Lazy Americans

In yet another first, Barack Obama roundly criticized Americans as lazy...while that in itself isn't a first, doing so before an international audience outside the borders of the United States is...here's a cartoon by Michael Ramirez,

Jonathan Alter's Challenge: You Think Obama's Been A Bad President?

Jonathan Alter, a far left blogger and "pundit" has asked in Bloomberg,  "You Think Obama’s Been a Bad President? Prove It".  Peter Wehner's response is very, very good...but here's agreat "non-professional" response that is just as good, if not better coming from an average citizen type:

ChallengeResponse 11 hours ago 3 comments collapsed CollapseExpand

Mr. Alter,

I thank you for your challenge to readers: "What, specifically, has he done wrong on policy? What, specifically, would you have done differently to create jobs? And what can any of the current Republican candidates offer that would be an improvement on the employment front?"  I take it as an actual challenge and not a rhetorical ploy. I accept your challenge.

You mention policy on Libya. The President should have acted far more quickly and forcefully with an air campaign. If he had done so, this phase of the war would have ended in days not weeks, as the President promised, and their would have been significantly fewer Libyan lives lost. The faster end to this phase of the war also means it would have cost less. This was all known at the time the President had to make a decision. With the exception of Ron Paul, it's reasonable for the public to believe that the major Republican candidates would likely have acted more swiftly and forcefully than Obama did.

Your comparison to Iraq is reasonable if you concede that Iraq was much more heavily defended and their were no rebels. The comparable phase of that war, toppling Saddam Hussein, took far less time than this phase of the war in Libya. For this comparison, President Bush was clearly a better Commander in Chief than President Obama. The hard part is just beginning in Libya.

I sincerely doubt that former Pennsylvania Governor Ed Rendell would agree with your characterization that he is "a hardcore liberal Democrat." He wouldn't have been elected governor of a relatively centrist state had this been true. The fact that the previously most liberal member of the Senate, President Obama, would press for a bigger stimulus hardly seems noteworthy given that fact.

Except for some Democratic partisans, there is near unanimity that the economy has been in bad shape for the entire Obama administration. This is why only 26% of the population approves of Obama's handling of the economy. The unemployment numbers from the U.S. Bureau of Labor Statistics give a rational for this sentiment. Under the Bush administration, unemployment was below 6.5% for 93 of 96 months, 97% of the time. Under the Obama administration, unemployment was above 8.5%

for 31 of 33 months, 94% of the time. With numbers like these it's entirely reasonable for the public to believe that any number of people, even Ron Paul, could do a better job.

There's wide spread agreement that the economy was in poor shape when President Obama took office. He had an opportunity to turn it around.For the first two years President had such a strongly Democratic Congress that Republican votes didn't matter. The President could pass almost any legislation he wanted to, and he did. The stimulus was enacted so swiftly that the Congress had little time to review it before voting. The administration said this haste was necessary because the stimulus would improve the economy so quickly and included numerous "shovel ready" jobs. The administration's economic theory predicted that the stimulus would hold unemployment below 8%. In fact, none of these things have been true. The public is rightly distrustful of Keynesian stimulus after this performance. It's entirely reasonable to conclude that the stimulus was just an excuse for a government payout to the President's political allies: unions, government employees, green technology firms, etc.

We can agree that Ben Bernake, appointed by President Bush, and the TARP bailouts of the banks that Bush pushed for have been successful. The bailout of Chrysler, General Motors, and their unions is another case. It is highly unlikely that the government will ever be fully repaid, and Ford has performed better without a bailout. There's no evidence that restructuring Chrysler and General Motors through the normal bankruptcy process would have performed any worse, and there

wouldn't have been any political favoritism involved.

You said "The Republican alternative for job creation wasn’t tax cuts (the stimulus contained almost $300 billion in tax cuts) but deficit reduction and rolling back regulation. I’ve yet to see a single economist convincingly argue how either would have reversed the catastrophic job losses." With all due respect either you're not looking or your standard of proof is unreasonable: economic arguments aren't generally provable at the same level as in the physical sciences. Just to offer one example on regulation, I suggest ThomasHopkins, an economist at the Rochester Institute of Technology. There

are many others if you're serious about looking. The onslaught of new and anticipated regulation and its attendant uncertainty have nearly paralyzed business. The cumulative effect is that businesses are hoarding cash, and waiting for the regulatory storm to end. The regulation includes unattainable EPA standards, Dodd-Frank, Sarbanes-Oxley, and the Affordable Care Act. To the average American, this is just common sense. While quantifying the cumulative effect of regulation is difficult, it is no less real. When Republican candidates campaign on these facts and President Obama ignores them, these candidates become more competitive.

You claim the Affordable Care Act couldn't possibly have a negative effect on the economy. "And Republicans have offered no evidence for their claim that the Affordable Care Act (which includes tax credits for small businesses) has contributed to current levels of unemployment. How could it? The program hasn’t even fully begun yet." Business investment and hiring isn't based entirely on current
conditions; a far greater factor is anticipated future returns. The Affordable Care Act will significantly affect most business for the worse, and they are reluctant to hire employees and make risky investments because of it. You quote Warren E. Buffett, "People invest to make money and potential taxes have never scared them off." For the sake of your argument, let's ssume that's true. That doesn't mean that taxes don't affect how people invest. For example, taxes are the reason that people invest in municipal bonds. Higher potential taxes drive investors towards safer investments with less risk but also less return. This is a net loss for the economy.

 

By the way, your attempt at sarcasm, calling Buffett a "noted lefty socialist" fails. Buffett has been a consistent supporter of thePresident, an occasional adviser, and has endorsed him for 2012 without any idea who he will be competing against. Given Buffet's banking investments and the President's consistent support of the banks, indeeds if not always in words, Buffet's actions could just be rational self interest. The tax hikes Buffet suggests would have limited effect on him, most of his money is shielded by donation to the Gates foundation.

 

I'm glad we can agree that the President "looked weak during the debt-limit debate.” You ask, "what would you have done?" Cut, cap, andbalance sounded reasonable to me. It's too bad that the Senate never debated the merits. Americans are waking up to the fact that their share of government debt has gone from owing roughly $30,000 apiece to $45,000 in two and a half years because of the current spending binge. They are reasonably outraged that government is growing at this pace while they tighten their belts to pay down their household debts. One could reasonably argue the repayment of this debt will be uneven across society, some will repay more while others will repay nothing. However, those repaying nothing may be hit hardest; the government services they depend on may cease to exist.

You left out an important proposal made by most Republican candidates to reduce tax rates, particularly corporate rates, by reducing deductions, exemptions, and credits for following the government's preferred activities. The entire economy would benefit if companies like General Electric payed their fair share of taxes and everyone else had a lower rate and was better able to compete with extreme right-wing countries like Canada with lower rates. Money that companies don't pay in taxes they reinvest; as Buffett said, they want to make money. Reasonable Democrats understand this, but there are many extremists who don't want to give up the donations that come from playing political favors with the tax code. The poster boy for this kind of favoritism is GE President and head of the President's Jobs Council, Jeffrey Immelt. In addition, if foreign corporate profits could come back to America without being taxed twice, additional American investment could take place.

 

To summarize, the President's economic policies have failed by any objective standard, including his own. The Republican candidates havesuggested that flatter taxes, reduction of double taxation, and a more common sense approach to regulation would create a better environment for the private sector to grow. When polls indicate that the public is willing to support almost any Republican candidate against President Obama, they're indicating a willingness to try a different economic theory.

Let's return to the actual, but unstated, question of your column, what can a President who is "a hardcore liberal Democrat" do within the current situation without abandoning his values? He can put the good of the nation ahead of partisanship and honestly search for common ground with Republicans. It needs to go beyond the lip service offered thus far. I suspect members of both parties in Congress would respond to an honest effort. If George W. Bush and Ted Kennedy could do it, and Bill Clinton and Rick Santorum could do it, President Obama could do it with enough of this Congress.

This doesn't have to be a zero sum game of redistribution. The President can push the reset button, give up for now on class warfare, and adopt strategies that make everyone wealthier. A tax neutral reduction of tax rates via tax reform is beneficial for most of the country. Getting rid of government programs and regulations with limited value is beneficial for most of the country. (The nation could survive without the Cowboy Poetry Festival.) Every politician talks about waste, fraud, and abuse, but no one does anything about it. It's hard to calculate the exact damage wasteful government activity does to the economy, but it certainly distorts it. Doing something about it isn't a panacea, but it could easily be bipartisan.

 

One could argue that the really big money is entitlements, and that's true. However, by any other standard there's still real money and economic improvement in the above ideas. There isn't going to be any progress on entitlements until both sides can resist the temptation to play politics with it. True bipartisanship on smaller stakes programs is a prerequisite to progress on entitlements, and even that looks unlikely.

Here's the real problem President Obama has: unlike President Clinton, he would rather be an ideologically pure one term president than honestly seek common ground with Republicans. Absent a third party candidate, that's the trajectory he's on.
Notice that I've played by your very reasonable rules: "I’m not interested in hearing ad hominem attacks or about your generalized 'disappointment.'" I've used specific facts and arguments. You may not agree with the arguments, and you may know of other facts that I haven't considered, but I have stated my case as factually and honestly as I can.      

Well said sir.   Here are Peter Wehner's points:

• * Under Obama’s stewardship, we have lost 2.2 million jobs (and 900,000 full-time jobs in the last four months alone). He is now on track to have the worst jobs record of any president in the modern era.
• * The unemployment rate stands at 9.1 percent v. 7.8 percent the month Obama took office.
• * July marked the 30th consecutive month in which the unemployment rate was above the 8 percent level, the highest since the Great Depression.
• * Since May 2009 — roughly 14 weeks into the Obama administration — the unemployment rate has been above 10 percent during three months, above 9 percent during 22 months, and above 8 percent during two months.
• * Chronic unemployment is worse than during the Great Depression.
• * The youth employment rate is at the lowest level since records were first kept in 1948.
• * The share of the eligible population holding a job has declined to the lowest level since the early 1980s.
• * The housing crisis is worse than in the Great Depression. (Home values are worth roughly one-third less than they were five years ago.)
• * The rate of economic growth under Obama has been only slightly higher than the 1930s, the decade of the Great Depression. From the first quarter of 2010 through the first quarter of 2011, we experienced five consecutive quarters of slowing growth. America’s GDP for the second quarter of this year was a sickly 1.0 percent; in the first quarter, it was 0.4 percent.
• * Fiscal year 2011 will mark the third straight year with deficits in excess of $1 trillion. Prior to the Obama presidency, we had never experienced a deficit in excess of $1 trillion.
• * During the Obama presidency, America has increased its debt by $4 trillion.
• That is to say, Obama has achieved in two-and-a-half years what it took George W. Bush two full terms in office to achieve — and Obama, when he was running for president, slammed Bush’s record as being “unpatriotic.”
• * America saw its credit rating downgraded for the first time in history under the Obama presidency.
• * Consumer confidence has plunged to the lowest level since the Carter presidency.
• * The number of people in the U.S. who are in poverty is on track for a record increase on President Obama’s watch, with the ranks of working-age poor approaching 1960s levels that led to the national war on poverty.
• * A record number of Americans now rely on the federal government’s food stamps program. More than 44.5 million Americans received Supplemental Nutrition Assistance Program (SNAP) benefits, a 12 percent increase from one year ago.

 Again...well said sir.

Why Democrats Are Losing in Politics

Rick Santelli gives a great explaination on just why Democrats are losing their grip on...not just Congress, but reality.



Hot Air, gives the best concise reasons why businesses aren't expanding and hiring again, despite the recession having ended almost two years ago.

We’re not seeing growth because of the hostile environment for investors, and a lack of consumer demand related to high unemployment. We could solve those tomorrow by reducing regulation (especially the arbitrary ObamaCare legislation that makes risk calculation nearly impossible), unfettering American energy exploration and extraction to create jobs and lower energy costs, and reform the tax system to put all investors on an even playing field and reduce the corporatism that drags down small-business creation and innovation. We don’t need social engineers tinkering with the economic system to achieve their notion of “fairness” — we need actual economic growth, which the social engineers have proven completely incompetent at delivering. {emphasis is mine, Ed.}

 That's why the Democratic party is losing in the market place of ideas in America.  They just  don't get it.  The GOP has an inkling of what's wrong, but the leadership in Washington has sold their souls by "going along to get along" for so long, that they're very nearly as corrupt as the Democrats.  Bottom line?  Ezra Klein is an idiot who  doesn't understand the very basics of economics or economic theory, but he often pontificates as if he does..."fairness"...what an idiot.

Hat tip to the BlogFather

ObamaVille: Carter's Redeaux...Only Much Worse

Pundits here on the right (Instapundit most often) have been saying since 2009 that a redeaux of Jimmah Carter's recession was a best case senario...I think that we're beyond that now.  Though, Mr. Obama doesn't seem to get the idea that blaming voters is the right way to go...Mr. Carter tried that very same strategy and lost...Obama's done it and may very well lose.

 

 

And...since the economic news is so bad, he's stopped getting a daily economic briefing as well.

 

 

That of course is a great strategy on his part.  Now, he can claim "not to have known" just how bad things are.  Mark Steyn, in the OC Register has hit the nail on the head.  In Toledo, Mr. Obama talked about how bumpy the road to economic recovery is,

"There are always going to be bumps on the road to recovery,'' President Obama said at a Jeep plant in Toledo the other day. "We're going to pass through some rough terrain that even a Wrangler would have a tough time with.'' His audience booed. They're un-fire-able union members with lavish benefits, and even they weary of the glib lines from his 12-year-old speechwriters.

 

 

At this point...with a double dip recession looming and job creation falling behind even LEGAL immigration, Mr. Carter's recession would be nice to have about now.  I lived through the late '70's and early '80's...it was tough.  I didn't have year'round, full-time employment until I volunteered for the military (USMC of course).  My wife is employed part-time and has been for two years, because NO-ONE is hiring retail managers (she has 17+ years of management experience).  So, as Mr. Steyn says,

 

 

This is Main Street, Obamaville: All bumps, no road. But shimmering on the distant horizon, beyond the shuttered diner and the foreclosed homes, is a state-of-the-art electric car, the new Fiat Mirage, that should be wheeling into town in a half-decade or so provided it can find somewhere to charge. "We will be able to look back and tell our children," declared King Barack the Modest of his own candidacy in 2008, "this was the moment when the rise of the oceans began to slow." Great news for the oceans! Meanwhile, back on dry land, a quarter of American mortgages are "underwater" – that's to say, the home "owners" owe more than the joint is worth. In Harry Reid's Nevada, it's 63 per cent. Perhaps Obama's Aquatic Bodies Water-Level Regulatory Authority, no doubt headed by Jamie Gorelick or Franklin Raines or some other Democrat worthy, could have its jurisdiction extended to the Nevada desert.

 

It's time for a change...and Mr. Obama isn't it. His campaign slogan for the comming election s "It's Morning In America."  Sorry, Mr. Obama, it's not, and your policies as well as those of your enablers in the Democratic party have made things immensely worse.  Charles Krauthammer was right when he said it's "dusk in America,"

 

 

Here's some poll numbers for you approval-disapproval of his policies:

• Economy – 40/59, was 40/55
• Deficit – 33/61, was 39/58
• Afghanistan – 52/41, was 60/29
• Terrorism – 60/34, was 69/21

Ed Morrisey of HotAir says that,

Republicans in Congress took the lead on public trust on the economy, 45/42 over Obama, for the first time since December. The outlook on the economy remains doggedly pessimistic, with only 11% rating it as positive at all, and 89% rating it negatively, the highest since the midterms. Eighty-one percent now rate the economic recovery as “weak,” up from 75% in February 2010. A large majority, 57/42, do not feel the effects of a recovery on their personal economic situation. These are not re-elect numbers by any stretch of the imagination.

In 2012, unless they completely blow it (not out of the realm of possibility after all, this IS the GOP we're talking about), the Republican (unless it's Mitt Romney) should be able to hammer Obama on ObamaCare as well as the economy. 

Failure of Logic: Keynesian Economics

Why Keynesian Economics and the Obama Economic model are a failure...I've always thought that the definion of insanity is repeating the same thing over and  over and expecting a different outcome...Keynesian economics failed during the Great Depression and directly contributed to another 7 years of depression following the small recovery of 1934 that was smothered by FDR's economic policies in 1935.

The Obama administration has basically admitted that the "Stimulus Package" was an utter failure...and has contributed to the extension of the current recession.  His SOTU address has asked for more of the same...how long will it take this president to realize that his policies are hurting the economy?  When will this administration realize that business creates jobs, not government?

SOTU Address

In his SOTU Address, Mr. Obama never actually talked about the dismal current state of the union.  He talked about continuing his current spending policies while only wanting "tinkering" with ObamaCare, not repealing it altogether.

Clean Energy:

We’re issuing a challenge. We’re telling America’s scientists and engineers that if they assemble teams of the best minds in their fields, and focus on the hardest problems in clean energy, we’ll fund the Apollo Projects of our time.

With more research and incentives, we can break our dependence on oil with biofuels, and become the first country to have 1 million electric vehicles on the road by 2015. We need to get behind this innovation.
Now, clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they’re selling. So tonight, I challenge you to join me in setting a new goal: by 2035, 80% of America’s electricity will come from clean energy sources.

It's too bad Mr. Obama hasn't learned from the Spanish clean energy debacle...the Spanish government has spent billions and billions of Euro's only to lose the vast majority.  Professor Peter Grossman wrote a paper entitled, “The History of U.S. Alternative Energy Development Programs: A Study of Government Failure.” in which he details the failure of every single government energy program starting with the 1950's "investment" in nuclear energy.
ObamaCare:

Now, I’ve heard rumors that a few of you have some concerns about the new health care law. So let me be the first to say that anything can be improved. If you have ideas about how to improve this law by making care better or more affordable, I am eager to work with you. We can start right now by correcting a flaw in the legislation that has placed an unnecessary bookkeeping burden on small businesses.


What I’m not willing to do is go back to the days when insurance companies could deny someone coverage because of a pre-existing condition.

Ann Althouse, an Obama voter has this take on Mr. Obama's signature legislation:

He'll work together with Republicans, but only if they offer little tweaks to the big overhaul he rammed through, with no consideration for their opinion, when they didn't hold the seats in Congress.

Emphasis is mine.  Even the Associated Press was confused at just exactly what Mr. Obama meant in his speech. 

"The ledger did not appear to be adding up Tuesday night when President Barack Obama urged more spending on one hand and a spending freeze on the other. Obama spoke ambitiously of putting money into roads, research, education, efficient cars, high-speed rail and other initiatives in his State of the Union speech. . . . But Obama offered far more examples of where he would spend than where he would cut, and some of the areas he identified for savings are not certain to yield much if anything.”

High Speed Rail:  Mr. Obama wants billions dollars in new spending on high speed rail.  In California, in order not to lose federal funding, they have opened the first section of track...without a station and it literally goes from nowhere to nowhere...and have already spent $5 billion on it.


So...a meaningless speech outlining more spending without meaningful cuts anywhere.  If the past two years is any sort of meter, his "targeted investment" will merely be billions in political payoffs to cronies.  In 2012, if unemployment doesn't fall below 8%, and his "laser-like focus" on job creation is a big a failure as his economic policies, he'll be a one term president, like James Earl Carter.

In the next 18 months, you'll see the MSM focus on any possible GOP contenders and work very hard to tear them down. 

If This Is Economic Recovery, Where Are The Jobs?

Major media keeps talking about the recovery...and how the economy is one the road to recovery.  If this is the case...then where are the jobs?  My wife and I have been sending out an average of 50-60 resumes each, each week.  We've long since begun looking for employment outside of the metro-Baltimore/Washington DC area.  Yet, with well over 400 resumes out, collectively, we've only had one phone interview...that has yet to bear any fruit.

Think about that.  Just one phone interview.  We're both educated and have at least 10 years of management experience under our belts with 20 or so years of total industry experience (I have 20 years in restaurants, 10 years in cabinetry, my wife has 24 years in retail and 17 of that in management positions) yet, no-one is hiring.

We'd move just about anywhere, excepting the failed economic states of Massachusetts, New York, New Jersey, Illinois or California...at our own expense, if only we could find work.  But, the Obama Adminstration wants to tell us that "all is well."



However, pretty much all the economic indicators are showing just the opposite...I'm worried, and you should be too.

Keynesian Economics Is Wrong: Economic Growth Causes Consumer Spending, Not the Other Way

Herbert Hoover, Franklyn Roosevelt and Barack Obama have all tried to use an Keynesian economic model to restart failing economies...all three have failed.  Here's why:

The Housing Double Dip Is Here

From Businessinsider.com is a chart showing the current and past housing market...

This is NOT good news...and portends bad things for our economy over the next year or so...

The chart (below) depicts the annual returns of the U.S. National, the 10-City Composite and the 20-City Composite Home Price Indices. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 1.5% decline in the third quarter of 2010 over the third quarter of 2009. In September, the 10-City and 20-City Composites recorded annual returns of +1.6% and +0.6%, respectively.

I expect that our double dip recession is here as well...the government is just too clueless to figure it out.

Bankrupting America

In just about the simplest form, here's an excellent explaination of just why American businesses are sitting on more than $5 trillion dollars right now.  It also shows just why businesses are hiring now, or any time in the foreseeable future.



via Instapundit

Obama's New Economic Team

The Fix

There recently was an article in the St. Petersburg , Fl. Times. The Business Section asked readers for ideas on: "How Would You Fix the Economy?" I think this guy nailed it!

Dear Mr. President,
Please find below my suggestion for fixing America 's economy. Instead of giving billions of dollars to companies that will squander the money on lavish parties and unearned bonuses, use the following plan.

 

You can call it the "Patriotic Retirement Plan": 
There are about 40 million people over 50 in the work force. Pay them $1 million apiece severance for early retirement with the following

 

stipulations:

1. They MUST retire. Forty million job openings - Unemployment fixed.
2. They MUST buy a new AMERICAN Car. Forty million cars ordered - Auto Industry fixed.
3. They MUST either buy a house or pay off their mortgage - Housing Crisis fixed.

 David Otterson, Largo

It can't get any easier than that!


P.S. If more money is needed, have all members in Congress pay their taxes...Mr. President, while you're at it, make Congress retire on Social Security and Medicare. I'll bet both programs would be fixed pronto!

Good news, bad news?

By JP Bender

Is a double-dip recession looming? Prognosticators are telling us so. I’m telling you “no”.

That’s probably good news to most of you. But you would be wrong. It’s bad news, because we are in fact racing toward a mega depression that will be worse than anything the country has ever experienced. A double-dip recession would be far better by comparison.

I realize that depression is a strong word, but the towering icebergs of local, state and federal debt are about to sink the country into a Titanic dive.

I was educated in top Catholic Universities, owned two successful businesses, and spent the last 25 years of my 70 in journalism. My background, education, training, and living my life to the fullest, have given me the opportunity to live and study key factors that will change my life – factors over which I can have little, if any, control.

The current economic situation has been building for decades and neither political party has clean hands.

When I returned from military duty in Southeast Asia, I quickly realized that this was no longer the world of my father. While I was gone, Presidents Kennedy and Johnson decided to reinvent the United States, within their interpretation of the Constitution, and that made me feel like an outsider.

Nixon, Ford and Carter continued to expand government services, increase government spending, and attempt to control our lives from cradle to grave.

Ronald Reagan first conceived the notion of not going to war to defeat the enemy, but rather outspend the enemy into complete economic collapse. It worked to a point. While succeeding in destroying the old Soviet Union, he lubricated the slippery slope of out-of-control spending, coupled with tax cuts, to achieve a victory that would become self-defeating.

Reagan’s successors, Bush 41, Clinton and Bush 43, followed suit. They got away with fiscal irresponsibility because America had recovered so quickly from its previous insane spending spree, and no one complained, as our leaders shoveled billions out to special interests.

Many Americans realized that this type of economic self-destruction couldn’t last forever so they foolishly had bought into the 2008 campaign promises of hope and change. But neither hope nor change was defined. The mere phrase of “hope and change” resonated with pro-Clinton followers and anti-Bush bashers.

President Obama quickly established an agenda to create change. But he never really offered any solid packages. Instead, he allowed Democrat congressional leaders to write the bills, line up the support and champion the causes, all the while taking bows. Predictably, Obama’s radical agenda of higher taxes, out-of-control spending, and massive government overreach, created an out-of-control government.

He of course was the figurehead, while Congress were the grunts in the field; they set the course, they provided the numbers, they provided the votes, and in a way it was a dual presidency. It is important to remember this because when it all collapses (and it will), there will be a lot of finger pointing. And don’t worry; there will be enough blame to go around for every elected official – federal, state and local.

The late Senator from Illinois, Everett McKinley Dirksen, was fond of saying, “a billion here – a billion there – pretty soon we are talking about real money.” He would use that line when talking about the wild spending of Congress. I wonder what he would think today about the trillions that we now spend – and owe?

How far we have sunk when the national debt is measured in multi-trillions and we have no clue when or how it ever can be paid off.

Taking a long hard look at today’s economy, I can see nothing but gigantic economic hurricanes ahead. These storm clouds are ominous and deadly. There are no shelters to offer protection or safe havens. If you think that Congress, the President, financial planners, or institutions will be the guiding lights, remember that they are the problem – not the solution.

When we don’t like what OPEC says, we silently say, “Let them drink their damn oil.” When we don’t like what the Arabs say, we silently say, “Let them eat their damn sand.” We say those things because we’re offended that they’re taking advantage of us.

When we falter and head into the largest and deepest depression in the history of the world, we will be unable to pay even the interest on our debt, much less the principal. Then the Asians will get stiffed, and they will be offended because we are taking advantage of them. It’ll be their turn to say about us, “Let them eat their damn money, and screw their democratic principals of freedom of religion, press and gun ownership.”

We laugh at Nero, who fiddled while Rome burned. But Americans are fiddling, wasting valuable resources debating Roe v. Wade, gay rights, civil unions, and immigration reform, when we should be balancing the federal checkbook.

If the madness doesn’t stop really very soon, the unlimited U.S. credit card will be cancelled, open lines of credit will be closed, and international trade will crumble. With what will we buy the oil to which we have become addicted? The dollar will be only somewhat more valuable than useless.

From where I stand and from what I can see, this massive depression could last 15 years or longer and there will be no World War or willing lenders to bail us out. Economic collapse will cause massive domestic foreclosures, lawlessness and skyrocketing crime, 25-35 percent unemployment, widespread starvation, escalating suicide rates, and untold numbers of killings.

Of course the rest of the world will not be immune to the U.S depression. It will soon spread to every nation and hamlet on the globe, further exacerbating existing tensions, insults and vendettas. The radicals will attack to further their insane agendas, and we won’t have the assets to counter. But that’s okay, because we will welcome them in the name of diversity.

The day of reckoning approaches.

Obama's Recovery Summer: No Jobs...

Nancy Pelosi Is An Idiot

Nancy Pelosi is an idiot...For 10 years I worked as a cabinetmaker. I wasn't a great one, but rather a pretty good one. Unfortunately, when the construction industry floundered in the summer of 2008, for the first time in my life, I had trouble looking for work. In October, 2008, the company I was working for laid me off.

I've spent the past year and a half working in restaurants for half of what I was making prior to the start of the recession. About the only good thing is that I've been given the time to re-educate myself on some basic economic theory. Stuff I've not taken a look at since college (many moons ago-and promptly forgot back then).

When you see stuff like this being spouted by the Speaker of the House of Representatives, you really begin to question the intelligence of our political leadership.



I originally posted this a few days ago...but just read an article that made me want to repost it, because it reminded me that our political "elite" basically know less about economic and economic theory than I do. That's a scary thought because these are the people who have control of the direction the country is going. If they know less than I do, why in the hell are they running things?

The Democratic party contains some pretty smart people. Many of them have studied economics...but like most people, they tend to ignore that which disagrees with their view on life. A recent study by the Harvard Business school shows that government spending actually DECREASES jobs. You'd think that this would have gotten greater notice in both the press and government circles...it didn't. Another study from UCLA concluded that FDR's Keynesian economic policies extended the Great Depression by nearly 7 years. There have been a number of other studies whose conclusions match these, but have been utterly ignored by the left leaning mainstream media complex since they don't support the conventional wisdom that massive government spending and increasing taxes are the key to ending economic decline.

But...if you take a look at the solutions that worked in previous period of economic decline, you come to realize that Mr. Obama's approach, like that of FDR is disastrous. In the early 1960's, JFK & Johnson used reductions in tax rates to quickly pull the country out of a short recession. Richard Nixon, on the other hand, tried price controls and spending...which didn't work. Jimmy Carter tried the same thing, and failed as well. Ronald Reagan, Bill Clinton and George W. Bush all used broad reductions in the general tax rates as well as (for the most part) cotrolling government spending (each to a greater or lesser degree). G. H. W. Bush attempted follow much the same path, but the short recession following the 1991 Gulf War, in which he felt forced to raise taxes, instead of controlling/reducing spending caused his loss in the 1992 election. (Read my lips "No New Taxes"...sank him).

They ushered in the longest period of economic growth this country has ever seen. What was the root cause of the current economic downturn is to be found in 1998 when Fanny May/Freddie Mac were forced by Congress to begin giving mortgages to those who...frankly, couldn't pay for them. In the early part of this century, this course was doubly encouraged when it was changed to "no down payment and 125% of the value of the property". This increased the pressure to loan money...which wasn't paid back...When George W. Bush along with Sen. John McCain attempted to end this practice 2003, their effort was lambasted by both the Democrats and their supporters in the mainstream press, thus failed.

Therefore, the credit/banking industry collapsed when the number of foreclosures exceeded their ability to withstand. That caused the "credit crunch." This was hugely exacerbated when Congress BORROWED almost $3,000,000,000,000.00 in order to bailout the banking industry, the domestic automobile industry and then the "stimulus package". That had the effect of literally sucking the life out of the loan market. That money would have, could have been used far more profitably in the private sector as loans, first to the manufacturing business, and then to the construction industry (both of whom literally thrive on easy credit). Both need credit to purchase materials/property in which to build/make things. Without easily obtainable credit, those sectors slow down...

The next basic concept in economics is that if you reduce taxes, broadly, all the way across the spectrum, you encourage not just investment, but you encourage businesses to begin producing goods and services. At the moment, with the Bush tax cuts set to expire at the end of this year, contrary to popular myth, more than just the wealthy will be affected. The expiration of those cuts will have an impact that will rebound across the economy. Already business who are leery of hiring more workers this year, have decided to wait until they know the impact of tax increases next year. Mr. Obama with Nancy Pelosi and Harry Reid, the Senate Majority leader, have consistently declared that they will raise taxes along with their vast increase in spending. This has had a decidedly chilling effect on the economy as a whole, and Walls Street investment in particular with the Dow Jones Industrial average dropping nearly 2000 points in the past several months.

By enacting a broad based tax cut, one that affects, not just the wealthy, but reducing the amount of the tax burden on business (The US whose business tax rate is 35% or so in this country, as opposed to Taiwan who just reduced theirs to 17% in order to compete with Singapore) would vastly encourage industry and small business to begin hiring new workers. BUT,  ObamaCare with it huge raft of taxes, fees and fines, must be repealed. Many companies are not hiring new workers because, despite Mr. Obama's repeated promises "If you like your health care, you can keep it", 51% of health insurance provided by companies doesn't meet ObamaCare guidelines (and thus, NO YOU CAN'T KEEP IT!). The State of Massachusetts model upon which ObamaCare is based is failing miserably to contain costs or provide more/better care. It has had the opposite effect, with rates raising roughly 33% since it was implemented. This is what we have in store...but that's an area for another post.

At this point, only by reducing government descretionary spending to that which is covered by taxes, and reducing taxes across the board will be end the current recession.  That's what the Germany and Sweden are doing (those paragons of Socialism are moving away from their historical economy models and turning to less regulation to encourage economic growth).  It works, but we have to change the political environment in Washington DC to do it.  That means we must elect Congressmen and Senators who will do what needs to be done...and not business as usual...

Dow Jones Repeats Depression Cycle

As if we didn't have enough to worry about, here's something else, by: CNBC.com

The Dow Jones Industrial Average is repeating a pattern that appeared just before markets fell during the Great Depression, Daryl Guppy, CEO at Guppytraders.com, told CNBC Monday.

“Those who don’t remember history are doomed to repeat it…there was a head and shoulders pattern that developed before the Depression in 1929, then with the recovery in 1930 we had another head and shoulders pattern that preceded a fall in the market, and in the current Dow situation we see an exact repeat of that environment,” Guppy said.

The Dow retreated 457.33 points, or 4.5 percent last week, to close at 9,686 Friday. Guppy said a Dow fall below 9,800 confirmed the head and shoulders pattern.

The Shanghai Composite is seeing a very rapid collapse, falling below 2,500, which suggests the major fall in the Dow, he added.

In the European markets, Guppy says Frankfurt's Dax is witnessing a different pattern to London's FTSE.

Guppy uses the broad trading band as measurement- giving the Dax a downsize target of 1,500. The same head and shoulders pattern seen in the Dow can also being seen in the FTSE, he added.

Keynsian Economics Fails When Tried

Stimulus Package Failed To Help Economy

Just 25% of voters nationwide believe the economic stimulus package created jobs and voters are counting on decisions made by business owners more than government officials to create the jobs needed by the nation.  The new survey found that just 29% believe last year’s economic stimulus plan has helped the economy while 43% believe it hurt. Not surprisingly, there is little appetite for another round. By a 69% to 15% margin, voters believe tax cuts is a better way to create jobs rather than more government spending.  Ultimately, though, voters are looking to the private sector to create jobs. Sixty-five percent (65%) say that decisions made business owners seeking to grow their business will do more to create jobs than decisions made by government officials. Just 23% expect the government officials to have a bigger impact.

This just goes to show that very few Americans  believe that the government can do anything economy to grow the economy.  On the other hand a majority believe that the government can actually hurt the economy by spending more money.

What Ailes the Country?

The root economic collapse are not simple. They stem from several sources, but primarily within Congress and a few Senators and Congressmen who insisted 12-14 years ago that owning a home was a "right" and must be extended to the broadest possible base. Another root cause is...again Congress, only this time, their ability to spend money without having to make commensurate cuts elsewhere in the budget. A third root cause of our economic woes is related to and a subsidiary dividend of the first two issues: Credit, or rather the lack thereof.

A number of years ago, Congressman Barney Frank, (D-MA4) along with Senator Charles Schumer (D-NY) and Christopher Dodd (D-CT) decided that home ownership was a right that must be extended to everyone in the United States...regardless of their ability to pay the resulting mortgage. They insisted that Fanny May and Freddie Mac, the publicly owned/financed mortgage guarantee corporations must begin issuing subprime home loans. Wikipedia defines subprime loans as follows:

"Subprime lendings evolved with the realization of a demand in the marketplace for loans to high-risk borrowers with imperfect credit.[2] The first subprime was initiated in 1993. Many companies entered the market when the prime interest rate was low, and real interest became negative allowing modest subprime rates to flourish; negative interest rates are hand-outs, such that the more you borrow the more you earn.[citation needed] Others entered with the relaxation of usury laws.[2] Traditional lenders were more cautious and historically turned away potential borrowers with impaired or limited credit histories.[2] Statistically, approximately 25% of the population of the United States falls into this category.[citation needed] In 1998, the Federal Trade Commission estimated that 10% of new-car financing in the US was provided by subprime loans, and that $125 billion of $859 billion total mortgage dollars were subprime.[2]

"In the third quarter of 2007, subprime ARMs only represented 6.8% of the mortgages outstanding in the US, yet they represented 43.0% of the foreclosures started. Subprime fixed mortgages represented 6.3% of outstanding loans and 12.0% of the foreclosures started in the same period.[3]"

Thus in a nutshell, subprime loans are those that are granted to people with poor credit, who have in the past shown that they are irresponsible and defaulted on loans in the past. An additional criteria of subprime home loans was that they were often granted with little or no money as down payment and the loans often exceeded 125% of the value of the home...thus more money was given than the borrower's ability to pay back and was greater than the value of the property in question. Thus the borrower has little or no incentive to remain in the property if the ensuing housing bubble bursts...

When the credit crisis of 2007-8 began to perk up into the greater economy, it stemmed from increasing foreclosure rates of those very borrowers who should never have been granted loans in the first place. Then, as credit began to dry up, it effected all other sectors of the economy but most significantly, automotive sales and construction, as those industries are based heavily on the availability of credit lines, first in auto loans, and secondarily in construction firms being able to borrow the funds necessary to construct homes, commercial property, etc. Without easily available credit, those two industries are bound to fail in a rapid manner...and fail they did.

Enter Congress...Congress in it's infinite stupidity, led by Speaker of the House, Nancy Pelosi, and the Senate Majority Leader, Harry Reid, jumped into the fray with the Toxic Asset Relief Program (TARP) which was supposed to buy up foreclosed properties and keep various "too big to fail" banking/lending houses on Wall Street solvent. Not coincidentally, AIG, was the most seriously endangered...it also happened to be the administrator of Congressional retirement funds...

These companies were deemed to important to be allowed to fail through normal marketary forces, i.e. they followed bad business plans and were rewarded for their stupidity, while small houses who followed economically vaible plans were punished by being forced to pay higher taxes and fees to partially fund the $750,000,000,000.00 plan (which has now ballooned beyond a trillion dollars). Unfortunately, most of these funds have been dispensed by the administration in a manner other than that which was mandated by Congress. Secretary of the Treasury, Timothy Geithner has used these funds to a slush fund in order to bailout GM and Chrysler to the tune of almost $100,000,000,000.00 so far.

Following the election, a victorious Barack Obama, with his enablers, Messer's Reid and Pelosi, settled upon a plan to spend another trillion dollars as a "stimulus package" to jump start the economy. Mr. Obama, in failing to show any leadership at all, delegated the formulation of the "package" to Congress...who larded it with pork typical of an emergency spending bill. It has been shown, that spending in Democratic districts has been more than 2-1 that of GOP held seats regardless of actual need in those districts.

However, in a recent study by Lauren Cohen, Joshua Coval and Christopher Malloy of the Harvard University Business School in their study, 'Do Powerful Politicians Cause Corporate Downsizing?' they discovered, much to their surprise, that massive government spending in Congressional districts (a convenient size for the purposes of their study) had the effect of eliminating jobs and a reduction in research expenditures in the private sector. In other words, they concluded that the stimulus package wouldn't stimulate the economy, it would have the direct and negative effect that it has had. Thus, unemployment has remained at 25 year highs...with a U6 rate of 17-20%. which is well above the U3 rate of 9.9%.

Once more enters Congress, which has passed in the past two years, record sized government budgets that will double the national debt within five years. Additionally, each year's projected deficit has exceeded $1,300,000,000,000.00 for last year, and 1,600,000,000,000.00 for this year, though that figure is been altered upward several times over the past few months as revenue received by the IRS has continued to slide.

There are several options available to alleviate our current economic woes. Unfortunately, this administration and Congressional leadership is deeply wedded to a flawed Keynsian economic model and won't implement any of these ideas. First off, a steep reduction in business taxes would release the private sector from an onerous burden and enable it to reinvest funds in expansion. Secondly, reducing or eliminating the Capital Gaines Tax would encourage further investment in the private sector. In the past, reducing taxes has been followed almost immediately by rapid expansion of the economy. The Reagan tax cuts of the 1980's led to the longest period of economic growth in our nation's history. Unfortunately, Congress as it is presently constituted will not implement either of these proposals, despite the fact that reducing taxes encourages economic growth, which leads to higher tax revenues.

Lastly, if Congress in a fit of sanity that's not envisioned in the near future, would not pass spending bills that increase spending without commensurate decreases' in other areas. This won't happen as our political class refuses to make the difficult decisions needed to eliminate deficit spending prefering to "kick the can down the road," and avoid having to make any hard decisions now.

Eliminating those governmental departments that are unnecessary or have become "jobs" programs, such as the Dept of Education, Health and Human Services, Commerce, as well as Energy. None of these departments are really necessary and don't actually perform well or efficiently in the sectors that they are purported to regulate. By eliminating them, nearly 25% of the overall budget would be eliminated and that unnecessary spending could be saved with an overall savings of nearly $1,000,000,000,000.00 per year. Yet, none of this will occur as Congress and this Administration want to have their cake and eat it too...

However, neither party has shown the political fortitude needed to tackle this growing list of economic problems.  Both seem to be enamoured of government expansion.  It's merely a matter of the rate of expansion that is the root issue.  In 2002-2006, the GOP expanded the scope of government to an unprecendented degree...but then, the Democratic Party took control of the reigns of government, in 2006, an began to pass budgets that exceed even those.  Once a Democrat took over the White House, the scope of government expansion sky rocketed.

Last year, compensation of government employees exceeded that of the private sector.  Addtionally, the numbers of people who no longer produce actual goods or services exceeded those in the productive private sector.  This sort of growth cannot be sustained.  In a business, if the administrative side begins to out number that of the productivity based side the business fails (i.e. GM, is an excellent example of this).  Government has now achieved that magic number.  What happens when governments reach this point?  Look at Greece, Spain and Portugal.  These three countries are bankrupt and can no longer afford the level of governmental spending that they have been following for several decades.  Greece's GDP is now exceeded by it's level of debt and is on the verge of defaulting on it's debt payments.   Our own government is predicted to reach this point in 2020...if not sooner.

The time has come for us as a nation to make those hard choices that are necessary in order to remain the ecnomic powerhouse that we have been for the past 160 years.  We have allowed our political class to spend money like drunken sailors without regard to the consequences to the future.  Social Security, which should have been able to sustain itself for another 50 years, has been through accounting tricks, systematically looted by Congress, both Democrat and Republican controlled, for more than 60 years, virtually since it's inception.  Medicare/Medicade, which were supposed to be capped at $40,000,000,000.00 spending now waste at least that much yearly.  We have allowed ourselves to be duped by politicians into believing that we can continue to spend money we don't have.

The time has come for us, as a nation to clean house and regain some measure of fiscal sanity.  In November, we must remove from office, thos incumbents who have shown that they are unable to look towards the future of our nation, and only look towards enriching themselves at the public trough.  Remember November!

Economic Recovery ...

Jim Geraghty doess a great job brining to light those signs of economic recovery in Alexandria, VA...right next door to DC.