“By continuing to support American Treasury instruments the Chinese are recognising our interconnection. We are truly going to rise or fall together,” Clinton said at the US embassy here.

Clinton had sought to focus on economic and environmental issues in Beijing, saying Washington’s concerns about the human rights situation in China should not be a distraction from those vital matters.  Beijing’s human rights record emerged nonetheless as an issue, as Chinese activists on Saturday reported being harassed or intimidated by Chinese authorities in a bid to stop them speaking out or meeting Clinton while she was here.

“Plainclothes police blocked me from leaving my home. They were afraid I would try to meet with Hillary Clinton or others in her delegation,” democracy campaigner Jiang Qisheng told AFP by phone on Sunday.

Clinton and Chinese Foreign Minister Yang Jiechi largely agreed to disagree on human rights as they pledged future joint action on the economy and climate change.The goodwill, also on display in her talks with President Hu Jintao and Premier Wen Jiabao, could raise hope for a new era of cooperation between the two largest greenhouse gas emitters and two of the world’s top three economies.

“Now it is more important than any time in the past to deepen and develop China-US relations amid the spreading financial crisis and increasing global challenges,” Hu told Clinton, according to state media.

Clinton began her day Sunday by attending a Protestant church service in western Beijing at which an AFP journalist saw plainclothes police taking away some visitors who attempted to enter the church.Their identities could not be confirmed. Later, Clinton met Chinese women’s rights advocates at the US embassy but continued to steer clear of speaking on contentious human rights issues.Instead, while taping an interview on a Chinese talk show, she focused on the need for China to help finance the massive 787-billion-dollar US economic stimulus plan by continuing to buy US Treasuries.

“Because our economies are so intertwined the Chinese know that in order to…” <<<Read Full Story>>>

Left to its own devices, the credit crisis, which began in August 2007, would have crushed economies as severely as did the Great Depression.

Belatedly, but thankfully, governments recognized that the only way to get credit flowing again was for them to make quick and direct massive infusions of new equity into beleaguered banks, as well as commit to other emergency measures hitherto unimaginable.

If sensible rescue efforts continue–and they will–the immediate crisis will quickly pass. Shell-shocked businesses and consumers won’t recover rapidly from the trauma of recent months, especially as we now cope with recession. But the downturn shouldn’t be prolonged: The economy here and those overseas should start to pick up no later than next spring.

That soon? Despite the crisis, the global economy still retains enormous strengths. Between the early 1980s and 2007 we lived in an economic Golden Age. Never before have so many people advanced so far economically in so short a period of time as they have during the last 25 years. Until the credit crisis, 70 million people a year were joining the middle class. The U.S. kicked off this long boom with the economic reforms of Ronald Reagan, particularly his enormous income tax cuts. We burst from the economic stagnation of the 1970s into a dynamic, innovative, high-tech-oriented economy. Even in recent years the much-maligned U.S. did well. Between year-end 2002 and year-end 2007 U.S. growth exceeded the entire size of China’s economy. Obviously China’s growth rates were higher, but China was coming off a much smaller base.

The world is flush with cash. It’s frozen because of fear, but the cash is there. Productivity gains are burgeoning.

So, will this global boom resume next year, slowly at first and then with increasing momentum? It should. Whether that happens, however, depends on the next, highly dangerous phase: <<<Read the Full Story>>>

>>>Learn more about Capitalism and becoming a capitalist

AFP (Breitbard.com) | US President George W. Bush said in an interview Tuesday he was forced to sacrifice free market principles to save the economy from “collapse.”

“I’ve abandoned free-market principles to save the free-market system,” Bush told CNN television, saying he had made the decision “to make sure the economy doesn’t collapse.”

Bush’s comments reflect an extraordinary departure from his longtime advocacy for an unfettered free market, as his administration has orchestrated unprecedented government intervention in the face of a dire financial crisis.

“I am sorry we’re having to do it,” Bush said. Bush said….<<<Read the Full Story>>>

Of course, things look entirely different to members of “free-market advocacy groups,” as they like to be called. One such group is the Ayn Rand Institute, named after the matriarch of the movement, whose antigovernment and anti-regulation views are embodied in her best-selling novels “Atlas Shrugged” and “The Fountainhead.” Indeed, Greenspan himself was a friend of Rand’s, and a devotee of her extreme free-market philosophy…[Read Full Article]

Since the 1930s, U.S. banks were the flagships of American economic might, and emulation by other nations of the fiercely free-market financial system in the United States was expected and encouraged. But the market turmoil that is draining the nation’s wealth and has upended Wall Street now threatens to put the banks at the heart of the U.S. financial system at least partly in the hands of the government.

The Bush administration is considering a partial nationalization of some banks, buying up a portion of their shares to shore them up and restore confidence as part of the $700 billion government bailout. The notion of government ownership in the financial sector, even as a minority stakeholder, goes against what market purists say they see as the foundation of the American system.

Yet the administration may feel it has no choice. Credit, the lifeblood of capitalism, ceased to flow. An economy based on the free market cannot function that way.

The government’s about-face goes beyond the banking industry. It is reasserting itself in the lives of citizens in ways that were unthinkable in the era of market-knows-best thinking. With the recent takeovers of major lenders Fannie Mae and Freddie Mac and the bailout of AIG, the U.S. government is now effectively responsible for providing home mortgages and life insurance to tens of millions of Americans. Many economists are asking whether it remains a free market if the government is so deeply enmeshed in the financial system.

Given that the United States has held itself up as a global economic model, the change could shift the balance of how governments around the globe conduct free enterprise. Over the past three decades, the United States led the crusade to persuade much of the world, especially developing countries, to lift the heavy hand of government from finance and industry.

But the hands-off brand of capitalism in the United States is now being blamed for the easy credit that sickened the housing market and allowed a freewheeling Wall Street to create a pool of toxic investments that has infected the global financial system. Heavy intervention by the government, critics say, is further robbing Washington of the moral authority to spread the gospel of laissez-faire capitalism.

The government could launch a targeted program in which it takes>>>>Read the Full Article

The staunch leftist said the world financial crisis had forced his U.S. counterpart to recognize flaws in the economic system that he had been pointing out for years.

“I am sounding like Bush, more or less. What a novelty!” Chavez said, after quoting from Bush’s warning that the United States was in the middle of a serious financial crisis that could push the economy into a long-term recession.

He then serenaded startled journalists before settling back into more familiar criticism of the “imperialist” regime he said had brought the current crisis upon itself.

“The president of the United States has finally recognized there is a crisis…that they are the ones who are responsible for the collapse that is happening the in world at the moment, the financial tsunami,” he told a news conference in Beijing.

“Socialism is the only route to the salvation of the world.”

Outspoken Chavez says Venezuela’s socialist economic system, based around state-owned national champions, has protected it from the worst of the turmoil now roiling global markets.

The self-proclaimed Maoist was in China to boost oil sales and secure extra cash for development programs in China.

SALT LAKE CITY, Sept. 24 /PRNewswire-FirstCall/ — Overstock.com, Inc. (Nasdaq: OSTK) chairman and CEO Patrick M. Byrne comments on President Bush’s September 24, 2008 speech outlining the President’s market rescue plan.

Dr. Byrne commented: “This bailout is necessary to save the bacchanal that is our US financial system. However, at the core of the administration’s plan is the assumption that Wall Street is worth saving. It is not. For years Wall Street has bossed Washington, DC around like they’re hired flunkies, while preying on Main Street businesses and investors. The federal government should use this opportunity to extract from Wall Street concessions that could never be extracted were Washington in its customary subordinate position.

“If American taxpayers are to bailout the Power Elite, they should attach conditions. Taxpayers should share in any upside, and gaping flaws in the current system should be fixed. Towards that end, I believe that any bailout legislation should include at least the following protections:

1. Taxpayers need to share in the upside if the bailout works, to compensate them for the risk that the administration is forcing them to take. This could be accomplished through warrants on shares in the firms being bailed out, such as those Mr. Buffett extracted from Goldman Sachs.

2. The government should impose a tax on those that benefit most from bailout — Wall Street itself. Perhaps a 0.25% transaction tax on all securities trades is in order? Such a tax would be insignificant to investors, while be largely borne by those that are merely speculators – including those that churn trades in an attempt to manipulate the markets.

3. Bailout or none, the government must fix underlying problems in our capital market. The fixes includes:

a. Reforming our stock settlement system so that trades actually settle promptly, precisely as Congress stipulated in 1934. This can be accomplished by putting in place a market-wide mandatory pre-borrow requirement (like the SEC did in the 30-day July 15, 2008 emergency order that protected the 19 financial institutions);

b. Creating the obligation that if a naked short seller fails to deliver a share, the broker-dealer must force a mandatory buy-in (as is done in civilized countries, such as Canada);

c. Tracking trades cradle-to-grave (rather than net blocks of trades against each other), so that it is obvious who the naked short sellers are and the total amounts they are stealing;

d. Providing regular, timely disclosure of when and how many shares have failed to deliver;

e. Enforcing the rules, including significant monetary penalties and jail time.

“Keynes said that an ocean of productivity can support a bubble of speculation, but an ocean of speculation cannot support a bubble of productivity. Washington has been captured by speculators at the expense of producers. I have long been talking about systemic risk and potential financial crisis (see http://www.youtube.com/watch?v=SIHw7C73s3E for a three- minute video from as early as October 2005). I am proposing specific steps to fix the system. For those that agree with these fixes which protect Main Street Americans, I ask you to sign the electronic petition at http://mainstreetamericans.info.”

The reason for the outrage—while Americans have been paying the lion’s share of the bill for Iraqi reconstruction, Iraq has been building up a budget surplus that is projected to reach $80 billion by year’s end. Since 2003 the “United States has put about $48 billion toward reconstruction.” Spending by Iraq for its own reconstruction has been significantly less. Rising oil prices have caused Iraq’s revenues to soar, yet they are spending American taxpayer money to rebuild their nation. “The export of crude oil accounted for 94 percent of Iraq’s revenues from 2005 to 2007, the GAO reported.”

The outrage is understandable. The war and reconstruction have been costly. Despite buzz that the war has been all about oil money, major oil contracts have been handed out almost exclusively to non-American companies. Additionally, Americans were told that this was a cost they would not be responsible for. “Bush administration officials said on the eve of the war that Iraqi oil money would pay for reconstruction.” Deputy Secretary of Defense Paul Wolfowitz is quoted as telling the House Appropriations committee, “We’re dealing with a country that can really finance its own reconstruction, and relatively soon.’”

With an already troubled economy, many Americans have questioned covering the cost of the war itself, let alone the costs of rebuilding. Sen. Carl Levin says, “It is inexcusable for U.S. taxpayers to continue to foot the bill for projects the Iraqis are fully capable of funding themselves.” And, while I agree that this should not be the duty of the American tax payer, I would say that it is equally inexcusable for us to push Iraqis to use government dollars for projects that should be privately funded. If Iraq is to ever have true freedom (something we don’t even have here), our focus cannot be the amount of money they do or don’t have. Our focus has to be adherence to the principles that form and guarantee freedom.

Key Points

• War and its devastations create a uniquely strenuous circumstance. The needs of the people are magnified as basic utilities, systems, and resources are rendered inoperable. Regardless of circumstance, principle is ignorant of need. God is the author of prosperity and He does not play dice with the universe. Principles govern at all times and in all conditions. When need is used as the basis for policy decisions, principle is discarded and freedom and prosperity will consequently die. It is when needs are greatest that principle must be adhered to if lasting solutions are to be found.
• For example, it would have been much more convenient for our Founders to avoid war with Great Britain and just remain subject to the crown than to stand for that which they knew to be right. Yet, had they chosen any path other than the principled one, we would not be the country we are today with the freedoms we enjoy.
• The Iraqi Government will never be able to stand and protect a free people if it is built on a flawed foundation. There are two major flaws being ignored in this foundation:
  • Encouraging the government of a prospective free nation to be the owner of oil reserves and incomes (or of any “public” property).
  • Establishing the habit of using government incomes to meet the needs of the people.
• Both of these flaws are plays taken straight out of the communist handbook. E.C. Riegel said, “When government undertakes to solve man’s problem for him it undertakes the mastery of society and it cannot be both master and servant.”

Conclusion

It is a difficult thing to perceive that the American Government can help establish a proper framework and set a proper example of freedom when we have strayed so far here at home.

Even if the Founding Fathers had chosen to enter a war like this (which they would not have chosen), they would clearly see the dangerous precedent being set here. While it has long been that oil and its revenues have been the property of the Iraqi government, this practice should be abolished in the process of setting up a free nation. Ownership of oil and its subsequent revenues should be private. James Madison said, “I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on the objects of benevolence, the money of their constituents.” I have never had to endure the immediate ravages of war and therefore have no concrete understanding of what it would be like. Regardless of the calamities, however, I believe that if I were an Iraqi, my request would be simple: “Let freedom ring, and let it ring completely.”

Action Items

1. Recognize teaching opportunities as you hear others complain that the Iraqi Government isn’t covering the cost of reconstruction. Share how freedom can’t be achieved by creating a socialistic welfare state.
2. Ponder difficult moments of need in your life. Do you stick to principle, regardless of the gravity of the situation?
3. Consider how you offer help to others. Do you teach them to help themselves, or do you create dependence?

MRFC Principles: 1 (1, 3, 13)

Sources

CNN, Iraq’s oil-fueled surplus could hit $80 billion, report says, CNN.com, August 6, 2008

Robert H. Reid, US officials defend Iraqi budget surplus, Associated Press, August 6, 2008

E.C. Riegel, Private Enterprise Money, a Non-Political Money System, 1944 (For more of Riegel’s writings, click here).

James Madison, speaking on the house floor, concerning a $15,000 appropriation for French refugees from San Domingo, 1794.

(Matthew Pilling is a member of the FreeCapitalist movement known as the Canadian Capitalist. Despite his time in the Great White North, Matthew loves America and all that it stands for. He lives with his wife and two children in Taylorsville and works in finance.)

With its low price focus, Wal-Mart may appear to help the U.S. economy. But, the reality is that with its poor wages and benefits, massive China sourcing and tax avoidance, Wal-Mart makes its workers and the communities where it operates poorer.

How is it possible for a company that hands out millions of paychecks every year to be “making its workers and the communities where it operates poorer”? No matter how small the paycheck and benefits are, can you actually become poorer by getting paid? Would even a 10-cent paycheck not make you 10 cents richer than you were before? If you could magically wave your hand and make the Wal-Mart disappear from your neighborhood, would people suddenly start becoming wealthier? Maybe the writer believes that unemployment benefits and other government programs are the key to wealth.

Think about what even a small raise for Wal-Mart’s 1 million+ workers would mean nationally, or what it would mean to your city or town if everyone at your local Wal-Mart got a raise.

What a great idea! Here, the writer, from the perspective of someone outside the relationship between Wal-Mart and its workers, proposes changing the terms of employment for the good of the community. He doesn’t bother to ask how to accomplish it, nor does he consider any consequences other than the presumed benefit to the people as a whole. In this mentality, it is assumed that the costs of such an idea will simply be borne by the wealthy, who have enough already and can afford to give more to everyone else. Presuming a beneficial outcome for “the people” is supposedly justification enough. Readers of Atlas Shrugged will immediately recognize this philosophy, and the consequences of imposing it on the producers of value by force.

As our nation’s largest employer and most financially-successful company, Wal-Mart is a singular American institution. It occupies a unique position in our world by virtue of its size, reach and responsibility for the livelihoods of millions of workers and the needs of billions of consumers. And with such overwhelming influence comes certain moral responsibilities. It is the acceptance or rejection of those responsibilities that determines greatness.

There is both praise and damnation in this statement, acknowledging Wal-Mart’s success while simultaneously using that status as tool of condemnation. These words embody the very morality of the modern socialist mentality. It is a sentiment that views profit as guilt, a burden to be relieved by giving it to others. It is the claim that the degree of one’s success is the degree of one’s indebtedness to others – that it is an indication not of the value one has created, but of a debt owed to society by virtue of its ability to do so. Here, greatness is measured by obedience to “certain moral responsibilities”, which are unnamed, undefinable, and subject to no standard other than the self-loathing of the moocher. No recognition is made of the effort required to succeed, only demands made of the fruits of those efforts – as if such fruits were simply a matter of luck and required better allocation.

Ironically, if a person were to win the lottery, few would claim that the prize should be redistributed to all those who weren’t lucky enough to win (despite the fact that those winnings were created from the pockets of all those who participated freely). But when the prize is earned through value creation and free exchange (from the pockets of the customers of Wal-Mart), many call for the profits to be more “fairly spread”. Such a mentality rewards gambling and penalizes effort, and breeds the idea that the lottery is a fair game where no one wins at the expense of others, while mercantile exchange is a dirty business.

Wal-Mart has rejected those responsibilities and because of that choice, the money spent there does nothing of what it could to strengthen our economy. Higher salaries, quality affordable healthcare and paying what they owe like any good American, are just three things Wal-Mart can do tomorrow that will make them a company worthy of our money.

By ignoring the debate about whether government handouts (taken from the taxpayers or from the printing presses) are even capable of “strengthening our economy”, and proclaiming the presumed evils of Wal-Mart, this writer has successfully avoided any meaningful discourse on how to effectively stimulate any economy. In the process, he has revealed his true agenda: to discourage people from shopping at Wal-Mart due to their failure to adhere to the moral standards of the moochers and looters.

Conclusion:

At the core of this argument is the presumption that if everyone who worked for and shopped at Wal-Mart knew (as the writer claims) the “hidden costs” of doing business with Wal-Mart, they would cease to do so on moral grounds. The fact that millions of people choose freely to accept wages and purchase goods from Wal-Mart is the greatest evidence of the morality of its business, and a far greater indicator than the complaints of this writer. As is usually the case in the socialist mindset, the writer presumes to know better than millions of free individuals how best to use their resources (even their own labor) – and given the power (of government), would likely use force against the villain he condemns, claiming to do so “for the good of the people”. And like every other well-meaning tyrant in history, would ignore the evidence and the freedom of the actions of “the people” for their own sakes.

If Wal-Mart – or any company – is not in the business of creating value for its employees and its customers, it will not be in business very long. Thus Wal-Mart’s success is evidence of the value it has created (Principle 6: Profit is the Tool of Validation). As long as its business does not rely on force or deception in its transactions, whether for wage labor or for cheap laundry soap, there can be no greater statement of the value it provides to each individual and thus, to our economy as a whole, than this confession by the writer:

“…our nation’s largest employer and most financially-successful company”

Action Steps:

• Examine your relationship with the people and companies you do business with – are your dealings with them voluntary, and free of force or deception?
• Write a letter to the editor in your local newspaper in support of those businesses (big or small) that are successful as a result of the value they create for you.
• Research what laws are being proposed in your community (from the city council to the state legislature) that seek to control prices, wages, or other terms of free exchange. Contact your representative and express your opinion.

MRFC Principles: 6 (5,7,8,9)

References:

Why Wal-Mart Does Not Strengthen Our Economy – by David Nassar
http://www.huffingtonpost.com/david-nassar/why-wal-mart-does-not-str_b_99463.html

Readers of Atlas Shrugged by Ayn Rand will remember the account of the 20th Century Motor Company, whose heirs decided to turn the company and its employees into a communal “family”. Rand describes a Marxist society that few today would consider plausible – yet the socialist kibbutzim are the literal ideological descendants of the axiom, “From each according to his ability, to each according to his needs.” To learn the economic history and hear the personal tales from the kibbutzim is to witness Rand’s fictional community come to life (with the exception that many modern kibbutzim have chosen reform).

Kibbutz Yasur, founded in 1949, serves as an example. Though it began with high ideals, textile and toy factories, they were unprofitable, and soon closed, leaving many without a means to provide for their future. Homes eventually sat empty, as children left town and no new members joined the community. Today, those homes are nearly filled, and old farmland is being sold for new real estate development.

“The new kibbutz is not perfect, but economically things are improving,” said Mr. Kilon, who manages Yasur and another kibbutz nearby (many kibbutzim are now run by professional managers rather than by popular vote). “The incentive to work has gone up, and after changes in the management, we are standing on our feet.”

Boaz Varol was born on a kibbutz in the far north, but he left at 18. “My parents worked all their lives, carrying at least 10 parasites on their backs,” he said. “If they’d worked that hard in the city for as many years, I’d have had quite an inheritance coming to me by now.”

Key Points:

• In the year 2000, more than half of Israel’s 257 collective farms were bankrupt.
  In the past, kibbutz members were rewarded equally, whether they milked cows or managed a large industry.
• On the new kibbutz, members earn salaries or receive end-of-month allowances reflecting the income they bring in.
• About half the kibbutzim have moved into real estate, selling plots for luxury neighborhoods in place of the fields and orchards outside their gates.
• House buyers generally do not join the kibbutz, but pay for services like child care.
  While the major assets of the kibbutzim are still collectively owned, the communities are now largely run by professional managers rather than by popular vote.

Conclusion:

What has emerged in the social consciousness of the kibbutzim is a newfound appreciation for the principles of prosperity – if not a total embrace. After decades of reaping the starving harvest of collectivism, the kibbutzim, in an attempt at self-preservation, have re-introduced the concepts of private property and wages based on productivity. The results have spoken for themselves.

The kibbutzim have traded pure socialist collectivism not for capitalism, but for a modern mixed economy, where individuals are free to work for themselves, generating private profits that are then taxed in order to fund communal socialist programs. Many assets are still owned communally, though housing is often owned privately. Such a policy is usually termed “privatization”, though leaders prefer to call it “renewal”. Allowing people to own property, produce value and be compensated for it has resulted in a surge in productivity and profit among the kibbutz members. Finally, the prosperity promised by marxist illusions is beginning to appear where free exchange is honored.

Such a society, however, is still not a free society, but a parasitic one. The socialist strategy over the past century has evolved pragmatically from one of total collective control (which, as the kibbutzim demonstrate, has always resulted in economic failure) to a parasitic co-existence with the private producers of value. Such an arrangement has allowed the socialists to remain on life-support, sustaining their moral bankruptcy as long as they allow just enough freedom for their capitalist hosts to produce the profits they are unable to produce for themselves.

The modern residents of the Kibbutzim are enjoying some of the benefits of capitalism, and their prosperity has attracted the attention of outsiders, resulting in increased demand and waiting lists for membership. While the changes have increased incentives to work and reduced the parasitic tendencies of the past, it remains to be seen whether the people will fully embrace the ideology at the core of their newfound prosperity. Their future depends on it.

Action Steps:

1. Read Atlas Shrugged – specifically the account of the train tramp who revealed to Dagny the story of the 20th Century Motor Company after its founder had died.
2. Examine your role in your community – what determines your individual prosperity? What determines your community’s prosperity?
3. What can you do to associate with others and develop local communities based on the principles of capitalism and freedom?

MRFC Principles: (2,3,5,6,7,8,10,11,12,13)

References:

The Kibbutz Sheds Socialism and Gains Popularity
http://www.nytimes.com/2007/08/27/world/middleeast/27kibbutz.html?_r=1&pagewanted=all