Author Archives: Cameron Macgregor

8 Steps to Revive the Right

The Tea Party needs leaders like UKIP's Nigel Farage.

The Tea Party needs leaders like UKIP’s Nigel Farage.


8. Play Offense: If the Right wants to win, it must play offense rather than defense. Romantic notions of idyllic times when politicians debated erudite issues instead of “playing politics” are both naïve and uninformed. The Federalists defeated Thomas Jefferson in the presidential election of 1796 in part by casting him as an anti-Christian atheist, and warning that his presidency would mean the seizure of bibles by executive mandate, utter non-sense but highly effective. Playing defense certainly did not serve Romney well; he unwittingly assumed that harping on a bad economy was enough to win the presidency. While Romney was buried under a morass of Bane Capital dross, Obama went unscathed. He should have learned from McCain’s unwillingness to “take the gloves off” and go on the offensive four years earlier.


7. Abandon the Warfare State: Patrick Buchanan and Ron Paul have been right about this for years. According to Pew Research, Americans by enormous margins want the United States to stop interfering in the affairs of other states and focus resources at home. Americans also recognize, as Chris Preble and Ben Friedman of the Cato Institute recently penned, that “the United States needn’t run the world to be safe in it.” In fact, trying to manage world affairs has made us weaker not stronger. Along these lines, we can and must cut our ridiculous defense budget, which exceeds the military spending of all other industrial nations put together. Supporting a strong national defense is not synonymous with advocating interventionism overseas, nor is it synonymous with profligate military spending.


6. Better Voter-Data Analytics: The success of Organizing for Action is well known, as are the tech foibles of the 2012 Romney campaign. The failure of Project Orca, a smartphone application designed to help turn out voters, is emblematic of the Right’s broader failure to keep technological pace with the Left. Though the importance of social media is probably overstated, especially because the younger voters they target are fickle, data mining is not. The Right needs more data infrastructure to challenge the Left’s dominance. Businesses are revolutionizing customer relationship management (CRM) by employing data rich sources. The analogy is direct, voters are customers. When it comes to canvassing, knowing is half the battle; once we know who and where potential voters are, we can launch directed organized outreach to turn them out.

5. Promote a Plan for Growth: On the Right, there is broad consensus that Washington needs a new tax system and an overhaul of existing regulations. But to capture public attention the Right needs a simple, digestible plan for growth. Here is one: New Enterprise, Energy, and Advanced Manufacturing. New companies trying to launch an IPO or secure funding from Venture Capital firms need less regulation, lower taxes, and a reformed patent system. America is in the embryonic stage of an energy revolution. To nurture its continued growth we need to lift restrictions on exporting oil overseas, greater access to federal lands and coastal areas, and more energy transportation and distribution infrastructure. Among the main reasons for the decline of the middle class is the decline of manufacturing. We need a national vocational system, incentives for manufacturing firms to build in the US, and a federal department oriented specifically to promoting domestic manufacturers. Reforms focused on these sectors will generate millions of jobs and restore growth to the battered US economy.


4. Develop a Strategy for Victory. Messaging is everything. The Right needs a new branding, a new image if you will. To do so it must think bigger, find a collective identity and express that identity in simple language. Here is a thought: become the Party of Innovation. The Left represents the past, the entitlement state, big government, and bailouts. The Right should champion innovations in health-care, education, technology, R&D, energy etc. It can do so by embracing public policies that endorses direct primary care, a national vocational system, tech start-ups, R&D funding, and pro-energy shale oil, natural gas, and tight oil exploration and development.


3. Fire Establishment GOP Leadership: When organizations fail in business, in warfare, or on the sports field executives are the first to go. Politics is the noticeable exception. The Republican Party is in a state of free fall, fractured by internal divisions, lacking a coherent identity, and absent clear leadership. If the Right wants to change the game, we need a new coaching staff. Off-loading RNC Chairman Reince Priebus, House Speaker John Boehner, Senate Minority Leader Mitch McConnell is a good start. “Republicans” on Capitol Hill who refuse to take on the exploding national debt, flirt with amnesty for over 12 million illegal immigrants, or cave to Obamacare should be put on notice—all RINOs will be primary-ed.


2. No Amnesty: This could be considered number one because granting any form of amnesty will all but eliminate the chance for a return to limited Constitutional government based on rule of law. Those who think that amnesty will secure Latino voters should consider a couple things: first, the last major amnesty (1987) was signed into law by Republican President Ronald Reagan, which did not help secure our borders or curry favor with Hispanic voters; and second, illegal voters are disproportionately government dependents uninterested in the Constitution or in assimilating to basic American culture by speaking English or following the law.


1. Find Leaders: The most important step to turning around any failing enterprise is to find people who can lead the turn around. Put differently, if you are going to fire the CEO you need to find a new one. No successful organization, business, party, or movement can be unified or successful without a designated leader or chain of command. Five years in the Tea Party is learning this lesson the hard way. There are many examples from history that immediately come to mind, but here is a more contemporaneous example of the difference leadership can make—Nigel Farage. Nigel Farage (pictured above) is the voice and leader of the UK Independence Party (UKIP). Farage’s unique skill set, his ability to rationalize and articulate UKIP’s populist anti-EU message, has transformed the erstwhile fringe party into a major force in British politics. It is noteworthy that Farage is not even an MP in London but a distant Member of European Parliament (MEP) in Brussels. In short, having talented spokesmen wherever they can be found is indispensable. Could Senator Ted Cruz be one of them?

Cameron Macgregor is a US Naval Academy graduate and former naval officer. He is currently a graduate student at George Mason University.

Ryan budget is “a joke and a betrayal!”

Ryan Murray

That’s what former Reagan Office of Management and Budget (OMB) director David Stockman called Paul Ryan’s budget agreement with Senate Democrat Patty Murray. The fiscally irascible Stockman should not be the only one unnerved by Ryan’s duplicity. The fait accompli debt deal eliminates sequestration driven defense cuts, lifts spending caps, and promises to make up for it somewhere down the road? The silver lining—no new taxes—another poorly conceived tactical defeat where we get nothing for something, courtesy of your Republican Party.

Sometimes the line between compromise and capitulation is narrow, but not this time. Reeling from the unpopular Tea Party forced government shutdown in October, the GOP leadership has officially turned its back on the Movement that put them in power. They have shown their true colors (certainly not red) and surrendered to the spend today damn tomorrow Libs.

The significance is clear as day. There will be no more budget showdowns, no more fanged initiatives for real cuts, no more attempts at meaningful reform, at least not from the GOP. A defensive House Speaker admonishes us, “Listen, if you are for deficit reduction, you are for this agreement.” Representative Tom Cole (R-OK) added further, “You can’t spend your time making perfect the enemy of good.” Translation, we have given up and so should you.

I guess they forgot telling’s not selling. In the big picture we all know how this ends: fiscal collapse, bankruptcy, default, Greece, or any other synonym for catastrophe that comes to mind. We have all heard the cynical phrase, “Kick the can down the road.” But, for how much longer can we “extend and pretend” before we run out of road.

The answer is fast approaching. The real economy, local and global, is in poor condition, and things are getting worse despite empty euphoria about soaring stock prices. Former banker Satyajit Das conveys the unpopular truth:

“There is a growing gap between financial markets and real economic activity, between the 1% who continue to gain from the current environment and the 99% whose economic fortunes have declined, and between the promises of policy makers and the economic reality.”

When small gaps between real and perceived become chasms disaster strikes. Eventually, the short term is overtaken by the long term and reality destroys fantasy. This phenomenon is already working against Obama, once the inspiring icon to the gullible, now a Potemkin to the disillusioned. It will soon act against the GOP, whom, like the Left, now conflates doing what is popular with doing what is right.

The entitlement state is dying. Instead of broadcasting that message and advocating reforms to confront its inevitability, Republicans have opted to rejoin the party on the Titanic. They will not be rewarded for doing so.

For those steadfastly opposed to building a new party, it is time to rethink that position. Over 60% of Americans now say there is a need for a third party because both major parties are out of touch, the most ever according to Gallup. For those already in the Tea Party Movement, it is time to think bigger and aim higher.

Cameron Macgregor is a former Naval Officer and USNA graduate. He is currently a graduate student at George Mason University.

Stop calling me a Conservative!



If you are a Tea Partier like me, you probably think of yourself as a conservative, but you’re not. Even though you believe in the constitution, the rule of law, private property, and America’s foundational English-speaking Western-Christian culture, you are not a conservative. And if you believe in the United States as a singular nation based on these principles, you are not a conservative either. In fact, you are neither a Republican nor a Democrat.

You are an American nationalist who wants fundamental reform from a federal government dominated by parties that reject these ideas in favor of others, mainly progressivism and multiculturalism. You’ve recognized that the federal government and it’s institutions of power—so-called big government—no longer resemble or abide by the constitution, in spirit or practice.

A few simple comparisons expose this basic reality: 100 years ago (1912) government spending comprised 2% of GDP; today it makes up 26%; in 1912, 97% of government spending was controlled and authorized directly by Congress; the number today is 33%. So much for a government shutdown that put at risk barely one third of federal spending—the rest is automatic, uncontrolled, and outside the reigns of constitutional dominion.

Big government fails other critical tests as well. The federal government no longer upholds the rule of law: it tolerates illegal immigration, doesn’t protect our borders, bails-out corrupt bankers, fights wars and launches strikes without the approval or consent of the American people. It does not protect private property: it redistributes by taxing the producers and transfers wealth to the corrupt and the underachievers; what little is left over goes to the needy, so we hope.

America was once an English speaking country, but no more.  Federal programs offer special services in other languages like Spanish and Arabic. “Please push 1 for English and 2 for ….” is how it goes. We have radio and TV stations in other languages, even street signs in parts of major cities are in foreign languages. Only selected States have enacted English-only laws, this despite an overwhelming majority of Americans who support them.

The United States is a country that celebrates freedom of religion, as long as that religion is not Christianity. Federal regulations require references to Christmas or Christianity removed or diminished while other religions are accommodated everywhere, like Muslim prayer rooms in airports. Thanks to the federal government, Christianity, still by far the most common religion practiced by Americans past and present, is largely banned from the public square.

Conservatism means little in this contemporary setting.  As a Member of Parliament in Britain’s House of Commons, Burke championed an early brand of conservatism. Burke accepted change as long as it did not undermine or destroy the basic pillars of British society. Unlike other ideas about government like socialism, fascism, or modern day progressivism, Burke’s mantra to “conserve and correct” was based more on prudence and rationality than ideology. Until now, Burke’s approach defined Americans on the Right for most of our history.

If the word “conservative” still had meaning, we would support Burke’s approach. We can no longer employ these tactics because the Left has created a new political, social and economic order that is utterly anti-American, unconstitutional and designed to transform this country into the Third World, a place where 400 years of Western Christian Civilization are erased. And that is why there is significant daylight between the Tea Party and the Washington elite who control both political parties.

So, what are we if not conservatives?

The Tea Party is reformist, and yes, nationalist. It is time we confront the truth that America’s national identity, its purpose and prosperity are being systematically destroyed by people on the far Left and their accomplices on the faux right, people like Lindsey Graham and John McCain who embrace big government because it profits them to do so, their country be damned.

So stop calling me a conservative and, by the way, don’t call me a Republican either.

Cameron Macgregor is a former naval officer. He is currently a graduate student at George Mason University.

Syria debate reveals gap between Americans and Washington

Syrian debate reveals gap between Americans and Washington

Barack Obama, John Boehner









The heads of both major parties in Washington want intervention in Syria, but the American people absolutely do not. By wide margins Americans stridently oppose yet another US led foray into yet another Mid East quagmire. Unfortunately, that appears to be of little concern to America’s top political leaders.

House Speak Boehner and President Obama don’t agree on much, but they do agree that the US military should hurl punitive missiles at Syrian President Bashar Assad for the alleged use of chemical weapons. For Obama, it’s about “red lines” and “international norms.” For Boehner, it’s about sending a message to “enemies around the world that need to understand that we’re not going to tolerate this kind of behavior.”

Americans are not happy, and who can blame them. After over a decade of endless conflict in Iraq and Afghanistan, what does the US have to show for it? The answer is tragically clear to most Americans, a raw deal. Americans have spent blood and treasure, and put their faith in Washington decision makers to tell them the truth and make the right decisions; they have done neither.

So here we go again: enter Syria. Washington’s abysmal record keeps piling up. First was Egypt. The United States pressured Mubarak to step down in favor of the Muslim Brotherhood. Two years later Egyptian blood flows in the streets of Cairo, and the military is the only levy holding back the deluge. Next came Libya. America’s reward for helping to remove Gaddafi: a dead US ambassador and a collapsed state united only by a craving for Sharia Law and its hostility to the United States.

Of course “this is no Iraq and no Afghanistan,” President Obama proudly stated. Indeed, Mr. President, it may not be. But it is almost definitely another Libya, Egypt, Haiti, Kosovo, Bosnia, Somalia and virtually any other botched intervention in recent memory.

This utter insanity is proffered by the sanctimonious, warmongering elites who dominate America’s power structure. Conflict, war, intervention means little to them; after all they will never be called upon to deploy, fight, and potentially die to uphold vague notions of so called “international norms.”

Boehner and Obama may be of different parties but they share the same Washington consensus. They and the power structure they command suffer from a toxic mix of arrogance and idealism. They arrogantly posture and grandstand from their Washington perch, barking moralism at the rest of the world while indulging in the absurd fantasy that launching a few missiles or slandering a few despots keeps the world in line.

It is time Americans wake up and realize that this madness will not stop until the Washington power structure is challenged and defeated. In short, Americans need to do more than light up C-SPAN call centers to vent their anger. America needs a new party, or more precisely a new movement, that mobilizes the frustration of the many against the haughty oppression of the few.

Cameron Macgregor is a former Naval Officer and graduate of the US Naval Academy. He is currently a graduate student at George Mason University.


Who cares about white America?

Suburban Poor in Atlanta







Tough economic times have brought many issues to the fore in America but one that is noticeably absent from public discourse is white poverty. Racial tension, gun violence, income inequality, immigration, and public debt justifiably command lots of media attention. However, growing poverty and social dislocation among working class whites in rural and suburban areas should be a leading headline, especially since whites represent by far the largest group living below the poverty line in the US.

Nearly 20 million white Americans make less than 23 thousand dollars a year per family of four. That makes whites 41 percent of the poor population, a staggering percentage that is roughly double that of black Americans. And for the last decade, working class white poverty has grown faster than working class non-whites.

Unfortunately, the numbers of white Americans living in poverty is just part of the story. According to various new economic surveys (from sources like the Census Bureau and one published by Oxford University) single parent households headed by white women has soared to levels previously experienced only in the black community. Further, out of wedlock births are up, as are teenage pregnancies. Related problems of drug abuse and high-school drop-out rates accompany these disconcerting trends.

The white working class in particular has been hurt by the last thirty years of economic change in the United States. Probably the biggest problem facing destitute whites is deindustrialization. The disappearance of coal mining, textile, and a dwindling manufacturing sector has left whites, largely though not exclusively in the Mid-West and Appalacia, without jobs.

In truth, declining wages and stagnant economic growth has been the norm for several decades. In his excellent 2005 work The Moral Consequences of Economic Growth, Benjamin Friedman explained that “The consequence of the stagnation that lasted from the mid-1970s until the mid-1990s was, in numerous dimensions, a fraying of America’s social fabric.” The extent of this fracturing finally emerged after the financial crash of 2008.

Still, perhaps the pivotal factor is cultural decay; here too, the white population is center stage. Charles Murray emphasized the cultural decline of white America in his recent book Coming Apart. According to Murray, the civic culture based on family, faith, and community that once strongly united white America has all but collapsed in working class areas. The touchstones of this cultural demise are the breakdown of the family, decline in industriousness, the absence of educational vigor, and the erosion of a value based ethic that used to be strongly supported by Christianity.

Who cares, or rather doesn’t care about these issues is equally troubling. While the problems that plague lower class white Americans are finally creeping to the surface, Charles Murray argues that the upper class that dominates the key public and private institutions in the country are unaware or unwilling to engage them. In many respects, Murray claims, this is because elites no longer understand white America.

The insulation of the elite echelon from their countrymen is not going unnoticed by the often termed “invisible” white poor. As a result, recent surveys show the white population collectively has become more pessimistic about their future, and importantly, more pessimistic than non-white minorities. In short, the white population is increasingly uncertain about its economic future but also feels unrepresented in Washington.

Demographic change has encouraged this sentiment. Massive demographic changes over the last two or three decades has added new voting blocs seized upon mainly by the Democratic Party, though numerous Republicans from George Bush to John McCain have desperately tried to court them as well. The white working class population has been lost in the mix. Consequently a feeling of “white alienation,” a term used by Harvard Professor William Wilson, is increasing.

Political groups in Washington represent virtually every minority group in the country, but who represents impoverished white America? At this moment, it is hard to answer that question. Historically, going back to the New Deal, the Democratic Party captured this electorate. That is no longer the case. The Republican Party may claim to represent them but has not done so explicitly, possibly out of fear.

In an age paralyzed by political correctness and race bating, it may be a challenge to act in the interest of white America. Nevertheless, the United States is in the midst of a social meltdown, and white America is at the center of it. Thus, resolving to address the problems beleaguering working class whites will benefit the entire country, not simply one demographic group.

Cameron Macgregor is a former naval officer. He is currently a graduate student at George Mason University.

Detroit’s Failed Paradigms are America’s

Detroit Abandoned Neighborhood






After arduous negotiations with Detroit’s creditors and pension beneficiaries failed to produce a resolution, city officials finally threw in the towel and filed for bankruptcy last week. Detroit’s disintegration exposes the basic failure of what have become modern America’s failed paradigms: too much debt, too much entitlement, and hindered economic growth.

Detroit is in ruins. The sprawling mid-century industrial metropolis of nearly 2 million people has been whittled down to roughly 700 thousand residents. While the Detroit community has experienced a steady exodus for decades, some 250 thousand people have abandoned the city since 2000.

Stripped of its erstwhile vibrant manufacturing base, plagued by overpowering unions, and governed by anti-competitive federal policies dating back to the first federal bailout of Chrysler in the 1980s, Detroit’s transformation is complete. City lights throughout the city don’t work, public parks are closed, entire neighborhoods are ghost towns, and drug gangs roam the streets with impunity.

The city, or what remains of it, is completely broke. Detroit’s total debt is projected to be at least 14 billion and likely as high as 20 billion dollars. The budget deficit alone is over 300 million dollars. As a result, public services have collapsed—police and firefighting services, public maintenance and administration have all been slashed.

In the past, borrowing was the answer. Instead of offloading unsustainable pension and health-care obligations, Detroit issued debt to make up the difference. Instead of reforming poor administration and correcting incompetent accounting, city leaders decided to push the problem into the future. Thus, dysfunctional public administration and a culture of entitlement combined with anti-competitive economic policies are responsible for the malaise that has taken root.

The tragedy of Detroit is likely to be glossed over; many will pretend that it is an outlier not reflective of America’s general state. Others will bemoan what has happened while shifting responsibility away from where it properly rests.

But the paradigms that bankrupted Detroit are acting on America with similar results. In 2010 Meredith Whitney, a prominent financial analyst, made headlines when she predicted 50-100 municipal defaults in 2011. She was widely rebuked for her comments, which turned out to be wrong in the short term. Nevertheless, accounting shortfalls around the country, particularly at state and local levels, is an explosive problem that has not been fixed.

The sources of America’s debt are the same as Detroit’s: an oversized public sector, unsustainable retirement benefits, and general economic slowdown. States in the worst financial conditions, blue states like New Jersey and California embraced massive entitlement spending, appeased strong unions, and indulged in unwieldy regulations. Also like Detroit, they suffer from some of the worst public school systems in the country.

Defaults have already started in California. Just last year Stockton, a small city in Northern California declared bankruptcy. Amazingly, even cities like Los Angeles are flirting with insolvency. In fact, former Mayor Richard Riordan has warned people publicly not to buy LA muni bonds, citing unfunded liabilities as his main concern.

Washington’s budgetary problems have and will continue to dominate national headlines. Indeed, the national debt is perhaps the gravest single threat to America’s economic stability. Still, Detroit’s bankruptcy should serve as an awakening.

Sometimes the worst disasters are the ones we all see coming, the ones that develop slowly right before our eyes. The paradigms that conspired to bring Detroit to its knees are doing the same to the entire country. It just might take longer.

Cameron Macgregor is a former naval officer. He is currently a graduate student at George Mason University.

The Failure of Mass Immigration

Mexican flag displayed at immigration protest

Mexican flag displayed at immigration protest












Among the many divisive issues consuming policymakers this summer, immigration is now center stage. This past week the Senate passed a bill proposing a “pathway to citizenship” for some 11 to 15 million illegal immigrants living in the US. Arguments for and against legalization are mainly centered on economics. Is legalization a net gain or a net drain on the US economy? Will legalization bring in more tax revenue or further strain welfare benefits? Will bringing people “out of the shadows” help or hurt America’s jobs crisis?

Unfortunately, there are other and perhaps more important issues to consider. Chief among them is the notion of culture. While the multiculturalists pretend that culture is either irrelevant—a fictitious social construct—or the legacy of nativist racism, the reality is that culture matters.

Europe provides an excellent example. Over the last few decades Europe has embraced America’s immigration model. European nations opened their borders to millions of immigrants from all over the world, especially the Middle East. The results are consistent across the European continent: sharp social and cultural division between indigenous and immigrant populations.

These divisions are becoming increasingly ferocious and hard to conceal, even by the main stream media that dominates Europe. This summer alone Sweden, Great Britain, and France have experienced potentially explosive social situations. In May, Muslim immigrants ransacked cars, office buildings, and community centers for almost a week, transforming the normally majestic city of Stockholm into an urban inferno.

Different story lines played out in London and Paris but with similar results. In England two Muslim youths attacked and murdered a British soldier in broad day light, violently mauling him to death on video. Within hours, members of the anti-immigrant group the English Defense League (EDL) stormed the streets of London in angry protest. A week later a French soldier was attacked and severely wounded in Paris. In both situations, the respective governments quickly distanced the attackers from their broader immigrant communities and media outlets carefully filtered the storylines to calm public emotions.

Of course these problems are not new. Major riots in immigrant areas erupted in London in 2011 and Paris back in 2005. Tension exists wherever mass immigration has occurred in Europe: Germany, the Netherlands, Switzerland, even in Greece. Unfortunately, the same tired arguments and familiar culprits such as economic disenfranchisement, Islamophobia or nativist racism are blamed for the melee. However, the obfuscation is gradually giving way to the underlying cultural divisions responsible for what is taking place.

It is not just about Islam versus secularism. It is about differences of language, values, and even legal regimes (Sharia versus sovereign law). In short, integration or assimilation is virtually non-existent in Europe. On the contrary, mass immigration has brought balkanization, segregation, and social disharmony.

How do these issues relate to the United States, the supposed paragon of assimilation where, historically, mass immigration has been a boon to prosperity? The truth is the European experience tracks very closely with America’s worsening immigration problem. Here too, large immigrant communities separate from main stream America have taken root.

These are primarily though not exclusively Hispanic. In these communities, crime is more frequent, illegitimate birth-rates are higher, poverty is more wide-spread, and the spoken language is Spanish rather than English. These should be troubling signs for Washington policymakers. But they are seldom mentioned as serious concerns.

The lesson of mass immigration in Europe, and indeed, throughout the world, is that it erodes national cohesion and inevitably produces conflict. Another lesson is that numbers matter. Immigration on a small scale can be beneficial, especially when immigrants speak the national language, possess marketable skills and education. However, immigration en masse from peoples of foreign cultures bereft of useful skills or even a basic education is simply a failed policy.

That’s right, culture is inescapably important. If huge numbers of a distinct group migrate into another country, they tend to insulate themselves from the broader national culture. In Europe’s case, millions of Muslims retain and reject Western culture (secularism and liberalism) because they can; their large numbers enable and encourage them to establish their own communities. In America’s case, millions—over 40 million since the 1970s—mostly from Latin America have done the same.

In sum, the sure fire way to destroy America’s already wavering social cohesion would be to grant amnesty to 15 million illegal immigrants. Legalization would undoubtedly flood our borders with millions more immigrants, as the 1986 amnesty certainly did. It would also further inflame racial-cultural tensions in the United States, eventually pushing America’s disunion to the breaking point.

Cameron Macgregor is a former naval officer. He is currently a graduate student at George Mason University.

Is the Fed game up?

Federal Reserve Building, Washington DC

Federal Reserve Building, Washington DC

For a very long time, rebooting the US economy has been left to a handful of central bankers at the Fed. After the swift and undemocratic action by the Bush and Obama administrations to cope with the financial crisis, Washington ceased to be a major player in the economy.  Short of dropping real dollars out of helicopters the Fed followed a basic game-plan: liquidity, liquidity, and more liquidity. But the Fed’s long run may be coming to an end. Why?

Considered virtually “fail safe” by Keynesian doctrinaires, the Fed’s liquidity strategy is not working.  By most accounts, the Fed has failed to achieve its stated aim, the creation of new jobs and the restoration of U.S. economic growth.  Though American financial markets are awash in dollars, US growth remains anemic, America’s fiscal situation continues to worsen and uncertainty plagues investors.

To some, this allegation may sound pessimistic, even blasphemous, but tough questions must be answered. What about the housing recovery, is it real or imaginary? What about the rising stock market fueled by fresh infusions of cash from the Fed? What about the claims of strong growth relative to the rest of the world? Perhaps there is something good about living in the biggest shack in the projects, but markets and economies are always about the fundamentals, and today the fundamentals are weak.

Real economic growth means job creation, technological innovation, entrepreneurialism, and rising standards of living for everyone, not just bankers like JP Morgan Chase CEO Jamie Dimon and his New York Colleagues. It is now widely believed on Wall Street and probably around the world that the recent stock market rally is largely artificial; many are calling it “the Bernanke Rally.”

It is also no secret that the Fed continues to purchase US treasury bonds in order to suppress borrowing costs for reckless spenders on Capitol Hill. To prop up the real-estate market the Fed also purchases roughly 40 billion dollars of Mortgage Backed Securities a month – to relieve banks of their “toxic” waste. The point is cheap money is not a substitute for tangible, concrete economic growth.

What cheap money can do, however, is create bubbles, huge overvaluations of assets and goods akin to the bubble followed by the housing bubble. In a recent interview with Bill Gross, the founder of the largest bond investment company in the world, PIMCO, tells investors bubbles are everywhere.

But the shell game may be coming to an end. Fed officials including Bernanke himself, have already signaled a possible end to Quantitative Easing Infinitum (QEI). That being said, the likelihood the Fed will slow or halt the liquidity train is unlikely.  The risks to the fragile American economy are simply too great.

Still, forces in the global market the Fed cannot easily control may overtake any future shift in Fed policy. Bond yields are on the rise, not just in US treasuries but in bond markets around the world, from Japan to Italy. Stock market declines in Japan and the unrelenting debt crisis in recession plagued Euro land will also lean heavily on Wall Street. Add to this combustible mix Washington’s protracted debt ceiling battle and it’s hard to imagine a soft landing for the U.S. or the world economy.

In truth, the liquidity-fed illusion of economic strength furnished by a bullish stock market and low interest rates may no longer be enough to prop up consumer confidence. The real economy is not recovering. The average US household has not recovered its losses from 2008, state and local governments are still anchored to enormous health care and pension obligations they are struggling to meet. And the job market is feeble. Millions of Americans remain unemployed or underemployed. Many have stopped looking for work altogether.

Perhaps, these points explain why Ben Bernanke will not attend the Fed’s annual meeting in Jackson Hole, Wyoming, the first time he has not participated since 2006. This could signal his departure as Fed Chairman. It could also mean the end game for current Fed policy.

Cameron Macgregor is a former naval officer. He is currently a graduate student at George Mason University.


Is It Time for a New Conservative Party?

CPAC 2013

In the halls of the Gaylord Hotel at the National Harbor just outside of Washington DC, the scene of CPAC 2013, confusion was palpable. Emotions were mixed as crowds gathered to hear speeches from the Republican Party’s motley crew of aspiring leaders. Organizers frantically tinkered with the schedule, changing times and moving speakers to accommodate competing agendas, messages, and events. In the end, the conference left many wanting and sparked more questions than answers.

Perhaps one question stands out among the rest—what is the future of conservatism in America? The New York Times skewered CPAC, leading with the following byline, “GOP Divisions Fester at Conservative Retreat.” Indeed, divisions were legion: Tea Party against establishment, interventionist against isolationist, and amnesty against accountability.

The disunion manifested in human form. Former Florida Governor Jeb Bush implored Republicans to eschew their ant-immigrant, anti-women, anti-gay persona. Sarah Palin charged that Republicans needed a rhetorical facelift. Senator Rand Paul called the GOP “stale and moss covered” while Senator Marco Rubio rebuffed, “We don’t need a new idea.” Mitt Romney, the keynote speaker, somberly asked Republicans to learn from their mistakes, and his.

This leads us to reality. Despite the dubious claims by conservative thinkers like George Will, who claim that the issues tearing apart the GOP are a source of strength, the reality is that the Republican Party is in meltdown. A party divided against itself cannot stand.

The Grand Old Party is undergoing a heart transplant and suffering a stroke at the same time. But before you tremble with fear for the future of America, bear in mind that the principle enemy to conservatism today is the GOP, not the DNC. Republicans caved to the New Deal. Republicans expanded LBJ’s Great Society Programs. Republicans granted the first amnesty. Republicans first exploded the country’s national debt. Conservatives stood by, happy to accept electoral victory even if their candidates failed to follow through on conservative principles.

And now Republicans want to finish off conservatism, this time for good. Senators McCain and Graham want amnesty for illegals, Speaker Beohner and Whip Cantor have conceded on Obamacare, and Representative Ryan’s budget actually increases federal spending for years to come.

But this time the GOP has gone too far. The conservative right has had enough. Conservative radio has grown defiant, filling the air waves with angry Americans who demand representation in Washington. They want a new voice, a new message, and a new party that represents their views, the views of people who are confronting America’s real problems.

The American people are beginning to realize their country is breaking down economically, culturally, and spiritually. Almost 50 million Americans are on food stamps. Over ten million are unemployed or underemployed. Well over 12 million illegal immigrants steal our jobs, exploit our public services, and ignore our laws. Washington is broke. The federal government brings in enough revenue to fund three major programs: Medicare, Medicaid, and Social Security. The rest of government is paid for with borrowed money, and much of that is printed out of thin air by the Fed.

Conservatism is not dead; it is finally emerging from hibernation. After decades of showing up at the polls to vote for RINOs or liberals, conservatives are walking away. A new party is on the horizon. The question is who will lead us there?

Cameron Macgregor is a former naval officer and USNA grad. He is currently a graduate student a George Mason University.


Closing in on the tipping point

The tipping point

The fiscal cliff fiasco proved once again that America is unwilling to wean itself off of the gravy train. It also proved that the election this past fall did not alter in any meaningful way Washington’s trajectory toward disaster. The once meager ranks of fiscal doomsayers inside and outside the beltway are recruiting new members with each “averted” crisis. The reasons for conversion post-cliff are legion: no spending cuts, no tax reform, no entitlement reform, and no leadership. The once unshakable faith in Washington’s ability to right the ship is deflating, spurring feelings of anguish and disgust.

Is America sinking? You decide. While Washington struggles through immovable stalemate steady decay has gripped Main Street. A shrinking middle class, stubbornly high unemployment and the explosion of debt levels across the board (public and private/federal and local) to sustain a falling standard of living betray the trembling voices emanating from the Obama White House that we are recovering. Signs of recovery in the housing market and strong holiday season consumption are fleeting and lack the stamina to sustain real growth.

There is a sense of calm before the storm, the feeling that America is closing in on the tipping point. The eye of a tropical cyclone contains gentle winds and clear skies, and it can stretch for nearly 120 miles. Since 2008, America has been sailing inside the hurricanes’ eye blissfully hoping that the worst is behind her. Put differently, the real problems confronting the United States, economic and political, cultural and spiritual have not been resolved.

America’s mess is one of her own making. George Will calls it “decadent democracy.” He believes that our once self-reliant Republic has fallen into a spiral of dependency—a self-destructive urge to satisfy immediate material gains at the expense of future generations whatever the costs. Basically, America’s culture of entitlement has become ungovernable. Will’s assessment captures the form of America’s decline, the substance lies in her spiritual undoing.

The United States is a country upside down. It has become a nation of style over substance where what is “politically correct” has replaced moral truth. America’s unifying culture rooted in common language and values (political and moral) has been jettisoned in favor of diversity, a doctrine of divisiveness that separates Americans according to race, gender, sexual orientation, and language under the guise of equality. Merit, integrity, and truth no longer matter—what matters is getting ahead, securing your own future, and perpetuating false ideals to do so.

Spiritually, America has become a nation of demagoguery. H.L. Menken noted that “The demagogue is one who preaches doctrines he knows to be untrue to men he knows to be idiots.” Our politicians preach multiculturalism, socialism, and imperialism, ideas Americans know to be false but its leaders celebrate because they are idiots. The spiritual undoing of America shows a nation lacking self-confidence, social cohesion, and a clear sense of itself.

What happens next? America stumbles forward, moving from crisis to crisis until the system finally gives, and the false utopia of the “Great Society” promised in the sixties crashes on the rocks. For many, the inevitable collapse of the welfare state and the tremendous social cost that comes with it spells doom for America. On the contrary, nations can be strengthened by crisis. Sometimes crisis unearths solutions, identifies the disease, and prepares the way for rapid convalescence.

America did not collapse after its Civil War, still the bloodiest conflict in her history. Parts of the south were completely devastated, especially South Carolina and parts of Georgia, and hundreds of thousands lay dead. But the Union survived, north and south reconciled, and the United States expanded west, becoming the leading industrial power in the next quarter century.

The coming crisis is an opportunity for spiritual reawakening. America must reaffirm the bedrock principles of her national identity: freedom, self-reliance, family, community, and cultural unity. Perhaps crisis will help put things back in focus, fully exposing Americans to Washington’s upside down reality. Entitlement is not equality, diversity is not unity, and redistribution is not prosperity. America needs a healthy dose of disillusionment, and the tipping point is fast approaching.

Cameron Macgregor is a former Navy officer and USNA grad. He is currently a graduate student at George Mason University.




A Rocky Road ahead after Election

2012 may be a year of decision for voters, but 2013 will be a year of crisis for lawmakers. Looking at the immediate future, Washington confronts several challenges converging on it simultaneously. The most obvious challenge is the “fiscal cliff,” an event triggered by Washington’s rapidly exploding debt burden. In the last hours of campaigning, how to discharge the national debt is a question without an answer.

For the moment, positive economic news has muted these concerns. Cautious optimism has been the theme this month on Wall Street, a feeling buttressed by tentative signs of economic recovery. Specifically, the latest employment report showed 171,000 new jobs, exceeding the 125,000 expected. This news bolstered consumer confidence ratings and the growing faith that the US housing market is beginning to recover, temporarily allaying investor fears.

However, momentary exuberance in the marketplace is not new. In fact, it is part of an overall trend reaching back several years. Investors ride economic roller coasters, euphoric one day and depressed the next. Truly, market rallies come pretty cheaply these days, courtesy of FED QEs or a dip in the “official” unemployment number. But volatility in the stock market, uncertainty among investors and business leaders, and economic slowdowns overseas in Europe and now in China suggest a fragile global economy.

Fragility is the real story. For every modicum of positive economic news, there is a pervasive sense inside the financial sector that America’s alleged economic recovery could easily succumb to any number of major weaknesses in Europe, Asia and at home. In tune with these fears, there is an unspoken truth: America desperately needs across the board reform to sustain a real economic recovery—a new tax code, regulatory modification, a restructuring of entitlements, and deficit reduction, among other things. And there is little confidence that any new Administration beleaguered by partisan paralysis can produce these changes.

The fiscal cliff will be the opening round in a long, potentially devastating struggle for economic recovery. Recent projections by the Congressional Research Service (CRS) predict a mild to severe recession in the first quarter of 2013 if we go over the fiscal cliff. A trillion dollars in spending cuts (sequestration) plus the expiration of the Bush tax cuts, the Payroll tax cuts, the expiration of unemployment insurance, and raising the national debt ceiling (set at 16.4 Trillion) await lawmakers as soon as the election is over. These issues, though severe, only tell part of the story.

The main crisis is the state of the US economy. While official unemployment statistics show a steady drop in unemployment (listed around 7.9%) and a growing economy (however modest), over twenty million people in America are unemployed or underemployed and almost fifty million are living on food stamps. In addition, the collapse in the US housing market during 2008 dramatically lowered household income, eroding the wealth of millions of American families.

The magnitude of these problems is only fully realized when government enters the picture. Today, the US federal government represents 24.6% of GDP, almost one fourth of all economic activity. A century ago in 1912 government represented a mere 2% of GDP. Other comparisons are equally staggering. For example, today Congress controls 33% of the US budget—67% is automatic spending due to legally binding entitlement obligations. One hundred years ago Congress controlled 97% of spending. Simply put, the federal government has grown so big that cutting it significantly is both difficult and extremely painful.

So why not spend our way out? Obama’s solution ignores the national debt in favor of massive government spending and borrowing. But America’s days of borrowing are numbered. Unlike the previous fifty years of deficit spending, US economic growth is flat lining. The pivotal relationship between growth and borrowing is fracturing, fatiguing the bond market until a breaking point. If America cannot return to high growth levels quickly, the US bond market will start to give, interest rates will rise, and the streets of major US cities will resemble those of Greece and Spain.

This impossible scenario is no longer impossible. Weaning America off such incredible dependency in a time of anemic economic growth will be painful irrespective of who wins the election, especially when returning to growth requires offloading America’s disastrous debts. The question is how painful?

Cameron Macgregor is a USNA grad and former naval officer. He is currently a graduate student at George Mason University.


How Romney can build on his debate victory

For many of us, Wednesday night was the beginning of the presidential election. For the first time Mitt Romney emerged as a legitimate contender, successfully challenging Obama’s policies, leadership, and dictating rather than reacting to the President’s political chicanery. In a stunning reversal of the last several weeks, Romney finally exuded confidence and commanded the stage while President Obama dithered, unable to muster much energy.  But while the first presidential debate has shifted momentum in Romney’s direction it was not a game changer.

Romney scored some good hits but did not land any killer blows. The debate was mired in policy, largely focusing on the economy and jobs, which played to Governor Romney’s strengths. Romney’s superior understanding of these issues seared Obama. However, outside of some clever wordplay like “trickle down government,” Romney did not capture the hearts and minds of Americans. His appeals were more cerebral than emotional.

In my view, defeating an incumbent president—the toughest challenge in politics—means accomplishing three things. First, a successful presidential contender must demonstrate the mental wherewithal to be president, the capacity to pilot the world’s largest economy and lead the most powerful nation. Second, a presidential contender must persuade Americans that their country is heading in the wrong direction, and requires a new one. Third, and most importantly, to become president means convincing the American people that you offer a better alternative.

Last night, Mitt Romney emphatically accomplished the first task. He conveyed a firm grasp of the problems confronting Americans, particularly on three key issues: job creation, government efficiency, and taxes. Governor Romney’s knowledge was deeper than the President’s, and he overwhelmed Obama with specific counter examples and policy recommendations. But Romney fell short of characterizing Obama’s presidency as a total disaster, and he failed to present a viable, concrete alternative.

The Obama campaign has already reloaded. The President attacked the GOP nominee for “dishonesty.” Their strategy is clear: spin the results and go back on the offensive. Mitt Romney should not play into their hands. He must keep on message and stay on the offensive. Neither candidate plays defense well, but Romney possesses the ability to attack without overreaching. That is how the Romney campaign should run their candidate all the way to November.

Media pundits and political junkies are often guilty of overstating the importance of political trends. Before last night Romney was largely written off because of his imprudent gaffes and lackluster campaign. His debate performance has silenced critics because Romney showed he has the mettle to compete with the President. But to win the election and become the next President, Mitt Romney must sustain this momentum by completely discrediting Obama’s feckless administration and presenting a simple, tangible way forward.

Cameron Macgregor is a USNA graduate and former naval officer. He is currently a graduate student at George Mason University.

Why Gun Rights Matter

A series of violent shootings have dominated the headlines this summer. Tragically, another shooting occurred this week in Old Bridge, New Jersey when a disgruntled employee killed two of his coworkers in a Pathmark supermarket, where he worked. Wearing camouflage and armed with a pistol and an AK47, the ex-marine entered the supermarket after-hours, firing on the entire store before committing suicide. Preceding this event, shootings have erupted in New York City, Colorado, Missouri, and Wisconsin.

Unsurprisingly, the torrent of violence has reignited America’s perennial debate about gun rights. Those critical of US gun laws have pointed to these shootings as evidence that we need more restrictive gun laws. Time’s columnist Joe Klein made this argument in a recent editorial called “How the Gun Won.” Reflecting on the last three decades of gun policy, Klein blamed the absence of tougher gun laws largely on the NRA, whose strength grew from about 2.5 million in the 1980s to over 4 million members today.

The NRA is well funded and one of the most powerful lobbyist groups in the country – it has certainly influenced elections and intimidated politicians on both sides. Interestingly, according to Klein, the NRA’s views on gun control are not as main-stream as people think, including its own members. He cites polling by Frank Luntz that suggests a majority of gun owners in the US support sterner background checks and more gun safety courses despite official NRA positions to the contrary.

Perhaps the most important question Klein raises is why the escalation in violent shootings from people carrying lethal weaponry has not moved the debate decisively in the direction of tougher gun laws. In fact, the Republican Party platform advanced at this week’s Convention is “perhaps the most gun-friendly platform that any party had ever adopted,” said NRA president David Keene. How could this be the case, especially with shootings leading the news and big city Mayors (Bloomberg) openly critical of gun laws?

Don’t advocates of tougher gun laws have a point? If Colorado shooter James Holmes was carrying a handgun instead of a semi-automatic assault rifle wouldn’t fewer people have been killed or wounded (he shot 70 and killed 12)? Is it completely unreasonable to ask people for background checks before they purchase weapons? Further, shouldn’t these shootings at least compel the NRA and other gun supporters to relax some of their rhetoric? Maybe.

Understanding why tougher laws are required may seem at times easier to understand, but there are always two sides to any debate. The starting point for most proponents of gun rights is the second amendment. Though many deprecate the second amendment as an archaic law dating back to a more primitive time, the right to bear arms remains one of the cornerstones of American national culture. Why?

The answer can be found in the American zest for freedom. Freedom does not simply mean the right to do and say as you please as long as it does not infringe on someone else’s freedom to do the same. It also means the right and the capacity to defend yourself and your property. Any State that monopolizes control of violence by stripping the rights of citizens to defend themselves and their property has taken away their freedom.

Does that mean that every American needs an assault rifle to be free? Of course not. But it does mean that Americans are right to be suspicious of putting their personal protection and security solely in the hands of the State, a common sentiment characteristic of free English Speaking peoples since the days of Oliver Cromwell. For this reason, American states have local militias and empower law enforcement to deputize private citizens.

But freedom does come at a price. Just as we tolerate buffoonery in the public square in the name of free speech, expression, and religion, allowing people to own firearms similarly enables crazies to lawfully acquire lethal firearms (Holmes had no criminal record). Although there are limits that should be placed on gun ownership, gun laws should air on the side of freedom, because the alternative is far worse.

As Alexis de Tocqueville said in the 19th century: “what good is it to me to have an authority always ready…to brush away all dangers from my path if such an authority… is also the absolute master of my freedom.”  More simply put, safety in despotism is not preferable to insecurity in freedom. Fortunately, America is a country that has a good measure of both freedom and safety, and overall the second amendment strengthens our safety while preserving our freedom.

Cameron Macgregor is a graduate student at George Mason University and a former naval officer. He is writing his first book.            



No More Mr. Nice Mitt

Mitt Romney has been around politics all of his life. His father, George Romney, was governor of Michigan and ran for president in 1968. His mother, Lenore, also ran for office, losing a tough Senate race against incumbent Senator Phil Hart (D-Michigan) in 1970. According to the Times, which headlined its June issue with a story about Romney’s relationship with his mother, Mitt has followed more in the footsteps of Lenore than George.

George Romney was a more ferocious figure than Mitt has become. He was less inclined to hold back his true feelings, a tendency that backfired at times, as in his strident opposition to the Vietnam War. Lenore Romney, on the other hand, though no less commanding than her husband, was said to be more cautious. She was more accommodating than confrontational in her character, and she approached politics accordingly. Like his mother, Mitt is also cautious, and fearful of making mistakes. He prefers predictability and civility to spontaneity and brashness. Ironically, his careful nature sometimes makes him seem awkward and robotic.

The Romney campaign, like most campaigns, reflects the character of its figure head. Romney’s campaign has highlighted his business experience, (how captivating?) portraying him as the pragmatic manager eager and ready to solve America’s economic problems. His campaign managers believe this persona contrasts well with Barack Obama’s image as a detached intellectual, a man who is cerebral but fails to understand how the real world works.

Mitt’s message may strongly appeal to effusive conservatives like Sean Hannity, who is already convinced that defeating Obama, a president presiding over an anemic economy, a failed stimulus package, a high unemployment rate, swelling welfare rolls, and a litany of public relations disasters – from Fast and Furious to Solyndra – will be a walk in the park. But Romney’s campaign has been lackluster, evoking no feeling and missing any real or compelling narrative that can rival Obama’s.

Romney’s campaign strategy thus far smacks of another failed presidential campaign, that of John Kerry in 2004. The Kerry campaign arrogantly dismissed Bush as a reckless dullard who unwittingly led America into the failed and unpopular Iraq War. They discounted Bush’s political acumen and personal appeal. The Left promoted John Kerry as the perfect alternative: in sharp contrast to Bush, Kerry was articulate, a seasoned diplomat, and a decorated war veteran.

But Kerry never moved America. He seemed above it all, remote from real Americans and disinclined to get into the trenches and inspire people to vote for him, other than saying “I’m not Bush.” Bush on the other hand, appeared genuine, oozed commonness, and connected with the average American.

That’s not the whole story of course. Kerry’s very strength, his laurels as a war veteran and his opposition to the Iraq War, was shredded by the Bush team. Karl Rove and company adroitly disfigured Kerry’s image as an upright war hero, recasting Kerry’s outspoken opposition to Vietnam as unpatriotic and questioning his wartime exploits. They also characterized Kerry as a flip-flopper, someone apt to change his position (supporting then opposing the Iraq war). Sound familiar?

Obama’s campaign has followed a similar strategy. The Obama team has utterly eviscerated Romney’s persona, flooding the airways with blistering attack ads tearing Romney apart for his time at Bane Capital, unreleased tax returns, and offshore bank accounts. Romney has not countered these attacks well, reacting defensively and deflecting rather than engaging. The tone of the campaign has been dictated by Obama, not Romney.

Romney will not win this campaign by default. He must roll up his sleeves and hit back if he wants to win. Team Romney must ramp up their own attacks, focus on Obama the person, not just the president. Romney should not jab at Obama but strike at him directly, paint Obama as the socialist, the Ivory Tower Liberal, and the anti-American. And Mitt must verbalize these criticisms himself, not some amorphous surrogate.

Then he must put forth a simple and concrete vision of America, divorced completely from Obama’s. Mitt Romney must tell Americans why he is the man to lead them back from the brink. He must forget about comparing himself to Obama and start communicating to the frustrated, angry, and struggling Americans desperate for change. Obama had “Hope and Change.” Romney needs something similar and ideally more substantive.

Mitt needs, to some extent, to throw caution to the wind. The political atmosphere is charged, not neutral. America is a country enshrouded in uncertainty, waning in confidence, and wanting in leadership. Mitt must recognize that he is not running for Governor in Massachusetts. He is no longer vying for the GOP nomination. Before, all he had to do was hold serve. Now, he needs to serve some aces.

Essentially, Mitt needs to channel his inner George. The American people must get to know this man. Mitt should eschew his reserved nice guy but unfeeling and artificial exterior and confront his critics directly, answer questions about his past pointedly, take assertive positions. Don’t dither and equivocate. Running for president is a big undertaking, and boldness wins elections, not timid fear of mistakes.

Cameron Macgregor is a former Naval officer and USNA grad. His is writing his first book.


A Grim Global Outlook

European Summit

The outlook for the global economy continues to get bleaker and bleaker. This week the focus remains on the euro as European leaders are meeting for the twentieth time in two years to discuss and attempt to resolve an increasingly hopeless financial situation. The two day summit in Brussels is more contentious than ever, pitting the embattled profligate countries of Southern Europe aligned with newly elected French President Hollande against the disillusioned Germans eager to distance themselves from any more bailouts or debt exposure.

The situation in the Eurozone is fluid to put it mildly. Spain continues to struggle financially as its banks hover over the abyss of insolvency, ominously watching their short term (6 month government bonds) borrowing costs triple Tuesday. Italy is not fairing any better – their six month borrowing rates rose a whopping three percentage points during a bond auction earlier this week. Meanwhile, the newly elected Greek government is trying to maintain its fledgling coalition by renegotiating a deal with the Eurozone to ease its austerity requirements, their Election Day promise.

With divisions hardening and financial crisis intensifying it is not a surprise that investor confidence is withering and the euro continues to fall in value. At its core, the main issue beleaguering the Eurozone is debt contagion. Spanish Prime Minister Rajoy put it succinctly, “The most urgent issue is the one of financing. We can’t keep funding ourselves for a long time at the prices we’re currently funding ourselves.”

Who will pay Europe’s debt is the principle question. There is a famous saying, “everyone is your brother until the rent comes due.” As Europe’s paymaster, Germany can certainly relate. Hollande and his Italian and Spanish counterparts want Germany to shoulder more of the burden, asking the ECB to issue Eurobonds. The Germans object. “As long as I’m alive,” Chancellor Merkel reportedly said, we will not accept any solution that requires more pooled debt at our expense.

Hard Landings in Emerging Markets

As fractured as things are in Europe, troubling signs are beginning to arise in emerging economies too. Indian Prime Minister Manmohan Singh met with government officials Wednesday to discuss souring investor confidence in India. As foreign investment has dipped, the Indian economy has slowed to its lowest growth rate in nearly a decade. The rupee has sunk to all-time lows against the dollar, inflation is high, and the government is struggling to cope with enlarged fiscal and current account deficits.

To arrest these trends, Singh, no stranger to boosting economic growth, has taken charge of the finance ministry. Singh is credited with engineering major reforms in the early 90s, which paved the way for India’s economic jolt. But his task is much more difficult this time around. India’s growth rate has fallen sharply in early 2012 to 5.3%, down from over 9% in the first quarter of last year. If Singh wants to “restart India’s growth story” he will need to implement drastic reform in everything from insurance to tax policy – not an easy task.

With the global economy stressed particularly in the West, China may stand to lose the most. Problems are starting to pile up in Beijing. Chinese leaders continue to wrestle with a property and construction bubble, spiraling local government debt, and huge gaps between rich and poor. Further, government growth projections have been adjusted in the current Chinese five year plan. It projects annual growth at a meager 7%, well below its near steady 10% growth over the last two decades.

Growth is paramount in China. Without it, supporting its huge population is nearly impossible. China’s export based economic model may be their undoing. When foreign markets cannot buy Chinese goods, especially western markets, China falters. The euro crisis is a big problem because Europe comprises 20% of their export market.

Given the worsening situation in Europe and elsewhere China could be headed for what analysts call a “hard landing.” Significantly lower growth rates in China could produce social unrest and major instability. Finance Professor Franklin Allen of Wharton Business School views a hard landing in China as unlikely, unless the euro blows up that is. The IMF agrees with his assessment; they believe a worsening euro crisis could bring China’s growth levels down to a dangerous 4%.

Revised Forecast in US

At home, financial analysts are flexing to the continuously erratic stock market, up one day down the next. US economic indicators have given somewhat mixed signals. Some reports show housing prices are beginning to stabilize, a very positive sign for the US economy. But other news has not been so good. According to Bloomberg, consumer confidence is at five month lows, probably driven by last month’s disappointing jobs report.

After a somewhat promising start to the New Year, the US economy is returning to its recent sluggishness. As a result, the FED revised its rosy projections for 2012, predicting that unemployment will remain high and growth tepid for the next couple years. US corporations have felt the pinch too, seeing declines in overseas revenues resulting from the global slow-down.

Nevertheless, it’s the US banking industry that has received most of the attention of late. Earlier this month Moody’s Investors Services downgraded 15 major financial institutions, Citigroup among them, dealing yet another blow to Wall Street’s already sullied reputation. JP Morgan has also come under fire not just for losing billions in risky bets but for suppressing a report on the municipal bond market completed last year. JP Morgan’s report, which was only distributed to privileged investors, revealed that the municipal bond market is far more indebted than originally suspected. It is worth noting that JP Morgan underwrites many US muni bonds.

Bad to Worse?

In the aggregate and that’s all that matters at this point, the world economy is steaming into rough seas ahead. Though there is a possibility that the Eurozone could survive, that emerging markets could return to sustainable levels of growth, and US markets could rebound sooner and stronger than anticipated, the chances of that happening are remote. The more likely outcome will be a global economic rebalancing, a restructuring of the world economy. It would unquestionably be a painful process, but a more sustainable and healthier world may emerge in the end.

Cameron Macgregor is a former naval officer and USNA grad. He is writing his first book.

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