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.

Voter's Remorse: Bill McClellan Edition

Bill McClellan, a journalist with the St. Louis Post-Dispatch has finally achieved voter remorse...in his column today, "I should have picked Hillary over Obama,"  he finally fesses up...

I was splashing around in Lake Michigan last week when the realization hit me like a wave — I was wrong about Barack Obama. I should have voted for Hillary Clinton in the Democratic primary three years ago.

At the time of the primary, the decision seemed easy. I saw in Obama the same qualities Jack Kerouac saw in Dean Moriarty in "On the Road." He was 'something new, long prophesied, long a-coming."

Hillary was not new. She represented the second act of "Billary," and I had tired of that play long before it ended its eight-year run.

So I voted for Obama in the primary and then again in the general election. I even left the election night party at the Pageant — a party with an open bar and filled with state legislators, union guys and other acquaintances — to go to the Chase Park Plaza, where the Obama people were celebrating. I knew almost nobody at that second party, but I was there when the networks declared that Obama was the next president. People cried and hugged. I got teary myself. A black president. The times they are a-changing.

Indeed. They keep getting worse.

Unfortunately, for millions of people who didn't vote for Mr. Obama, we saw all those things that many are just now noticing.  This man is unfit to sit as President of the United States.  It's not about racism, I don't give a damn where you, or your ancestors came from, all I care about is that you are either citizen, or legal resident.  If you are neither, then you don't belong here, and should be punished to the fullest extent of the law.  Any one employing you should lose their business liscense and be fined as well, if not jailed.  That being said, I believe that Mr. Obama is a legal citizen of the United States.  But that's the only qualification he has for the office he holds.

The media was so in love with the idea of electing the "first black president" that they failed miserably in thier constitutional mandate to fully vet all of the candidates.  They have invested themselves in the success of this president, that his failure fully resides with them, the media.  By not doing their jobs, and asking Mr. Obama any of the difficult questions, the horrendous vetting that they imposed upon all of the other candidates, excepting John Edwards, who is now being prosecuted for his alleged crimes, they have lost credibility with voters at large.  Below is my response to his article above.

Dear Mr. McClellan,

I'm glad to see that you have "voter's remorse" over your choice for President in 2008. Many of us tried, and tried to tell people like yourself that Mr. Obama was unfit to be president...none of you listened and now we have to pay the price.

My business too failed. Chisel & Plane was a small cabinet shop in Pikesville, Maryland, just outside of Baltimore city. Most of my neighbors drank the Kool-Aide and voted for Mr. Obama as well. Several have since told me that I was right...unfortunately, it's too late for thousands of businesses.

Hopefully, you'll go against the media's bias and begin to actually ask some of those difficult questions that the media has so far refused to ask. Where is the transparency Mr. Obama promised? He claims to have all sorts of plans, yet absolutely refuses to produce them. why? I hope that you have learned from your mistake. I know that I'm paying for it. I lost my business, my home and nearly my marriage to this depression we're suffering from. Perhaps, you too will be hurt...but I doubt it.

The time has come for our government to start living within it's means and not spending money we don't have. Since 2007, when the Democratic Party took control of Congress, and produced Mr. Bush's largest deficit, some $400 million dollars that year, Democratic control has added nearly $5,000,000,000,000.00 to the debt, that's 1/3rd of the total. It took us some 230 years to produce the rest, but only 4 years to add that much. Spending must be curbed, Keynesian economics has clearly failed.

The time of huge deficits is over. Our great grand children will be paying for our selfishness, to their dismay. The historian that once I was, laments this fact. You have a voice, and a bully pulpit, I hope that you'll use it wisely, though I suspect not.

Sincerely,
Richard A. Vail
Pikesville, Maryland

"The task of weaning various people and groups from the national nipple will not be easy. The sound of whines, bawls, screams and invective will fill the air as the agony of withdrawal pangs finds voice." -Linda Bowles

Received In The Mail: "Reckless Endangerment: How Outsided ambition, Greed, and Corruption Led to economic Armageddon"

 I received a copy from the publisher in return for writing a review.  I'll be posting a review as soon as I finish reading it. I wrote  a comment in a widely read blog that I'd love to read it and write a review...and was contacted within 24 hours by the publisher who graciously offered a copy for review. 

It's The Economy Stupid: Chapter 312

Barack Obama, again has refused to take responsibility for the failing economy.  The trillion dollar "stimulus package" that his Democratically controlled Congress rammed through along party lines in 2009 has utterly failed in it's declared goal to keep unemployment below 8% (even the biased "politifact.com" finds that Obama said so...and failed misserably. 

Even that being said, with regulations as welll as currently existing ones costing the economy $1.5 trillion dollars per year, the EPA is set to ramp up even more costly carbon emissions standards. This will cost at least an additional half trillion dollars. So...

Who does Mr. Obama blame for the economy that he and his party have driven over the cliff?  Why you and me! 

A cascade of bad economic and political news knocked President Barack Obama off his game today, and prompted him to revive his 2008-style criticism of his predecessor, and also to suggest that investors, consumers and even the media are responsible for today’s stalled economy.

The blame-game rhetoric – which pollsters say is counterproductive – came during the White House’s joint press conference with Germany’s chancellor, Angela Merkel. “It is just very important for folks to remember how close we came to complete disaster,” he told the watching TV cameras and reporters.

“The world economy took a severe blow two and a half years ago, and in part that is because of a whole set of policy decisions that had been made, and challenges that have been unaddressed over the course of the previous decade,” he said, standing alongside Merkel, whose economy has rebounded during the last two years.

Of course, it's not his fault, or that of his party...it's ours...you and me. It's the voters fault! That's the ticket, yeah...

Even James Carville, who thought up "It's the economy, stupid," thinks Mr. Obama is in for a rough time.

“[L]ook, I don’t think anybody — if 54,000 new jobs is the new standard, it’s going to be a very, very rough 2012 for President Obama,” Carville said. “But the three-month average was 160,000. If that is the case, then he will do OK. I can’t tell you what will happen. But yes, if this, if this last jobs number is an indication of future job numbers, it’s going to be very, very rough.”

Things are so bad in this administration ecnomic team, that Austan Goolsbee, who lead the Council of Economic Advisors for only 9 months has resigned to return to academia...where he can teach  progressive ideas (that don't work) to future progressive leaders.   Mr. Obama in 2009 formed a "dream team" of economic advisors who would "turn the country around." 

With Goolsbee’s departure, the collapse of the president’s economic team is nearly complete. The first to leave was the president’s original chair of the Council of Economic Advisers, University of California-Berkeley economist Christina Romer. She holds the distinction of predicting an $800 billion stimulus program would bring joblessness down to 8%. Also gone is Jared Bernstein, the actual architect of the stimulus, and the man who was behind Vice President Biden’s “Summer of Recovery.”

Mr. Obama is out of ideas, and almost out of time, while we're almost out of money.  I suspect that he'll keep trying to redistribute it until he's out of office.

It's the Economy STUPID!

A reader asked me how long a bounce Mr. Obama would get from the killing of OBL...I predict 2 weeks.  That's about how long the MSM will be able to wind this out.  The love fest was evident on ABC tonight with their "news breaks" on "late breaking news."  What'shername, the ABC evening news anchor, just gushed about "our brave seals."...

After 2 weeks, reality will return, and people will see the cost of gasoline rise above $4.50...and begin it's inexorable climb to the $5 dollar rung.  Of course, pretty much our entire economy is tied to the price of fuel.  Very soon, we'll see real inflation rates approach 10%.  The current system for measuring inflation doesn't count the cost of energy or food...both of which require intensive use of petroleum products to reach market, not just to grow.  Thus, the GAO continues to insist that there is no inflation...but then, they don't do any grocery shopping.
Mr. Obama claims he can't do anything about the cost of gasoline in the immediate future (the next few months).  While technically, that's correct, we as a nation, have some of the largest reserves of oil in the world.  We are continually finding new oil fields.  What this government has refused to do is permit new drilling.  The reason that the deep water BP spill happened at all is that environmentalists have successfully blocked the exploitation of newly discovered (over the past 20 years) of  oil fields located on the continental shelf (The CS lies in waters from 0 feet to approximately 500 feet deep).   This has forced us to exploit very deep water fields.  But now, even that's off limits.

But not for Brazil.  We gave Brazil's Petrobaz (spelling?) $2,000,000,000.00 to exploit  a new field discovered in deep water off the south east coast of Brazil.  Now, just who holds the largest block of privately held stock in that partially publically (Brazillian government) owned company?  Why George Soros, one of the huge contributors to Obama's 2008 presidential campaign.

Then throw in Mr. Obama's faux "deficit reduction plan" (which budget is still 25% larger than the largest signed by Mr. G. W. Bush)...that has markets in flux, and has caused Stardard & Poors, among other bond rating agencies to down-grade US Treasury bonds...plus the Chinese have started to sell off  US T-Bills (one common indicator that an attack on the dollar is imminent)...and IT'S THE ECONOMY STUPID!

Now, the real question is...will Washington listen?

The Tipping Point....?????

I live in metropolitan Baltimore area.  In the past several months, I and my wife have struggled to get by.  Rising prices of basic staples such as...bread, beef, chicken combined with a steep rise in the cost of gasoline-diesel have nearly pushed us back over the edge.  The Obama administration and their enabler's in the MSM would have us believe that we're not on the brink of another recession, but we are.

The combination of rising gasoline prices and the steepest increase in the cost of food in a generation is threatening to push the US economy into a recession, according to Craig Johnson, president of Customer Growth Partners....With gas prices now standing at about $3.90 a gallon, energy costs have now passed 6 percent of spending—a level that Johnson says is a "tipping point" for consumers. "Energy is not quite as essential as food and water, but is a necessity in today's economy, and when gasoline costs more than bottled water—like now—then it takes a huge bite out of disposable spending," he said, in a research note.

I personally, can't afford another recession as the last one has rendered me nearly desitute.

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.

Stimulus Payments...

This is rather amusing...

Sometime this year, we taxpayers will again receive another 'Economic Stimulus' payment.

This is indeed a very exciting program, and I'll explain it by using a Q & A format:

Q. What is an 'Economic Stimulus' payment ?
A. It is money that the federal government will send to taxpayers.

Q.. Where will the government get this money ?
A. From taxpayers.

Q. So the government is giving me back my own money ?
A. Only a smidgen of it.

Q. What is the purpose of this payment ?
A. The plan is for you to use the money to purchase a high-definition TV set, thus stimulating the economy.

Q. But isn't that stimulating the economy of China ?
A. Shut up.

Below is some helpful advice on how to best help the U.S. Economy by spending your stimulus check wisely:

* If you spend the stimulus money at Wal-Mart, the money will go to China or Sri Lanka .
* If you spend it on gasoline, your money will go to the Arabs.
* If you purchase a computer, it will go to India , Taiwan or China .
* If you purchase fruit and vegetables, it will go to Mexico, Honduras and Guatemala ..
* If you buy an efficient car, it will go to Japan or Korea .
* If you purchase useless stuff, it will go to Taiwan .
* If you pay your credit cards off, or buy stock, it will go to management bonuses and they will hide it offshore.

Instead, keep the money in America by:
1) Spending it at yard sales, or
2) Going to ball games, or
3) Spending it on prostitutes, or
4) Beer or
5) Tattoos.
(These are the only American businesses still operating in the U.S. )
Conclusion:
Go to a ball game with a tattooed prostitute that you met at a yard sale and drink beer all day !
No need to thank me, I'm just glad I could be of help.

The Recession Is Over? Says Who?

If you listen to the network news (I have to, I can't afford cable any more), you'd think that the recession was over.  It's not.  Despite "a growing economy" no one is actually hiring.  Because of all the uncertainty, there really aren't any jobs around.  Most of those are merely seasonal for the holidays.  The competition for those is so fierce that it's almost frightening.

How do I know?  I'm working all of 14-16 hours a week...for a catering company.  That's all the work I've been able to find.  I have 10 years experience as a cabinetmaker/carpenter and 22 in restaurant, but the best I've been able to find is part time work as a bartender...no tips straight hourly wage.  My wife isn't doing much better.  She works 22 hours a week for a big box department store as an HR clerk.  That's despite having 23 years experience in retail management. 

On Tuesday, November 23, at 10 am, we are scheduled to be evicted unless we can raise $873.50 to pay October's rent.  I don't know what I'm going to do about November's rent at this point either.

With the largest tax hike in history looming come January 1st, I don't think I'm going to be able to find a job any time soon. We tried applying for food stamps.  But here in Maryland the system is so screwed up, we were notified that we would have a "telephonic hearing" two days after the hear was scheduled.  Needless to say, our application was denied. 

I worked for just under 30 days as with a company as a cabinet maker, but what I thought was a permanent position, was only to finish a deadline job...and was laid off as soon as that work was completed.  To compound it all, I didn't work long enough to qualify for unemployment!  What makes it  even worse, is that I turned down a position with a new restaurant in downtown Baltimore that just opened in October as "Service Lead" (head waiter in prepolitical correctness days).  About the only good news I have is that I do have a job interview on Tuesday morning with a company that assembles office furniture. A friend has recommended me to a couple of the incoming Congressmen and I am supposed to undergo an FBI background check in the next few weeks, but I've not heard anything directly on that as of yet.

I this point I don't know what to do.  We can't even afford to rent a storage unit to what few things we have left since I closed my cabinet shop in December of 2008 when we lost the house.  So we'll pack up this weekend, and hope we can find someone who will allow us to use their garage to store our things.

I don't want a free ride, I want to work...but what do you do when there's no work to be found?  It's not like I'm not putting our 20-30 resumes a day.  I've long since begun applying to jobs all over the eastern US...but so far I've only had "thanks for applying if anything meeting your qualifications opens up we'll..." 

If you can afford to do so, I'd appreciate you're hitting the tip jar to the right.

UPDATE:  I would like to thank everyone who has been so kind and generous to help my wife and I.    I will be contacting everyone who donated, directly in the next day or two, but wanted to get something up here now.   Thank you again for all your generosity, you have no idea how much it means to us.

Rich Vail
Pikesville, MD

It's All Bush's Fault, Part 3

Let's think about just what Mr. Bush is at fault for.  He did push the toxic TARP legislation which was passed at the very end of his term...Mr. Obama hasn't allowed us to forget that pretty much was his fault.  It's been his mantra for two years now.  However, here's what Mr. Bush did right. 

We’ll undoubtedly be treated to more of the Bush blame game. Forget for a moment that Bush held average unemployment at 5.3%, saw the strongest productivity growth in four decades, and witnessed robust GDP growth. Set aside the fact that he oversaw this growth despite an inherited recession, 9/11, Hurricane Katrina, and wars in Afghanistan and Iraq. Focus instead on the simple fact that the last budget that a Republican Congress had control over had a deficit of approximately $162 billion dollars — a large number to be sure, but not so large that the Democrats and our “progressive” president couldn’t expand it in under two years by nearly a factor of ten. Under the Obama administration and with the Democrats in complete and total control, we have record debt, record deficits, record unemployment, record underemployed, record foreclosures, record bankruptcies, and soon, record tax increases.

That bolded section is something to take a long hard look at.  The first budget passed by Congress after the Democrats took control in 2007, had a budget deficit of $462 billion dollars.  The first budget signed by Mr. Obama was $1.7 TRILLION DOLLARS!  More than 10 time that of Mr. Bush's last GOP Congress.  Last year's budget was $1.6 Trillion dollars...so in two years of complete Democratic control of both the legislative and executive branches of government they added $3.3 Trillion dollars to the debt...that leaves off the $1.3 Trillion dollars of the last budgetary year for Mr. Bush that was passed by Congress AFTER HE LEFT OFFICE and it was then signed by the newly sworn in President Obama...so just what has Mr. Bush wrought?

That's rather difficult to quantify, but with the plethora of these:

sprouting around the country, I'd have to say that he probably will fare far better through the lens of history than the current occupant of the White House will.  On the other hand, on January 1, 2011, the largest tax increase in history will go into effect.  Pretty much everyone's taxes will go up by 13%.  Some businesses will see a 28% increase while other only see a 23% increase.  Death taxes will double...and all sorts of fees, taxes, etc., will kick in under ObamaCare...no wonder business has been very nervous the past year or so.  They worry about just what it will cost them to hire each individual "new" employee...much less how much it will cost them to continue to employ "old" workers.

American's for Tax Reform has published this:

First Wave 

Bush Tax Cuts Expire. Congress didn’t even have the strength of character to stay and vote on extending the Bush tax cuts before running home to protect their professional political careers. These tax cuts all expire on January 1, 2011. Thereafter, the top income tax rate will rise from 35% to 39.6%, the same rate at which two-thirds of small business profits are taxed. The lowest rate will rise from 10% to 15%. All the rates in between will also rise. Somewhere I seem to recall a promise about tax cuts for 95% of “working families.”

• Higher Taxes on Marriage and Family. The “marriage penalty” (narrower tax brackets for married couples) starting with the first dollar of individual income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.
• Death Tax Returns. 2010 is a great year to die; there is no death tax. For those dying on or after January 1, 2011, however, there is a 55% top death tax rate on estates over $1 million. A person leaving behind a home and a 401k could easily pass along a death tax bill to their family.
• Higher tax rates on savers and investors. The capital gains tax will rise from 15% this year to 20% in 2011. The dividends tax will rise from 15% this year to 39.6% in 2011. These rates will rise another 3.8% in 2013.

 The second wave — summarized by Joan Pryde, senior tax editor for the Kiplinger letters — will follow closely on the heels of the first.

Second Wave

 

Obamacare will be the focus of congressional wrangling over the next two years, but it is unlikely to be repealed in that time. There are over 20 huge and completely new taxes contained within the new health care law which was hurried through Congress without being read and passed against the will of the American people. Several will first go into effect on January 1, 2011.

 

They include:

• The “Medicine Cabinet Tax.” Under Obamacare, the ability to use pre-tax dollars from health savings accounts, flexible spending accounts, or health reimbursement accounts to purchase non-prescription, over-the-counter medicine will be a thing of the past.
• The “Special Needs” Kids’ Tax. There will be a new cap on flexible spending accounts of $2500 where there currently is no limit. This will hit parents of special needs children particularly hard. Tens of thousands of parents with special needs kids currently use FSAs to pay for their kids’ educations — which can add up to tens of thousands of dollars per year.
• The HAS Withdrawal Tax Hike. The health care bill Nancy Pelosi told us we’d have to pass to see what was in it increases the additional tax on non-medical early withdrawals from a health savings account from 10% to 20%, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10%.

The third wave will ensnare an additional 28 million Americans and countless small businesses.

 

Third Wave

• The Alternative Minimum Tax and Employer Tax Hikes. The AMT, which was originally intended simply to make sure that wealthy taxpayers didn’t use tax shelters and other tactics to avoid having to pay any taxes at all (a good start for an argument for a flat tax), affected nearly 4 million families last year. Starting in 2011, it will affect over 28 million families. According to the leftist Tax Policy Center, Congress’ ineptitude and failure to index the AMT will result in an explosion of AMT taxpaying families, each of which will have to calculate their tax burdens twice, and pay taxes at the higher level.
• Small Business Expensing Is Slashed and 50% Expensing Disappears. Obama doesn’t understand that small businesses can normally expense (rather than slowly deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.” The effect is a huge tax and an additional expense to the businesses which create jobs.
• Tax Benefits for Education and Teaching Slashed. The deduction for tuition and fees will no longer be available. Tax credits for education will be limited and teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut, as will employer-provided educational assistance. The student loan interest deduction will be disallowed for hundreds of thousands of families.
• Charitable Contributions From IRAs Disappear. Under current law, an IRA can contribute up to $100,000 per year directly to a charity without penalty. This contribution also counts toward an annual “required minimum distribution.” Not any more, thanks to a compassionate and ultra-liberal Congress.
• The Health Care Tax That Wasn’t. Remember when your president told you straight-faced that when Americans are required to obtain health insurance or pay a penalty it wasn’t a tax? He lied. In defending the Obamacare mandate in court, Obama and his army of lawyers are now defending the requirement as an exercise of the government’s “power to lay and collect taxes.” How’s that hope and change working out for everybody? I thought everybody making less that everybody making less than $250,000 per year wouldn’t see an increase in their taxes.

This is what we face in 2011...the largest tax increase in our history...and it's all Bush's fault, right?

Unemployment Really 22%, CBS News Is Reporting

WOW!  CBS finally admits on 60 Minutes show that unemployment is above 20%...think about that...the most liberal of news oranizations on network TV, admits that the employment numbers the government is using are too low.



via JamieWearingFool, is CBS's video:



This is huge...9 days out the liberal news media is admitting that the economy is in deep shit...

How The Democrats Caused the Financial Crisis

Here's a short video explaining how the Democratic Party caused the financial crisis of 2008-present.

The Failing Economy Explained: FEDERALIST No. 62

Clayton Cramer makes an interesting point on why the economy is still failing.  He quotes from The Federalist papers #62.  I'm bolding and italisizing what he quotes as the reason.  Here it is in it's entirety
: 

FEDERALIST No. 62
The Senate
For the Independent Journal.
Alexander Hamilton or James Madison

To the People of the State of New York:

HAVING examined the constitution of the House of Representatives, and answered such of the objections against it as seemed to merit notice, I enter next on the examination of the Senate.

The heads into which this member of the government may be considered are: I. The qualification of senators; II. The appointment of them by the State legislatures; III. The equality of representation in the Senate; IV. The number of senators, and the term for which they are to be elected; V. The powers vested in the Senate.

I. The qualifications proposed for senators, as distinguished from those of representatives, consist in a more advanced age and a longer period of citizenship. A senator must be thirty years of age at least; as a representative must be twenty-five. And the former must have been a citizen nine years; as seven years are required for the latter. The propriety of these distinctions is explained by the nature of the senatorial trust, which, requiring greater extent of information and tability of character, requires at the same time that the senator should have reached a period of life most likely to supply these advantages; and which, participating immediately in transactions with foreign nations, ought to be exercised by none who are not thoroughly weaned from the prepossessions and habits incident to foreign birth and education. The term of nine years appears to be a prudent mediocrity between a total exclusion of adopted citizens, whose merits and talents may claim a share in the public confidence, and an indiscriminate and hasty admission of them, which might create a channel for foreign influence on the national councils. II. It is equally unnecessary to dilate on the appointment of senators by the State legislatures. Among the various modes which might have been devised for constituting this branch of the government, that which has been proposed by the convention is probably the most congenial with the public opinion. It is recommended by the double advantage of favoring a select appointment, and of giving to the State governments such an agency in the formation of the federal government as must secure the authority of the former, and may form a convenient link between the two systems.

III. The equality of representation in the Senate is another point, which, being evidently the result of compromise between the opposite pretensions of the large and the small States, does not call for much discussion. If indeed it be right, that among a people thoroughly incorporated into one nation, every district ought to have a PROPORTIONAL share in the government, and that among independent and sovereign States, bound together by a simple league, the parties, however unequal in size, ought to have an EQUAL share in the common councils, it does not appear to be without some reason that in a compound republic, partaking both of the national and federal character, the government ought to be founded on a mixture of the principles of proportional and equal representation. But it is superfluous to try, by the standard of theory, a part of the Constitution which is allowed on all hands to be the result, not of theory, but "of a spirit of amity, and that mutual deference and concession which the peculiarity of our political situation rendered indispensable." A common government, with powers equal to its objects, is called for by the voice, and still more loudly by the political situation, of America. A government founded on principles more consonant to the wishes of the larger States, is not likely to be obtained from the smaller States. The only option, then, for the former, lies between the proposed government and a government still more objectionable. Under this alternative, the advice of prudence must be to embrace the lesser evil; and, instead of indulging a fruitless anticipation of the possible mischiefs which may ensue, to contemplate rather the advantageous consequences which may qualify the sacrifice.

In this spirit it may be remarked, that the equal vote allowed to each State is at once a constitutional recognition of the portion of sovereignty remaining in the individual States, and an instrument for preserving that residuary sovereignty. So far the equality ought to be no less acceptable to the large than to the small States; since they are not less solicitous to guard, by every possible expedient, against an improper consolidation of the States into one simple republic.

Another advantage accruing from this ingredient in the constitution of the Senate is, the additional impediment it must prove against improper acts of legislation. No law or resolution can now be passed without the concurrence, first, of a majority of the people, and then, of a majority of the States. It must be acknowledged that this complicated check on legislation may in some instances be injurious as well as beneficial; and that the peculiar defense which it involves in favor of the smaller States, would be more rational, if any interests common to them, and distinct from those of the other States, would otherwise be exposed to peculiar danger. But as the larger States will always be able, by their power over the supplies, to defeat unreasonable exertions of this prerogative of the lesser States, and as the faculty and excess of law-making seem to be the diseases to which our governments are most liable, it is not impossible that this part of the Constitution may be more convenient in practice than it appears to many in contemplation.

IV. The number of senators, and the duration of their appointment, come next to be considered. In order to form an accurate judgment on both of these points, it will be proper to inquire into the purposes which are to be answered by a senate; and in order to ascertain these, it will be necessary to review the inconveniences which a republic must suffer from the want of such an institution.

First. It is a misfortune incident to republican government, though in a less degree than to other governments, that those who administer it may forget their obligations to their constituents, and prove unfaithful to their important trust. In this point of view, a senate, as a second branch of the legislative assembly, distinct from, and dividing the power with, a first, must be in all cases a salutary check on the government. It doubles the security to the people, by requiring the concurrence of two distinct bodies in schemes of usurpation or perfidy, where the ambition or corruption of one would otherwise be sufficient. This is a precaution founded on such clear principles, and now so well understood in the United States, that it would be more than superfluous to enlarge on it. I will barely remark, that as the improbability of sinister combinations will be in proportion to the dissimilarity in the genius of the two bodies, it must be politic to distinguish them from each other by every circumstance which will consist with a due harmony in all proper measures, and with the genuine principles of republican government.

Secondly. The necessity of a senate is not less indicated by the propensity of all single and numerous assemblies to yield to the impulse of sudden and violent passions, and to be seduced by factious leaders into intemperate and pernicious resolutions. Examples on this subject might be cited without number; and from proceedings within the United States, as well as from the history of other nations. But a position that will not be contradicted, need not be proved. All that need be remarked is, that a body which is to correct this infirmity ought itself to be free from it, and consequently ought to be less numerous. It ought, moreover, to possess great firmness, and consequently ought to hold its authority by a tenure of considerable duration.

Thirdly. Another defect to be supplied by a senate lies in a want of due acquaintance with the objects and principles of legislation. It is not possible that an assembly of men called for the most part from pursuits of a private nature, continued in appointment for a short time, and led by no permanent motive to devote the intervals of public occupation to a study of the laws, the affairs, and the comprehensive interests of their country, should, if left wholly to themselves, escape a variety of important errors in the exercise of their legislative trust. It may be affirmed, on the best grounds, that no small share of the present embarrassments of America is to be charged on the blunders of our governments; and that these have proceeded from the heads rather than the hearts of most of the authors of them. What indeed are all the repealing, explaining, and amending laws, which fill and disgrace our voluminous codes, but so many monuments of deficient wisdom; so many impeachments exhibited by each succeeding against each preceding session; so many admonitions to the people, of the value of those aids which may be expected from a well-constituted senate?

A good government implies two things: first, fidelity to the object of government, which is the happiness of the people; secondly, a knowledge of the means by which that object can be best attained. Some governments are deficient in both these qualities; most governments are deficient in the first. I scruple not to assert, that in American governments too little attention has been paid to the last. The federal Constitution avoids this error; and what merits particular notice, it provides for the last in a mode which increases the security for the first.

Fourthly. The mutability in the public councils arising from a rapid succession of new members, however qualified they may be, points out, in the strongest manner, the necessity of some stable institution in the government. Every new election in the States is found to change one half of the representatives. From this change of men must proceed a change of opinions; and from a change of opinions, a change of measures. But a continual change even of good measures is inconsistent with every rule of prudence and every prospect of success. The remark is verified in private life, and becomes more just, as well as more important, in national transactions.

To trace the mischievous effects of a mutable government would fill a volume. I will hint a few only, each of which will be perceived to be a source of innumerable others.

In the first place, it forfeits the respect and confidence of other nations, and all the advantages connected with national character. An individual who is observed to be inconstant to his plans, or perhaps to carry on his affairs without any plan at all, is marked at once, by all prudent people, as a speedy victim to his own unsteadiness and folly. His more friendly neighbors may pity him, but all will decline to connect their fortunes with his; and not a few will seize the opportunity of making their fortunes out of his. One nation is to another what one individual is to another; with this melancholy distinction perhaps, that the former, with fewer of the benevolent emotions than the latter, are under fewer restraints also from taking undue advantage from the indiscretions of each other. Every nation, consequently, whose affairs betray a want of wisdom and stability, may calculate on every loss which can be sustained from the more systematic policy of their wiser neighbors. But the best instruction on this subject is unhappily conveyed to America by the example of her own situation. She finds that she is held in no respect by her friends; that she is the derision of her enemies; and that she is a prey to every nation which has an interest in speculating on her fluctuating councils and embarrassed affairs.

The internal effects of a mutable policy are still more calamitous. It poisons the blessing of liberty itself. It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man, who knows what the law is to-day, can guess what it will be to-morrow. Law is defined to be a rule of action; but how can that be a rule, which is little known, and less fixed?

Another effect of public instability is the unreasonable advantage it gives to the sagacious, the enterprising, and the moneyed few over the industrious and uniformed mass of the people. Every new regulation concerning commerce or revenue, or in any way affecting the value of the different species of property, presents a new harvest to those who watch the change, and can trace its consequences; a harvest, reared not by themselves, but by the toils and cares of the great body of their fellow-citizens. This is a state of things in which it may be said with some truth that laws are made for the FEW, not for the MANY.

In another point of view, great injury results from an unstable government. The want of confidence in the public councils damps every useful undertaking, the success and profit of which may depend on a continuance of existing arrangements. What prudent merchant will hazard his fortunes in any new branch of commerce when he knows not but that his plans may be rendered unlawful before they can be executed? What farmer or manufacturer will lay himself out for the encouragement given to any particular cultivation or establishment, when he can have no assurance that his preparatory labors and advances will not render him a victim to an inconstant government? In a word, no great improvement or laudable enterprise can go forward which requires the auspices of a steady system of national policy.

But the most deplorable effect of all is that diminution of attachment and reverence which steals into the hearts of the people, towards a political system which betrays so many marks of infirmity, and disappoints so many of their flattering hopes. No government, any more than an individual, will long be respected without being truly respectable; nor be truly respectable, without possessing a certain portion of order and stability.

PUBLIUS.

If you haven't  a copy of the Federalist Papers, I strongly suggest you buy one.  Most book stores keep it in stock.  It's not on the "best seller's list" but it should be required reading in High School civics class.  But alas, our schools no longer actually teach anything useful...

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.

How Politicians and Regulators Caused the Sub-Prime Financial Crisis of 2007 and the Subsequent Crash of the Global Financial System in 2008, and Likely Will Again

By Kevin Villani

[here's the summary of the paper in question...here's a link to the PDF--ed.]

That the US financial system crashed and almost collapsed in 2008, causing a globally systemic financial crisis and precipitating a global recession is accepted fact. That US sub-prime lending funded the excess housing demand leading to a bubble in housing prices is also generally accepted. That extremely imprudent risks funded with unprecedented levels of financial leverage caused the failures that precipitated the global systemic crash is a central theme in most explanations. All of the various economic theories of why this happened, from the technicalities of security design (Gorton, 2009) to the failure of capitalism (Stiglitz, 2010) can be reduced to two competing hypotheses: a failure of market discipline or a failure of regulation and politics.


While still sifting through the wreckage and rebuilding the economy in mid July, 2010, the Congress passed the 2,315 page Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to prevent a reoccurrence of this disaster. The disagreement in the debates regarding the appropriate policy prescription reflected the lack of a consensus on which of these two competing hypotheses to accept. The risk was that, following the precedent established in the Great Depression, politicians will blame markets and use the crisis to implement pre-collapse financial reform agendas and settle other old political scores. By having done just that, this Act worsens future systemic risk.

That there was little or no market discipline is obvious. Contrary to the deregulation myths, regulation and politics had long since replaced market discipline in US home mortgage markets. Regulators didn’t just fail systemically to mitigate excessive risk and leverage, they induced it. This didn’t reflect a lack of regulatory authority or zeal, as politicians openly encouraged it.

The politically populist credit allocation goals that promoted risky mortgage lending, whether or not morally justifiable, are fundamentally in conflict with prudential regulation. The system of “pay-to-play” politically powerful government sponsored enterprises (GSEs) was a systemic disaster waiting to happen. The recent advent of the private securitization system built upon a foundation of risk-based capital rules and delegation of risk evaluation to private credit rating agencies and run by politically powerful too-big-to-fail (TBTF) government insured commercial banks and implicitly backed TBTF investment banks was a new disaster ripe to happen. Easy money and liquidity policies by the central bank in the wake of a global savings glut fueled a competition for borrowers between these two systems that populist credit policies steered to increasingly less-qualified home buyers. This combination created a perfect storm that produced a tsunami wave of sub-prime lending, transforming the housing boom of the first half decade to a highly speculative bubble. The bubble burst in mid-2007 and the wave crashed on US shores in the fall of 2008, reverberating throughout global financial markets and leaving economic wreckage in its wake.

By the time the financial system finally collapsed bailouts and fiscal stimulus were likely necessary even as they risked permanently convincing markets that future policy will provide a safety net for even more risk and more leverage. Given this diagnosis, how to impose market and regulatory discipline before moral hazard behavior develops is the most important and problematic challenge of systemic financial reform.

The public policy prescription is simple and straightforward. Prudential regulation remains necessary so long as government sponsored deposit insurance is maintained, which seems inevitable. Prospectively the traditional regulatory challenge of promoting market competition and discipline while safeguarding safety and soundness remains paramount. But the prudential regulation of commercial banks needs to be de-politicized and re-invigorated, with greater reliance on market discipline where public regulation is most likely to fail due to inherent incentive conflicts. This means sound credit underwriting and more capital, including closing the off balance sheet loopholes typically employed by big banks and eliminating the incentives for regulatory arbitrage. Universal banking should remain, but divested of hedge fund and proprietary trading activity. In addition, firms that are “too big to fail” (TBTF) are probably too big to be effectively controlled by regulators and should either be broken up or otherwise prevented from engaging in risky financial activities by reducing or eliminating their political activities.

Most importantly, the two main sources of TBTF systemic risk and subsequent direct government bailout cost, Fannie Mae and Freddie Mac, no longer serve any essential market purpose. The excess investor demand for fixed income securities backed by fixed rate mortgages that fueled their early growth is long gone and now easily met by Ginnie Mae and Federal Home Loan Bank securities alone, as fixed nominal life and pension contracts have largely been replaced by performance and indexed plans. Fannie Mae and Freddie Mac should be unambiguously and expeditiously liquidated subsequent to implementing an adequate transition plan for mortgage markets.

Read the whole thing!

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.

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!