Reuters to US Economy: ‘Our Heart Will Go On’

Shutdown: A fight with no room for compromise ... To end the government shutdown, all Speaker John Boehner (R-Ohio) needs to do is let the House of Representatives vote on a budget. It would pass within 30 minutes. Virtually all 200 House Democrats would vote to keep the government open, as would as many as 50 Republicans. An easy majority. But no. Boehner and other Republican leaders refuse to do that because they are in thrall to Tea Party conservatives. Hard-line conservatives number about 50 out of 232 House Republicans. But those conservatives are threatening to lead an insurrection against party leaders if they dare to allow a vote. Other Republican members are terrified that they will face a tough primary challenge from the right if they don’t go along with the Tea Party.  So what have we got? Minority government. It’s outrageous when you think about it. – Reuters editorial

Dominant Social Theme: The government is not so important after all, even if it goes broke. The US economy is exceptionally vibrant and no matter what happens, the system will continue.

Free-Market Analysis: This past week saw an astonishing outpouring of opinion, much of it vitriolic in the US news media regarding the so-called US government shut down. Nowhere was the coverage more dramatic than over at Reuters, where seemingly the entire team of top columnists breathlessly chronicled every aspect of a grieving nation’s inability to provide products and services to needy masses.

The above excerpt is a good example: an editorial that focuses relentlessly on the here and now without providing a larger context that might provide us with more insight into the underlying fundamentals of the “shut down.”

Reuters, like The Economist, serves as an elite mouthpiece, filtering news through its editorial process and then spewing dominant social themes out into the blogosphere. Habituated to editorial staff meetings, we are well aware of what went on. The leaders of Reuters “conferenced” the editorial staff electronically or otherwise and explained that this story was such a big one that everyone would have to pitch-in in order to cover it from all angles.

An editorial “top gun,” probably someone with a Rhodes Scholarship, breathlessly quarterbacked the coverage, barking out orders to the wire service’s well-compensated ink-stained wretches. The media columnist was asked to cover the shutdown from a media perspective, while a more erudite and theoretical editorialist was advised to address the issues via “game theory.” Clever that.

The result of all the coverage is a series of extraordinary articles examining an essentially manufactured event from almost every conceivable angle.

Never mind, of course, that most of the government has NOT shut down and that what has shut down has been hand-picked by the Obama administration to ensure that the few scant services affected (national parks and monuments come to mind) are among the most high-profile and popularly visited of all public facilities.

Here, from the Washington Times: “Where's sense of crisis in a 17% government shutdown?”
Everyone knows the phrase "government shutdown" doesn't mean the entire U.S. government is shut down. So in a partial government shutdown, like the one underway at the moment, how much of the government is actually shut down, and how much is not?

 … I asked a Republican source on the Senate Budget Committee for an estimate. This was the answer: "Based on estimates drawn from CBO and OMB data, 83 percent of government operations will continue. This figure assumes that the government pays amounts due on appropriations obligated before the shutdown ($512 billion), spends $225 billion on exempted military and civilian personnel, pays entitlement benefits for those found eligible before the shutdown (about $2 trillion), and pays interest costs when due ($237 billion). This is about 83 percent of projected 2014 spending of $3.6 trillion."

So the government shutdown, at least as measured by money spent, is really a 17 percent government shutdown.

Yes, the federal government’s death is considerably exaggerated. Of course, you wouldn’t know it from the editorial we’ve selected as an appropriate example of Reuters coverage. The screed paints the quarrel starkly. Conservatives wear black hats; liberals, white. Here’s more:

Hard-line conservatives are blocking majority rule so they can get their way. They insist they are taking a stand on principle. Why? “Because we’re right, simply because we’re right,” one of them told the New York Times.  What principle? The principle that the Affordable Care Act is an unconstitutional expansion of government power and that President Barack Obama is not a legitimate president. 

But didn’t the Supreme Court rule back in June that Obamacare is constitutional? It did. A Tea Party activist protested at the time, “Just because the Supreme Court says something is constitutional doesn’t mean it is.”  And didn’t the voters re-elect Obama last year? They did. But hard-line conservatives insist that’s only because Republicans put up a candidate who wasn’t a true conservative.

Conservatives have a talent for denying facts. “The American people overwhelmingly reject Obamacare,” Senator Ted Cruz (R-Texas) said on Meet the Press, “They understand it’s not working.”  Do they? Well, the public has always been skeptical of the Affordable Care Act. Americans polled last week by Quinnipiac University were split over the new healthcare law — 45 percent support it and 47 percent oppose it. 

… There is no way Republicans can win this fight. We’re already seeing polls that show Democrats building a lead over Republicans when voters are asked how they will vote for Congress. The Quinnipiac poll shows a 9-point Democratic lead — the biggest margin so far.  That has a lot of congressional Republicans freaking out. They’re rushing to try to restore spending on popular programs like veterans’ benefits and national parks. But Obama and congressional Democrats are holding fast. They know they’ve got the leverage. 

Don’t Republicans remember what happened the last time they shut down the government in 1996? President Bill Clinton coasted to re-election.  Conservatives argue that what hurt Republicans in 1996 wasn’t the shutdown. It was the “surrender.” They believe they lost because they gave in too quickly instead of keeping the government closed. 

What exactly do Republicans think they can accomplish with this maneuver? Some are using terms like “the Alamo” and “Custer’s Last Stand” — glorious defeats, fighting for a noble cause. Thank goodness nobody has mentioned the Confederacy as the great Lost Cause.  Senator Barbara Mikulski (D-Md.) reminded her Senate colleagues that the issue here is the federal budget. It’s a debate over money, she said, “not about political or ideological viewpoints.” 

Actually, that’s exactly what Republicans insist it is about. “This is a matter of core principle,” one Republican congressman said.  A budget is supposed to be a fight over interests. Interests can be negotiated and compromised.  But you can’t make deals if this is a fight over values, which is what conservatives claim it is. Values are about right and wrong. There’s no room for compromise. 

We've quoted a lot of the article because it is a prime example of the kind of rhetoric that has surrounded the health care debate – as provided by the US mainstream media. The editorial is incredulous that the US government has shut down and contemptuous that that the shutdown is being cast in terms of "core principles."

We beg to differ. This latest eruption is symptomatic of a much larger trend that in our view is going to continue for the foreseeable future. People know instinctively that the current Western economic and sociopolitical system is unstable and getting worse. They want something else and politicians, like clumsy herbivores, ever have their noses in the wind, sniffing the prevailing sentiment.
What they are sniffing is change, fundamental change – and thus the increasing paralysis of government not just in the US but in Britain, Spain, Italy and even France. (Germany, not yet … but wait.)

For the past decade we’ve been arguing that what we call the Internet Reformation has been busily reorganizing the sociopolitical and economic fabric of the West, and thus the world. We’ve made prediction after prediction pointing out that the power elite running the world’s central banks would turn to age-old tools of war and economic ruin to combat the dawning of the new information era.

Those following our paradigm would not have been surprised by the West’s economic decline, by the rise in the price of gold relative to the dollar or even by the wars in the Middle East that are replacing secular governments with Islamic fundamentalist governments (loosely affiliated with US Intel.)

We’ve predicted almost every major trend in the West over the past decade in the context of two separate web sites and there’s no evidence, from what we can see, that any of our analysis is suddenly going to skew towards inaccuracy or irrelevance.

People are losing faith in regulatory democracy, as well they should. The freedom movement in the United States is huge and every move the authorities make now to repress the Internet and re-emphasize dominant social themes is met with an equal pushback from the other side.

The 21st century is not the 20th. Western citizens generally are economically and socially libertarian. The false schism of Left and Right or Democratic and Republican is increasingly in danger of being discarded entirely. Just as we predicted, people like Rand and Ron Paul have emerged as some of the most influential politicians in the Western world. In England, UKIP is now coming on as a free-market oriented party. Soon France and the rest of Europe will follow.

It is ineluctable. When given the choice between freedom and servitude, people will choose freedom. The myth perpetrated by the powers that be that people will always choose security over self-determination is based on the idea that people don’t understand the choice, or believe they have none. But they do.

The Tea Party, partially co-opted by the Republican establishment, was not an aberration. The current dysfunction of the federal government is not an aberration. The revulsion of British and US citizens to war, recently illustrated as it has been, is not a coincidence. People speak of low information voters but many are using modern information technology to radically expand their knowledge base.

The Internet Reformation has just begun. The banking elites are helpless against it. They can try to shut it down, arrest people who increasingly question the current paradigm, utilize false economic arguments to prop up statist arguments regarding “public banking” but ultimately it’s not going work.

Those who understand what is going on – and the editorial we’re analyzing gets it fundamentally wrong – will apply their comprehension to every facet of their business, family and investment lives. The elites have worn their rope down to a nubbin. There will be one more “last gasp” – a final stock market party that will make some very wealthy indeed. And then gold will pop once again and the West will sink into the icy grasp of a further depression.

These people want more and more globalized facilities: a global central bank, global money and a fully globalized political system. They are counting on chaos and war to deliver a supine public into their grasp. They will continue to pound away at their increasingly dysfunctional dominant social themes, trying to frighten people in to giving up power and authority to international facilities.

But they won’t get it. The Internet was not deliberate. It was a mistake that combined a military-industrial facility developed by DARPA with the unexpected creation of Apple’s personal computer and floppy disk. The result was an explosive technology that expanded via Friedrich Hayek’s “spontaneous order.” The Internet is the best and biggest argument for the prosperity inherent in anarchy that there ever was. Government didn’t create this magnificent digital enterprise, the private sector did.

And government is not likely going to be able to shut it down, either. Technological advances like the Internet are very hard to control. It took the elites of the Middle Ages centuries to undo the damage to their authority caused by the Gutenberg press. There is no reason to believe that they can control the ramifications of the ‘Net in a decade.

The Reuters editorial harkens back decades to explain what is going to happen to the Republicans now that they have “shut down” government. But in our view, this is a fundamental misreading of what is occurring.  This article puts us in mind of a song that served as the theme for the blockbuster "Titanic." It began like this:

Every night in my dreams
I see you, I feel you
That is how I know you, go on
Far across the distance
And spaces between us
You have come to show you, go on

This admittedly schmaltzy melody can surely be seen as the Reuters theme song, though in Reuters's case it is aimed not at a handsome lover but at the government itself and its persistence in its current expansive state. “Government,” sings Reuters passionately, will “go on … far across the distance and spaces between us.”

Probably, it won’t.



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