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Bankrupting Liberty

A reader e-mailed Mark Steyn at The Corner on National Review Online regarding the financial impact on companies that Obamacare has had - immediately. Pay close attention here.

3M Corporation announced that it was taking a 12 cent per share charge to earnings for the effects of the health care bill. The costs here are really of two varieties. First, is the hard costs that shows up on company's income statement and is reflected in the reduced earnings per share. The second cost is the effect of the reduced earnings per share on the company's market value. 3M sells for about 18 times its earnings per share which means that a 12 cent charge reduces the stock price by about $2.16. Multiply that by 711 million shares outstanding and you get a reduction in the market value of the company of about $1.5 billion.

That's one business. It would be interesting to know just how much value last Sunday's vote instantly vaporized at, say, the S&P 500 companies. We will soon enough.

And, again via NRO, as Victor Davis Hanson reminds, In the End, There Is Only the Debt. And climbing out from under this debt is impossible while we as a nation continue to pile the dirt of debt upon our financial grave.

Amid all the fighting over health care, Obama's new promises, the Israeli spat, the Frum controversy, et al., looms the national debt. We can ignore it; get angry at it and say, "What the hell, I'll quadruple it!"; have our "experts" write sophistic treatises about how it either doesn't matter or is in truth good; hear our politicians claim it is secondary to the passing of a "progressive" agenda; or secretly smile that its service will require higher taxes and more "redistributive change"; but in the end, what we as a nation collectively owe others and ourselves transcends politics.

Cranky 19th-century-minded farmers used to preach about the tentacles of low interest. Apparently they had this strange idea that when interest rates went too low, the uninformed mob-like masses borrowed too much -- and the resulting live-for-today demand for cheap money forced the once-endless pool of ready loans to dry up and interest to rise -- and a few smarter people were sticking around to profit when this cycle played out like clockwork.

In short, the United States is floating far more loans than ever before in peacetime, and for longer scheduled durations, because interest rates are only a quarter of what they have been in the past. But this theory that we can endlessly multiply the size of our debt because the service costs remain low and static is a prescription for disaster -- like the credit-card introductory offer of 2 to 3 percent for 6 months that hooks the naive into charging thousands of dollars, only to end up without the means to service the debt when the rate climbs over 20 percent. For a technocracy that is Ivy League certified and brags about its competency, we have fallen into the age-old trap that snares the naive ARM house buyer, the teenaged MasterCard mega-borrower, and the "free" coupon holder who heads headlong to Vegas.

This is the recipe used to cook Mexico - or if your news cycle attention span prefers, Greece.

The talk of a VAT tax will gain much momentum, probably coming to a head in 2012 debates. But the uncomfortable truth will remain: As we punish our businesses and vilify their CEO's, the economy is relentlessly constricted by all levels of American government like a team of angry pythons. And extracting tax revenues from it will become soon akin to squeezing blood from a stone.

Obamacare is merely a component; indeed, like a gateway drug.

We are witnessing the antithesis to the Laffer Curve. And it should be dubbed the Crier Curve.

It is a curve along the path that has but one name: Unsustainable.

The consequences are dire in every sense of the word. For all of us. And for the cause of Liberty the world over. For as America consumes herself, the defense of Liberty falls to no one.

Again, as a National Security writer and commentator, I feel compelled to challenge: Forget what you're defending and Defense isn't all that important, is it?


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Comments (24)

You may be surprised to lea... (Below threshold)

You may be surprised to learn that more than a few of us on the hard left are in agreement with your comments about liberty

I hope there are many more ... (Below threshold)

I hope there are many more like you, Mr. Morris.

Financial sustainability and Liberty should - must - transcend politics. The political arguments must be what we do with them. Instead, we are witnessing the systemic destruction of both, leaving us ultimately with neither.

Arguments on abortion, Social Security, Defense and the like will be seen as luxurious debates of days past while we focus on the security, safety and feeding of our families as a general rule rather than unfortunate exceptions to it.

I dread that day, and yet see only catalysts to its coming.

My country makes me sad. Despondent at times.

No worries Steve. Timmy Ge... (Below threshold)
GarandFan:

No worries Steve. Timmy Geithner will just print more money. No problem!

HINT TO SCHOOL KIDS: Learn to speak Chinese. It will get you a better servant's job when our new masters take over.

The total S&P market cap on... (Below threshold)
Usful Ijit:

The total S&P market cap on 3/26/2010 was ~5.2 trillion. If the market as a whole averages the same earnings adjustment as 3M, then it's ~250 billion dollar hit.

Hear, hear, Steve. <p... (Below threshold)

Hear, hear, Steve.

And GarandFan, I believe Japan now owns more of our debt than even China.

This is the same Japan with debt that is 190% of GDP.

Nice, huh?

"This is the same Japan wit... (Below threshold)
GarandFan:

"This is the same Japan with debt that is 190% of GDP."

That's astounding when you consider that the US ended WWII with 105% of GDP.

Good liberals and conservat... (Below threshold)
mag:

Good liberals and conservatives alike (or the ones that I know) want their country on a good financial footing. The hating leftists are the ones that wantt to destroy this country by ruining our economy. This is how I see Obama, not as a liberal, but as a leftist. It's proving to me more and more each day, that this man was the worst possible person to be in the office of the president.

Well, what's particularly i... (Below threshold)
Caesar Augustus:

Well, what's particularly ironic and apropos of this entry is that the so-called "progressive left" (i.e., old hippies and their young students, and Democrat Party leaders) are quite smugly satisfied with the notion of America's global leadership role being diluted and then eventually elminated by massive deficit spending and borrowing.

"...are quite smugly satisf... (Below threshold)
GarandFan:

"...are quite smugly satisfied with the notion of America's global leadership role being diluted and then eventually eliminated...."

Oh, just like those who didn't care about what was going on in Europe circa 1930's. After all, that was THEIR problem. Didn't concern us.

Financial advice from the p... (Below threshold)
SteveP:

Financial advice from the party that nearly destroyed our financial industry.

Sure. That's welcome.

How about this. Raise 96 million and spend 109 million. That's the new Michael Steele republican math based on his "justified" expenditures in February. Now, I'm not even getting into the strip club issue.

The Republican Party. They say NO to the people and YES to themselves.

Stuck on stupid has arrived... (Below threshold)
914:

Stuck on stupid has arrived!!

Yes, the Republicans could ... (Below threshold)
Jim Addison:

Yes, the Republicans could have stopped Dodd and Frank from destroying the financial industry, but they were afraid of being called "raaaaacist!" because the bad paper the Democrats forced Fannie Mae, Freddie Mac, and by extension the whole industry, to write went mostly to "underserved minorities" with bad credit.

So they call us "raaaaacist!" anyway - maybe we will get the message and stop caring what jackasses like Al Sharpton and Jim Clyburn say.

Hey Stevie P. If you think... (Below threshold)
GarandFan:

Hey Stevie P. If you think someone is going to run to the defense of Steele, you've come to the WRONG PLACE.

Why not wander over to Franklin Raines house and help him spend that $6+ MILLION he got in "bonuses" from his tenure at Fannie Mae.

Steve, why don't you go buy... (Below threshold)
bobdog:

Steve, why don't you go buy yourself a book on economics and have somebody read it to you?

Jeezus.

QUESTION: Hey Stevie P, if... (Below threshold)
GarandFan:

QUESTION: Hey Stevie P, if we disagree with Steele on some issues, DOES THAT MAKE US RACISTS?

Well, barking Bob, I've rea... (Below threshold)

Well, barking Bob, I've read two that I strongly suggest: Basic Economics: A Citizen's Guide to the Economy and Applied Economics: Thinking Beyond Stage 1. Perhaps you'd like to compare notes in the margins? Or have you ever so devoured or studied a subject that you've done that to a book?

For giggles, I read this when I was 12. You should be OK with it, I presume.

I am quite confident the two of us would enter a room, one would explain economics to some understandable degree and the other would throw empty tantrums and look to friends for approval.

Here's the trick that is, however, to your advantage: My vote and your vote are equal in measure and effect.

It's easy to be ignorant and all fired up. If one has a working vocabulary, one can even get away with sounding informed and authoritative. To the ignorant, and even then not indefinitely.

I can't believe that Waxman... (Below threshold)
GarandFan:

I can't believe that Waxman and Stupak are dumb enough to want to bring up anything about the health care bill. One CEO is on record as saying he attempted to explain the repercussions to Barry during a sit-down "but he just didn't get it". Someone else chimed in, 'they don't understand because they've never had a real job'.

Hardly the kind of stuff you'd want brought up on national TV. If any of those CEO's have any balls, they should string Waxman up by his.

Steve Schippert -I... (Below threshold)
JLawson:

Steve Schippert -

I may be wrong, but I think Bobdog was 'barking' at Steve P, not you.

Steve P apparently thinks it's perfectly acceptable to take in $2 tril in revenue, have $12 tril in debt, add to the debt by $1.6 tril this year and $1 tril a year in decades to come.

Sane and rational people look at the numbers and shudder. Politicians on the left look at them and think "How much of that can I get before it all collapses - and who can I blame it on?"

Hazards of being away for s... (Below threshold)

Hazards of being away for so long, I've clouded things and lost track of commenters. My apologies, Bobdog. Seriously. Ouch.

If it applies to Steve P, well Steve P, it applies.

The New America. Money just appears from nowhere without cost or consequence.

Call me in 6 years when your bitterness is replaced with destitution.

Pardon us while Stevie P ge... (Below threshold)
GarandFan:

Pardon us while Stevie P gets his ass whipped again, so again changes topic.

Steve Green -What'... (Below threshold)
JLawson:

Steve Green -

What's past is prologue. I had no control over the money spent - and frankly at this point $150 billion a year's looking like fucking pocket change the way Obama's doling out the benjamins. Only thing is - Bush realized you needed a functioning private sector economy and took pains to make sure it DID work - until Pelosi and Reid got hold of the purse strings.

A Goy and his Blog » Blog Archive » Every picture tells a story. Don't it.

Of course the turning point signaling the destruction of our nation's economic health is best seen by what happened to the federal deficit immediately following the rise of Harry Reid and Nancy Pelosi to positions of power and control in Congress. Their very first major legislative act was an attack on American Business - hiking the minimum wage, which helped lead to massive employment decline. This was just the beginning of the Democrat animosity toward American business and investors, which continued with attacks on the banking sector, insurance, investment and a virtual takeover of the automobile industry, during which contracts were shredded, stockholders were robbed outright and wealth was unconstitutionally redistributed to the Unions. Meanwhile, insolvent GSEs Fannie Mae and Freddie Mac were encouraged by the Democrats to continue their rape of the American Taxpayer, which led to the credit sector meltdown in 2008.

While persisting in these attacks, the Democrats increased federal spending dramatically. During the years 2004-2007, Republican budgets steadily reduced the federal deficit to a low point of $160B. But as soon as they took control of the House and Senate, Democrats TRIPLED the federal deficit and, as we've seen, that was only the beginning.

Take a look at the article above. Follow the links.

Blaming Bush for the economy's just about worn out. The Dems have BOUGHT what we've got - they spent the Cash for Clunkers on it, bailed out the auto industry, bought the banks, bolstered Fannie and Freddie - racked up more deficit spending in one YEAR than Bush did in 8, and you're going to try to blame BUSH for it all?

You know the real problem? The schools did too good a job. Instead of teaching that $2+$2=$4, they should have taught that the sum was whatever the government deemed it should be. Too many people are looking at what's being wasted, and they're remembering under Bush when unemployment was touted as intolerable high under 5%, and when they still had a job before the government started 'helping' fine-tune the economy.

We were reducing the deficit under Bush. If Pelosi and Reid hadn't gotten control of the House and Senate, we could well have actually been running a surplus in 2008.

Now? Well, Pelosi and Reid did a good job buying votes in 2008. And we're so damn broke we can't pay attention at this point, yet Obama's STILL spending like a drunken sailor. (Apologies to drunken sailors everywhere - at least you're spending your OWN money...)

You might want to stop memorizing talking points, and actually observe what been going on as a result of all the 'help' the economy has gotten.

Reality ALWAYS trumps ideology.

Bush knew that. Obama could fucking care less.

You and reality don't even ... (Below threshold)
JLawson:

You and reality don't even have a nodding acquaintance, do ya? You seriously can't see what damage is being done, with your apparent blessing?

Well, watch and learn. I know you're not the type to question your programming, but your ideology's doing it's damndest to destroy the functioning economy of the US. Maybe that's all right with your handlers, maybe you don't question how it'll all work - but you seriously ought to look at what you're in for.

The folks you're supporting have a lower sense of ethical responsibility than used car salesmen, and will leave you twisting in the wind once they've got what they want. And they don't give a damn about you - it's all about the ideology and how you can be forced to serve it.

Too funny.Steve Gree... (Below threshold)
Hank:

Too funny.
Steve Green is quoting himself.
And even then, he may well lose the argument.

"Reality:JL... (Below threshold)
914:

"Reality:

JLawson thought it was perfectly fine to spend over a trillion in taxpayer funds on a pointless war -- but bellows like a stuck pig when similar amounts are spent to create jobs, rebuild our economy, our provide health care insurance for sick children."

It's really that simple."

Green, where are all those "jobs" asshat?

In your case "Fantasy trumps Reality"




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