If I grew up in a middle class home, and watched as my parents and neighbors enjoying the good life, with a nice home, two cars in the driveway, a big screen television, annual vacations, and frequent restaurant meals, I would expect the same for myself when I attained adulthood.

I may have been a very prudent young person, getting good marks in high school, and graduating from college or university.

But then, the train went off the tracks. After finishing school, it’s not fun to be confronted with the stark reality of our current economic malaise. Someone who entered the workforce in 1982, or 1992, or 2002, had the benefit of a relatively strong economy for many years to guarantee a good head start.

However, those unfortunate enough to enter the workforce after the credit crisis of 2008 have faced a much different reality. Good jobs, even for the educated, are much harder to find. Even those who started their working careers in 2005, 2006, or 2007 may not have had enough time to establish their careers before the down turn claimed many working lives.

Those unfortunates expected to now be living the “American Dream”, with a nice car, nice house, nice vacations, and every “i” imaginable (iPod, iPad, iPhone).

Instead, unable to find well-paying work, they find themselves, at age 20, or 25, or 30, living in their parent’s basement, with no real hope for anything better.

No hope.

It is that lack of hope, I suspect, that is the root cause of the “Occupy” movement. What else can one do if one cannot find a job, and has no prospects? Go to Wall Street and “occupy”, I guess.

Of course these protests are not just an American phenomenon, and in fact their origins are not on Wall Street, but instead are perhaps derivatives of the “Arab Spring”, and the protests in Greece, and other countries.

Alas, I’m sad to say, their occupation is misplaced.

This apparently leader-less movement is occupying Wall Street, the heart of American business, apparently because American business is to blame for our current problems. The fault, apparently, lies with the big corporations and their obscene profits, and the bankers who foreclose on homes and then declare massive bonuses for their top ranking executives.

This gives rise to the “99% ers”, rallying against the 1% of the population that apparently controls all of the wealth, and makes all of the profit.

Is it really the corporations that are the cause of all of our problems?

No.

It’s true that corporations exist to make a profit, so that’s what they do. But we as consumers have the ultimate power over corporations: we can choose to buy, or not buy, their products and services.

If I object to the fact that Apple Inc. makes most of their products at “sweatshops” in China where employees work for 12 hours per day in hot, unpleasant conditions for very low pay, I can choose to not buy an Apple product. (It was interesting to observe the out-pouring of love for Steve Jobs, after his death. The average American apparently loved the man who exported jobs overseas, but that’s another story for another day).

So if the corporations are not to blame for acting like corporations, who is to blame?

The answer, obviously, is the government.

Government spending has continued to increase for decades. That spending represents a burden on future generations (that same generation that is now protesting). But it was not just runaway spending that has caused our current crisis; there were other stupid policies that must also share the blame.

One glaring example was the government policy, promoted most heavily during the Clinton years, that every American should be able to own a home. Fannie Mae and Freddie Mac became, via the banks, the home mortgage lenders to every American that could breathe, and we still today read the absurd stories of the person earning $10 per hour working at McDonalds who qualified for a $300,000 mortgage.

Is it any wonder that an increasing number of homes are under foreclosure?

Of course the biggest mistake was the numerous bank bailouts. The government encouraged stupid lending practices (through artificially low interest rates, Fannie and Freddie, etc.). The banks, like a drunk with access to free vodka, kept on borrowing, and lending, and derivative swapping. And then, inevitably, it all went bust.

When John Q. Public borrows too much and can’t pay it back, he goes bankrupt.

That’s what should have happened to the banks. They should have been allowed to fail, causing the shareholders and the executives to suffer the losses that they created.

But the politicians, funded in large measure by these same banks, decided that the banks were “too big to fail”, so they bailed them out. Through various means (I won’t bore you with a discussion of the “Fed Discount Window”) the government took your money, and borrowed more, to paper over the bank’s mistakes.

That is the crux of the problem. The government is spending considerably more than they have.

Of course it’s not just the banks where governments are blowing money. The American government has spent trillions on wars in foreign countries for no obvious reason, and for no benefit to Americans. The wars have made America much less safe, and broke.

And that’s sad. If the government borrowed money to build roads and bridges, at least we’d have roads and bridges. But when you spend money on war, and bank bailouts, the money is gone and you have nothing to show for it but debt.

That leads to the inevitable collapse of the U.S. dollar, as foreign investors are no longer willing to buy American bonds. That’s why the U.S. Dollar Index, which peaked around 120 in 2001, is today around 75. That means in the last decade the U.S. dollar has lost well over 30% of it’s value.

In simple terms, and yes I am over-simplifying here, the government, through reckless spending, has given away a third of the value of the country.

That’s a reason to protest.

But the protests should not be happening on Wall Street. They should be happening in Washington.

Protesting on Wall Street makes the “occupiers” look silly.

They put on their clothes, made in China, that they bought at The Gap (a corporation), and take the subway (made by a corporation) to the protest where they take pictures with their Nikon Camera (Japanese corporation) and send text messages to other occupiers over their Apple iPhone (American corporation with production in China) over the Verizon network (a corporation). They are using products made by corporation to protest corporations.

That’s silly.

Instead they should be marching on Washington demanding an end to:

• corporate bailouts with government money;
• wars we can’t afford; and
• foreign borrowing that’s killing the currency.

Either the protestors don’t understand the problem, or they don’t want the correct solution.

Sadly, I fear the later.

It appears that the solution the protestors want is more government. They want government to solve their problems, through more taxes on the rich, or more spending, or whatever.

If the solution to the problem of too much stupid government is more stupid government, the economy is doomed.

BBC News published an article today: Space shuttle: The darker view of the end of an era, and it raises some interesting issues.  In the article they poke fun at the American coverage of the last Shuttle flight, all happily retrospective.  The truth, of course, is that NASA is backing off from manned space exploration, even while the Chinese make plans to send a man to the moon. My thoughts:

It can be argued that this is a sad day for America.  With the end of the shuttle program, thousands will lose their jobs, and those thousands of people may no longer be working developing the technology that made the USA an economic powerhouse for the last hundred years.

As a Canadian, our collective consciousness is scared by the cancellation of the Avro Arrow project in the late 1950′s.   The Avro Arrow was a very advanced interceptor aircraft, and it had the potential to make Canada a world leader in this type of technology.  Instead, with the cancellation of the project, the brains behind the Avro Arrow left to take work at a new organization down south:

NASA.

And now NASA is faced with the same issue: to continue, or not.

Is it a tragedy that many NASA employees and related company employees will be losing their jobs.  It is sad that the Chinese government is taking over from the government run NASA organization.

It is sad that American astronauts must now rely on the Soyuz  ”Russian taxi service” to take them to and from the International Space Station.

But, is it really a tragedy?

It will depend on whether or not the private sector steps into the void and takes over the race for space.

The central problem with NASA, in my view, is that they are a government owned and operated organization.  They are not required to turn a profit, and they are subject to the whims of politicians.  John K. Kennedy wanted America to put a man on the moon “before the end of this decade” and they did.  Presidents Bush and Obama realized that there is no money left in the kitty, so the shuttle program is killed, with no obvious replacement.

If there is a profit to be made, private enterprise will take over many elements of the space program, and they will probably do it more cheaply, and perhaps better.

The criticism of private enterprise, of course, is that they cut corners and put profit ahead of safety.  Perhaps, but I believe we lost two space shuttles, and their crew, so I doubt private enterprise could have a worse safety record.

Is the end of the shuttle program a tragedy?  Only time will tell.  The end of the shuttle program may set back the American space program, or it may be just the boost it needs, if more efficient and innovative private enterprise steps in to fill the void.

In communities across the world people will drive their cars to the town square, or wherever, and they will sing songs in the darkness for an hour.  They they will drive home, turn on their televisions, and continue on with life as normal.

If you want to make a real change, try this: instead of sitting in the dark, turn on your lights, and go through your house and assemble everything you’ve got that you no longer use or need.  Old clothes, electronics, dishes, whatever.  Then take all of that stuff to the local Salvation Army, or Goodwill, or even the used clothing/sporting goods/whatever store.  Not only will doing that reduce our use of landfills, but you will eliminate clutter in your house, help someone else, and save the earth by reducing future production of goods that will just get thrown out.

While you are at it, make a list of 20, or 100 things in your house that you can’t live without.  Then, get rid of everything else.  If we eliminated all of our clutter, we could live in smaller houses, buy less, and reduce the strain on the environment.

Are any of us actually willing to do that?

No.

Instead of making real change, it’s much easier to stand in the dark for an hour and say we did our part for Earth Day, until next year.

And that’s why I think Earth Hour is still silly.

The central problem, I believe, is that Americans actually believe the government can do something. They believe governments can actually create wealth and make things better. For the most part, that’s not true.

The only real power that government have is the ability to take money from one person (through taxation) and give it to someone else (through spending). That’s it. That’s all government can do. Unfortunately, when government does that, it messes up the economy, and makes things worse for everybody. Here’s why:

Someone wants to get elected, so they promise to make things better for the voters. Perhaps they promise to give everybody $1,000 to buy a new, energy efficient, environmentally friendly, solar powered lawn mower. Everyone thinks it’s a great idea. It will help the environment, and create jobs.
Sure enough, when everyone gets their $1,000 lawn mower cheque from the government, demand for solar powered lawn mowers goes up. Lawn mower companies hire more staff, which creates jobs. Banks lend more to lawn mower companies, because it’s a great business. Everybody is happy. Companies continue to expand. Life is great. The boom times are here.
But then, at some point, the demand for solar powered lawn mowers starts decreasing. Lawn mower sales decline. Employees are laid off. Banks have trouble collecting loans. Unemployment rises. The economy goes into a recession. The people are not happy. They call for more help from the government.
In order to get re-elected, the politicians realize that the simplest answer is to spend more money. So they create another new program. Perhaps this time it’s tax credits for wind powered snowblowers. The cycle repeats. Demand increases, jobs are created, demand peaks, jobs are lost, and more government intervention is needed to pump the economy back up.

Over and over it goes. Boom and bust. It’s as simple as that. Government intervention causes booms and busts. If it wasn’t for the government meddling in the economy, there would be no recessions.

Yes, you read that correctly. Prices would rise and fall in a free market based on supply and demand, but recessions only exist because the government caused them.

I fear that until people realize that the government is not the solution to all of their problems, this cycle will continue.
Here’s a video of an American who appears to honestly be live that Barack Obama as President will "pay for my gas and my mortgage."

I hate to be the bearer of bad news, but Mr. Obama does not have any money of his own. The government does not have any money of their own. All they have is the money they have either borrowed or raised through taxation.

If the government gives you money to pay for "gas" and your "mortgage", they have to take that money from someone else. It’s that simple. Taxes mean they took the money from someone else today; borrowing means they are taking it from a future generation.

Now please, don’t misunderstand me. I’m not saying we shouldn’t help people less fortunate than ourselves. We should. If your family member or neigbour can’t afford to buy gas, by all means help them out. Give them some money, or even better help them find a job so they can support themselves. I also have no objection to giving money to charities to help people either. Charities are run, for the most part, by volunteers, so their cost to provide a service is much lower than the overhead cost when government gets involved.

It would be great if…..

It would be great if a politician stood up and said "I can’t take care of you. Only you can take care of you. So starting today I am going to gradually wind down this massive, unproductive government we have built. I won’t do it all at once, but I will do it. At the same time I will drastically reduce your taxes, so you will have more money to support yourself and your family. The government will still control law enforcement, and the military to protect our country from outside aggressors, but for the most part the government will no longer control your lives."

Yes, that would be great, but it won’t happen. There are estimates that more than half of the population receives more from the government in subsidies than they pay in taxes, so it is highly unlikely that there will be any will to change.

And that’s sad.

If you want to read a bunch of jibberish, you have come to the wrong place.  On this blog I plan to discuss whatever strikes my fancy.  Specifically, I want to discuss what we need to do to get the economy back on track.

Why now?  Because we are getting ready for federal elections in both the United States and Canada this fall, so now is the time to discuss the issues that will effect us all.  Stay tuned.