QE2 dissected

From Joe comes this link to a video that, as he notes, is the best explanation out there of the Federal Reserve's 'QE2', or second quantitative easing. The video lasts just less than 7 minutes; recommend you watch it all. But have your Kleenex ready; it's a sad tale.

Now here's a factory

Bob sent me this incredible video of Volkswagen's new state-of-the-art factory in Dresden. VW manufactures its luxury car, the Phaeton, here. And you can literally watch them do it, since the factory is transparent. Also, see how they solved the problem of truck traffic to deliver the parts and components to a center-city site.

I've heard that VW wants to make a big push to expand its market share in the United States. I admit I was skeptical, but the thought and money that went into this plant has me revising my vision of VW.

Developing Africa - or not

Kurt Gerhardt, a former journalist and German development aid specialist, explains in Der Spiegel why Africa has failed to develop.

It's not that the West hasn't spent enough money: it's that we've spent too much, draining local initiative and thus ensuring that things never get better. The direct beneficiaries of the assistance may prosper, as do the Westerners supported by the development aid industry, but the average African does not.

Gerhardt argues that the West must recognize that Africans need to take control of their own destiny; Westerners can't do it for them.

Do you think this message will ever get through?

The 'capital strike'

Here are three good insights as to why, as a result of government policies, capital is now 'on strike'.

First, as Michael Barone describes it, American businessmen (and women) don't dare to spend when they have no idea how much of their potential profits they'll be able to keep. The uncertainty has created a 'mattress economy': "People seem to be following this investment strategy. Step one: Go to Mattress Discounters and buy the biggest mattress you can find. Step two: Take it home, and stuff all your money in it. Step three: Lie down, and get some rest."

Second, the Business Roundtable has sent a lengthy letter to the Obama adminstration listing key regulatory issues that impede economic growth and job recovery. Those issues pretty much cover the waterfront: excessive corporate taxation; proposed financial regulatory reform that will reduce efficiency, stifle competition and deter capital formation; failure to adopt trade agreements; the proposed union-backed Card Check Bill; the proposed cap and trade bill, as well as ObamaCare.

Third, a new Harvard Business School study tracks changes in congressional committee chairmanship, since once you're a chairman, you can bring home much more pork. The resulting "fiscal spending shocks appear to significantly dampen corporate sector investment activity . . . when the spending shocks reverse (through a relinquishing of chairmanship), most all of these behaviors reverse."

Makes you wonder why we're doing this to ourselves, doesn't it? We must be nuts!

A little perspective on Greek troubles

Here, once again thanks to Rachel, is a little historical perspective on Greece's financial and social woes, provided tongue-in-cheek by Christopher Buckley. And just think, it actually appeared in the New York Times! So read it and take a little break from awful stories about being buried alive.

Health care guide

The American Thinker blog has one of the best pieces I've seen about the health care reform proposals. Dr. Frank Rosenblum addresses 10 points made by President Obama with which he strongly disagrees. Most analyze the problems caused by the government's current interference in the health insurance system.

I had always thought that the fundamental problem with our system was that a third party, aside from doctor and patient, was involved in deciding how much to do and what it would cost. I thought that third party was the insurance company; now I realize it's the federal government.

One or two of the comments appended to this article are also extremely thoughtful. Enjoy!

A silver lining

Now that we have a 'salaries czar' to decide what corporate executives deserve to get, I'm hopeful that U.S. corporations are learning that taking the government's money is not without peril - extreme peril. Let's hope we're reaching the natural limit of government interventions.

Love that recession

The Wall Street Journal reported a day or two ago that France and Germany, the motors for Europe, are coming out of the recession. According to a piece by Rick Moran in the American Thinker, they are not alone: China and India are recovering as well. Among the most developed economies, only the United Kingdom and the United States are lagging behind.

Some of this is probably due to the huge overhang of U.S. consumer debt; Americans today are paying down their debts before running out to buy new stuff. This is an essential correction, but in the short term it means that consumer spending won't boost a recovery.

However, government policies also make a big difference. If you remember, France and Germany resisted pressure from President Obama and from the UK government to increase deficit spending. They argued that creating more government debt was not the answer - and looks like they were right.

Nor did either of these governments jump with both feet into the business of saving some big corporations by taking them over, while letting others fail. Nor has either of them, to the best of my knowledge, appointed a 'salaries czar' to decree how much corporate executives deserve. If you want to write a primer on how to destabilize an economy, be sure to include these techniques.

Obama and the stimulus bill

If you want my analysis of Obama's handling of the stimulus bill, it's here on the Political Mavens blog.

An observation

In response to the deteriorating economic conditions, people are rioting in a number of European countries. I reported earlier on troubles in Central Europe and the Balkans, linked in part to the disruptions in Russian natural gas deliveries, but late last month unrest, in the form of a general strike, spread to France. What's interesting is that, so far, nothing comparable has occurred here.

Americans are worried; lots of them are being laid off, while many have seen tremendous losses in their financial portfolios. Nevertheless, a majority are still calm enough to see through the non-stimulus 'stimulus package' and call for a more sensible response. I can think of two reasons why this is so:

-- First, most people don't expect the government to solve all their problems - at least, not yet!

-- Second, the American economy is tremendously resilient, and there are a lot of resourceful and creative people out there thinking as hard as they can about how to climb out of the hole.

Think about it, next time you feel discouraged about what's becoming of America.