Richard Nixon: 1971 Annual Message to the Congress on the State of the Union

I have highlighted some of the state of the union addresses by Herbert Hoover in the past because I see the Great depression as a time with certain parallels to the present economic hardship. Let’s look at the 1970s instead now.

Here’s Richard Nixon from 1971, with what was considered a conservative agenda in 1971 based on balancing the federal budget and rolling back centralised governance. However, regarding details, Nixon proposes small government ideas on welfare reform and big government ideas in almost all other aspects of his State of the Union Address.

I have bolded what I consider the most important parts

The Elephant in the Room Is Spain, Not Italy

The decision for Europe’s bosses is this: they must ultimately confront the consequences of their policy choices. They can destroy the eurozone by continuing with the same failed mix of policies or by salvaging it by adding what has been missing from the outset: a mechanism for shifting surpluses to the deficit regions in the form of productive investments (as opposed to handouts or loans)

Greek protests turn very anti-Germany

This is how it’s going down in Greece right now. The sentiment is very Anti-German on the eve of the austerity/bailout decision. The debt haircut and writedowns coming of upwards of 50% is a default in everything but name. Technical default is a real possibility as well

Doug Casey on the Coming War with Iran

It could just be saber rattling during an election year, but Western powers have been provoking Iran for years now – two decades, really. I just saw another report proclaiming that Iran is likely to attack the US, which is about as absurd as the allegations Bush made about Iraq bombing the US, when he fomented that invasion. It’s starting to look rather serious at this point, so I do think the odds favor actual fighting in the not-too-distant future

Chart of the Day: Government Deficits as Far as the Eye Can See

The chart below from the blog Pragmatic Capitalism shows the U.S. Federal government deficit for each quarter since 1952. As you can see, almost the entire period is marked by deficits

Auerback: Austerity during recession is equivalent to medieval bloodletting

Here’s a good video performance by Marshall Auerback on BNN’s Business Day program. Marshall thinks the Greek default deal is actually a relatively good one. But sees a Portuguese default after the Greek default as a real possibility and envisions a scenario in which Portugal and Spain look to extract similar terms. Moreover, the quid pro quo for Greece is austerity – and that makes getting debt loads down harder when implemented during a downturn

Obama Administration propaganda on prosecuting elite financial frauds

The Obama administration’s record of prosecuting elite financial frauds is worse than the Bush administration’s record, which is a very large statement. Neither administration has prosecuted any elite CEO for the epidemic of mortgage fraud that drove the ongoing crisis. This contrasts with over 1,000 elite felony convictions arising from the S&L debacle. The ongoing crisis caused losses more than 70 times greater than the S&L debacle and the amount of elite fraud driving this crisis is also vastly greater than during the S&L debacle

Is the Greek PSI Sweetener Enough?

Even if the private sector participation sufficiently high, will it be enough to put Greece’s debt on a sustainable path? This seems unlikely and there is increasing risk that the ECB forgoes getting anything but its initial investment back

Chart of the Day: Permanent Zero and Personal Interest Income

If you are a retiree, you’re not happy these days. Five years ago, you were getting a decent return on your fixed income investments. But since then, the Fed has trashed the fixed income market by reducing interest rates to zero percent for “an extended period”. The thinking is that this will get people to take on more credit. But the reality is that a lot of people are stuffed to the gills with existing credit and are not creditworthy. The Fed is pushing on a string

The Twilight of the Leisure Class

Taken to its end, industrialization class distinctions are revealed by conspicuous consumption. This points to the objective of industrial production: goods in the realm of common consumption become removed from social distinction. This is what Mumford meant when he stated that the machine is a communist. Products bear the same impersonal imprint. They either function or do not. There is no difference between the light bulb – or phone, or computer, or Kindle – of the common and the wealthy to signal a difference in status. The consummation of the industrial revolution, and insofar as we link the industrial revolution to capitalism, of capitalism as well, will occur when the same can be said in all areas of production

I repeat: The Fed’s Permanent Zero rate policy is toxic

Permanent zero can work over the medium-term but the economy is dependent on employment growth and monetary policy doesn’t drive that

The stark contrast between European economic policy and US economic policy

I was on CNBC yesterday ahead of Ben Bernanke’s speech explaining the FOMC’s recent decision to add an explicit inflation target to its decision to extend its rate easing/permanent zero policy. My conclusion: the Obama mortgage plan and Bernanke easing campaign are bullish for the US economy