arabs are still giving oil away at current prices. Their loss; they should be conserving and selling at $300/bbl.

2) We need gas prices to be way, way higher to make conservation even worthwhile in a free market. Right now, things are just too easy.

3) The only reason we make fertilizer from NG is that it is so dang cheap! The nutrients required for "fertilizer" are N (Nitrogen), K (Potassium) and P (Phosphorus). Oil is made of H (Hydrogen) and C (Carbon), so it isn't needed. Fertilizer can be easily produced from coal...which, by the way, America has more of than anyone else. We are sitting very pretty in the food department - something 95% of other nations cannot say.

4) Whomever is loaning America money right now has all the problems, not us. Look at the housing boondoggle - in the end, it's foreigners holding dollars or American property who gets screwed if the bottom falls out. The world is living in terror that we will pull the plug, because if so they lose everything. Remember, we can just create hyperinflation and shed our debts to other nations overnight (this would screw the wealthy boomers on the golf course and the American fat cats plus return the economic power to local labor, I like it already). But to fret this would be America's problem is laughable. Any debt we hold is the world's problem, fueled by their greed for profit. I'm sorry, I don't feel much sympathy for them: how many nations have fooled around with our loans to them? (Russia, South America, Africa, Europe come to mind).

Right now, America has plenty of nukes, the largest coal reserves that will last hundreds of years, a solid government, can easily feed ourselves, has proven we can take immigrants peacefully in a soon-to-be-population-declining world, and is one of the last socially conservative places left in the world. While I agree military adventures abroad are problematic, and that anything can happen politically at home due to our penchant for liberal facism and social decline, there is still not a single other place in the world doing as well as America right now, or even in the forseeable near or long term future.

Patrick Deneen said...

I suppose defaulting on loans, or hyperinflating is a definite strategy (it was in fact the strategy called for a few weeks ago in a column in the Wall Street Journal. I think the fat cats plan to do well in an inflationary environment. Don't be so sure it will be good for the little guy, however). It's a strategy that is as likely as unrelenting strip mining. Neither is an especially admirable, or sustainable, long-term strategy. You only get to do each once, but maybe that's the plan.

Anonymous said...

I think the fat cats plan to do well in an inflationary environment.

I think they are scared ****less. People still vote, and with 1/10 of us commoners on food stamps, I think they know the days of the fat-cat gravy train are numbered. This isn't Mexico yet; we still have an angry middle class. Just imagine how it's gonna shake out at $8/gal gas? Fat cats and Republicans beware.

Don't be so sure it will be good for the little guy, however

Agreed. But this crazy level of no-care consumption can't go on forever, and watching the fat cats squirm will make the belt tightening so much more tolerable for the rest of us. Or maybe I'm just a bad person.

brierrabbit said...

My suspicion is like Mr Deneens, so the rich get shafted. They have FAR more cushion to land on, than the rest of us do. So, a 50 millionare loses 25 million. Big Deal. I lose $25, and sometimes thats all thats needed to sink me. So we got lots of coal for fertilizer. You want to level West Virginia, eastern Kentucky, to get it? And we are not sitting pretty in the food department. I sometimes think there might be 2 farmers left in north america, still farming for themselves. The other 2 grow everything for Archer Daniels Midland, and Cargill. You want to depend on THEM for our food supplies? Mr Deneen is quite right about this. We just can't seem to bring our selves to act like adults, and start living some resposibility. As far as those "stimulus checks" , I suspect many people will give them right back to the goverment, to pay the taxes the goverment imposed on them.

Anonymous said...

This post vividly illustrates yet another feature of false economic exchange. Such 'exchanges' represent what happens when 'rights' replace the 'good', and 'objects' replace 'subjects.' Responses to the question of whether an action such as this SHOULD be taken by a governing body could only illicit utilitarian responses.

Prof. Deneen is quite right to draw our attention to the falsity of this kind of practical deliberation.