There are too many year-end top ten lists, so I'm not going to do that. I'm going to do 12.
I've chosen those things from The Daily Capitalist's perspective that I thought impacted our lives here in the USA. These 12 events created a lot of buzz, things we were all talking about.
Here's my list. What did I forget?
1. Sudden Acceleration
What I found fascinating was not that mighty Toyota slipped a notch in the public's eye, but the folks who made up stories of sudden acceleration in Priuses to get attention. Remember the guy driving 90 mph down the freeway in San Diego, ostensibly with a stuck accelerator, waving at people, calling 911, and finally rolling to a stop with the highway patrol there to assist him? The news went viral. We shared his terror of being out of control. The only problem was that he was lying. This is the Andy Warhol 15 minutes of fame/shame syndrome, a now permanent social phenomenon of our society. I don't believe anyone has actually proven the stuck accelerator theory yet. ¿Quien sabe?
What can I say? The Gulf oil spill was a disaster of huge proportions. It went on and on and on until the kill shot/junk shot/slant drill finally worked. It was like a national toothache as there seemed to be no end to the gushing oil. You might well ask "How can this happen?" "Who is watching these guys?" "Why is there a $75 million liability cap?" Yikes! We had a blowout here in Santa Barbara in 1969 that kicked off the environmental activism movement. With all the claims of ecological disaster, we found that the ocean rather quickly recovered. I understand that Prince William area is different and they are still finding problems. But, the good news is that the environment damage to the Gulf, as compared to the scope of the disaster, doesn't appear to be dire. But, time will tell as they say. I believe BP should be sued for the fullest extent of the damages they caused. Obviously, the liability cap allows oil companies to ignore the risk of these ventures.
In my article, Capitalism Saves Lives and Haiti is Proof, and Capitalism Saves Lives, Part II, I pointed out the difference between the fallout of the earthquake in Haiti versus the one in Chile. The Chilean quake was an 8.8 event, roughly 500 times more powerful than Haiti’s, or about one million Hiroshimas. Now, Haiti's loss of life, 230,000 is horrific, but in the articles I quoted Professor Don Boudreaux of George Mason University who said, "The ultimate tragedy in Haiti isn’t the earthquake; it’s that country’s lack of economic freedom. The earthquake simply but catastrophically revealed the inhuman consequences of this fact." On the other hand, Chile, thanks in large part to Milton Friedman, is the most capitalistic country in South America. Chile suffered 486 dead. The point being that you can have the strictest building codes in the world but they mean nothing without the capital to build according to code.
The passage of the Obama health care bill made few of the lists that I saw, but in my opinion it is the worst thing economically and socially that happened to us in 2010. It will be the camel that breaks our collective backs. It, like all entitlement programs, are wasteful, costly, result in increased taxes and poorer service, and are impossible to get rid of. Several years in the making, the bill was signed into law on March 23, 2010. I urge anyone who believes that this bill will not ruin our health care system and threaten our economic stability to read the many thoughtful articles put out by Cato. This bill tells me that the Democrats are still stuck in the New Deal and that they have no imagination or creativity when it comes to doing the right thing for America. It is the equivalent of have the US Postal Service overseeing 16% of our economy. Can't they think of anything else but government as a solution? Central planning doesn't work at any level, and nowhere in the world do similar systems work well to provide the best health care to the most people at the most efficient cost. Social welfare programs worldwide are going broke. That is where we are headed unless the Supreme Court starts striking down parts of the bill. If the mandatory provisions are struck down, Obamacare will fail and need to be overhauled.
This bill was a vast federal power grab engineered by Republicans and Democrats to avoid any blame for the Crash and Recession. Hypocrites like Senator Dodd and Representative Frank have absolutely no clue why we had a housing boom and bust. They, of course, blamed it on Wall Street and Greed. Yet, since greed is ever present in human nature (I think the better term is "self interest") why all of a sudden did we have a boom in housing? When the Fed floods the economy with fake money, why would we expect humans to behave other than as they always do. The cause wasn't "greed," although many of the egregious problems were a result of greed; central banks are the sole cause of boom-bust cycles. This time it manifested itself in housing rather than Dot Com stocks or apartment buildings (S&L crisis). It would be an excellent exercise to see what role Dodd and Frank played in funneling money into housing (see here). Wall Street deserves blame for using bad risk models, but The Cause? No.
I see iPads everywhere now. It's like when the iPhone first came out. "Hey, let me see that," as you enviously play with one while your buddy explains how cool it is. It is a great gadget and no doubt the future of portable computing. I have an iPhone which I love and at this point don't want to carry around an iPad in addition to the phone. I do notice that my friends who have iPads are carrying them around less and less. But they are cool and useful for certain purposes. Me? I bought a Kindle and love it. I try to not buy books any more. It and devices like it will end the paper book one day.
This is the constant background, the wallpaper, for the Obama Administration. It is my opinion that it will remain high for quite a while. How high? How long? I don't know, but I don't see economic forces yet that would significantly reduce it below 9%. While economists will talk about recovery, everyone knows that until unemployment starts going down as a trend, recovery is not just around the corner. The Obama Administration came in, appearing rather cocky to me, brimming with confidence in their Keynesian nostrums. Those have failed them and us. This is Obama's political Achilles' heel. If he can't make a significant dent in unemployment before the 2012 election, he's in trouble.
8. Quantitative Easing
This is the Administration's last ditch effort to stimulate the economy. It tried ZIRP (zero interest rate policy), easing up reserve requirements, the Recovery Act, Cash for [your industry here], tax cuts, and a host of other things which have all failed. Now it is just printing money (despite Dr. Bernanke's denials) and distributing it to Wall Street to spend. Quantitative easing didn't work the first time around (QE1) and it won't work now (QE2). If unemployment doesn't subside, we'll see QE3, as Bernanke said the other day. I believe it will lead to price inflation and we are already seeing money supply growing as a precursor of that. I don't think it will lead to a boom-bust cycle this time around but rather we will see stagflation. It is disastrous for the economy.
9. Chilean Miners
This was the feel good story of the year and I think we were all moved as we saw the miners reach the surface signaling their joy at being saved. Chile had a tough year with its earthquake, but again they showed their competence in how they handled the rescue. I'm sure luck had a lot to do with it as well, but in my book the engineers get all the credit for making it happen. Viva Chile!
Julian Assange and his friends are either heroes or bums. Ron Paul, Reason, Cato, and the Mises Institute are almost unanimous in saying that the leaks are a good thing for America and exposes the dark underside of the Leviathan State. They vary in their opinion as to whether or not all secrets must be exposed, but in general the State should know that we are watching. I have mixed feelings. Since our Constitution allows the federal government to conduct foreign policy and war, I think some secrets are necessary. If it jeopardizes our troops or agents, I think it's wrong to leak such material. But ... If it exposes wrongdoing by our government, and I am thinking about "W" Bush and the Iraq War, I am all for exposing their lies. It's a mixed bag. But WikiLeaks was on everyone's lips.
11. Tea Party
Whether or not they have a lasting impact as a movement remains to be seen. While they were not the entire story of the November elections, there is no question that they had a major impact on them. My information is that about half the participants in the Tea Party movement are libertarian types which gives it ideological strength. The rest of the Party are led by moose-skinning soccer mom, Sarah Palin, who has done a good job of bringing people together who are angry about the economy and angry at the Obama Administration. What bothers me about the angry side of the movement is that you cannot create a movement without an ideological base, and Sarah Palin has yet to provide that. The Palin followers seem to want their welfare benefits (Social Security and Medicare) but they don't want to pay for it. I expect the Tea Party to last until the 2012 elections, and I think they will have an impact on Congressional races which would help the Republicans. I don't expect Obama to lose the presidency because, (i) it is rare for incumbents to lose, and (ii) he is moving to the center in order to maintain his power.
This problem is driving our fellow Americans nuts. On the one hand they understand that they need to be scanned/groped to get on a plane but they resent the hell out of it. As such they are angry at the TSA, the government's attempt to manage airport security. What a boondoggle. Do you remember the debate about whether the TSA should be managed by private industry versus creating a public agency to do it? "W" Bush went with Big Government, a huge mistake. I sort of enjoy the drama because it makes people resentful of government. Like many, I would subcontract the whole enterprise to an Israeli company, profile passengers, and stop the insanity of groping and scoping.
What a year!
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.