2. Foreign policy, akin to “Homeland,” looks worse than healthcare reform. As to foreign policy, the real world situation tends to be more and more similar to what plays out on the TV show “Homeland.” The Middle East seems to be a greater mess than it has been in 50 to 100 years, Russia is attempting to reassert itself with a new and more refined version of Joseph Stalin or Nikita Khrushchev as its leader. For the first tine in the recent past, China has challenges with its own savings rate, which is leading to a slowdown in growth. Since China is our biggest lender, we have a vested interest in its success and growth.
In “Homeland,” it seems like the worst is behind for the characters in the current plot and before another thrill unfolds. Similarly, it seems like the Mideast turmoil, the Russian reemergence and China’s slowdown could all make for their own blockbuster episode. But a bigger issue awaits: More terrorist states seem on the brink of getting a nuclear bomb.
It is a challenging world we are living in.
3. Interest rate policy on steroids; core American values turned upside down by the Bush and Obama administrations. In a vast conspiracy of circular reasoning, we have been driven to a spot where interest rate policy has kept rates near zero. This has led to increased net worth inequality, and it also discourages and harms savers. The low interest rate policy results in asset inequality because there becomes no benefit to putting money in strict savings, and investors favor stocks and real estate. Then the prices of these asset classes rise, and these assets are held by those who already have assets and net worth. Thus, the interest policy ultimately helps the rich — not the poor. In an absurdity of modern times, the Democratic administration and such policy is a large cause of income inequality, yet the party campaigns on the issue of income inequality. As Jonathan Gruber pointed out, I think the administration believes the American public is too dumb to understand this.
The low interest rate environment discourages what we traditionally viewed as core American virtues. Remember the concept of a penny saved is a penny earned? Now, because interest rates are so low, the more realistic inclination is to speculatively invest that money rather than save it. The Bush and Obama administrations have done a horrible job of backing core American values. The Bush administration encouraged people to take their money and use it to drive consumer spending — i.e., don’t save, but buy appliances. The Obama administration has reduced interest rates so as to discourage saving. It is literally a world turned upside down in terms of economics.
