No Such Thing As An Opinion!

July 21, 2011

I found an article that is so good that I must praise it...  

Regular readers of mine know what my No Holds Barred, Daily News Commentary section is about:

On a daily basis, I provide commentary and "a-ha" moments of insight about a particular news article.

My articles usually expose flaws in others' work.  Such people are often well known, experts or thought leaders in their field, such as:

Sandra Day O'Connor, Supreme Court Justice.

Fareed Zakaria, prominent thought-leader, bestselling author of Post-American World and host of CNN's television show Fareed Zakaria GPS.

Jeffrey Miron, Senior Fellow at the Cato Institute and Harvard University's Director of Undergraduate Studies in the Department of Economics.

Bill Ford, executive chairman of Ford Motor Company.

Various (unnamed) market geniuses.

California judges

William Rodriquez, forensic anthropologist and witness for Casey Anthony's defense.

Tim Wise, "anti-racist essayist, author and educator."

Piper Hoffman, an employment lawyer and writer.

Clarky Davis
, a writer and "debt management expert and spokesperson for CareOne Debt Relief Services," known as "The Debt Diva".

Barack Obama
.  I've written numerous articles about Obama.

Michelle Obama
.  You know her, right?

Oh ya...just in case you are wondering, I am not politically biased.  I've exposed both liberals and conservatives!

My commentary primarily points out aspects of others' work that happen to be inaccurate or illogical.

That's what my site is about...sharing my knowledge and ability with others :)  Not for the sake of being critical itself, but to spread my knowledge and help improve people's understanding of important issues!

As you might imagine,
I see flaws just about everywhere I look.  Not that I look for flaws...I just notice them! (This ability has both advantages and drawbacks!) 

What I'm trying to say is this:

It's rare that I find a piece of writing that I'm impressed with.

So rare, in fact, that I'm now going to highlight a piece of work that I'm very impressed with!

John DeFeo of TheStreet wrote
an article titled: 

"10 Myths That Politicians Want You to Believe"

What I Liked About The Article

1)  First, it's not politically correct.  These days (well, for quite a while now!), not only has political correctness gone wild, but many people consider journalists to be anti-journalists.  Meaning, journalists who don't report the truth.

However, there are a
fair number of authors who aren't politically correct.  DeFeo's lack of political correctness is certainly not what made his article stand out the most.

Let's examine the aspects of his article that really stood out:

2)  Many of his arguments make a very persuasive case about
complicated topics by using only a minimum of information.  That takes talent.

Good examples are his point #10,
"Quantitative Easing Helps the Economy", and point #9, "Republicans Are Fiscal Conservatives".

Now, expanding ones thoughts in more detail can also be helpful, but he has an excellent ability to first provide a few credible, easily researched nuggets of information.

3)  What I like most, however, is his ability to see things that
others don't see.  His "a-ha" insight, his expose of the following myths (some of which are particularly ingrained):

"Republicans Are Fiscal Conservatives"

Instead of taking the route so many others take, that is to weigh whether tax cuts are better than increased spending, he provides financial research that summarizes decades' worth of fiscal budgets.

Excellent.  Unique.  It's information rarely seen or heard in the media.

Now, it's true one might argue that the figures don't
necessarily mean that Democrats have been more fiscally conservative than Republicans, because it's possible that the Republicans encountered fiscal challenges that the Democrats did not.

But it's also true that research could find that the
Democrats encountered fiscal challenges greater than those encountered by Republicans, meaning it's possible that the Democrats' fiscal lead over the Republicans is even greater than it appears!

Most importantly, his research is
consistent with the point he's making, and his research certainly provides enough of a starting point to allow others to continue it themselves!

"President Obama Is an Enemy of Wall Street"

He needed only one sentence to support his argument: Obama's appointment of Larry Summers and Gene Sperling.  Well done.

"The Financial System Is Safer Today Than in 2008"

Interesting, succinct, supported and referenced (or easily researched) points were made:

"The Federal Reserve, which neglected to use regulatory powers to rein in the last crisis, has been awarded more regulatory powers."

"The majority of 'too big to fail' banks are even bigger."

"And while the government is guaranteeing fewer mortgages through
Fannie Mae(FNMA_) and Freddie Mac(FMCC_), it's made up the difference by guaranteeing mortgages through the Federal Housing Authority."

"'No One' Could Have Seen the Financial Crisis Coming"

Again, interesting, succinct, supported and referenced:

"No one -- except for everyone who did. TheStreet has interviewed numerous economists and money managers who have been pounding the table for years."

"Republicans Are a Bunch of Fat-Cat Millionaires"

When was the last time you heard someone in the media
imply that Democrats are rich, much less provide statistics that show that among the richest fifty members of Congress there are more Democrats than there are Republicans?

And My Absolute Favorite

f)  "U.S. GDP Is Growing"

"U.S. GDP has increased by 4.26% from 2007 to 2010, according to data compiled by the U.S. Bureau of Economic Analysis. In the same period of time, the U.S. national debt has increased by 61.6%, according to the U.S. Treasury. Looking at these numbers, you don't need to be an economist to see that something is very, very wrong."

Bravo!  This is a
crucial point about the economy, something that so few people notice, much less understand!

You hear about GDP.  GDP this, GDP that.

When was the last time someone told you that it actually tells you
nothing about whether an economy is growing?

Let me summarize what his 4.26% and 61.6% figures mean:

The US has shrunk between 2007 and 2010! Massively!

Now, GDP went up over that period, didn't it?  How could the US have shrunk?

The gains weren't
real.  They were achieved using borrowed money!  Using borrowed money, it's possible for a country to never go into recession! Really!

Here's how it works:

There's an organic level of goods produced by a country.  Meaning, if the government didn't take steps to borrow money through a stimulus package, the country would create a
certain amount of goods and services.

During the recession, the organic amount of goods and services produced by the USA plummeted by several tens' of percentage value (depending on what your reference period is).

Now, imagine that the US government can borrow money through a stimulus package, as Obama did.  Imagine that the government takes that money, and spends that money
directly, in many ways.  For example, look at "shovel-ready" projects: The money directly hires construction workers, who directly produce goods, who (by purchasing materials for concrete) indirectly create concrete, and raise the GDP. 

The increase in the GDP was
completely artificial.

It had
nothing to do with the production ability of the country itself, and everything to do with borrowed money.  Because that money is not free, and needs to be repaid, its effect on GDP means nothing.

Imagine this scenario: You are self employed in sales.  You are not selling enough to cover your monthly expenses.  Eventually, you deplete your entire savings.

Instead of going bankrupt, you borrow money on your credit card.  As a result, you are able to continue making sales, but you are still unprofitable, still selling less than is required to cover your overhead.

Note, however, that the sales you
are making, regardless of how unprofitable they are, still count as sales!  They still show up in your own GDP figures!

Therefore, your GDP is
higher than it otherwise would be, but it is all artificial, because the sales were completely a result of borrowed money that needs to be paid back!

Borrowing money to help an unhealthy economy can simply delay the inevitable.

DeFeo's point about GDP is something I had
already been aware of.  A previous article of mine briefly pointed out: 

"Well, the GDP measure tells you little in this respect.  This is because GDP could be growing as a result of the USA borrowing money..."

I had been dying to write an article that would allow me the context to fully explain!  DeFeo gave me that opportunity!


John DeFeo: Congrats!  I'm impressed.  I still have hope for humanity :)

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