The Obama Great Depression

16 01 2016

 By Timothy D. Naegele[1][2]

Soon after the presidency of Barack Obama began—on April 8, 2009—the  McClatchy-Tribune News Service published an article of mine entitled, “Euphoria or the Obama Depression?”[3]  In it, I wrote:

Barack Obama is euphorically optimistic, but neither he nor the leaders of other countries can hold back an economic tsunami, just as mankind is helpless to stop the wrath of natural tsunamis in the oceans.

. . .

According to the Rasmussen Reports, most Americans—53 percent, in fact—believe the United States is at least somewhat likely to enter a 1930s-like Depression within the next few years. If so, the repercussions are unfathomable.

. . .

Years from now, economic historians may look back at this era and conclude that the world’s central bankers were overwhelmed and Depression-era “safety nets” did not work; and global market forces ultimately determined the depth and duration of the economic meltdown, not the politicians in Washington or anywhere else.

The tsunami that was released when the housing bubble finally burst may not run its course until about 2017-2019; and its effects will be devastating worldwide. There are no legislative solutions or quick fixes to the problems. The carnage between now and 2019 will approximate the Great Depression. . . .

. . .

America and other nations are in uncharted waters; and their politicians may face backlashes from disillusioned and angry constituents that are unprecedented in modern times. Also, the limits of godless secularism and paying homage to the false gods of materialism may become self-evident.

It is interesting to reflect on these comments and others contained in the article, as well as those in an companion article that I wrote for the American Banker—the daily newspaper of the U.S. banking industry—and in an interview that I gave on these subjects.[4]  Today, it is as though the economies of individual countries are “careening,” creating a “cascading” effect.

This is not 2008 all over again. It may be much worse, even eclipsing the Great Depression of the last century.  A “perfect storm” has been gathering for a long time now; and when it hits with its full force and fury, 2008 may seem like a “blip” by comparison.  America’s Fed and the other central banks of the world will be overwhelmed; Depression-era “safety nets” will not make any difference; and panics may ensue.

The biggest worry in Washington for many years has been that there would be runs on the big funds, which are uninsured, and that a “liquidity crisis” of unfathomable proportions would occur—which would be unstoppable.  Americans and people of other countries have lost trust in their governments, which will only compound the problems.

Hold on tight. Things will get very scary between now and the end of this decade.[5]  Whatever happens will be attributable principally to Barack Obama’s failed presidency.  Indeed, there are so many tragedies he has spawned that it is impossible to do justice to each of them in a short article like this one.

For example, he has set back race relations in the United States by years if not decades. He has been a divider, not a healer.[6]  With respect to his so-called major policy “accomplishments”—such as Obamacare, limited gun control, and the Paris man-made “global warming” accords—they can and probably will be undone by executive orders on Day One when the next American president takes office less than a year from now.  Americans are clamoring for this to happen.[7]

Obama may go down as the worst president in American history, even eclipsing Jimmy Carter, which is a remarkable feat unto itself.  History may record that Obama became a “transformative” or revolutionary president, which is not what the majority of Americans wanted. Perhaps because he was not raised on the U.S. mainland, his perspective is not that of most Americans . . . even blacks.[8]

With the global economy imploding, and Obama being an impediment to the U.S. growth that has occurred, his place in American economic history may rank next to or below that of Herbert Hoover.

Today, Barack Obama is like a minstrel wandering the land, with respect to whom no one will listen.

© 2016, Timothy D. Naegele

Obama-gone

_______________________________________________

[1]  Timothy D. Naegele was counsel to the United States Senate’s Committee on Banking, Housing, and Urban Affairs, and chief of staff to Presidential Medal of Freedom and Congressional Gold Medal recipient and former U.S. Senator Edward W. Brooke (R-Mass). He and his firm, Timothy D. Naegele & Associates, specialize in Banking and Financial Institutions Law, Internet Law, Litigation and other matters (see www.naegele.com and http://www.naegele.com/documents/TimothyD.NaegeleResume.pdf). He has an undergraduate degree in economics from UCLA, as well as two law degrees from the School of Law (Boalt Hall), University of California, Berkeley, and from Georgetown University. He served as a Captain in the U.S. Army, assigned to the Defense Intelligence Agency at the Pentagon, where he received the Joint Service Commendation Medal. Mr. Naegele is an Independent politically; and he is listed in Who’s Who in America, Who’s Who in American Law, and Who’s Who in Finance and Business. He has written extensively over the years (see, e.g., www.naegele.com/whats_new.html#articles), and can be contacted directly at tdnaegele.associates@gmail.com; see also Google search: Timothy D. Naegele

[2] Note: This article is an expansion of earlier articles and comments at this blog.  See, e.g., https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/ (“The Economic Tsunami Continues Its Relentless And Unforgiving Advance Globally”) (see all of the comments beneath it) and https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/#comment-8016 (“Barack Obama: A Failed American Presidency”) and https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/#comment-8011 (“Helter Skelter Is Arriving With A Thud, Sell Everything”) and https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/#comment-7614 (“Doomsday Clock For Global Market Crash Strikes One Minute To Midnight As Central Banks Lose Control“) and https://naegeleblog.wordpress.com/2012/02/07/poverty-in-america/#comment-7646 (“The Surging Ranks Of America’s Ultrapoor”) and  https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/#comment-8006 (“The EU’s Collapse In 2016?“) and https://naegeleblog.wordpress.com/2015/07/01/global-chaos-and-helter-skelter/ (“Global Chaos And Helter Skelter”)

[3]  This article has been republished by RealClearPolitics, and can be found at the links that follow.

See http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html (“Euphoria or the Obama Depression?”) and http://www.naegele.com/documents/Commentary-EuphoriaortheObamaDepression.pdf (“Commentary: Euphoria or the Obama Depression?

[4]  See http://www.americanbanker.com/issues/173_212/-365185-1.html and http://www.naegele.com/documents/GreenspansFingerprints.pdf (“Viewpoint: Greenspan’s Fingerprints All Over Enduring Mess”); see also http://marketshadows.com/2012/05/21/greenspans-legacy-more-suffering-to-come/ and http://seekingalpha.com/instablog/2951-market-shadows/31177-interview-with-timothy-d-naegele and http://www.naegele.com/documents/InterviewwithTimothyD.Naegele-ilene–SeekingAlpha.pdf (“Greenspan’s legacy: more suffering to come”)

[5]  Not factored into these comments explicitly are the effects of (1) the terrorist strikes on Paris and elsewhere in the world; (2) the immigration issue that is tearing Europe and the Middle East apart; (3) the military implosion that is taking place in the Middle East, with much worse yet to come; and (4) the effects of our adversaries (e.g., China, Russia, North Korea, Iran) on peace, and on the American and global economies.

See, e.g., https://naegeleblog.wordpress.com/2015/11/20/we-are-all-parisians/ (“We Are All Parisians”) and https://naegeleblog.wordpress.com/2010/01/19/emp-attack-only-30-million-americans-survive/ (“EMP Attack: Only 30 Million Americans Survive”) and https://naegeleblog.wordpress.com/2015/11/29/the-death-of-putin-and-russia-the-final-chapter-of-the-cold-war/ (“The Death Of Putin And Russia: The Final Chapter Of The Cold War”) and https://naegeleblog.wordpress.com/2011/01/13/china-is-americas-enemy-make-no-mistake-about-that/ (“China Is America’s Enemy: Make No Mistake About That”) and https://naegeleblog.wordpress.com/2010/12/22/the-next-major-war-korea-again/ (“The Next Major War: Korea Again?”) and https://naegeleblog.wordpress.com/2009/12/28/human-trafficking/ (“Human Trafficking”) and https://naegeleblog.wordpress.com/2015/12/06/islamophobia-is-un-american/ (“Islamophobia Is Un-American”) and https://naegeleblog.wordpress.com/2015/12/31/is-israel-doomed/ (“Is Israel Doomed?”)

[6]  See, e.g.https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/#comment-8016 (“Barack Obama: A Failed American Presidency”)  and https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/ (“Is Barack Obama A Racist?”)

[7]  See, e.g., https://naegeleblog.wordpress.com/2015/11/30/a-34-trillion-swindle-the-shame-of-global-warming/ (“A $34 Trillion Swindle: The Shame Of Global Warming”) and https://naegeleblog.wordpress.com/2012/12/20/abortions-and-autos-kill-more-in-america-than-guns/ (“Abortions And Autos Kill More In America Than Guns”)

[8]  See, e.g., https://naegeleblog.wordpress.com/2015/01/03/edward-w-brooke-is-dead/#comment-7434 (“Disappointment In Obama Leads Some Blacks To Ask Whether Voting Is Worth It”)





Islamophobia Is Un-American

6 12 2015

 By Timothy D. Naegele[1]

Christianity has 2.2 billion followers. Islam has 1.8 billion followers. At most, Judaism has 14 million followers.  There are radical members of each religious group; and Americans cannot allow fear to generate unbridled hatred and anger.[2]  The United States and the American people are not at war with Islam or its followers. Anyone who suggests otherwise is Islamophobic.

Islamophobia does not have any place in the U.S.  Yet, this is exactly what many are preaching today, which is wrong.  Islamophobia is un-American, and inconsistent with Jesus’ teachings as set forth in the New Testament—just as racism, anti-Semitism and other forms of discrimination are evil.  Fear spawns hatred, anger and retribution. Too much of it is present in America and other countries.

According to the rhetoric espoused by some people, one might think that they want to kill all followers of Islam, or attack or discriminate against them, which is absurd and evil unto itself.  A large number of Americans are afraid. But their fear is nothing when compared with the fears that were present in the U.S. after 9/11.

We live in difficult and challenging times.[3]  But the terrorist acts of a few cannot be allowed to permeate and change our great nation or the American people.  This is a lesson we learned from World War II.  An estimated 110,000 Japanese-Americans were “interned” at Manzanar in California and at other camps, because of similar fears.[4]

Terrorist attacks have occurred in the U.S. and abroad.  Tragically,  it seems that “terrorism”—in its many forms—will be present for a long time to come.  Kate Steinle was killed brutally in the “sanctuary city” of San Francisco by a known criminal and illegal immigrant.[5]  Oklahoma City was bombed by Timothy McVeigh[6].  More than 900 perished in the religious cult of Jim Jones.[7]  Mass killings occurred recently in Paris[8] and San Bernardino, California[9].  And the list goes on and on.

Large numbers of Americans tune out Barack Obama because of their frustrations, anger and disgust.  Indeed, there is enormous venom with respect to the followers of Islam and him—as well as outright racism—which appears on Web sites in the U.S. and abroad.  Often, violent statements and actions are directed at both.[10]

This is not the American way.

© 2015, Timothy D. Naegele

Islamophobia

_______________________________________________

[1] Timothy D. Naegele was counsel to the United States Senate’s Committee on Banking, Housing, and Urban Affairs, and chief of staff to Presidential Medal of Freedom and Congressional Gold Medal recipient and former U.S. Senator Edward W. Brooke (R-Mass). He and his firm, Timothy D. Naegele & Associates, specialize in Banking and Financial Institutions Law, Internet Law, Litigation and other matters (see www.naegele.com and http://www.naegele.com/documents/TimothyD.NaegeleResume.pdf). He has an undergraduate degree in economics from UCLA, as well as two law degrees from the School of Law (Boalt Hall), University of California, Berkeley, and from Georgetown University. He served as a Captain in the U.S. Army, assigned to the Defense Intelligence Agency at the Pentagon, where he received the Joint Service Commendation Medal. Mr. Naegele is an Independent politically; and he is listed in Who’s Who in America, Who’s Who in American Law, and Who’s Who in Finance and Business. He has written extensively over the years (see, e.g., www.naegele.com/whats_new.html#articles), and can be contacted directly at tdnaegele.associates@gmail.com; see also Google search: Timothy D. Naegele

[2]  It has been said: “Muslims are like guns and gun owners. There is only trouble with a small percentage.”

See also https://naegeleblog.wordpress.com/2012/12/20/abortions-and-autos-kill-more-in-america-than-guns/ (“Abortions And Autos Kill More In America Than Guns”)

[3]  See https://naegeleblog.wordpress.com/2015/07/01/global-chaos-and-helter-skelter/ (“Global Chaos And Helter Skelter”); see also https://naegeleblog.wordpress.com/2015/11/29/the-death-of-putin-and-russia-the-final-chapter-of-the-cold-war/ (“The Death Of Putin And Russia: The Final Chapter Of The Cold War”)

[4]  A Japanese submarine attacked the oil fields at Ellwood, north of Santa Barbara, California:

Though damage was minimal, the event was key in triggering the West Coast invasion scare and influenced the decision to intern Japanese-Americans.

See https://en.wikipedia.org/wiki/Bombardment_of_Ellwood (“Bombardment of Ellwood”); see also https://en.wikipedia.org/wiki/Manzanar (“Manzanar”)

[5]  See https://en.wikipedia.org/wiki/Shooting_of_Kathryn_Steinle (“Shooting of Kathryn Steinle”)

[6]  See https://en.wikipedia.org/wiki/Timothy_McVeigh (“Timothy McVeigh”)

[7]  See https://en.wikipedia.org/wiki/Jim_Jones (“Jim Jones”)

[8]  See https://naegeleblog.wordpress.com/2015/11/20/we-are-all-parisians/ (“We Are All Parisians”)

[9]  See https://en.wikipedia.org/wiki/San_Bernardino,_California#21st_century

[10]  The President’s religious “origins” in Islam contribute to this.  See, e.g.https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/ (“Is Barack Obama A Racist?”)





China Is America’s Enemy: Make No Mistake About That

13 01 2011

By Timothy D. Naegele[1]

While it would certainly be nice to think of China as a benign, friendly, democratic nation, if not an ally of the United States—which makes the computers and cellphones that Americans use, and provides most of the products sold in Walmart stores—the fact is that China is our enemy, now and in the future.  A failure to recognize this fact has serious national security implications for our great nation.  Those who cavalierly dismiss this and similar assessments, as nothing more than the rantings of “Cold Warriors,” may be condemned to repeat and relive the world wars of the past.

Does this mean that we will be in a shooting war with China any time soon, or that we should gird for war in the future?  No, but it means that we must maintain and strengthen our military might, and do nothing to diminish it.  We face deadly challenges elsewhere in the world too: for example, from North Korea, Iran, Russia and terrorists.  However, we must never underestimate the threat from China, America’s rising Asian rival globally.  Among other things, there is a “disconnect” between China’s civilian and military leaderships, which may grow dramatically—and it does not bode well for the future.

As the Wall Street Journal reported:

China conducted the first test flight of its stealth fighter just hours before U.S. Defense Secretary Robert Gates sat down with President Hu Jintao here to mend frayed relations, undermining the meeting and prompting questions over whether China’s civilian leadership is fully in control of the increasingly powerful armed forces.[2]

In early 2001, at the beginning of George W. Bush’s presidency, China’s military tested his metal by forcing down one of our spy planes near the island of Hainan. There were serious questions raised then—as they are being raised now—about whether China’s civilian leadership was fully in control of the country’s military.

Also, the New York Times had a fine article recently, which stated in part:

Older Chinese officers remember a time, before the Tiananmen Square protests in 1989 set relations back, when American and Chinese forces made common cause against the Soviet Union.

The younger officers have known only an anti-American ideology, which casts the United States as bent on thwarting China’s rise.

. . .

Chinese military men, from the soldiers and platoon captains all the way up to the army commanders, were always taught that America would be their enemy.[3]

Viewed in its starkest terms, China has threatened a nation-ending EMP Attack against the United States already—which went largely unnoticed by most Americans, even though such an attack might kill all except 30 million of us.[4] In addition to its submarine forces that have been expanded greatly in the past decade, China’s military is deploying new ballistic missiles that can sink U.S. aircraft carriers, and are potentially game-changing, unprecedented threats to our supercarriers and their carrier battle groups.[5]

Also, China is preparing to build an aircraft carrier, which symbolizes the ambition to move far beyond its own shores[6].  Its growing anti-satellite capabilities and quite soon its fifth-generation fighter, not to mention its ongoing Cyberwarfare and economic warfare, are alarming to say the least.

Barack Obama manipulated the 2010 lame-duck session of Congress to ratify the “90 percent useless and 10 percent problematic” New START Treaty with Putin’s Russia—from which the next Republican administration should withdraw[7], just as George W. Bush withdrew from the ABM Treaty, which had expressly prevented major American advances in missile defense.  However, the United States’ focus must be on China, not on an essentially-Third World, backwater country like Russia.[8]

As one China military-affairs specialist put it:

Clearly, China’s communist leadership is not impressed by the [Obama] administration’s ending of F-22 production, its retirement of the Navy’s nuclear cruise missile, START Treaty reductions in U.S. missile warheads, and its refusal to consider U.S. space warfare capabilities. Such weakness is the surest way to invite military adventurism from China.[9]

On the positive side, China represents an enormous consumer market.  Yet, even on that front, caution is advised and prudence is required.  As the Wall Street Journal noted:

It’s tempting for U.S. companies to believe they can rely on access to hundreds of millions of new consumers in China and other emerging-market countries for the lion’s share of future profits. But they had better be prepared for a wide variety of unforeseen barriers.[10]

The United States has other issues and problems with China, including but not limited to Chinese adoption policies that foist “sick” children on unsuspecting, needy American adoptive parents, leading to tragic human suffering and other consequences[11]; China’s human rights abuses, including political prisoners who often serve their terms in an archipelago of labor camps scattered across the country called Laogai[12]; North and South Korea—and their respective international protectors, China and the U.S.—which might be heading for a showdown in the future[13]; and China’s expanding influence in the world, such as its willingness to bail out debt-ridden countries in the euro zone[14].

China has a violent history, which is of recent vintage.  Indeed, the Soviet Union’s Joseph Stalin and China’s Mao Tse-tung were the most ruthless killers of their own people in the 20th Century, and perhaps in the entire history of mankind.  Mao was directly responsible for an estimated 30-40 million deaths between 1958 and 1960, as a result of what his regime hailed as the “Great Leap Forward.”[15] Even though human rights activist Liu Xiaobo won the 2010 Nobel Peace Prize—after having been sentenced to prison for putting his name to the “Charter 08″ human-rights manifesto, which says that the Chinese people “see clearly that freedom, equality, and human rights are universal values”—he was denied the right to have a representative collect the prize for him.[16]

Perhaps the best hope for a democratic China at peace with the world rests with the expansion of human rights in the country, as well as consumerism and capitalism; and greater civilian control over the country’s potentially-renegade military.  Whether this hope comes to fruition, or ends up as a pipe dream, remains to be seen.  Will China’s bluster and swagger lead to war, or dissipate over time; and are the United States and China on a collision course in the Western Pacific and elsewhere?[17] Only time will tell.  However, one can never forget that China’s violent past was only a short time ago, and its human rights abuses continue to this day.

© 2011, Timothy D. Naegele


[1] Timothy D. Naegele was counsel to the United States Senate’s Committee on Banking, Housing, and Urban Affairs, and chief of staff to Presidential Medal of Freedom and Congressional Gold Medal recipient and former U.S. Senator Edward W. Brooke (R-Mass).  He practices law in Washington, D.C. and Los Angeles with his firm, Timothy D. Naegele & Associates, which specializes in Banking and Financial Institutions Law, Internet Law, Litigation and other matters (see www.naegele.com and http://www.naegele.com/naegele_resume.html).  He has an undergraduate degree in economics from UCLA, as well as two law degrees from the School of Law (Boalt Hall), University of California, Berkeley, and from Georgetown University.  He is a member of the District of Columbia and California bars.  He served as a Captain in the U.S. Army, assigned to the Defense Intelligence Agency at the Pentagon, where he received the Joint Service Commendation Medal.  Mr. Naegele is an Independent politically; and he is listed in Who’s Who in America, Who’s Who in American Law, and Who’s Who in Finance and Business. He has written extensively over the years (see, e.g.www.naegele.com/whats_new.html#articles), and can be contacted directly at tdnaegele.associates@gmail.com

[2] See http://online.wsj.com/article/SB10001424052748704428004576075042571461586.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsTop

[3] See http://www.nytimes.com/2010/10/12/world/asia/12beijing.html?_r=3&hp=&pagewanted=all

[4] See, e.g.https://naegeleblog.wordpress.com/2010/01/19/emp-attack-only-30-million-americans-survive/

[5] See, e.g.http://www.washingtontimes.com/news/2010/dec/27/china-deploying-carrier-sinking-ballistic-missile/

[6] See, e.g.http://www.ft.com/cms/s/0/fa7f5e6a-09cc-11e0-8b29-00144feabdc0.html#axzz18PUuKHZh

[7] See https://naegeleblog.wordpress.com/2010/02/09/russias-putin-is-a-killer/#comment-1014: see also https://naegeleblog.wordpress.com/2010/02/09/russias-putin-is-a-killer/#comment-1167 and https://naegeleblog.wordpress.com/2010/02/09/russias-putin-is-a-killer/#comment-1245

[8] See https://naegeleblog.wordpress.com/2010/02/09/russias-putin-is-a-killer/

[9] See http://www.washingtontimes.com/news/2010/dec/27/china-deploying-carrier-sinking-ballistic-missile/

[10] See, e.g.http://online.wsj.com/article/SB10001424052748704852004575258541875590852.html?mod=WSJ_hp_editorsPicks

[11] See, e.g.https://naegeleblog.wordpress.com/2010/04/15/problems-with-foreign-adoptions/; see also https://naegeleblog.wordpress.com/2010/02/09/russias-putin-is-a-killer/#comment-348 and https://naegeleblog.wordpress.com/2010/02/09/russias-putin-is-a-killer/#comment-434 (“[B]oth Russia and China have used the U.S. as dumping grounds for their ‘sick’ children”)

[12] See, e.g.http://www.naegele.com/documents/BretStephens-FromAthenstoBeijing.pdf (“How strong can China be if it is terrified of Nobel Peace Prize winner Liu Xiaobo?”); see also https://naegeleblog.wordpress.com/2010/02/09/russias-putin-is-a-killer/#comment-824

[13] See, e.g., https://naegeleblog.wordpress.com/2010/12/22/the-next-major-war-korea-again/ and https://naegeleblog.wordpress.com/2010/02/09/russias-putin-is-a-killer/#comment-1012

[14] See, e.g.https://naegeleblog.wordpress.com/2010/02/09/russias-putin-is-a-killer/#comment-1177

[15] As I have written:

Like Stalin, Mao’s crimes involved Chinese peasants, many of whom died of hunger from man-made famines under collectivist orders that stripped them of all private possessions.  The Communist Party forbade them even to cook food at home; private fires were outlawed; and their harvests were taken by the state.  Those who dared to question Mao’s agricultural policies—which sought to maximize food output by dispossessing the nation’s most productive farmers—were tortured, sent to labor camps, or executed.

See https://naegeleblog.wordpress.com/2010/02/06/the-silent-voices-of-stalin%E2%80%99s-soviet-holocaust-and-mao%E2%80%99s-chinese-holocaust/

[16] See infra note 12; see also http://en.wikipedia.org/wiki/Liu_Xiaobo#Nobel_Peace_Prize

[17] See, e.g.https://naegeleblog.wordpress.com/2010/02/09/russias-putin-is-a-killer/#comment-1188





The American Legal System Is Broken: Can It Be Fixed?

3 01 2011

By Timothy D. Naegele[1][2]

I have been an American lawyer for 44 years.  I am a member of the bar of the United States Supreme Court, the District of Columbia Bar, the State Bar of California, and the bars of other federal courts.  I have been a U.S. Senate lawyer and a lawyer at the Pentagon, and have represented more than 200 banks and other financial institutions.  I have purchased banks for our clients, and advised two States; and I testified as an expert on behalf of the FDIC in a failing bank case.  I have done essentially everything that I ever wanted to do in the law, except work at the White House; and I have attended meetings there.  In these and countless other ways, I have seen the American legal system “up close and personal.”[3]

I have two law degrees, from Berkeley and Georgetown, at opposite ends of this great country.[4] I can say without any hesitation, reservation or equivocation that the finest education I received was at Berkeley’s law school par excellence, Boalt Hall.  I was taught—to think analytically, and to write—by outstanding professors[5] who instilled in my fellow students and me a belief that the law is sacred, sacrosanct and pristine, “a shining city upon a hill.”  Since then whenever I have encountered what I perceived as legal injustices and incompetence, I have taken umbrage and railed against them, albeit generally in my own quiet ways.

John Lennon probably said it best: “Life is what happens to you while you’re busy making other plans.”  I never truly wanted to become a lawyer; that was not my life’s ambition.  I wanted to be a businessman instead, and buy and sell companies, but the Vietnam War intervened and changed my life forever.[6] I never dreamed of being a lawyer, like so many of my law school classmates at Berkeley did, which may explain why I view the profession—which so many Americans have come to despise—with a certain degree of detachment and healthy skepticism.  For example, I would not recommend the practice of law to anyone.  Among other things, the time demands and stress on young lawyers are a “family-killer,” which is why there is a high rate of divorces among members of the profession.

When my son wanted to attend law school, I encouraged him to get both a JD and an MBA, to “hedge his bets” and give him options.  When he was nearing graduation with both degrees in hand, I did my best to talk him out of practicing law.[7] Friends of mine, who have practiced law for many years and have been very successful at doing it, feel much the same way and have told their kids and others not to pursue a legal career.  Indeed, some of these friends and I have joked that we should give lectures to graduating college seniors and entering law school students, telling them what the practice of law is really all about.  If we told them the unvarnished truth, many might decide not to enter the profession.

Despite a healthy contempt for many lawyers, and judges—who are often egotistical, callous, mean-spirited, power-hungry, arrogant, self-righteous, condescending and incompetent—I have had wonderful friends over the years who are lawyers and even judges.  I have worked with them, and some have represented me, and I will always respect and be deeply indebted to them.  They are special people, who stand head-and-shoulders above others in the profession; and they are nice people as well—which may be what distinguishes them from the others.

Perhaps the most disturbing qualities about lawyers and judges are their arrogance and abuse of power, and their lack of empathy and innate legal and life skills to deal with vital human issues that come before them.  For example, lawyers who are prosecutors are often less interested in fairness and justice than they are in winning at all costs, and exercising their raw power and hurting others in the process—such as those who are innocent but are convicted anyway.[8]

Similarly, lawyers are trained in law schools to be advocates.  When they represent clients in divorce proceedings, the last things that estranged couples need are their respective lawyers “stirring the pot” to earn greater fees, and increasing the acrimony that already exists.  Also, male lawyers prey sexually on their distraught and vulnerable female clients, which should give rise to immediate disbarments but it does not.  The American legal system is broken today, inter alia, because it has often attracted the wrong type of people.[9]

Can our legal system be fixed, and will the American people come to trust and respect lawyers and judges again, and believe that justice not only exists but prevails in this great nation?  Maybe . . . if the profession is restructured, and if it attracts those people who believe that the law is sacred, sacrosanct and pristine—truly a shining city upon a hill—and they put such principles into practice.  The profession does not require saints, but it does need something different than “Law West of the Pecos by Judge Roy Bean.”  And it needs people who are different than it has been attracting: who are often driven, ruthless, unprincipled, money-hungry, and power-hungry.

© 2011, Timothy D. Naegele

[See also (1) https://naegeleblog.wordpress.com/2013/07/15/justice-and-the-law-do-not-mix/ (“Justice And The Law Do Not Mix”), (2) https://naegeleblog.wordpress.com/2012/03/21/the-united-states-department-of-injustice/ (“The United States Department of Injustice”), (3) https://naegeleblog.wordpress.com/2014/09/08/the-state-bar-of-california-is-lawless-and-a-travesty-and-should-be-abolished/ (“The State Bar Of California Is Lawless And A Travesty, And Should Be Abolished”)]


[1] Timothy D. Naegele was counsel to the United States Senate’s Committee on Banking, Housing, and Urban Affairs, and chief of staff to Presidential Medal of Freedom and Congressional Gold Medal recipient and former U.S. Senator Edward W. Brooke (R-Mass).  He practices law in Washington, D.C. and Los Angeles with his firm, Timothy D. Naegele & Associates, which specializes in Banking and Financial Institutions Law, Internet Law, Litigation and other matters (see www.naegele.com and http://www.naegele.com/naegele_resume.html).  He has an undergraduate degree in economics from UCLA, as well as two law degrees from the School of Law (Boalt Hall), University of California, Berkeley, and from Georgetown University.  He is a member of the District of Columbia and California bars.  He served as a Captain in the U.S. Army, assigned to the Defense Intelligence Agency at the Pentagon, where he received the Joint Service Commendation Medal.  Mr. Naegele is an Independent politically; and he is listed in Who’s Who in America, Who’s Who in American Law, and Who’s Who in Finance and Business. He has written extensively over the years (see, e.g.www.naegele.com/whats_new.html#articles), and can be contacted directly at tdnaegele.associates@gmail.com

[2] The issues addressed in this article are discussed further in a partially-completed book of mine entitled, “Never Become A Lawyer.”  Its chapters include but are not limited to the following subjects: law schools, law firms, divorces, bar associations, Congress, lobbying, mergers and acquisitions, litigation, law enforcement, state governments, the federal government, judges, federal courts, the U.S. Supreme Court, politics, abuse of power, justice, lawyer scams, and other careers.

The book’s last chapter starts with the words:

I began writing this book with the idea of thoroughly trashing the legal profession of which I have been a member for more than 40 years, as well as the American “system of justice”—and God knows there is plenty of support for that approach.  However, the United States has many fine lawyers, including former classmates of mine at Berkeley and friends who have tried to do their very best to help others, such as those lawyers who have helped me.  Thus, in the final analysis, I endeavored to present a somewhat objective view of the profession. . . .

I assume my assessment will remain the same, or close to it, when the book is finished and published.

[3] See, e.g., http://www.naegele.com/naegele_resume.html

[4] See https://naegeleblog.wordpress.com/2010/02/26/america-a-rich-tapestry-of-life/

[5] They included but were not limited to Edward C. Halbach Jr. (see, e.g.,  http://www.law.berkeley.edu/php-programs/faculty/facultyProfile.php?facID=44), who became dean of the law school and gave me an “A” in Conflicts of Law during my last year at Boalt, which I will remember always; Sanford H. (“Sandy”) Kadish (see, e.g., http://www.law.berkeley.edu/php-programs/faculty/facultyProfile.php?facID=61), who taught Criminal Law and became dean of the law school too; Barbara N. Armstrong, who was the first woman law professor at a major American law school (see, e.g., http://en.wikipedia.org/wiki/UC_Berkeley_School_of_Law); Richard W. Jennings (see, e.g., http://www.universityofcalifornia.edu/senate/inmemoriam/richardwjennings.htm), who taught Securities Law and came to Washington when I was a young attorney with the Senate Banking Committee, and we shared stories; and Michael (“Mike”) Heyman (see, e.g., http://www.law.berkeley.edu/php-programs/faculty/facultyProfile.php?facID=52), from whom I never took a class, but I will always remember his smiling face, and that he was a “force” for excellence at the law school and beyond (e.g., he ran the Smithsonian in Washington, D.C. for many years).  A giant in the law of Torts, William L. Prosser (see, e.g., http://en.wikipedia.org/wiki/William_Prosser), was at Boalt too; however, he left shortly before I arrived—although his spirit was still there.

[6] As a result of enrolling in Army ROTC as an undergraduate, I had a commission as an officer when I graduated from UCLA in January of 1963.  I wanted to attend a business school; however, I needed to work from January to September at two jobs, to earn enough money so I could afford any graduate school.  Even though UCLA’s business school had classes that I could begin right away, in January—whereas, law school classes only began in September—my choice became a law school.  The Vietnam War was raging; and the Army would defer me for law school, but would not let me work for the same amount of time before entering a business school, which is the graduate education that I really wanted to pursue.

Having become a lawyer, however, I have always tried to do my very best, and believe that I have done so.  Also, reading endless legal decisions at Boalt Hall and later at Georgetown, I learned the English language in ways that were unfathomable at the time, but have proved to be quintessentially-invaluable with respect to any skills that I have today as a writer.

The great American poet, Robert Frost, wrote a wonderful poem about life choices entitled, “The Road Not Taken,” which perhaps says it all:

Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;

Then took the other, as just as fair,
And having perhaps the better claim,
Because it was grassy and wanted wear;
Though as for that the passing there
Had worn them really about the same,

And both that morning equally lay
In leaves no step had trodden black.
Oh, I kept the first for another day!
Yet knowing how way leads on to way,
I doubted if I should ever come back.

I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.

See, e.g.http://en.wikipedia.org/wiki/The_Road_Not_Taken_(poem)

[7] I was adamant that neither of my kids would work on Capitol Hill, because of what I had witnessed there.

See https://naegeleblog.wordpress.com/2010/09/24/washington-is-sick-and-the-american-people-know-it/

[8] A federal official with reason to know told me that between 15-20 percent of the indictees in federal courts are probably innocent.  Some are seniors who have been charged with cheating the Social Security program, and they are scared to death, so they agree to plea bargains rather than fight for their innocence.

[9] This is true of many judges, who serve for life and cannot be removed if they are federal judges.





Barack Obama Is A Lame-Duck President Who Will Not Be Reelected

3 12 2010

By Timothy D. Naegele[1]

Like former Presidents Jimmy Carter and Lyndon Johnson before him, in 1980 and 1968 respectively, Barack Obama will not be reelected in 2012.[2] The twin pincers of a domestic economy in the throes of the “Great Depression II”[3]—which economic historians will describe as such, or by using similar terms 20-40 years from now—and his failed Vietnam-like Afghan war[4] will seal his political fate.  Other factors will contribute mightily too, such as the perception that he is “out of touch” just as Jimmy Carter was; and that Obama is a silver-tongued, narcissistic “foreign born” demagogue who is un-American.[5] Perceptions often become reality, certainly in politics.

We are witnessing the end of Obama as a politician now.  The zenith of his presidency occurred with the enactment of ObamaCare, just as Hillary Clinton’s health care efforts marked the “high water mark” of her influence during Bill Clinton’s presidency.  Obama’s nadir is yet to come, but the 2010 mid-term election debacle represented an important milestone on the slippery downward slope of his presidency.  The domestic economy will get far worse; his Afghan war is a morass that seems unwinnable and inescapable; and national security issues loom—such as North Korea and Iran—which may prove “hazardous” at best.

Barack Obama is a failed politician whose “magic” has come and gone.  He is not merely a bad president. He may have the distinction of going down in history as one of the worst presidents that America has ever had, or perhaps the worst depending on what happens during the remainder of his term in office.  That he is presiding over a failed presidency is not in dispute. The only question becomes: how bad will things get for the American nation, its people and for him, before he leaves public office?[6] It is fair to surmise that we have only seen the tip of an enormous political, economic, social and national security “iceberg”—or nightmare—reminiscent of the one that the RMS Titanic struck in 1912.

It is not beyond the pale to believe that scandals will engulf Barack Obama’s presidency as more and more is learned about who he is and how he has governed, and what he and others in his administration have done during the time they have been entrusted with the presidency.[7] Barack Obama is no Bill Clinton: a “cat” with seemingly nine lives politically. He is a “mix” between Carter who was perceived as cerebral and out of touch, and Johnson who was viciously maligned and prevented from running for reelection.

When I was a young Army officer stationed at the Pentagon, before working on Capitol Hill, I remember bumper stickers on cars in the District of Columbia that asked: “Where is Lee Harvey Oswald now that we really need him?”—a reference to John F. Kennedy’s killer.  Johnson was hated, and such implied threats were real.  There are rising negative sentiments about Obama today, involving large numbers of Americans who are not racially prejudiced or merely disillusioned.  Indeed, two Democratic pollsters and advisers to Presidents Clinton and Carter respectively, Douglas E. Schoen and Patrick H. Caddell, wrote an important op-ed piece in the Washington Post recently, which stated:

[W]e believe Obama should announce immediately that he will not be a candidate for reelection in 2012.

. . .

[T]he president has largely lost the consent of the governed.  The [2010] midterm elections were effectively a referendum on the Obama presidency.[8]

However, his raving and overarching narcissism will likely drive his decision making to put his own perceived best interests ahead of the good of the country and his political party; and he will probably fight on to the bitter end.  More and more Americans are concluding that he does not deserve a second term in the White House.[9] Political pundit and former adviser to Bill Clinton, Dick Morris, argues that he will be challenged by both those on his left and right politically.[10]

Barack Obama is an unsuccessful “community organizer” from Chicago—and before that, Hawaii and Indonesia—who became a black man when it suited him, despite the ethnicity of his mother and her parents who nurtured him like no one else in his life.  The best of him, he has readily admitted, is what the three of them gave him; and clearly he cherishes their memories.[11] Yet, it is not such personal qualities that will determine his political fate.  Jimmy Carter was perceived as likable too.

With respect to the economy, we are in the midst of the “Great Depression II,” and there is nothing he can do about that fact.  The economic tsunami that former Federal Reserve Chairman Alan Greenspan unleashed has been rolling worldwide, with no end in sight. At most, government policies can affect it at the margins—because it will run its course, essentially oblivious to government intervention. Where and when it stops, no one knows; however, Obama’s actions to date have only made it worse.[12] His so-called “stimulus package” has done little or nothing to help the economy; and his reform of the financial markets is akin to shuffling deck chairs on the Titanic[13].

His signature legislation, ObamaCare, was opposed by a majority of the American people, but that did not stop Obama and House Speaker Nancy Pelosi from arrogantly shoving it down their throats, as if to say that the two of them knew what was best for their wards.  ObamaCare is likely to be a tragedy for Americans who need health care the most, such as senior citizens; and according to a Rasmussen Reports national telephone survey, 58 percent of American voters favor its repeal, while 37 percent are opposed.[14]

His policies with respect to Russia’s “dictator-for-life” Vladimir Putin are a travesty to say the least, which simply reflect his almost-total naïveté that is stunning—America’s “Hamlet” on the Potomac.  His negotiation and endorsement of the New START Treaty is a perfect example.[15] Also, he stood by helplessly while those Iranians who advocated freedom were tortured or killed.  His positive contributions with respect to peace between the Israelis and Palestinians are essentially nonexistent, at a critical juncture in the history of the Middle East.[16] And the list goes on and on.

Writing for Germany’s Der Spiegel, Klaus Brinkbäumer stated bluntly:

[N]obody in the US understands [the Afghan] war any more.  The conflict long ago ceased to be Bush’s war, and is now Obama’s.  Worse still, it will inevitably end with an inglorious withdrawal.  Why, then, should the US send in yet more troops?  Why spend $100 billion a year waging war when train stations and schools back home are falling to pieces, and the money would be better spent on other American projects and research?  Congress refuses to approve extra spending on renewing America: The money has already been spent.

. . .

The problem is simply that Obama is smaller than the promise he made, and tiny in comparison to the hopes an entire nation placed on him in 2008. There’s one thing that Barack Obama failed to do. That was his real failure, the big mistake he made, back when everything seemed possible.

. . .

[H]e didn’t even try.[17]

The fact is that Barack Obama is a professional politician and nothing more.  And Americans have come to loathe such creatures, not love them.  So “out of touch” is he that when the BP oil spill was polluting the Gulf of Mexico, Michelle Obama and their youngest daughter flew to Spain—and she was described as America’s “Marie Antoinette.”  More importantly, Obama is not fit to serve or govern, and he never has been.  He is a demagogue and a liar[18], and an embarassment to this great nation and its people.  He is incompetent[19]; and yes, he is evil.[20] Before his presidency ends, he is apt to do even more irreparable damage to our national security, our economy, and with respect to a whole host of critical areas.

He should be relieved of command, and end his political career with dignity like his former military commander in Afghanistan, General Stanley A. McChrystal.  This is what Democrat pollsters Schoen and Caddell have urged Obama to do.  The good General McChrystal, who was forced by Obama to resign his command, might be the first public official (or former-public official) to call for Obama’s resignation.[21] He knows, better than most people, about Obama’s ineptitude and recklessness with the lives of U.S. military personnel and America’s honor—which are at stake and on the line each and every day in Afghanistan and elsewhere around the world.

The fact that Obama named General David Petraeus to replace McChrystal as commander of American and NATO forces in Afghanistan, and that Petraeus was willing to accept the job and step down from his position as Commander of the U.S. Central Command—which oversees American military efforts in Afghanistan, Iraq, Pakistan, Central Asia, the Arabian Peninsula, and parts of Africa—speaks volumes about the character, talent, loyalty and integrity of Petraeus.  However, it does not change the verdict with respect to Obama and his failed presidency.

There is nothing positive about his administration or what he has done to date, nothing.  Despite projecting an upbeat, positive, personable image on the campaign trail, which enthused millions of voters and gave them hope, at best he has proved to be an “empty suit.”  If Americans read his book, “Dreams from My Father,” they will realize that his radical beliefs are in tune with Indonesia where he lived—or perhaps some other foreign country—but not with the United States.[22] The “change” he espoused has not been consistent with the beliefs and goals of mainstream American voters.

The critical words that General McChrystal and his staff spoke in a Rolling Stone interview[23] were true and needed to be said—even though lots of Americans might have preferred not to hear about the acrimony and dissension between our military and the Obama Administration.[24] We have a president who is a far-Left neophyte and wrong for America; and he is presiding over a presidency that almost surely will get dramatically worse with the passage of time.  And we have a lovable but utter buffoon for vice president, who is a pathological liar and the laughingstock of the world, and who makes former Vice President Spiro Agnew look brilliant by comparison.[25]

With respect to Afghanistan, at the same time that Obama announced the deployment of an additional 30,000 American troops, he said the U.S. would begin pulling out by July of 2011—just before his anticipated reelection campaign begins in earnest[26], and only one year after our forces will have been deployed fully.  If implemented, it would be tantamount to conceding the country to our enemies sometime in 2011; and it would result in the shedding of American blood and that of our allies for nothing, like Vietnam.

While Obama may be in the process of jettisoning that unrealistic timeline, his thought processes are not surprising because he is an anti-war politician who never served in the U.S. military, and he knows nothing about running a war.  His goals—which never refer to the possibility of “victory” in Afghanistan—are designed to appease his political soul mates and constituency, America’s anti-war far-Left.  He is focused on an “exit strategy” instead of winning.  He has not been successful at running anything, ever[27]; and it is unlikely that Afghanistan will be an exception.  Since when does a failed, anti-war, far-Left “community organizer” from Chicago, who was raised in Hawaii and Indonesia, know how to run a war, much less successfully?

Independents and Republicans helped elect Obama and Democrat candidates in 2008; and they  joined with “disenchanted” Democrats and members of the Tea Party movement in November of 2010 to produce an opposite result.  The combination of Afghanistan—which is apt to be Obama’s Vietnam—and growing economic problems may doom his presidency, just as similar issues converged to deny Lyndon Johnson’s reelection in 1968.  Like John F. Kennedy before him, who inspired so many people and caused legions to enter politics, Obama has feet of clay and is dashing Americans’ dreams and political fantasies.[28]

In the final analysis, it is increasingly clear that Obama is a fad and a feckless naïf, and a tragic Shakespearean figure who will be forgotten and consigned to the dustheap of history—unless he tragically alters the course of American history.  His naïveté is matched by his overarching narcissism; and he is more starry-eyed and “dangerous” than Jimmy Carter.  Indeed, it is likely that his presidency will be considered a sad and tragic watershed in history; and the American people are recognizing this more and more with each day that passes.[29] Hopefully he chooses to end his political career with dignity by not running for reelection in 2012, instead of continuing to drag this great nation down with him.[30]

© 2010, Timothy D. Naegele


[1] Timothy D. Naegele was counsel to the United States Senate’s Committee on Banking, Housing, and Urban Affairs, and chief of staff to Presidential Medal of Freedom and Congressional Gold Medal recipient and former U.S. Senator Edward W. Brooke (R-Mass).  He practices law in Washington, D.C. and Los Angeles with his firm, Timothy D. Naegele & Associates, which specializes in Banking and Financial Institutions Law, Internet Law, Litigation and other matters (see www.naegele.com and http://www.naegele.com/naegele_resume.html).  He has an undergraduate degree in economics from UCLA, as well as two law degrees from the School of Law (Boalt Hall), University of California, Berkeley, and from Georgetown University.  He is a member of the District of Columbia and California bars.  He served as a Captain in the U.S. Army, assigned to the Defense Intelligence Agency at the Pentagon, where he received the Joint Service Commendation Medal.  Mr. Naegele is an Independent politically; and he is listed in Who’s Who in America, Who’s Who in American Law, and Who’s Who in Finance and Business. He has written extensively over the years (see, e.g.www.naegele.com/whats_new.html#articles), and can be contacted directly at tdnaegele.associates@gmail.com

[2] See https://naegeleblog.wordpress.com/2010/01/20/the-end-of-barack-obama [Please note: the postings beneath this article are important as well]; see also https://naegeleblog.wordpress.com/2010/11/12/sarah-and-todd-palin-the-big-winners and https://naegeleblog.wordpress.com/2010/03/31/the-rise-of-independents/ and https://naegeleblog.wordpress.com/2010/09/01/the-speech—is-barack-obama-smoking-pot-again/ and https://naegeleblog.wordpress.com/2010/01/01/barack-obama-america’s-second-emperor/

[3] See, e.g., http://www.americanbanker.com/issues/173_212/-365185-1.html and http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html and http://www.philstockworld.com/2009/10/11/greenspan’s-legacy-more-suffering-to-come/ and https://naegeleblog.wordpress.com/2009/12/16/the-great-depression-ii/ and https://naegeleblog.wordpress.com/2010/04/23/is-financial-reform-simply-washingtons-latest-boondoggle/ and https://naegeleblog.wordpress.com/2010/05/16/will-the-eus-collapse-push-the-world-deeper-into-the-great-depression-ii/ and https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally

[4] See, e.g., https://naegeleblog.wordpress.com/2010/09/09/are-afghanistan-iraq-and-pakistan-hopeless-and-is-the-spread-of-radical-islam-inevitable-and-is-barack-obama-finished-as-americas-president/ and https://naegeleblog.wordpress.com/2009/12/26/obama-in-afghanistan-doomed-from-the-start/

[5] See https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/

[6] See, e.g., https://naegeleblog.wordpress.com/2010/01/19/emp-attack-only-30-million-americans-survive/

[7] In his book, “Dreams from My Father,” Obama wrote:

Junkie.  Pothead.  That’s where I’d been headed: the final, fatal role of the young would-be black man.

See Obama, “Dreams from My Father” (paperback “Revised Edition,” published by Three Rivers Press, 2004), p. 93; see also pp. 120, 270; https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/.

Regardless of whether he has taken illegal drugs or not since his college years, he is occupying our White House; and sooner or later, stories will trickle out about the time he has spent there.

[8] See http://www.washingtonpost.com/wp-dyn/content/article/2010/11/12/AR2010111202846.html; see also https://naegeleblog.wordpress.com/2010/01/20/the-end-of-barack-obama/#comment-974

[9] See http://www.quinnipiac.edu/x1295.xml?ReleaseID=1538; see also https://naegeleblog.wordpress.com/2010/01/20/the-end-of-barack-obama/#comment-999

[10] See http://www.dickmorris.com/blog/obama-may-face-left-wing-primary/; see also https://naegeleblog.wordpress.com/2010/01/20/the-end-of-barack-obama/#comment-968 and https://naegeleblog.wordpress.com/2010/11/12/sarah-and-todd-palin-the-big-winners/ (“[I]t is not beyond the pale to believe that two women might face off for the American presidency in 2012, Sarah Palin and Hillary Clinton, which would be historic!”)

[11] See https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/ and Obama, “Dreams from My Father” (paperback “Revised Edition,” published by Three Rivers Press, 2004).

[12] Paul Krugman has written a New York Times’ article entitled, “The Third Depression,” which states:

Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as “depressions” at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31.

. . .

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost—to the world economy and, above all, to the millions of lives blighted by the absence of jobs—will nonetheless be immense.

. . .

[T]he recession brought on by the financial crisis arguably ended last summer.

But future historians will tell us that this wasn’t the end of the third depression, just as the business upturn that began in 1933 wasn’t the end of the Great Depression.  . . .  [B]oth the United States and Europe are well on their way toward Japan-style deflationary traps.

See http://www.nytimes.com/2010/06/28/opinion/28krugman.html

This conclusion is consistent with the thesis of articles that I have written and interview responses that I have given; namely, we are in the midst of the “Great Depression II”—certainly in terms of the 20th and 21st Centuries—which will continue to unfold during at least the balance of this decade.  See infra n.3.

Krugman added:

As far as rhetoric is concerned, the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover, up to and including the claim that raising taxes and cutting spending will actually expand the economy, by improving business confidence. As a practical matter, however, America isn’t doing much better. The Fed seems aware of the deflationary risks—but what it proposes to do about these risks is, well, nothing. The Obama administration understands the dangers of premature fiscal austerity—but because Republicans and conservative Democrats in Congress won’t authorize additional aid to state governments, that austerity is coming anyway, in the form of budget cuts at the state and local levels.

Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And it’s true that bond investors have turned on governments with intractable deficits. But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors. On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider; Ireland has imposed savage cuts in public spending, only to be treated by the markets as a worse risk than Spain, which has been far more reluctant to take the hard-liners’ medicine.

It’s almost as if the financial markets understand what policy makers seemingly don’t: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.

So I don’t think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times.

And who will pay the price for this triumph of orthodoxy?  The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.

Amen.  Where I differ with Krugman is that his solution is more Keynesian governmental spending, with the goal of spending our way to prosperity.  As stated in articles that I have written and interview responses that I have given, the economic tsunami that Alan Greenspan unleashed has been rolling worldwide, with no end in sight.  At most, government policies can affect it at the margins—because it will run its course, essentially oblivious to government intervention.  Where and when it stops, no one knows.  Originally I predicted the 2017-2019 time frame, but it may take longer than that because of misguided and wasteful government “tinkering.”

In an editorial entitled, “The Keynesian Dead End,” the Wall Street Journal concluded that spending our way to prosperity is going out of style—and the editorial essentially rebuts the solution that Krugman recommended:

For going on three years, the developed world’s economic policy has been dominated by the revival of the old idea that vast amounts of public spending could prevent deflation, cure a recession, and ignite a new era of government-led prosperity. It hasn’t turned out that way.

. . .

The response at the White House and among Congressional leaders has been . . . Stimulus III. While talking about the need for “fiscal discipline” some time in the future, President Obama wants more spending today to again boost “demand.” Thirty months after [Obama economic adviser Larry] Summers won his first victory, we are back at the same policy stand.

The difference this time is that the Keynesian political consensus is cracking up. In Europe, the bond vigilantes have pulled the credit cards of Greece, Portugal and Spain, with Britain and Italy in their sights. Policy makers are now making a 180-degree turn from their own stimulus blowouts to cut spending and raise taxes. The austerity budget offered this month by the new British government is typical of Europe’s new consensus.

To put it another way, Germany’s Angela Merkel has won the bet she made in early 2009 by keeping her country’s stimulus far more modest. We suspect Mr. Obama will find a political stonewall this weekend in Toronto when he pleads with his fellow leaders to join him again for a spending spree.

Meanwhile, in Congress, even many Democrats are revolting against Stimulus III. The original White House package of jobless benefits and aid to the states had to be watered down several times, and the latest version failed again in the Senate late this week.  . . .  Mr. Obama is having his credit card pulled too—not by the bond markets, but by a voting public that sees the troubles in Europe and is telling pollsters that it doesn’t want a Grecian bath.

The Journal adds:

The larger lesson here is about policy. The original sin—and it was nearly global—was to revive the Keynesian economic model that had last cracked up in the 1970s, while forgetting the lessons of the long prosperity from 1982 through 2007. The Reagan and Clinton-Gingrich booms were fostered by a policy environment for most of that era of lower taxes, spending restraint and sound money. The spending restraint began to end in the late 1990s, sound money vanished earlier this decade, and now Democrats are promising a series of enormous tax increases.

Notice that we aren’t saying that spending restraint alone is a miracle economic cure. The spending cuts now in fashion in Europe are essential, but cuts by themselves won’t balance annual deficits reaching 10% of GDP. That requires new revenues from faster growth, and there’s a danger that the tax increases now sweeping Europe will dampen growth further.

President Obama’s tragic mistake was to blow out the U.S. federal balance sheet on spending that has produced little bang for the buck. . . .

With the economy in recession in 2008 and 2009, we argued that some stimulus was justified and an increase in the deficit was understandable and inevitable. However, we also argued that permanent tax cuts aimed at marginal individual and corporate tax rates would have done far more to revive animal spirits, and in our view would have led to a far more robust recovery. . . .

What the world has now reached instead is a Keynesian dead end. We are told to let Congress continue to spend and borrow until the precise moment when Summers and Mark Zandi and the other architects of our current policy say it is time to raise taxes to reduce the huge deficits and debt that their spending has produced. Meanwhile, individuals and businesses are supposed to be unaffected by the prospect of future tax increases, higher interest rates, and more government control over nearly every area of the economy. Even the CEOs of the Business Roundtable now see the damage this is doing.

A better economic policy will have to await a new Congress, which we hope at a minimum can prevent punishing tax increases. But for now the good news is that voters and markets are telling politicians to stop doing what hasn’t worked.

See http://online.wsj.com/article/SB10001424052748703615104575328981319857618.html?mod=WSJ_hp_mostpop_read

Thus, economic “thinkers” continue to flail around, while the Great Depression II takes its toll in terms of horrendous human suffering worldwide, with no end in sight.

[13] See https://naegeleblog.wordpress.com/2010/04/23/is-financial-reform-simply-washingtons-latest-boondoggle/

[14] See http://www.rasmussenreports.com/public_content/politics/current_events/healthcare/health_care_law

[15] See, e.g.https://naegeleblog.wordpress.com/2010/02/09/russias-putin-is-a-killer/ and https://naegeleblog.wordpress.com/2010/02/09/russias-putin-is-a-killer/#comment-1014

[16] See, e.g.https://naegeleblog.wordpress.com/2010/02/20/israels-senseless-killings-and-war-with-iran/ [Please note: the postings beneath this article are important as well]

[17] See http://www.spiegel.de/international/world/0,1518,723814,00.html

[18] In his announcement with respect to McChrystal, Obama stated:

I don’t make this decision based on any difference in policy with Gen. McChrystal, as we are in full agreement about our strategy. Nor do I make this decision out of any sense of personal insult.

See http://blogs.wsj.com/washwire/2010/06/23/obama-on-mcchrystal-nothing-personal/

It has been said before, and it bears repeating, that if one wishes to watch Barack Obama lie, all one needs to do is watch his lips move.

[19] See, e.g., http://www.dickmorris.com/blog/2010/07/28/leaked-report-hurts-obama/#more-1230 (“Having already lost all Republicans and almost all independents, Obama is shedding Democrats these days.  . . .  [W]hile liberals have increasing reason to question Obama’s performance on their litmus-test issues, they also have increasing cause to wonder at his competence”).

[20] He is not evil in the sense of being the “antichrist,” as some would suggest, but evil in the sense of leading the United States in the wrong direction and having lied to the American people in the process of doing so.  As stated previously:

It has been said: “Jimmy Carter may be heading to #2 on the [list of] all-time worst presidents in American history, thanks to ‘O.’” This is an understatement.  When history is written, Barack Obama may be hated more than George W. Bush has been by the Democrats, more than Bill and Hillary Clinton have been hated by the Republicans, more than Nixon was hated by the Democrats, and even more than Johnson was hated by a broad swath of the American electorate . . . and the list goes on and on.  Obama may emerge as the most hated president in history.

See https://naegeleblog.wordpress.com/2010/01/20/the-end-of-barack-obama

[21] With McChrystal’s military career at an end, there will be nothing to prevent him from lashing out at Obama and telling the truth (e.g., in memoirs released shortly before the 2012 presidential elections, which tell the unvarnished truth about Obama’s handling of the war in Afghanistan and sear Obama in explicit terms):

Obama seemed to suggest that McChrystal’s military career is over, saying the nation should be grateful “for his remarkable career in uniform” as if that has drawn to a close.

McChrystal left the White House after the meeting and returned to his military quarters at Washington’s Fort McNair.

See http://www.msnbc.msn.com/id/37866754/ns/us_news-military/

Former adviser to President Bill Clinton and political pundit Dick Morris adds:

Relieving the general of command sends a message that Obama is thin-skinned, arrogant, and easily offended.

Coming at the same time that the failure of the Obama Administration to clean up the oil spill in the Gulf is already rankling liberal voters, the McChrystal comments will add to their doubts about Obama. They already are against his decision to send additional troops there and have long believed that we should not be fighting in Afghanistan. By calling attention to how badly the war is going and the disarray in the president’s foreign policy apparatus, the McChrystal interview can only highlight and underscore these concerns and further dampen liberal enthusiasm for Obama.

Neither the oil spill nor the Afghan War will drive any liberals to vote for conservatives or induce Democrats to vote Republican. But they both will hold down Democratic turnout and reinforce cynicism about the Obama presidency on the left. Those initially attracted by Obama’s charisma will be driven away by these twin failures.

The Democratic Party is really a synthesis of environmentalists and peace advocates with a few gay rights activists and public employee unions thrown in. Now, Obama has alienated both the green and the anti-war segments of the party. And the continuing spillage from the Gulf oil well and from the General’s mouth will further damage his standing with his political base.

Whatever the fate of General McChrystal or of the American involvement in the war, the mounting casualty lists will drag down Obama’s prospects in November still further and depress his ratings in the days ahead.

See http://www.dickmorris.com/blog/2010/06/23/mcchrystals-attack-hurts-obamas-left-wing-base/#more-1096

[22] See https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/

While some of his far-Left “true believers” may have read the book and agreed with his core beliefs, the majority of Americans did not; and they had no idea how much his future policies would differ from what they perceived as the mainstream views that he was espousing on the campaign trail.

[23] For example, the author Michael Hastings writes:

The general’s staff is a handpicked collection of killers, spies, geniuses, patriots, political operators and outright maniacs . . . , and they pride themselves on their can-do attitude and their disdain for authority.

. . .

[McChrystal] also set a manic pace for his staff, becoming legendary for sleeping four hours a night, running seven miles each morning, and eating one meal a day. (In the month I spend around the general, I witness him eating only once.) It’s a kind of superhuman narrative that has built up around him, a staple in almost every media profile, as if the ability to go without sleep and food translates into the possibility of a man single-handedly winning the war.

See “The Runaway General” by Michael Hastings, Rolling Stone (June 22, 2010), http://www.rollingstone.com/politics/news/17390/119236#

Barack Obama is quoted by the national media as having said that the article showed “poor judgment,” and that he wanted to talk with McChrystal before making any decision about whether he should remain the U.S. commander in Afghanistan.

See, e.g., http://www.politico.com/news/stories/0610/38837.html and http://online.wsj.com/article/SB10001424052748704853404575322354071542896.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsTop

While it was surprising that McChrystal gave the Rolling Stone any access, much less seemingly unfettered access to his innermost thoughts and beliefs—especially given the Rolling Stone‘s reputation—the fact is that he did, and he and his staff spoke their minds, and their words are now part of American history.

The article adds:

After arriving in Afghanistan last June, [McChrystal] conducted his own policy review, ordered up by Defense Secretary Robert Gates. The now-infamous report was leaked to the press, and its conclusion was dire: If we didn’t send another 40,000 troops—swelling the number of U.S. forces in Afghanistan by nearly half—we were in danger of “mission failure.” The White House was furious. McChrystal, they felt, was trying to bully Obama, opening him up to charges of being weak on national security unless he did what the general wanted. It was Obama versus the Pentagon, and the Pentagon was determined to kick the president’s ass.

. . .

Obama has quietly begun to back away from the deadline he set for withdrawing U.S. troops in July of next year. The president finds himself stuck in something even more insane than a quagmire: a quagmire he knowingly walked into, even though it’s precisely the kind of gigantic, mind-numbing, multigenerational nation-building project he explicitly said he didn’t want.

It is reminiscent of “Brer Rabbit And The Tar Baby,” and Afghanistan is becoming Obama’s “tar pit.”

See, e.g.http://en.wikisource.org/wiki/Uncle_Remus%3A_His_Songs_and_His_Sayings/The_Wonderful_Tar-Baby_Story

The article continues:

In private, Team McChrystal likes to talk shit about many of Obama’s top people on the diplomatic side. One aide calls Jim Jones, a retired four-star general and veteran of the Cold War, a “clown” who remains “stuck in 1985.” Politicians like McCain and Kerry, says another aide, “turn up, have a meeting with Karzai, criticize him at the airport press conference, then get back for the Sunday talk shows. Frankly, it’s not very helpful.” Only Hillary Clinton receives good reviews from McChrystal’s inner circle. “Hillary had Stan’s back during the strategic review,” says an adviser. “She said, ‘If Stan wants it, give him what he needs.'”

. . .

 

At one point on his trip to Paris, McChrystal checks his BlackBerry. “Oh, not another e-mail from [Special Representative to Afghanistan Richard] Holbrooke,” he groans. “I don’t even want to open it.” He clicks on the message and reads the salutation out loud, then stuffs the BlackBerry back in his pocket, not bothering to conceal his annoyance.

“Make sure you don’t get any of that on your leg,” an aide jokes, referring to the e-mail.

. . .

When it comes to Afghanistan, history is not on McChrystal’s side. The only foreign invader to have any success here was Genghis Khan—and he wasn’t hampered by things like human rights, economic development and press scrutiny.

. . .

The very people that [McChrystal’s military strategy known as counterinsurgency, or] COIN seeks to win over—the Afghan people—do not want us there.  . . .  There is a reason that President Obama studiously avoids using the word “victory” when he talks about Afghanistan. Winning, it would seem, is not really possible. Not even with Stanley McChrystal in charge.

The media and politicians like Barack Obama said the same thing about George W. Bush’s—and David Petraeus’—”surge” in Iraq, and they were mistaken.

[24] The highly-respected Rasmussen polling organization found in results that were released on June 25, 2010:

Forty-seven percent (47%) of U.S. voters agree that it was appropriate for President Obama to fire America’s top commander in Afghanistan this week, according to a new Rasmussen Reports national telephone survey.

Thirty-six percent (36%) disagree and say the president should not have removed General Stanley McChrystal from his command. Another 17% are not sure.

Just 32%, however, believe it was appropriate for McChrystal to criticize the president and other top U.S. officials in an interview with Rolling Stone magazine. Fifty percent (50%) feel the general’s public comments were not appropriate. Nearly one-out-of-five voters (18%) are undecided.

Publication of that interview prompted the president to call McChrystal back to Washington and, during a private White House meeting, to accept his resignation. Obama then announced that General David Petraeus, who commanded U.S. troops in Iraq in 2007 and 2008, will take his place.

Forty-seven percent (47%) view the naming of Petraeus as the new top commander in Afghanistan as good for the U.S. war effort there. Only nine percent (9%) say it’s a bad move, while 30% think it will have no impact. Fourteen percent (14%) aren’t sure.

Voter confidence in the course of the war in Afghanistan has been falling in recent weeks. Just 41% of voters now believe it is possible for the United States to win the nearly nine-year-old war in Afghanistan. Thirty-six percent (36%) disagree and say it is not possible for America to win the war. Another 23% are not sure.

See http://www.rasmussenreports.com/public_content/politics/obama_administration/june_2010/47_support_obama_s_decision_to_fire_mcchrystal_36_oppose

[25] In an editorial entitled, “The Petraeus Hail Mary,” the Wall Street Journal pointed out the divisive effect that Biden has had with respect to American policies and their implementation in Afghanistan.  Biden has been a “loose canon,” who was fully capable of fabricating facts if not engaging in outright lies.

See http://online.wsj.com/article/SB10001424052748704629804575325073086949444.html?mod=WSJ_Opinion_LEADTop (“Mr. Obama said yesterday that no one individual is indispensable in war, but if any single person is, it is a President. Mr. Obama too often gives the impression of a leader asking, ‘Won’t someone rid me of this damn war?'”); see also https://naegeleblog.wordpress.com/2009/12/26/obama-in-afghanistan-doomed-from-the-start/#comment-169

Former President Bill Clinton was reluctant to take on the military politically, and wisely so—much to the chagrin of his far-Left constituents, some of whom believe America does not need to be strong militarily.  As I have stated before: “America’s economic and military strength go hand in hand. Both are indispensable ingredients of our great nation’s future strength.”

See http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html

[26] If Obama’s presidency does not end before 2012, it is likely that he will not run for reelection, just as Truman declined to run in the midst of the Korean War, and Lyndon Johnson declined to run in the midst of the Vietnam War.

[27] See, e.g., http://dyn.politico.com/printstory.cfm?uuid=1FF04086-18FE-70B2-A8502AE14AB8C592 and https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/

[28] See, e.g., https://naegeleblog.wordpress.com/2010/10/04/john-f-kennedy-the-most-despicable-president-in-american-history/ and https://naegeleblog.wordpress.com/2010/03/20/ronald-reagan-and-john-f-kennedy-a-question-of-character

[29] Also, there is the issue of personal Obama family extravagances at the expense of U.S. taxpayers, especially at a time when so many Americans are suffering.  See, e.g.http://www.dailymail.co.uk/news/worldnews/article-1298063/Michelle-Obama-takes-daughter-Sasha-Spanish-getaway–leaves-birthday-boy-Barack-behind.html (“Michelle Obama is set to holiday with daughter Sasha on Spain’s Costa del Sol.  . . .  Mrs Obama . . .  has reserved 30 rooms at a five-star hotel”)

[30] Lyndon Johnson chose not to run for reelection in 1968; and Obama advised New York Congressman Charles Rangel to end his political career with dignity as well.  Hopefully he follows his own advice.

See http://www.politico.com/blogs/bensmith/0710/Obama_Time_for_Rangel_to_end_career_with_dignity.html





The Economic Tsunami Continues Its Relentless And Unforgiving Advance Globally

27 09 2010

By Timothy D. Naegele[1]

The Wall Street Journal has an article about the EU entitled, “Currency Union Teetering, ‘Mr. Euro’ Was Forced to Act,” which is worth reading and reflecting on seriously.[2] It represents an excellent discussion of what has happened in the past.  However, its conclusions are sobering and ominous:

[F]our months later, the root causes of the Greek crisis remain: There is no central authority to even coordinate national tax-and-spending policies.

In the past month, financial markets have turned their sights on Ireland and Portugal. Doubts remain over the solvency of banks on Europe’s stricken fringe. That leaves them dependent on [the European Central Bank president Jean-Claude Trichet]’s largesse, in the form of “temporary” lending facilities introduced by the ECB when the crisis first hit.

Despite Mr. Trichet’s assurances that the bond-buying program is a stop-gap, it not only continues but has also increased in recent weeks—with no end in sight.

Put succinctly, Europe is still on the brink. It is foolish to believe otherwise. The “green shoots” that have appeared recently are an “illusion” and merely a brief respite in the midst of a maelstrom, which economic historians will describe as the “Great Depression II” (or by some similar name) 20-40 years from now.

Americans and their counterparts around the world have lost faith in their governments, and rightly so[3]; and the governments have come closer to exhausting all of their viable economic options. As this becomes increasingly clear, and as governments thrash about trying to find solutions that do not exist, and as politicians continue to lie—which after all is what they are most proficient at doing—the economic tsunami will continue to take its toll and run its course worldwide during the balance of this decade.

It will get very ugly, economically, socially and politically. Barack Obama will be swept out of office in the United States, and this process has begun already. It will accelerate with November’s elections. He is caught in the twin pincers of an economy in decline that he cannot influence except negatively, and an Afghan war that cannot be won. Republicans and Independents do not support him now; and his own Democrats are deserting him.

The slippery slope out the White House door will follow, like it did for Lyndon Johnson prior to the presidential election of 1968, when the political consequences of the Vietnam war made him unelectable.  Obama will return either to Chicago or Honolulu to lick his wounds and set up his presidential library, and assume an “elder statesman” role—similar to Bill Clinton—after only one term in office.

The efforts of Jean-Claude Trichet, or “Mr. Euro,” will prove similar to measures undertaken to put Humpty Dumpty back together again.  Trichet is not “Superman,” and he will lack the necessary skills; and the policy options will have been exhausted. Panics may ensue in the financial markets; and the recent crises may seem like child’s play by comparison to what is coming. The “Band-Aids” that Trichet, America’s Federal Reserve Chairman Ben Bernanke and others applied will be ripped asunder as the economic tsunami continues its relentless and unforgiving advance globally.[4]

Hold on tight. It is apt to get very ugly. The euro zone will unravel, which is likely to be a relatively small but critical part of what will be happening worldwide; and financial turmoil will engulf the euro-zone nations. There will be nobody of consequence in charge economically or politically in the United States or other countries. And the human suffering and chaos will be unfathomable.[5] Throw military and national security issues into the mix, and the results may be explosive.

 

© 2010, Timothy D. Naegele


[1] Timothy D. Naegele was counsel to the United States Senate’s Committee on Banking, Housing, and Urban Affairs, and chief of staff to Presidential Medal of Freedom and Congressional Gold Medal recipient and former U.S. Senator Edward W. Brooke (R-Mass).  He practices law in Washington, D.C. and Los Angeles with his firm, Timothy D. Naegele & Associates, which specializes in Banking and Financial Institutions Law, Internet Law, Litigation and other matters (see www.naegele.comand http://www.naegele.com/naegele_resume.html).  He has an undergraduate degree in economics from UCLA, as well as two law degrees from the School of Law (Boalt Hall), University of California, Berkeley, and from Georgetown University.  He is a member of the District of Columbia and California bars.  He served as a Captain in the U.S. Army, assigned to the Defense Intelligence Agency at the Pentagon, where he received the Joint Service Commendation Medal.  Mr. Naegele is an Independent politically; and he is listed in Who’s Who in America, Who’s Who in American Law, and Who’s Who in Finance and Business. He has written extensively over the years (see, e.g., http://www.naegele.com/whats_new.html#articles), and can be contacted directly at tdnaegele.associates@gmail.com

[2] See http://www.naegele.com/documents/CurrencyUnionTeeteringMr.EuroWasForcedtoAct.pdf; see also http://online.wsj.com/article/SB10001424052748703467004575464113605731560.html?mod=WSJ_hps_MIDDLETopStories

[3] See, e.g., https://naegeleblog.wordpress.com/2010/09/24/washington-is-sick-and-the-american-people-know-it/

[4] See also https://naegeleblog.wordpress.com/2010/09/09/are-afghanistan-iraq-and-pakistan-hopeless-and-is-the-spread-of-radical-islam-inevitable-and-is-barack-obama-finished-as-americas-president/ and https://naegeleblog.wordpress.com/2010/05/16/will-the-eus-collapse-push-the-world-deeper-into-the-great-depression-ii/

[5] See also https://naegeleblog.wordpress.com/2009/12/16/the-great-depression-ii/#comment-750 and https://naegeleblog.wordpress.com/2009/12/16/the-great-depression-ii/#comment-745





Will The EU’s Collapse Push The World Deeper Into The Great Depression II?

16 05 2010

By Timothy D. Naegele[1]

“For want of a nail . . .  the kingdom was lost.”[2] Will Greece’s debt crisis lead to a Greek debt default and the collapse of the euro and an ensuing collapse of the 27-member European Union (or EU), and trigger the next round of crashes that will be described by economic historians decades from now as “the Great Depression II”?[3] The assassination of Archduke Franz Ferdinand of Austria and his wife in Sarajevo, Serbia brought the tensions between Austria-Hungary and Serbia to a head.  In turn, it is said this triggered a chain of international events that embroiled Russia and the major European powers; and World War I broke out in Europe.[4] Will Greece’s debt crisis set a series of events in motion that sends the world into a downward economic spiral of unfathomable proportions?

For years, I have wrestled with the question of whether the Europe would collapse economically, politically, socially and militarily.  Sounds absurd, you say?  The countries are too interwoven and mutually dependent now for that to happen, and at the very least they will muddle along, making the worst of the best situations, and achieving the lowest common denominator?  The United States of Europe, they are not and never will be, but they have achieved a degree of cohesiveness that I never thought was likely years ago.

I believed jealousies and rivalries and, yes, the hatreds of the past would linger barely beneath the surface, coming unglued at the most inopportune times when it really mattered the most.  When the chips were down, I felt the EU would splinter and fall apart; and that its participants and the world would write it off as a noble experiment that failed, much like the League of Nations.  After all, its successor—the United Nations—is considered to be a colossal joke by Americans, many of whom would love to see it shipped to Europe, and its building on the East River in Manhattan bulldozed and turned into a park, or made into co-ops or condominiums.

The bitter hatreds of the past seem to have subsided in Europe though, and it has become a cultural melting pot, more and more.  Airbus was the first tangible sign of economic integration that I never thought would be possible.  To see the Germans and French working together, and genuinely enjoying each other and producing competitive aircraft on a global scale, was something to behold.  The economic interdependence and booming economies covered up a myriad of sins, mistakes and weaknesses.  It all looked very rosy until the economic tide in Europe and worldwide began to turn.  Then, potholes showed up where there had been rose gardens; and recriminations began to occur that had been buried beneath the surface.

Today Greece is teetering, and anger is intensifying over proposed cuts that are to be made as part of the EU deal to save the country’s economy.  It is the age-old battle between the haves and have-nots, and between those who will bear the burden of the cuts and the wealthy who will escape them.  However, anti-American sentiments are growing because the International Monetary Fund (or IMF) is viewed as a tool of the U.S., which is carrying out American policies.  Like the U.N., the IMF has taken on more powers and responsibilities than were ever envisioned; and it needs to be curbed, and its U.S. support diminished.[5]

Perhaps a recent editorial by the Wall Street Journal best captured the “contagion” that began with Greece:

It hasn’t been a week since the terms of Athens’s . . . bailout were set, and already the reviews of this latest Greek drama are saying it’s a flop.  Yesterday the euro sank to its lowest level in a year.  Stock markets across Europe fell nearly 3%, and the carnage spread to Wall Street and beyond.  Greek interest-rate spreads climbed higher again, and market players have turned their attention to the euro zone’s other weak sisters as everyone tries to figure out who is most likely to follow Greece down the road to national insolvency.

The bailout, in other words, hasn’t stopped the much-feared contagion. If anything, it has spread it.[6]

The Archduke revisited—and hardly encouraging to a world that is in the process of revisiting the Great Depression.  And reason enough for panics, with many more to come.[7]

In another editorial, the Journal added:

The real gamble is being made by politicians who are calculating that, by taking the risk of sovereign default off the table for now, they are giving the global economic recovery time to build and making it easier to address Europe’s fiscal woes.

. . .

In the euro’s first serious test, the political class blinked.  The resulting moral hazard will haunt the single currency for years and reduce the incentive for governments to keep their fiscal houses in order.[8]

Even more troubling is the prospect that the 16-nation (out of the 27-EU member states) shared euro currency may be headed for disintegration.  “The euro is doomed,” said one market analyst.

As German Chancellor Angela Merkel observed, Europe is in a “very, very serious situation”; and the U.K.’s new Prime Minister David Cameron and his coalition partner, Nick Clegg, may have major problems keeping the left wing of the Liberal Democrats and the right wing of the Conservatives (or Tories) in line, and a new election may be called before year-end.[9] Also, it is predicted that “China’s economy will slow and possibly ‘crash’ within a year as the nation’s property bubble is set to burst”—which may have troubling implications for whether China will continue to buy and hold our government debt.[10] In turn, this is a major economic and national security risk.

The economic tsunami that former Federal Reserve Chairman Alan Greenspan unleashed has produced consequences far beyond those that were ever envisioned—and far beyond American shores—which will last through the end of this decade, and possibly a generation.  Giulio Tremonti, Italy’s Minister of Economy and Finance, has said: “Greenspan was considered a master.  Now we must ask ourselves whether he is not, after [Osama] bin Laden, the man who hurt America the most.”  These words speak volumes; however, they fall short of describing the global dimensions and consequences of Greenspan’s actions and inactions.[11]

The central banks of the world are essentially out of options, and the worst is yet to come.  Hold on tight.  It will not be pretty—and global citizenry anger may be truly mind-boggling![12]

© 2010, Timothy D. Naegele


[1] Timothy D. Naegele was counsel to the U.S. Senate Banking Committee, and chief of staff to Presidential Medal of Freedom and Congressional Gold Medal recipient and former U.S. Senator Edward W. Brooke (R-Mass), the first black senator since Reconstruction after the U.S. Civil War.  He practices law in Washington, D.C. and Los Angeles with his firm, Timothy D. Naegele & Associates (www.naegele.com).  He has an undergraduate degree in economics from UCLA, as well as two law degrees from the School of Law (Boalt Hall), University of California, Berkeley, and from Georgetown University.  He is a member of the District of Columbia and California bars.  He served as a Captain in the U.S. Army, assigned to the Defense Intelligence Agency at the Pentagon, where he received the Joint Service Commendation Medal.  Mr. Naegele is an Independent politically; and he is listed in Who’s Who in America, Who’s Who in American Law, and Who’s Who in Finance and Business. He has written extensively over the years.  See, e.g., www.naegele.com/whats_new.html#articles

[2] The proverb, “For Want of a Nail,” states:

For want of a nail the shoe was lost.

For want of a shoe the horse was lost.

For want of a horse the rider was lost.

For want of a rider the battle was lost.

For want of a battle the kingdom was lost.

And all for the want of a horseshoe nail.

See http://en.wikipedia.org/wiki/For_Want_of_a_Nail_(proverb)

[3] See, e.g.http://apnews.myway.com/article/20100408/D9EURADO0.html and http://www.bloomberg.com/apps/news?sid=aL3SiaURK8dQ&pid=20601087

[4] See, e.g.http://en.wikipedia.org/wiki/Assassination_of_Archduke_Franz_Ferdinand_of_Austria

[5] As the London Times points out:

Even greater social unrest is expected as resentment simmers among poorer families at being told to tighten their belts when wealthy Greeks can protect their fortunes by moving their money abroad, some of it into property bargains in London.

See http://www.timesonline.co.uk/tol/news/world/europe/article7113941.ece The Times article adds:

Mikis Theodorakis, the 84-year-old musician who composed the score for the film Zorba the Greek, calls for revolt against what he sees as an American plot to turn Greece into a “protectorate”.

[6] See http://www.naegele.com/documents/TheGreekBailoutFlop_000.pdf

[7] On May 6, 2010, the Dow Jones Industrial Average “ended down 347.80, or 3.2 percent, at 10,520.32, after being down as much as 998.50 earlier, the Dow’s biggest intraday drop on record.”

See http://www.cnbc.com/id/36988229

The CNBC article added:

“We’ve seen a crisis start in a country—Greece—become regional, impact the whole of the Euro zone and is on the verge of truly going global,” said El-Erian, CEO of the world’s biggest bond fund.

. . .

There is simply a growing recognition that Greece has got to default, said Rochdale banking analyst Dick Bove. “The riots in the streets showed the decision to repay the debt was not going to be made by the people in Germany, France and Switzerland, it’s going to be made by people in Greece and they’re not going to repay it,” he said. “Anyone seeing the riots is going to recognize that this government is going to be thrown out and anything replacing this government is going to be far more leftist leaning and they’re going to repudiate.”

See id. A Wall Street Journal article added:

The velocity of the plunge in stocks was breath-taking. Investors fled everything from stocks and risky bonds to commodities and poured money into safe assets such as U.S. Treasurys and gold.

. . .

“You worry about the a domino effect, from Greece to Portugal to Ireland and Spain,” said Richard Schottenfeld, general partner of Schottenfeld Associates, a New York hedge fund. “Pretty soon those kinds of losses are bigger than housing.”

Investors said they were worried about potential contagion from Greece’s ongoing problems, and whether eventual losses could even exceed those of the U.S. housing collapse.

See http://online.wsj.com/article/SB10001424052748704370704575227754131412596.html?mod=WSJ_hps_LEADNewsCollection

[8] The Journal’s editorial added:

The real euro crisis, in short, is one of overspending and policies that sabotage economic growth. Sunday’s shock and awe campaign has merely postponed that reckoning—and at a fearsome price.

See http://www.naegele.com/documents/TheRealEuroCrisis.pdf

[9] See http://www.bloomberg.com/apps/news?pid=20601087&sid=aqquuYOAN_sE (“European policy makers last week unveiled a loan package worth almost $1 trillion and a program of bond purchases in an effort to contain a sovereign-debt crisis that has threatened to shatter confidence in the euro.  . . .  By resorting to what some economists have called the ‘nuclear option,’ the [European Central Bank, or] ECB may open itself to the charge it’s undermining its independence by helping governments plug budget holes”)

[10] See http://www.upi.com/Top_News/Analysis/2010/05/07/Commentary-Fiscal-WMD/UPI-69801273233877/

[11] See http://www.philstockworld.com/2009/10/11/greenspan’s-legacy-more-suffering-to-come/ and http://www.americanbanker.com/issues/173_212/-365185-1.html and http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html

[12] See also http://www.naegele.com/documents/MatthewKaminski-EuropesOtherCrisis.pdf (“Germans no longer feel obliged to pay for the sins of their forefathers by bankrolling Europe.  . . .  ‘The EU is falling to pieces'”) and http://finance.yahoo.com/news/Spain-debt-downgraded-by-apf-1816859080.html?x=0&.v=27 (Spain) and http://www.ft.com/cms/s/0/6f696c52-456a-11df-9e46-00144feab49a.html (“Soros warns Europe of disintegration”) and http://online.wsj.com/article/SB10001424052748703525704575061172926967984.html?mod=WSJ_hp_mostpop_read (“Europe is entering unprepared into a serious economic crisis—and the nascent global recovery could easily collapse due to the unsustainable and Ponzi-like buildup of government debt in weaker countries.  . . .  The issues for troubled euro zone countries are straightforward: Portugal, Ireland, Italy, Greece and Spain (known to the financial markets, and not in a polite way, as the PIIGS) had varying degrees of foreign- and bank credit-financed rapid expansions over the past decade.  In fall 2008, these bubbles collapsed.  . . .  Since these struggling countries share the euro, run by the European Central Bank in Frankfurt, . . . they are left with the need to massively curtail demand, lower wages and reduce the public sector workforce.  The last time we saw this kind of precipitate fiscal austerity—when nations were tied to the gold standard—it contributed directly to the onset of the Great Depression in the 1930s.  . . .  Ireland’s banks are today probably insolvent. Who can afford to repay their mortgages when wages are falling and unemployment rising?  Irish house prices continue to speed downward.  This is not an example of a ‘careful’ solution—it is a nation in a financial death spiral”) and http://www.dailymail.co.uk/news/worldnews/article-1250433/Greece-debt-bailout-EU-leaders-split-euro-crisis.html and http://www.nytimes.com/2010/02/14/business/global/14debt.html?hp=&pagewanted=all