The High Cost of Recovery

Can America really spend its way out of recession?

By Alyssa A. Lappen
FrontPage Magazine | Jan. 27, 2009

In the first sweep of his Presidential pen, President Barack H. Obama proclaimed Jan. 20 a “National Day of Renewal and Reconciliation” to hearten Americans in a “season of trial” and discord. Obama asked citizens to shoulder the “glorious burden” of U.S. democracy with service to a “common purpose,” that is, “remaking this Nation for our new century.” (And that, ironically, the same day Rev. Joseph Lowery insulted all Americans by implying that heretofore whites always embraced what is wrong.)

Renewal sounds great in theory. But Obama apparently proposes to remake the U.S. economy into the “fixer-upper” bought by two hopeful newlyweds in the popular 1986 comedy, The Money Pit. They poured their love and life’s savings into the house. In the end, the structure literally crashed down around them, and their marriage nearly went with it. Obama may now be on his honeymoon with most U.S. voters. But such a remake, America doesn’t need.

Trouble is, Obama’s renewal thesis erroneously hinges on $825 billion more in government aid—euphemistically labeled the American Recovery and Reinvestment Act (ARRA). If it passes, that would be $550 billion in new spending and $275 billion extra tax relief—more than most U.S. government spending sprees in history, and some 3% of gross domestic product (GDP) through 2010. Proposed January 16 in the House, that spending would top upwards of $2.7 trillion exhausted in 2008, not counting $167 billion in emergency tax rebates—and at least $7 trillion allocated to “economic rescue.”

The ARRA plan includes some great ideas. For example, it proposes $32 billion in support for a “smart electrical grid” to vastly improve energy efficiency, as initiated in Europe in 2005, mandated by the 2007 Energy Independence and Security Act, and detailed by President Bush’s Department of Energy. Also potentially valuable are $20 billion in renewable energy tax cuts and credits and $6 billion to weatherize modest income homes.

But most of Obama’s ARRA proposals amount to run-of-the-mill programs, conveniently lumped under the “economic renewal” label for political expediency. The bill allocates $32 billion to transportation projects, $31 billion for government building and public infrastructure repair, $19 billion to water projects and $10 billion for railways. It proposes $79 billion for state-level fiscal relief to prevent educational aid cuts, $41 billion for local school districts, $21 billion to modernize schools and $16 billion for science and rural internet facilities.

Conceivably, at least, those funds could be well used. But legislators traditionally squabble over federal aid, which is also bridled with red tape, terribly inefficient—and usually lined with pork.

Obama well understands how and why to serve legislative pork. Chicago schools, for example, did not fare well during his Illinois State and U.S. Senate tenures. In 2005, teachers in suburban Chicago’s Thornton Township earned an average of $83,000 for nine months of five-hour and forty-five minute school days. By Obama’s account, Thornton’s children wanted longer school days. But his Chicago Teachers Union supporters rejected that. Thus Chicago spent $10,500 per student in 2008, 15% over the 2006 national average. But last year only 34% of Chicago students met or exceeded reading standards on the Prairie State Achievement Exam (PSAE), and 28%, its math standards. Sure, scores on Chicago’s Illinois Standards Achievement Tests (ISAT) appeared improved from 2005 to 2008. Yet only 55% of Chicago students graduated in 2007.

Also masquerading under Obama’s economic renewal act is $154 billion for health care—$90 billion to bolster state Medicaid funds, $39 billion in health insurance subsidies for the officially unemployed, $20 billion for health-information technology modernization, and $4 billion for preventive care. Improving health-information technology might fall under economic renewal. But what do $134 billion in health care subsidies have to do with it? Perhaps they’re meant to jump-start Obama’s controversial nationalized health care plans even before Congress discusses the subject.

As for $275 billion in proposed tax relief, how do $140 billion in personal tax cuts for two years ($500 per worker and $1,000 per couple) differ from the Bush Administration’s ineffective 2008 emergency relief program? Most of the rest would cover more subsidies: $1,000-per-child tax credits for the working poor, expanded earned income credits for families with three kids, $2,500 college tuition credits, and permanent forgiveness on repayment of $7,500 tax credits for first-time home buyers. The only real economic stimuli, two of which duplicate one other, are tax credits on past profits for currently unprofitable businesses, “bonus” depreciation for new plant and equipment purchases, doubling small business capital investment and new equipment write-offs, and tax credits for companies hiring “disconnected youth and veterans.”

Obama’s economic team, including Treasury Secretary-designate Tim Geitner, posits that all this spending will magically stabilize things and “create or save” nearly 4 million new jobs by 2010. On Jan. 21, Geitner reiterated that to the U.S. Senate Finance Committee, arguing that the Congressional Budget Office (CBO) had miscalculated its projection that the U.S. cumulative budget deficit would reach nearly $2 trillion by 2013, since the office had not factored in Obama’s proposals. The full Senate approved Geithner’s nomination Jan. 26, by 60 to 34.

Mind you, the CBO is neither authorized nor mandated to base economic projections on draft proposals of presidents-elect. Moreover, the CBO projected budget issues for the next ten years on Jan. 8, over a week before House Democrats introduced the ARRA. And ARRA would pump most of the total into government programs, not directly into the economy.

Yet Geitner insisted, had the CBO only factored in such Obama provisions “as the bonus depreciation and fiscal aid to the states” and less traditional accounting “assumptions of the spend-out rates,” it would have concluded that the proposed bill would “ensure the fast-acting spend-out rates that would be needed fiscal stimulus [sic] over the next few years.” He neglected to note that the Federal Reserve Board can’t provide further economic rocket fuel by slashing the “federal funds rate” charged on overnight interbank loans. That barrel is dry.

“What has been tried hasn’t worked,” former Sen. Finance Committee chairman Sen. Charles Grassley noted, suggesting that Congress fix the broken financial system before adopting yet another stimulus package. Geitner ignored that point.

Unfortunately, the Committee voted, 18 to 5 (based on Geithner’s unpaid past taxes, Grassley opposed), to send the nomination to the full Senate, which like the Senate Finance Committee ignored Grassley’s point. So much for bi-partisanship.

They should: In three months, the U.S. Fed doubled the monetary base—total bank reserves plus U.S. currency—to no avail. The Fed wasted all this money creating a “liquidity trap.” No one is borrowing.

Notably, printing money has failed abysmally worldwide. The U.K. expended nearly £500 billion to “restore confidence in Britain’s major lenders,” bolster bank shares and guarantee loans. British investors gained zero confidence. Rather, the British pound hit a 23-year low on Jan. 21, after the Bank of England announced it would increase the money supply to keep inflation over 2.0%. Likewise, Swiss Economic Minister Doris Leuthard last October injected bailout funds into UBS and Credit Suisse, mainstays of an industry supplying 11.4% to her country’s GDP. But UBS wrote off $550 billion of its asset value to cut balance sheet leverage to 3%.

Spain invested $41 billion into illiquid Spanish bank assets. Standard & Poors nevertheless downgraded Spain along with Greece as their risks of public debt default rise and put Ireland and Portugal on negative watch lists. Iceland officially went bankrupt last year. Hungary neared bankruptcy and this year expects at least 1.7% economic decline despite monetary easing.

The short-term failures of money-printing are everywhere visible. The “European Central Bank, the Bank of England and the central banks of India, China, Australia, Norway, Sweden South Korea, the Czech Republic, Switzerland, Japan and even Indonesia” all aggressively eased monetary policy to buoy faltering economies, notes famed economist A. Gary Shilling,—who like myself predicts deflation—not inflation. Nothing worked. Now “central bank rates are approaching zero at which point, … they’ll stop falling,” he jests darkly. In Asia, Sinagpore predicts economic contraction of 2% to 5% this year, following an annualized decline of nearly 17% in its domestic product from October through December.

Long term, even Obama’s stridently Keynesian team members realize that printing money is no cure all. Brookings Institution economist Jason Furman wrote last year that government tax and spending stimuli should be short-lived and “not increase the already large long-run budget deficit,” lest they also increase inflation and tighten the money supply.

Likewise, Obama budget director nominee Peter Orszag focuses on “putting the budget on a more sustainable course.” Obama wants to establish national universal health care, but has already floated the idea of cutting Social Security and Medicare. Interesting.

Despite his bluffs at the Senate Finance Committee, Obama economic point man Tim Geithner knows the projected $1.2 trillion 2009 U.S. budget deficit, and $412 billion 2008 interest bill—above 9% of the U.S. budget—are serious causes for concern. He also knows that interest bills will only rise with increased spending, not least since interest rates themselves have nowhere to go but up.

The U.S. national debt, now $10.6 trillion, equals $34,868 for each of 304 million U.S. citizens. But Americans filed only 143 million tax returns for 2007, a number likely to fall sharply as unemployment rises. Every dollar the U.S. government spends must be paid back some time. Taxpayers will inevitably shoulder the gargantuan, ill-conceived burden.

Do Americans really want change that remakes the U.S. into a national Money Pit?

All Articles, Poems & Commentaries Copyright © 1971-2021 Alyssa A. Lappen
All Rights Reserved.
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Is the Wilders movie ‘Fitna’ a distortion of Islam? (updated with response)

By Andrew Bostom and Alyssa A. Lappen
American Thinker | Jan. 22, 2009

Rick Moran’s blog entry “Geert Wilders to face anti-Islam charges,” is uninformed with regard to his claim that the film Fitna distorts Islam. Wilder’s documentary Fitna (watch it here) is entirely faithful to classical, mainstream Islamic exegesis on the Koranic verses cited in the film (see Robert Spencer’s excellent analysis from March 2008 here; and for details on the jihadist and Antisemitic Koranic verses and their classical exegeses, see my two books here and here) — regardless of what faux “scholars” — i.e., cultural jihadists, and their witting or unwitting abettors, may claim.

Moreover, Winston Churchill equated the Koran with Mein Kampf — in appropriate fashion. Specifically, Winston Churchill on p. 50 of “From War to War,” the first part of the first volume of his 6-part Second World War, proclaimed Hitler’s Mein Kampf to be, “…the new Koran of faith and war: turgid, verbose, shapeless, but pregnant with its message.”

Below is the statement I gave to Family Security Matters on the subject.

As Dutch Prosecutor Otto Van Der Bijl told CNN, a paltry total of nine persons filed complaints with the Court of Appeal, which is now drafting an indictment that charges Parliamentarian Geert Wilders with “incitement of hatred,” based upon the contents of his short documentary film Fitna, and Wilders’ discussion of the film. Fitna merely demonstrates how various Koranic verses – based upon orthodox, mainstream Islamic interpretations of these verses – are used by Muslim clerics and political leaders to incite Muslim populations to violence. It is beyond Orwellian to prosecute Wilders – who simply holds up a mirror to Islamic societies – for being in any way responsible for the Koranic incitement and Muslim violence his documentary faithfully records, and he appropriately condemns.

Update: Rick Moran responds:

A 17 minute film accurately describes Islam and the Koran?
I respect Mr. Bostom’s knowledge of Islam but please, don’t set Mr. Wilder’s film up as anything more than it was; a blatant appeal to bigotry and a generalization about Islam and the Koran in particular.

As I say in my original post, Mr. Wilders should be free to speak his mind and disseminate this propaganda. But to make the argument that this shallow, emotionally charged, and in the end subjective and inaccurate portrayal of Islam should be defended as a revealed truth is wrong.

Can you tell the story of Christianity in 17 minutes? I would like to see that. I am a fan of slapstick comedy. Could you tell the story of Judaism by pulling quotes willy nilly out of the Bible that glory in violence and blood and show the Jews to be wedded to the sword? It’s been done. The Nazi short film “The Eternal Jew” was a similar film to Mr. Wilder’s in that it dishonestly clipped and pasted sections of the Bible to show the Jews to be violent, acquisitive sub-humans. The propaganda effect was remarkably the same.

Wilder doesn’t go as far as all that. But an example of his dishonesty is given by my good friend Michael van der Galien, a converted Muslim, who reviewed Fitna for his blog Poligazette:

However, Wilders basically makes the same mistake Osama Bin Laden et al. make.

What do I mean by that? Well, simple. Wilders and OBL do exactly the same thing: they read 10% of the Koran, and use it to ‘prove’ that the Koran can be used to excuse terrorism, and conveniently ignore the other 90% of Islam’s Holy Book. For instance, Wilders quotes verses from a particular Sura that says that Muslims should kill the unbelievers, who are the enemies of Islam / the Muslims.

That’s violent alright.

But he conveniently forgets to quote the verses before these violent verses. These verses before it say:

[8.56] Those with whom you make an agreement, then they break their agreement every time and they do not guard (against punishment).

[8.57] Therefore if you overtake them in fighting, then scatter by (making an example of) them those who are in their rear, that they may be mindful.
[8.58] And if you fear treachery on the part of a people, then throw back to them on terms of equality; surely Allah does not love the treacherous.

And then come the verses right after Sura 8 verse 60:

[8.61] But if the enemy incline towards peace, do you (also) incline towards peace, and trust in Allah: for He is the One that hears and knows (all things).

In other words: live in peace with non-Muslims, but when they attack you, fight back. Sure, that’s not quite the same as “turn the other cheek,” but it’s quite different than “kill infidels!” as well. In fact I dare say that this message is one we can all believe in: live in peace with everyone else, but when they attack you or your society, fight back. Isn’t that what we all do, and isn’t that what the war on terrorism is all about?

So I would say to Mr. Bostom that there is the idea that Fitna is “entirely faithful to classical, mainstream Islamic exegesis on the Koranic verses cited in the film” and then there is the simple fact that Wilder distorted the truth.

I have absolutely no doubt that Islams holy men use these versus in the Koran to incite their suicidal, hate filled followers. But to condemn an entire religion practiced by more than a billion people by taking these verses out of context and overlaying images of death and destruction caused by the small subset of extremists we are at war with just doesn’t make sense. Before we have defeated the terrorists, we are going to need those billion on our side. I hardly think the rantings of an ambitious politician like Wilder who is seeking to ride the wave of revulsion against Islamic immigrants in the Netherlands to power is going to advance that cause.

Andrew Bostom responds:

Uncritically Accepting Corrosive Islamic Apologetics, and Spraying Charges of “Demonization of Muslims” Against Those Who Don’t

Rick Moran accepts uncritically the corrosive Islamic apologetics he cites on the one hand, and then makes his own ugly accusations of so-called “demonization” of Muslims by Wilders, on the other, because he is self-righteously ignorant of all the following:

Disregarding their validity as sources for the historical advent of Islam, what matters, ultimately is the lasting impact of the pious Muslim narrative as recorded in the Koran, hadith, and sira (earliest pious Muslim biographies) on Islamic doctrine and Muslim behavior. Robert Spencer’s 2006 biography of Muhammad elucidates this point:

…it is less important to know what really happened in Muhammad’s life than what Muslims have generally accepted as having happened, for the latter still forms the foundation of Muslim belief, practice, and law.

Ibn Ishaq’s biography (the earliest and most authoritative) chronicles the evolution of Muhammad’s teaching and behaviors which accompanied the hijra, or migration to Medina from Mecca, in 622. Initially,

The apostle had not been given permission to fight, or allowed to shed blood…He had simply been ordered to call men to God and endure insult and forgive the ignorant. The Quraysh had persecuted his followers, seducing some from their religion, and exiling others from their country. They had to choose whether to give up their religion, be maltreated at home, or to flee the country, some to Abyssinia [Ethiopia], others to Medina.

Then after being “wronged” and “badly treated” Muhammad and his followers were enjoined to fight in self-defense:

When Quraysh became insolent toward God and rejected his gracious purpose, accused his Prophet of lying, and ill-treated and exiled those who served Him and proclaimed His unity, believed in his prophet, and held fast to His religion, He gave permission to His apostle to fight and to protect himself against those who wronged them and treated them badly. The first verse which was sent down on this subject from what I have heard from ‘Urwa b. al-Zubayr and other learned persons was: [Qur’an 22:39-41] “Permission is given to those who fight because they have been wronged. God is well able to help them,-those who have been driven out of their houses without right only because they said God is our Lord. Had not God used some men to keep back others, cloisters and churches and oratories and mosques wherein the name of God is constantly mentioned would have been destroyed. Assuredly God will help those who help Him. God is Almighty. Those who if we make them strong in the land will establish prayer, pay the poor tax, enjoin kindness, and forbid iniquity. To God belongs the end of matters”. The meaning is: “I have allowed them to fight only because they have been unjustly treated while their sole offense against men has been that they worship God. When they are in the ascendant they will establish prayer, pay the poor tax, enjoin kindness, and forbid iniquity, i.e., the prophet and his companions, all of them”.

Robert Spencer emphasizes that the phrase, “When they are in the ascendant” refers to the establishment of a ruling Islamic community or state wherein Muslims will perform regularly prescribed prayer, pay the zakat (“poor tax”), and institute the Shari’a (Islamic Law).

But the revelation process continues — Ibn Ishaq tellingly quotes Qur’an 2:193 sanctioning aggressive warfare — a doctrine which was ultimately elaborated into the uniquely Islamic institution of jihad.

Then God sent down to him: “Fight them so that there be no more seduction [i.e., to idolatry; modern translations state “persecution”, or “oppression”], i.e., until no believer is seduced from his religion. “And the religion is God’s. i.e., until God alone is worshipped.

Molla Khosrew (d. 1480) was a celebrated writer and jurist, who was appointed the Ottoman Shaykh-al-Islam (i.e., penultimate cleric) by Sultan Mehmed II in 1469. One of Molla Khosrew’s authoritative, widely cited legal works, reiterated these classical views on jihad which confirm the important evolution outlined centuries earlier by Ibn Isaq, and embodied by that timeless example for all Muslims, Muhammad himself:

…jihad is a fard al-kifaya, that is, that one must begin the fight against the enemy, even when he [the enemy] may not have taken the initiative to fight, because the Prophet…early on…allowed believers to defend themselves, later, however, he ordered them to take the initiative at certain times of the year, that is, at the end of the haram months, saying, “Kill the idolaters wherever you find them…” (Q9:5). He finally ordered fighting without limitations, at all times and in all places, saying, “Fight those who do not believe in God, and in the Last Day…”(Q9:29); there are also other [similar] verses on the subject. This shows that it is a fard al-kifaya

Indeed, as suggested above, the Koranic text itself charts Muhammad’s bellicose evolution. But how, exactly? The Koran’s “verses of peace”, frequently cited by both Muslim and non-Muslim apologists, most notably verse 2:256, “There is no compulsion in religion”, were all abrogated by the so-called verses of the sword. These abrogating verses of the sword recommend beheading or otherwise murdering and mutilating non-Muslims, and Muslim apostates. According to classical Muslim Koranic commentators verse 9:5 (perhaps the most infamous verse of the sword), “Slay the idolators wherever you find them, and take them captives and besiege them and lie in wait for them in every ambush…”, for example, cancels 124 verses that promote patience and toleration.

The sacralized Islamic sources indicate that as the Muslim prophet Muhammad accrued political and military power, he evolved from a proselytizer and persuader, to a warrior (i.e., a prototype jihadist; see: The Prophet Muhammad as a Jihad Model), and dictatorial legislator. Thus the sword and other similar Koranic verses-as per the linkage between Muhammad’s biography and the Koranic narrative-capture the Muslim prophet at his most dogmatic, belligerent, and intolerant. Muslims are enjoined to fight and murder nonbelievers-woe unto those who shirk these campaigns-but those who are killed fighting for the one true religion, i.e., Islam, will be rewarded amply in the afterlife. A sampling of such verses, which established these eternal injunctions, are included below:

47:4: “Now when ye meet in battle those who disbelieve, then it is smiting of the necks until, when ye have routed them, then making fast of bonds”

9:29: “Fight those who do not believe in Allah, nor in the latter day, nor do they prohibit what Allah and His Messenger have prohibited, nor follow the religion of truth, out of those who have been given the Book, until they pay the tax in acknowledgment of superiority and they are in a state of subjection.”

4:76: “Those who believe fight in the way of Allah, and those who disbelieve fight in the way of the Shaitan. Fight therefore against the friends of the Shaitan; surely the strategy of the Shaitan is weak.”

8:12: “When your Lord revealed to the angels: I am with you, therefore make firm those who believe. I will cast terror into the hearts of those who disbelieve. Therefore strike off their heads and strike off every fingertip of them.”

8:38-39: “Say to the Unbelievers, if (now) they desist (from Unbelief), their past would be forgiven them; but if they persist, the punishment of those before them is already (a matter of warning for them). And fight them on until there is no more tumult or oppression, and there prevail justice and faith in Allah altogether and everywhere; but if they cease, verily Allah doth see all that they do.”

9:39: “If you do not go forth, He will chastise you with a painful chastisement and bring in your place a people other than you, and you will do Him no harm; and Allah has power over all things.”

4:74: “Therefore let those fight in the way of Allah, who sell this world’s life for the hereafter; and whoever fights in the way of Allah, then be he slain or be he victorious, We shall grant him a mighty reward.”

9:111: “Surely Allah has bought of the believers their persons and their property for this, that they shall have the garden; they fight in Allah’s way, so they slay and are slain; a promise which is binding on Him in the Taurat and the Injeel and the Quran; and who is more faithful to his covenant than Allah? Rejoice therefore in the pledge which you have made; and that is the mighty achievement.”

As the scholar Ibn Warraq-now a Muslim freethinker — but born and raised a madrassa-attending Muslim in Pakistan — notes, aptly (p.69):

…”tolerance” has been abrogated by “intolerance”

And this doctrine of abrogation, necessitated by the many contradictions which abound in the Koran, originates as putatively taught by Muhammad, himself, at verse 2:106: “Whatever communications We abrogate or cause to be forgotten, We bring one better than it or like it. Do you not know that Allah has power over all things?”. This verse, in combination with verses* 16:101, 22:52, and 87:6, was elaborated into a formal system of abrogation (naskh in Arabic) by the greatest classical Muslim Koranic scholars and jurists, which entailed (p.72),

…the suppression of a ruling without the suppression of the wording. That is to say, the earlier ruling is still to be found in the Koran, and is still to this day recited in worship, but it no longer has any legal force.

But it is only when viewed in the larger context of the uniquely Islamic institution of jihad war–which derives substantively from the abrogating Koranic sword verses-that Moran’s naïve equation to Christianity or Judaism (or so-called “similar” verses from the Old Testament, etc.) becomes entirely fatuous. From the bellicose verses in the Koran, expounded upon in the hadith (the words and deeds of Muhammad as recorded by pious Muslim transmitters), Muslim jurists and theologians formulated the Islamic institution of permanent jihad war against non-Muslims to bring the world under Islamic rule (Shari’a law).

Since its earliest inception, through the present, jihad has been central to the thought and writings of prominent Muslim theologians and jurists. The precepts and regulations elucidated in the 7th through 9th centuries are immutable in the Muslim theological-juridical system, and they have remained essentially unchallenged by the majority of contemporary Muslims. The jihad is intrinsic to the sacred Muslim texts, including the divine Koranic revelation-“the uncreated word of Allah”. The Old Testament sanctions the Israelites conquest of Canaan-a limited domain-it does not sanction a permanent war to submit all the nations of humanity to a uniform code of religious law. Similarly, the tactics of warfare are described in the Old Testament, unlike the Koran, in very circumscribed and specific contexts. Moreover, while the Old Testament clearly condemns certain inhumane practices of paganism, it never invoked an eternal war against all of the world’s pagan peoples.

Uninformed ecumenical zeal in search of a fantasy Islam yet to be created, does not excuse making intellectual, let alone moral equivalences, between the severely limited and contextualized war proclamations of the Old Testament, and the permanent proto-jihad war injunctions of the Koran. Staking out the presumptive “higher” moral ground by attacking a courageous Dutch politician ultimately seeking profound, not cosmetic (and meaningless) changes in how Muslims adapt to their Western host countries, is unsavory and destructive, regardless of Moran’s misguided motivations.

(* 16: 101: “And when We change (one) communication for (another) communication, and Allah knows best what He reveals, they say: You are only a forger. Nay, most of them do not know.”; 22:52: “And We did not send before you any messenger or prophet, but when he desired, the Shaitan made a suggestion respecting his desire; but Allah annuls that which the Shaitan casts, then does Allah establish His communications, and Allah is Knowing, Wise”; 87:6: “By degrees shall We teach thee to declare (the Message), so thou shalt not forget”)

America’s Deficit Disorder

The U.S. economy is on dangerously thin ice.

by Alyssa A. Lappen
FrontPage Magazine | Jan. 19, 2009

Upon his January 20 arrival in the Oval Office, President-elect Barack Obama will face the worst recession to hit the U.S. economy since World War II, the Congressional Budget Office reported to the Senate Budget Committee on January 8. The U.S. Treasury deficit—what the government spends over and above its income—will nearly triple in 2009 alone, to $1.19 trillion. Worse, the cumulative U.S. budget deficit will reach almost $2 trillion in the next five years.

To put things in perspective, last October, the projected $1.2 trillion 2009 deficit was 8.2 percent of the nation’s gross domestic product (GDP). That’s still far more than the minimum 3% to 5% “savings rate” economists expect of average Americans this year, which in turn is a vast improvement from savings rates in recent decades. Meanwhile, the economic soothsayers also predict gross U.S. production, already falling, will slump at least 4% to 5% by next December, while federal revenues also drop some 6.6%.

All this only spells big trouble for overburdened U.S. taxpayers and businesses now keeping the government afloat. It will be like trying to stretch a 10-inch diameter buckskin over the head of a 30-inch diameter drum. And taxpayers and businesses will be asked to do most of the stretching.

Assuming that U.S. economic policies remain unchanged—and the Federal Reserve Board has already expended most available economic rocket fuel by cutting to nearly zero the “federal funds rate” charged on overnight interbank loans—Obama can’t do much more than that besides printing money.

And print money, Obama surely will.

In fact, the Bush administration gave the greenback presses a galloping start. Since August, the Fed issued “tons of newly created dollars into the economy,” doubling the monetary base—the nation’s total bank reserves plus U.S. currency— a “phenomenal increase” that had some (erroneously) worrying about the potential for steep inflation, reports the Wall Street Journal. [Update Jan. 19, 2009: On the contrary, the Consumer Price Index (CPI) fell 0.7% in December—the fifth consecutive decline. Consumer prices rose hardly at all—only 0.1%, against the 1.5% to 2% rate of price increases preferred by the Fed.]

The federal government has already allocated at least $7 trillion to the nation’s “economic rescue,” including the $700 billion Troubled Asset Relief Program (TARP), last year’s $168 billion Economic Stimulus Act, the $300 billion loan-loss backstop for Citigroup and $152 billion AIG rescue. Of those allocations, the U.S. has already torn through upwards of $2.7 trillion—not counting $167 billion in emergency tax rebates granted to consumers.

In this light, Fortune magazine’s October 2008 prediction that Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson could handle the mess looks far too optimistic. The empty Federal Reserve tool chest resembles that of 1935, when Chairman Marriner Eccles had lowered discount rates as much as possible to create “easy money.” You “cannot push on a string,” a Maryland Democratic congressman had noted back then. “One cannot push on a string,” Eccles agreed.

Now too, massive Fed and Congressional stimulation have not altered the U.S. economy’s downward trajectory. Indeed, the U.S. economy in 2008 lost an aggregate 2.6 million jobs, more than in any year since World War II, putting 7.2% of the work force in the “unemployment” lines. Add in all part-time, volunteer and self-employed workers considered fully employed by conventional unemployment measures, and the key “unemployment” statistic undoubtedly has already have hit double digits. Factory orders, housing construction and retail sales decline precipitously and banks foreclose on millions of American homes.

The Fed has again created what “some economists” call a “liquidity trap.” Printing money is a “vastly overrated” economic stimulant “even in ordinary times,” according to Wall Street Journal veteran George Melloan. The “liquidity” the Fed has injected into the U.S. economy is like trying to “push on a string.” Americans are not interested in or able to borrow. Whatever savings they have gets deposited in banks, for which deposits are liabilities that must be invested to keep banks afloat.

For the time being at least, the U.S. Treasury has profited nicely from this ugly dilemma. As investors and banks seek “safety,” U.S. Treasuries have become a haven, bolstering the formerly beleaguered U.S. dollar, and pushing rates on 30-year Treasury bonds to just 3.06% and 10-year bonds only 2.39%.

But cheap credit does not spur new investment or economic growth. In his 1993 study of more than 5,000 U.S. manufacturing companies from 1971 to 1990, economics professor Steven Fazari found that business invest based on overall economic health and the growth in their own sales and profits. “Weakness in the economy is more likely to reduce investment than lower interest rates are to stimulate it.” But low rates can and will spring like a jack knife if and when investors find other outlets for their “easy” liquidity-induced cash.

Meanwhile, U.S. taxpayers still face the extraordinary deficit burden already heaped upon them—and only likely to grow under the Obama administration. As Melloan noted, in the 1990s, “Japan tried to spend its way out of its post bubble malaise,” but merely accumulated “a mountain of debt” and lost a decade to “little or no economic growth.”

Even if the national deficit increases no further, national debt would grow more onerous in the case of a Great Depression-like deflation tornado, such as shredded the U.S. economy and in 1933 raised unemployment to 24%. The debt will remain the same or even grow until it is paid off, while incomes and the tax base shrink. Keep in mind, as in 1933, interest rates and stocks have already declined steeply.

Moreover, to cover the U.S. deficit, taxes will certainly rise. In an inflationary environment, those new taxes could broadly pass to willing (or resigned) consumers. Now, however, in a contracting economy, they must be spread more narrowly to shrinking companies and a shrinking pool of workers. Companies are likely to respond by further slashing jobs, thus adding to the very grave potential for a deflationary spiral.

That such an enormous economic disaster could compound current financial woes is not hard to imagine, given the massive deflation already seen in basic commodities like oil: On January 14, the European Central Bank cut interest rates to 2%. “It looks odds-on that Eurozone consumer price inflation will fall well below 1.0% during 2009, and a brief period of deflation is very possible,” IHS Global Insight chief European and UK economist Howard Archer informed his research clients. Moreover, he expects European interest rates to halve again, to 1.0%.

For all the horrors of galloping inflation, massive deflation is exponentially worse.

The Eternal Danish Optimist

by Alyssa A. Lappen
January 5, 2009 | An Exclusive Right Side News Interview
©2009

On Sept. 15, 2008, the editor of Danish daily Berlingske Tidende summoned historian and columnist Lars Hedegaard to his office to lower the proverbial ax. He received a transparently suspicious explanation. “I’d been tedious and repetitive, and they needed younger people,” he said. “I thought, they’re not going to get me. There will be a record of what I’ve done these nine years.”

Within two weeks of its December 1 publication, Danish bookstores sold out two printings of Hedegaard’s Groft Sagt (“Roughly speaking”), a collection of 109 of his 2,000-plus columns for Berlingske Tidende. The book also includes 26 cartoons by Kurt Westergaard, 73, renowned for Jyllands-Posten‘s September 2005 Mohammed cartoons—which the Muslim Brotherhood blamed for the January 2006 worldwide riots, murders and embassy attacks they instigated. But Hedegaard, too busy with two other book projects, does not plan to translate the work into English.

The book cover (and page 35) feature a Westergaard caricature of former Danish Foreign Minister Uffe Ellemann-Jensen, reviled by the Danish populace for opposing the original cartoons. Ellemann-Jensen is kneeling by an inkwell labeled “freedom of expression,” which also contains an explosive-laden (presumably Islamic) fanatic. For his courage, Hedegaard has received great blog coverage, but not much American press notice beyond that of Washington Times columnist Diana West.

Overall, the press and Western leaders have had “yet another missed opportunity” to stand up “and call madness what it is,” in the words of scholar Robert Spencer. During World War II, however, Denmark was the only European nation to save virtually all its Jewish citizens.

In that Danish tradition, Hedegaard recognizes “the fragility of freedom.” In an exclusive interview with Alyssa A. Lappen, Hedegaard announced the December 21 formation of International Free Press Society (IFPS), following the lead of Denmark’s Free Press Society, established in 2004. The founders chose Hedegaard as their president, and Diana West as vice president. Among the organization’s Board of Advisers is Fitna producer Geert Wilders.

Hedegaard: Of course, many more people are involved in this…. We are trying to create an organization that will defend free speech in the Western World, on the assumption that if free speech goes down where we live, it will be doomed in the rest of the world as well.

The organization will be built up over the next few months. I am the president of the Danish Free Press Society, created in 2004, and a very successful organization. The enemies of free speech are organized and well financed and we have to counteract their activities. The new international organization will lead the fight for free speech on a global basis. We will then set up national organizations where they do not exist, as sisters to the Danish organization. We have very ambitious plans to recruit people. We already have a board of directors, and want to recruit for the board of advisors. We will set up a website and will pull together all we know about relevant issues, that is, attacks on free speech everywhere.

AAL: How do you defend against an onslaught against free speech that is so prevalent and widespread?

Hedegaard: You make the public understand that free speech is under attack. That was why we thought of [forming the Free Press Society] in Denmark. We found ourselves in Denmark in a situation where most of the press was not telling the truth and not dealing with real issues.

AAL: How exactly does Denmark’s Free Press Society help?

Hedegaard: It is a fact that we exist. Even that alone [has made us successful]. The membership is 500 to 600, which is quite big for a country of our size. Membership is growing all the time. The very fact that we have the audacity to organize ourselves gives our members courage to express themselves. The biggest fear is that anyone thinks, “here, I am, Joe Schmo. I am all alone and no one thinks like I do. I can’t see anyone who expresses the same opinions or fears as I do, so I am probably crazy.”

My family tells me that I am insane.

So the fact that we did this gives people courage. We have big conferences in Copenhagen, and frequent meetings that are very well attended. The press is there and we always fill the hall. And we invite all kinds of speakers. Like Geert Wilders.

We have had Ibn Warraq, Bat Ye’or, Kurt Westergaard, Daniel Pipes, Roy Brown, Chahdortt Djavann, Shabana Rehman, Samia Labidi, Bruce Bawer, Henryk Broder, and anyone who is in fear for his or her life. Copenhagen gives them a hearty welcome and it makes a difference. In February we’ll have the pleasure of meeting [Dutch cartoonist] Gregorius Nekschot.

That’s how we operate. We also have friends in government and in parliament. Many do not say they are our friends, but that is quite an accomplishment. So if we stay the course, true to our convictions and do not waver, there is hope. I am optimistic.

AAL: Yet many Europeans are coming to North America because they think Europe is dead.

Hedegaard: Europe is not dead. What does it mean, “we’re dead?” You know the true resistance against tyranny and Islam and bullshit is here in Denmark. It is. I do not like to brag, but this is where it’s at. I do not feel that we have lost.

The backbone of all this is the Danish population of 5.4 million, of which about 5 million are Danes. It’s always been the backbone of our identity and our nation. Never the upper class, never the rich or famous or the nobility. It’s always been the peasant, the man in the street, the working class, and I do not have the sense that they are giving up. The upper crust are willing to sell out. They would sell us out for anything. Jesus. Of course there are exceptions and these brave people are more than welcome in our midst.

AAL: The same kind of people are selling out in the U.S. and Canada, too.

Hedegaard: It is happening all over. It is a disease. It is a sickness. The upper crust, the upper classes are simply opposed to the idea of the West. They hate our freedoms. They hate our culture. We saw it in the ’30s, with the British aristocracy [alliance with] Hitler. We saw it in the U.S., where many members of the political class were Stalinists, Alger Hiss and what not. Books were written about that. And again now, we see it. It’s a very mysterious thing. But you could go back even to the Roman Empire where a guy named Tacitus wrote a book about the barbarian Germans (my own ancestors, by the way), and his admiration for these people. The Roman upper crust admired barbarians. When some, a certain class of society get all they want, money, sex, power, it’s like they have gotten bored.

AAL: They seem to think that they will not be targeted and do not understand that they, too, will have nowhere to go.

Hedegaard: They can’t imagine that. They do not think that way. They start hating their own people. Why has practically every Danish political party backed immigration of Muslims into the country. We have taken in 10,000s people from the back woods, goat herders and the like who could neither read nor write. For what purpose? Why have they done that?

I am talking about things that I have thought about constantly for seven or eight years. Every day I question how they could have done this. What is the purpose? Why are the universities going along? Why haven’t they warned politicians about what would happen? Why have the journalists, the artists, everyone who should be in the know, failed to tell the truth? Not only that. They have actively encouraged this influx of enemies into our midst.

AAL: The press has committed a dereliction of public duty.

Hedegaard: You cannot trust any Western world institution. Mark Steyn wrote a book, America Alone. But in fact America will not defend itself either. There is no difference. I have been to the U.S. three times in the last three months. America is even more stupid when it comes to facing up to reality than Europe.

How can you allow some Taliban idiot to parade on Fifth Avenue with a sign saying: “Death to all Juice“? He’s not talking about orange juice but about finishing Hitler’s project. In the middle of the biggest Jewish town in the world. What a disgrace.

AAL: Why are you so optimistic, then?

Hedegaard: I am optimistic because I have experienced the difference made by what you do. You can accomplish a lot by organizing and telling the truth. What you absolutely must not do is sit back and despair. You mustn’t do that. That is what the enemies of free speech want you to do. Everyone that I know is telling the truth. So as long as we can tell the truth, and work, and talk and write and make waves, we are not dead. There may come a time when we can do nothing, none of what we’re doing now, and then we will be really dead. Let’s not give them the chance.

And also, despite the fact that I am probably one of the most hated men in Denmark, the enemies of free speech don’t know really where I am coming from. My views are noted. Hardly a week goes by than I am not talked about. “He’s an idiot. He’s an asshole. He’s evil.” But as long as you annoy them, you’re okay.

AAL: I had 2,200 attempts to break into my website the week before last alone.

Hedegaard: Well they fear you, and that is to your great credit. Keep it up. I have been asked, Do you fear for your life. The answer is no. I don’t know why. I have given that answer to others. I am sure that there are all kinds of plans to eliminate any one of us, but we are going to die any way. So let’s have some fun in the meantime.

I tell my family, “How would you like to live after I am gone. It won’t be a hell of a lot of fun, if we lose.” I think adults have an absolute duty to stand up for what is right.

AAL: Why aren’t you translating this book into English?

Hedegaard: I don’t have the time, and I’m not sure that my Danish angles on the concrete issues would be appreciated by an English-speaking audience. And if you have to provide footnotes for your pieces, it’s not very elegant. I can get things into the mainstream press. I won’t write any more for the paper that fired me in September, just as a matter of pride. I have no problem publishing. But I am more engaged in the work to set up the international organization. And I am also engaged in writing a couple of books now. The first one, I will finish in about three or four months, is on war theory and the concept of Holy War.
…

The other book that I’ve been working on for the last six or seven years, is on the Danish left wing.

For the time being, I feel very relieved not to have to write a daily column for any newspaper. I am sure I will be back to write something. But I am not in need of any immediate communication.

AAL: Are the Westergaard cartoons directly related to the content?

Hedegaard: Every one of the cartoons is directly related to content. The cartoon labeled Adolf Laban relates to the text on page 29, written on Dec. 19, 2005, just [before] the cartoon [riots] took off in January 2006. A group of Danish imams was then traveling in the Middle East trying to stir up trouble. There was also a request by a number of Danish imams, including the most influential imam and chief organizer of trouble at the time, Ahmed Abu Laban, to atone for the cartoons with a Mohammad week in Danish universities. Several university presidents were receptive to the idea. My point was that this monopolization of Muhammad would leave other institutions chagrined. But they shouldn’t despair. So far no university had thought of celebrating Hitler’s birthday, so why not do that? However, the organizers had to make sure that the two arrangements didn’t collide – especially because they would largely appeal to the same audience.

Laban is dead. He died [in February 2007] of some disease [cancer].

On page 82, there’s a cartoon proving a woman may rape a man. It is based on a column entitled “On the peeing front,” that is absolutely true. [In Sweden, activists at Malmoe’s Free Women’s University attacked “the root cause of sexual inequality – the fact that men stand up when they urinate whereas most women tend to sit down.” In August, 2007, the university offered a three-day course in Upright Urination for Women and university director Aasa Staahl noted in the daily Sydsvenska Dabladet that women could “either use a funnel-like device” or “direct the jet by means of a special squeeze with their fingers.”]

AAL: You don’t have to make this up.

Hedegaard: No I don’t.

On page 18, we find “Jews and Yogurt,” a January 2006 column written after Hamas won the Palestinian elections. “The Europeans have been pumping lots of Euros into creating a representative government that would reflect the will of the Palestinian majority.

And now they have succeeded as the great majority of the Palestinian voters have backed a party that favors the eradication of Israel. Now the big Arabian riddle is who will last longer? Danish yogurt in Saudi supermarkets or Jews in the tiny strip of land between the Jordan River and the Mediterranean.

And although the prospects are bad for both Jews and yogurt, “Roughly Speaking” would put its savings on the Jews. For even though Hamas leader Mahmud al-Zahar, speaking to the Italian daily Corriere Della Sera in July 2005, rejected co-existence with Israel, he was magnanimous enough to grant the Jewish State a respite of 5-10 years before removing it from the face of the earth. … That is better than nothing, and ‘Roughly Speaking’ therefore believes that it is only a matter of time before the European countries gathered around the EU’s idealistic foreign policy spokesman Xavier Solana will accept Hamas’ extended hand and put some billions into it. That will also give the European countries time to consider what to do with the Jews of Israel. In view of all the commotion it would cause among our Arab friends, the Jews would be wise not to settle in Europe. But in the 1930s there was a plan to settle them in Madagscar. Perhaps the EU would be well advised to reconsider that option.”

On page P. 43, “Uhort Klarsyn,” means “Unheard of perspicacity.” The column, written on April 29, 2008, concerns the fact that the Danish court authorities have decided judges can wear the hijab. A Supreme Court justice has ruled that there is absolutely no problem with women wearing Islamic garb when serving as judges or jurors. The important thing, according to this upholder of due process, is that veiled women signal neutrality. And they do. Otherwise they would be exposed before they were hired for the job.

Now the point of the commentary is that the Danish courts must have discovered a method to expose the Muslim use of taqiyya – which implies that the true believers are advised or required to hide their real intentions when it benefits Islam or the individual Muslim. “This newly discovered method – which Islam’s neighbors have been trying to find for the past 1400 years – enables the Danish courts to determine whether or not the veiled woman speaks the truth. … Would the court please be kind enough to inform the rest of us how they have accomplished this feat, particularly in view of the fact that this must be of great interest far beyond our Danish borders?”

Kurt’s cartoon shows that the real wielder of power is this jerk hiding behind a screen of legality. By opening our legal system to the hijab, we’re bowing to the leaders of the Islamic ummah, or “nation.”

On page 104, another column entitled “Revealed law” concerns Islamic law, supposedly revealed by God, and the competing system in the European Union, which is also revealed law. Nobody knows where it came from, and no one has ever voted for it. There is, however, an important distinction between the sharia – Islamic law – and EU law in that no new revelations have come down since the death of the Prophet in the seventh century, whereas our European law-givers are constantly receiving new revelations from someplace they have never told us about.

I never asked Kurt what to draw or what his drawings mean. He had an absolutely a free hand. We took every drawing he did and put it into the book.
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