17 December 2008
But Madoff’s Ponzi scheme is not the largest, nor the most nefarious scam ever. I would argue that the largest, most expansive Ponzi scheme is the United States of America. That Ponzi scheme will cost trillions upon trillions of dollars. Why do I say that? Quick answer: TARP (isn’t it funny how something like a blue piece of plastic used as a temporary measure to keep water out after roof damage is used to name the bailout plan?). Long answer: Deficit spending – taking money from others (children and future generations of Americans in the form of debt) to pay for current programs.
The United States has been unsustainable for some time. Many financial bubbles have been created in the past, only to burst or slowly deflate. I contend that each bubble is a sort of Ponzi scheme. The credit bubble has been one of the worst and the resulting “rescue” plan will only make matters worse. The invented money (speculation on real estate and bad loans) led to more invented money etc. We have seen the effects of that now. All the building and real estate speculation was not sustainable. So now the federal government will “stimulate” the economy to create (invent) jobs and consumer demands etc. in an attempt to keep the bubble from deflating even more. Eventually the bubble created by that will also burst. It seems that the majority of pundits, politicians, and economists fundamentally do not understand or want to accept that there needs to be a severe retraction before everything can start again (even now they are scratching their heads wondering why the infusion of hundreds of billions is not helping – silly humans). Maybe there a good automotive analogy would be flooding the car – you have to wait a bit before trying to start the car again.
By trying to reverse something that was invented we are just setting the system up for yet another failure. Mr. Madoff could not reverse his Ponzi scheme unless he actually invested that money and had real returns on that investment. The federal government will not get away with its own Ponzi scheme unless it rights the fiscal ship. We simply cannot continue to borrow heavily against the future to pay for the present.
Other good reading: Congress in a Glass House
Photo by KCThinker, Blue Door, San Juan
02 November 2008
This was an election about the last 8 years of Bush more than anything else. Let’s be honest, the electorate is not smart enough to actually look at the issues and make an informed decision, they would rather base their selection on emotion. The contradictory political ads make it even more difficult for the shallow to make sense about where the candidates really stand. In the end, America is all about making themselves feel better – whether that be at the shopping mall or in the voting booth.
After the congratulatory back slaps, lip smacking at the new found political power and the statements of an imagined mandate are over, there still looms the 800 pound gorilla in the room. I stand by my belief that no matter who gets elected (I am about 95% certain that Obama will be elected) nothing will really change where it really matters. The only change will be who is called president. Sure there will be some other changes –Obama will change from Bush’s tax-cut-and-spend administration to a tax-increase-and-spend administration. Oh yeah, Obama will enact cap and trade of plant food (carbon dioxide) which will significantly increase all of our energy bills (although, to be honest, McCain is also talking about that).
What really needs to happen? We need a real leader that would present America with a plan that will include touch choices. A real leader will work with Congress to enact those tough choices. What would those tough choices be?
- Balance the budget with the current revenue stream and that includes excluding social security revenue from the revenue stream. That means across the board cuts, including the military.
- A tax increase levied only to pay down the debt and pay back the trillions in IOUs to the social security fund. I propose a modest national sales tax in lieu of increasing income taxes.
- Consolidate government, reduce duplicity, and increase governments’ effectiveness and efficiency.
- Reform Medicare and Social Security. That means cutting benefits and eliminating the maximum earnings amount above which you stop paying the social security payroll tax.
- Reform our education system and invest in math and science education.
- Drill more and invest in renewable energy. We need to be leaders in the renewable energy field.
- Close military bases around the world and pull our military back. We need to defend OUR borders first and foremost.
- Squash the climate change nonsense which would waste trillions trying to reduce global temperatures by a tenth of degree. Taking that money and investing it in math and science education, renewable energy research, and infrastructure would have a far greater impact.
If the $11 trillion in debt and $54 trillion in unfunded liabilities does not say it all, you, quite frankly, are a moron of massive proportions. These two numbers alone provide enough justification for the measures I propose above. These two numbers provide a measure of the precariousness of our situation. Americans need to realize that the run is over. America needs to rethink its priorities. America needs to realize that money does not grow on trees and cannot be printed wantonly without dire consequences. America can no longer enslave on our children and grandchildren with debt. It is time we take responsibility for our actions, at a personal level and at a national level.
Wake up America. Take some aspirin and drink some water. Shake the hang-over off and demand real change, not the change promised in pretty speeches.
Photo by fellow Engineers Without Borders member, Sugar cane fields, road, railroad, and mountains, Dominican Republic
21 October 2008
1. Please explain to me how you are going to pay for your policies and spending proposals and have a balanced budget without counting the social security surplus.
2. Please justify deficit spending with more than $10 trillion in debt and $54 trillion in unfunded liabilities.
3. Please justify the burden you are putting on my children and their children with reckless policies and spending habits.
4. Please look into my children's eyes and tell them what you just told me.
20 October 2008
The last 8 years of Bush were all about tax cut and spend. How will Obama change that? Will he cut spending? No. He will increase spending by billions taking the nearly $500 billion budget deficit for fiscal year 2008 and increase it at a time we need to be cutting spending across the board including the military. Neither candidate does not take into account the trillions spent trying to “save” the system (oh wait, that was “printed” money – my mistake that doesn't count).
Will he increase taxes? Yes and No and Yes. Those making more than $250,000 a year or the top 5% of income earners (those making more than $150,000) will pay more, (not sure which number he means) but those making next to nothing will get money. However, Obama will make plant food (CO2) a major pollutant and likely enact cap-and-trade of plant food (CO2). The dirty, little secret on that is that all our energy prices will sky rocket hitting every income class. Obama giveth with one hand and taketh with the other.
Another change under an Obama administration will be reverting to Woodrow Wilson era politics where those critical of the administration will be silenced. We already have seen the beginnings of that with the handling of Joe the Plumber. An innocent question about Obama's tax policies by "one of us" leads the press to investigate Joe's taxes and licensing. It turns out that all of a sudden Joe needs to be silenced and discredited. Wouldn't you know it, Joe owes back taxes. Never mind that a member of the United States senate, Senator Rangel (D), owed back taxes recently too, but then again he did not have the audacity to question Obama’s policies. Obama had the arrogance to say that he never heard of any plumbers making $250,000. I suppose only elitists with degrees from Harvard and Presidents of the United States are allowed to make that much. How out of touch can he possibly get? He obviously has never run a business or knows anything about running a business based on a comment like that.
Now Obama by himself with a republican controlled house and senate may be held in check and things like the Fairness Doctrine would never see the light of day. Unfortunately, we have the dumb leading the dumber. The combination of Pelosi and Reid will make a nasty three-headed monster that should keep any child from getting a good nights rest. The Obalosied tax monster is coming for your pocket book. Oh, it is a nice monster to poor people, but you rich people better watch out. The Obalosied monster will have the audacity to steal from your pocketbook in the middle of the day. Wow, I really am looking forward to the next 2 to 4 years. If you thought things were rough now, just wait, worse is around the corner.
We are so screwed. Thanks for nothing democrats and republicans. You both have put us in an untenable position. Instead of being so self-absorbed in your party’s power you should have been looking out for America. You should have been leading and not pandering. I hope you can look in your children and grandchildren in the eyes and know that you had a chance to turn the tide, but you chose to be selfish. Thanks for nothing, now go to hell.
15 October 2008
Those of us in the undecided category were listening tonight to maybe help us make up our minds on which of these morons would be the lesser of two evils. I bet Obama sounds like a good choice to many undecided voters after tonight’s performance. He even sounded reasonable to me at times.
Before you utter your disbelief that there are people that actually have not made up their minds yet in this election, let me tell you that those of us that are undecided are probably more thoughtful about our vote than the rest of you. There is a lot riding on this election. We won’t just vote for someone that has a D or R behind their name and we won’t just support a candidate based on one favorite hot-button issue. I personally have been weighing the issues and pluses and minuses of the candidates. Even right now, after McCain’s mind numbing performance I am sitting here with absolutely no clue on how to vote. If Obama gets in and has Pelosi and Reid and democratic house and senate there is no telling what will happen – look how bad it got when the republicans controlled everything for six years. If McCain gets in there is no telling what he will do because I am not sure what the guy stands for – look who we will have waiting to take the reigns if he kicks the bucket. My third option is a write-in candidate by the name of Mr. None of the Above. That third option is looking better and better the closer we get to the election.
Please, Mr. Obama, instead of using the word “fair” just say what you mean – “redistribution”. Obama says that the Buffets of the world can afford a tax increase. Of course the Buffets of the world can afford a tax increase, but there are less than 500 billionaires in this country (500 out of 300 million – do the math). Tax those guys all you want; they probably won’t miss it (By the way, do you ever wonder why they just don’t “donate” their money to the government? Instead they set up their own charities. Seems to me they know how inefficient and ineffective the government is). He says that he will increase taxes on the top 5% - the income split for the top 5% is $153,542. The top 5% pay 60% of the income taxes in this country. The top 10% pay 70% of the income taxes – the income split at that level is $108,904. What is fair in that? I am going to be punished for working hard because you feel the need to fund worthless, bloated government programs and have a vastly different idea of what “fair” means. If someone makes $150,000 they likely have a mortgage and expenses that reflects that $150,000. You take money out of their pockets you take money out of the economy and especially from charities. And believe me charities do a whole lot more than any government program has done or will ever do.
Instead of increasing our taxes (and asking us to be “patriotic”) or borrowing money from our children and grandchildren start by shrinking government spending first. You could get me on board with a tax increase if you cut spending and produced a balanced budget (how about a Balanced Budget Amendment to the Constitution) and then you came back to me and said that now we need to increase taxes and that tax increase will solely go to pay down the debt in 10 years, for example, and make sure that social security and Medicare are solvent. Once that 10-year plan is accomplished we will remove the tax increase. But you can’t promise me anything like that because you have such disdain for the taxpayer and quite frankly I can’t trust you. You say one thing one week and then something else the next. You move to one end of the spectrum to placate some moronic voting block and then just as fast swing the other way. I simply cannot take your word. Once we start giving to you, you take and take and take. Plain and simple; you, Mr. Obama, and you, Mr. McCain have lost my trust. I did not hear anything tonight that makes me think I can trust either of you with the top job. Where is the talk of balanced budgets, fiscal responsibility, and solving the unsexy problems of Medicare and Social Security? By not talking about the really vexing issues I tend to think that you 1) don't care, 2) don't know, or 3) know but don't want to tarnish your precious political backside by making the necessary but unpopular reforms. I know AARP votes and children don't.
NONE OF THE ABOVE
10 October 2008
The details of this bill are coming out and they literally pulled the wool tax credits over our eyes. For someone opposed to pork, McCain had no objections to voting for this bill laden with tens of billions dollars in giveaways. For someone opposed to tax loopholes for businesses, Obama had no problems forking over more than $700 billion in debt for a dubious fix and the same tax credits for businesses he is always railing against. I wonder if he could even look his daughters in the eye that night. I wonder if he sees the same dark and cloudy future that I see when I look at my children. But then again when has any candidate really truly cared about the children, after all they can’t vote, but they sure do make for good political spin. Every day the clueless at the helm of this country enslave our children and grandchildren more and more by adding more and more debt.
Oh by the way, the stock market still tanked after the being signed into law and continues its slide. Makes one wonder what the rush was Mr. Chicken Little Bush? The fact remains is that the bubble needs to burst. The stock market housing bubble and its paper value need to deflate. It will probably tank until hits its below 7000 points.
One thing is for certain and that is that both parties are guilty as hell in allowing this to happen. But you will not see them pointing the finger at themselves. You will see Congress trot financial scapegoat after scapegoat out to be grilled to make themselves look good. In the end nothing will change. Saturday Night Live had it right with this sketch. There are actual truths to the sketch that actually also blamed the democrats for the crap sandwich we all have to take a big bite from so I am surprised that they even allowed it to be aired.
What is coming? More rescue packages that will do nothing. Once Obama is elected we can expect to see a big, fat New New Deal that will hasten our demise and prolong any recover (read the real history of the great depression in The Forgotten Man by Amity Shlaes - history does not repeat, but it rhymes awfully well). Congress is clueless and thinks that pumping more money into the system will solve the problem. Both candidates are highly unprepared and will not do the right thing. They are pumping bad money in to prop up a system that needs to fall. This has large and imminent failure written all over it. We need to start working on our representatives and senators and let them know that this is not a road we can afford to go down. Tell them “NO. HELL NO.”
30 September 2008
Disgust and revulsion are only a couple terms that come close to describing how I feel about the Emergency Economic Stabilization Act of 2008, also known as the “bail out plan”. This terribly crafted and short-sighted legislation is being rammed down our throats. Thankfully, a good number of democrats and republicans voted against the “bail out plan”. Please thank your representative for voting against it if they happen to have done that. If your representative voted for it, well you know what to do on November 4, 2008 to show your “appreciation” for their stupidity.
The same President Bush that cried out that Iraq was a major threat to the United States came on the radio this morning on my drive to work and claimed the sky is falling. He claims we need to implement immediate measures or we will suffer dire consequences. You really have to question his motivation here. So what if the Dow dropped 777 points in one day (an estimated $1 trillion in paper money – all I hear are crickets chirping); it went back up 485 points the next day. The markets are based on emotion not reality and not a good indicator to base economic policy on.
Most folks in the know look at the London Interbank Offered Rate (LIBOR) to determine how the credit markets fair. The LIBOR is the interest rate at which large international banks are willing to lend each other money on a short-term basis. Many home equity lines of credit, small business loans and student loans also use LIBOR as an index, and this interest rate has been increasing which makes loans more expensive.
I do not believe President Bush. How can you trust Secretary Paulson after what is coming out with regard to the AIG bailout? Speaker Pelosi is utterly clueless. I have no faith that Senator Reid knows what he is doing. They are politicians first and foremost and care more for their own backsides than what is best for America. This is a housing bubble of an estimated $8 trillion of which only $4 to $5 trillion has been lost – meaning more losses to come. We should be very skeptical and extremely suspicious of anyone using the argument that we will make money from this deal. They screwed up and we are supposed to look the other way and pick up the stinking pile of crap they left for us? No thanks.
Dean Baker from the Center for Economic Policy Research was on C-SPAN talking about the failed bail out. He penned a plan that makes more sense than what Bush and company are proposing. There is absolutely no reason to rush into this. Most reasonable economists agree and would rather see a fiscal stimulus such as investing in infrastructure and direct intervention by trying to work with home owners on the edge rather than sending hundreds of billions through the financial institutions. Let the failed financial institutions hang.
Now the Senate is set to vote on their plan (read: push their failed policies) on Wednesday, 1 October 2008. The Senate will call up H.R. 1424: Genetic Information Nondiscrimination Act of 2008, the text of which will be substituted with the economic rescue plan (a Dodd amendment which must have the consent of both the Majority and Minority Leaders).
Other than the bailout, what does their plan include?
- Raises federal deposit insurance (FDIC) limits to $250,000 from $100,000
- Adds a set of popular business tax breaks
- Adds legislation to prevent more than 20 million middle-class taxpayers from feeling the bite of the alternative minimum tax
A little bit of sugar with a whole lot of poison. Please call your senators and send them a message loud and clear that we do not like this plan and would rather see it defeated.
Photo by KCThinker, Butterfly - Omaha Zoo
26 September 2008
The bail out must contain, at a minimum, the following four key items:
1. There should be crystal clear transparency into how this money is used and to what companies this money goes to. This is a gamble with an extraordinary sum of money that our children and grandchildren will be beholden to pay off. We cannot afford to let it be used without knowing how and why and where.
2. There should be no compensation (i.e., golden parachutes) for the executives that have been at the helm of any companies receiving government-funded help. They were the leaders and they should be held accountable for their actions. Through their actions they will also likely cause thousands of Americans to lose their jobs. There should be no reward for landing their companies in the positions they are in.
3. If any profits (highly unlikely) are realized from this venture they should, first and foremost, be used to pay down the national debt, which is almost $10 trillion. No profit should be used to justify more spending or tax cuts or more risky government programs. The only place that profits shall go is to reduce the debt burden on future generations of Americans.
4. The government should enforce the existing rules and regulations or create new ones to prevent this from happening again. The idea that everyone should own on a home is a good one, but we need to make sure that people buying homes can afford them, can prove that they can afford them and understand what they are getting into. This crisis has been largely created as a result of congress men and women letting politics cloud judgment. The full extent of the law should be used to prevent discrimination of race, religion, etc. being used to prevent someone from securing a home loan. However, this notion has been abused to the extent loans are given to people who simply could not afford them.
The bail out will likely happened whether the majority of the American people are pissed off by it or not (it’s torches and pitchforks time people!). In my opinion we are propping up a bubble built with made up money with more made up money. The end result may be far worse than if we had just let the bubble burst to begin with. Something about this whole situation just plain stinks and makes me feel dirty.
I am not sure most Americans understand the gravity of the situation. We are at a key turning point in this country; we may not recover from the fine mess Congress and the President has created. More than the executives of these failing firms, we should blame our elected officials for allowing this to occur in the first place. While playing politics like kids play house they failed to realize what is more important than being a democrat or republican and that is being an American.
Photo by KCThinker, Passage in San Juan, Puerto Rico
25 September 2008
Back to my real point; I was telling the Haitians that the United States was heading for tough times when really hard choices will need to be made and that I thought that our self-appointed role as world police and shining example to the poor would most likely change for the worse. I explained that we have the current problem but the undercurrents of the larger problems with our entitlement programs are far worse. One of the doctors then asked if the United States could no longer be the world's police force who then would assume our role. He added that he did not think that China or Russia would assume it in our stead.
The question/comment struck me. There are many people in third world countries that look to the United States for many reasons. I am not sure the average American can appreciate the standing we have in the world and how this standing is affected by our actions both politically and economically.
Our own depravity is not only having consequences on Main Street in America but will also have long term consequences for those living in shanty towns throughout the world. The consequences will be felt through fewer charitable contributions to the many non-governmental organizations (NGOs) working in countries like Haiti to less foreign aid from the United States. In countries like Haiti where there is controlled chaos, the consequences of the bubble bursting will be disastrous.
Photo by KCThinker. Women washing clothes in stream, Haiti.
20 September 2008
For me this election is about the economy, the short-term and long-term fiscal stability of the United State, and a diverse and secure energy policy. If we do not get a handle on those things, you can forget about all the rest because there won’t be a United States of America anymore. We will soon likely have a country in Chapter 11 with foreign governments helping us “reform” or the World Bank treating us like Haiti. Our AAA bond rating will be downgraded meaning that we will have to pay a higher interest rate on our debt which will overnight increase the trillions in unfunded liabilities that are not being addressed.
More than ever we need a leader that will care more for this country than for his party. After more than a year of pure political torture (and hundreds of millions of wasted dollars – the economy seems good enough for Obama to raise more than $390 million off the backs of the “working people”), this 4 November 2008 we will finally get to vote for president of the United States of America. Our choices: Barack Obama (D) and John McCain (R). Given these choices I wonder why I should even vote for president. I would be better off with a box “None of the Above” or “Can I please have a real choice?”
Why should I vote for Barack Obama?
The main reason to vote for Obama is that after the last 40 years we need something new. Obama is young, energetic, healthy, dashing, and a decent orator with a teleprompter. He would bring life back into the stale politics of old, white men. Obama had it right when he opposed the start of the war in Iraq.
Why I should not vote for Barack Obama?
His main mantra is bringing change to Washington, D.C. Yet his policies are largely the policies of the democratic party. The only change he will bring is who sits in the White House, and thankfully that was going to occur regardless. I do not agree with the majority of his policies. From biofuels to taxes, he comes across as a naïve upstart. After the last 8 years I want a president that I think is smarter than me. Obama is definitely not smarter than I am. He is first and foremost a politician that can give a good prepared speech.
Here are a few reasons I will not be voting for Barack Obama:
- He thinks people that make $250,000 are rich. Really? He would increase taxes on the “rich” and cut taxes on the lower middle class at the same time he is proposing billions in new spending. That does not equate to a balanced budget. We simply cannot afford more deficit spending.
- Like his main rival, his energy policy is too one sided and not diversified. Obama likes biofuels. Any civilization that burns food should be severely punished in my opinion. His policy relies too much on alternatives with no realistic fossil fuel bridge. By the way, we still need oil to make the stuff we use everyday – you know, stuff like plastics, drugs, chemicals, and hundreds of thousands of other everyday items we take for granted.
- He wanted to sell oil out of the strategic reserve to lower gas prices. I suppose he does not understand what strategic means unless he thinks it means pandering.
- He believes climate change should and can be fought. The war on climate change brought to by Al Gore. We have seen how effective the war on poverty, the war on drugs, and the war on terror have been (ergo wasted trillions of dollars for very little to show for it).
- Obama preaches change yet he picks an entrenched career politician, fellow senator Joe Biden, for his vice president. Biden has been in the senate for 36 years. Obama complains that McCain has not made any meaningful changes during his 22 years in congress, yet Obama picks a stale old white man to be his running mate. For all his supposed foreign policy expertise, Biden suggested dividing Iraq up into three countries; that would have had disastrous consequences.
- Obama thinks that a strong economy will strengthen the dollar and lower gas prices except he wants cap-and-trade for carbon dioxide (higher energy prices) and he is silent on debt, a balanced budget, and unfunded liabilities (strength of the dollar). A strong economy needs a secure financial structure and cheap energy…endless do loop begins.
- He thinks it is the government’s responsibility to grow the economy. Here he is wrong again - the government is there is provide a stable and responsible platform from which the economy can grow.
- Obama thinks we should to take to people like Mahmoud Ahmadinejad, President of Iran, who has called for wiping Israel off the map. He naively holds the belief that if only we talked to Iran and engaged them they would not be so belligerent. Looking back at history I see now how effective Chamberlain was in preventing WWII by talking to Hitler.
- For all his talk about reaching across the aisle, there is very little evidence of it. We need someone that will get past the Karl Rove divisive political game. I do not see Obama rising above typical Washington, D.C. politics despite all his "talk".
- Then there are all of his personal entanglements with unrepentant domestic terrorists and racist preachers. Given his quick and convenient disassociation with these people that have supposedly formed him as a man one wonders what he really believes in.
I look at the Obama platform and I see BIG GOVERNMENT. I see us moving closer to socialism where we tax the crap out of everyone and “fairly redistribute” wealth; I see this country digging itself deeper and deeper into debt with yet more failed government and more debt that our children and grandchildren should not be on the hook for. The net result of his platform is that the government will take care of us from cradle to grave. That is fine for hazardous waste management but not for the future of this country.
Why should I vote for John McCain?
He is the maverick. He is a straight talker and calls it as he sees it. He is a fighter and a survivor. Instead of giving up in Iraq he supported the surge (it appears to have been the right move, but the jury is still out on that one). He is saying the right things when it comes to both the democrats and republicans being at fault for the financial crisis. He does not want to bail out any more banks and financial companies. Unlike Obama, he has reached across the aisle, working with Kennedy and Lieberman (of course, we can debate the wisdom of the legislation that came from those pairings). On the face of it, his vice-presidential pick of a reform-minded Sarah Pahlin is refreshing (although her negatives are outweighing her positives). Overall, I believe him more than Obama when it comes to bringing reform (change) to government.
Why should I not vote for John McCain?
Here again, after the last 8 years of Bush I want someone smarter than I am. I want someone with good judgment. There is the stigma that he will be beholden to his party and his party is stuck in the backwoods when it comes to social issues. The republicans also have not shown that they can govern for the people and not for big business.
Here are a few reasons I will not be voting for John McCain:
- McCain is yet another old, white man from the entrenched political establishment. Instead of running a country the guy should be in Florida enjoying retirement. We need a leader that understands the role technology plays in today’s society. I am not sure McCain understands that role. There is also the likelihood that he will die in office during his first term.
- He has stated that we may need 5 more years of budget deficits. We can no longer afford to NOT have a balanced budget. I am not sure he understands the gravity of the situation we are in.
- How can we afford his proposed tax cuts? We are already running a deficit and McCain’s proposals would just increase the deficits. The suggestion of tax cuts increasing revenue just does fly especially when our economy is being hit with this mortgage crisis that is sending it into a tailspin. The bailouts only make the situation more tenuous.
- His vice-presidential pick, Sarah Pahlin, has made statements that worry me. How can I vote for a ticket on which there is a person that would not even allow abortion in the case of rape or incest?
- Although McCain had an interesting pick for vice president, her inexperience and religious right baggage will ultimately be the downfall of the ticket. I have no interest in having another born-again like Bush in the White House.
- McCain’s energy policy is lopsided to the policy of drill here, drill now. We need a balanced approach which only Paris Hilton seems to understand.
- He appears to be a war monger. Just like Obama, he has a naïve approach when it comes to Iran and Islamic fundamentalism. McCain’s policy is at the opposite end of spectrum from Obama’s.
I look at the McCain platform and I see more of the same failed policies of the Bush administration. Our international standing is at all time low and I doubt McCain can help that.
There you have it; all the reasons to simply skip over the presidential part of the ballot on 4 November 2008. Concentrate on the local elections, although to be honest, until we get a true centrist third party what’s the point. The whacked out fringes of the two party system will continue to dictate the worthlessness of the majority of the candidates that we can elect.
19 September 2008
Instead of investigating steroids in baseball, maybe our elected officials should be investigating how we got into this mess and measures to prevent it from happening again. Where are the emergency sessions that spotlight the financial mess? Of course such an investigation would also point the finger at them for allowing lax lending practices in the first place for the misnomer of home ownership for everyone regardless if they could really afford it. Such inquiries would also inevitably shed light on the thousands of dollars of political contributions received by politicians from Fannie Mae and Freddie Mac (The Clinton administration's White House Budget Director Franklin Raines ran Fannie Mae and collected $50 million. Jamie Gorelick — Clinton Justice Department official — worked for Fannie Mae and took home $26 million. Big Democrat Jim Johnson, briefly on Obama's VP search committee, has hauled in millions from his Fannie Mae CEO job). They probably know that these skeletons will have disastrous consequences shortly before an election which is why I fear that nothing is being done but putting the proverbial finger in the failing dike. Unfortunately, I, like many other Americans, are tired of the divisive politics that permeates Washington, D.C. We want solutions, not half-measures and more political pandering.
It is time our "leaders" stopped thinking about themselves and their political careers and started thinking about the country and its citizens. They need to stop thinking about themselves as democrats and republicans and instead see themselves as Americans first. Continuing down this road of billion dollar deficits and billion dollar bail outs will be the end of this country. You are probably aware of the testimony of David Walker, former Comptroller General and his forecasts of tens of trillions of dollars of unfunded liabilities. Maybe they should turn Sarbanes-Oxley on the financial books of the United States government. Where is the accountability? Stop pointing fingers at one another and start with constructive governance.
I sure hope they can sleep at night knowing that our children and grandchildren will suffer in debt bondage due to the actions and inactions of selfish politicians and greedy bankers.
Photo by KCThinker. Street side in Les Cayes, Haiti.
14 May 2008
There is still manufacturing here, it is just not at the same scale as we have seen in the past. I see many small manufacturing companies in the most unlikely places throughout the Midwest. I have worked in towns like Pella, Iowa which hosts companies like Pella and Vermeer. I have worked in towns like Columbus, Nebraska which hosts companies like BD Medical, Behlen, Flexcon, and Vishay. Among the larger manufactures in these towns there are typically numerous smaller ones.
While there has been a decline in United States manufacturing, these declines cannot be solely attributed to NAFTA and other free trade agreements. Detroit and the Big Three auto manufacturers have been hit hard, but there have been plants built in other areas of the United States by Subaru, Toyota, Honda, and BMW. The Big Three are in decline, not because of trade agreements like NAFTA, but because they have been stubborn when it comes to their products, not embracing quality that leads to consumer loyalty, and have been burdened by the union system among other things. When looking at a decline in manufacturing jobs you also have to consider productivity gains and the continued automation of manufacturing. If a company is going to survive, grow and provide more jobs it needs to cut costs.
Let's be honest about wages, health care costs and corporate taxes. The standard of living continues to go up and with it the cost of living. Cost of living and inflation pressures wages to go up which makes it more expensive to make things. Health care costs are increasingly a larger share of doing business in the United States, but companies in other countries do not necessarily have to shoulder this burden because they are in a country with a nationalized health care system. Finally, the United States has the highest corporate tax rate in the world. A company wants to make money and not break even or lose money. They need to make money to also invest a portion of that money back into their company to develop new products to keep competing, keep making money, and keep employing. The higher the taxes the less profit and can go to innovation and the less motivation to grow your business. If that company cannot do those things there is no incentive to keep their doors open. Companies under such pressures will close doors, cut back, or simply leave for somewhere that provides a more conducive environment to do their business. First and foremost, a company is there to make money and not be a government job service program.
Free trade agreements break down the barriers erected by tariffs. And trade often goes both ways. Before complaining about something try and look at the total picture and not just a one sided politically influenced view. The majority of issues are not black and white, but rather gray through and through.
14 March 2008
Citizens Against Government Waste (CAGW) has this to say about the rejection of Senate Amendment 4347. CAGW rightfully named all 71 senators voting against this amendment as Porkers of the Month.
In light of more than $9 trillion in national debt how can they say that $17.2 billion does not matter? Unbelievable.
29 February 2008
I will preface this by saying that I am no economist. But I am a thinker. Here are a few of the issues that I see as bringing us to brink of collapse:
- The government making money cheap for banks to loan out to artificially prop up the housing market.
- The banks making risky loans to people who in all reality should never have been given a loan.
- The government borrowing massive amounts of money to pay for huge spending increases in the wake of a tax cut and an epic military campaign in the Middle East.
- The homeowner who thinks they need it all and subsequently borrow more than their house is worth.
- The pending retirement of the baby-boomers.
- The thousands of bureaucrats whose action or inaction has far reaching consequences that they are either to dim to understand or could care less about the repercussions of as long as they get reelected.
- The falling dollar as a result of foreign investors who see an unsustainable economy and no leadership at the helm of a rudderless ship.
- An education system that fails to produce students capable of competing in a global market.
People are defaulting on their loans. House prices are falling. Banks are losing billions. There is panic in the halls of Congress. “We need to do something” they cry. What do they want to do? They want to dust off a 1930’s program called the Home Owners’ Loan Corporation (HOLC). The HOLC was established in June 1933 to help distressed families avert foreclosures by replacing mortgages that were in or near default with new ones that homeowners could afford. It did so by buying old mortgages from banks ... and then issuing new loans to homeowners. The HOLC financed itself by borrowing from capital markets and the Treasury. On the whole this sounds benign enough. But if you were to actually strip the emotion from it and step back and think about it you would come to several realizations: 1) the banks and people should not be bailed out by the government; 2) we have more than $9 trillion in debt and cannot really afford to borrow any more money to bail them out in the first place; and 3) Fannie Mae reported that rising defaults and falling home prices contributed to a $3.56 billion loss in the last three months of 2007 and now we want to put more liability on the taxpayer. None of it adds up. But then again, the politicians are accustomed to fuzzy math; how else could you justify using the Social Security surplus to balance the budget.
The reality is that the housing market was artificially inflated and now we are witnessing the impact of bad monetary policy and piss poor decisions by greedy assholes in the banking sector. Why are housing prices falling? Well in some markets they were hyper-inflated to begin with and in other areas there is too much supply and not enough demand. Hear that? SUPPLY AND DEMAND. Of course falling housing values have other consequences, namely the municipalities that have bet on increasing property taxes to finance public projects will soon find less money in the coiffeurs.
The response from Washington, D.C. is long in thoughtlessness and vote pandering and short in common sense. The sky is falling, the sky is falling. So they pass a $150 billion fiscal stimulus. They talk about things like the HOLC. Not once do they consider the long-term impacts of their policies. Not once do they consider the billions we will have to pay on the $150 billion we had to borrow for the fiscal stimulus. Not once do they consider the long-term impacts of inappropriate measures like the HOLC. They give me the impression that they could care less what shape they leave this country in.
The housing crisis alone would probably not be a deal killer for our country. But the real problem is only a few years away – the retirement of the baby boomers. On the horizon is another fiscal crisis we are not prepared to deal with and that is funding Medicare and Social Security. Add to that the reports that state and local government pensions may be underfunded by $1 trillion or more (Illinois alone has a $40 billion unfunded pension liability). Ouch.
If you want to know why I am so depressed you need to read a book called the “The Forgotten Man: A New History of the Great Depression” by Amity Shlaes. You can literally watch the car wreck that became the Great Depression unfold in front of your eyes. History does not repeat itself but it does rhyme. What we are seeing today is reminiscent of the actions of lawmakers before the Great Depression. I even think the conditions are much worse today than they were back then.
From The Angry Economist:
"I saw a bumper sticker today saying "If you're not OUTRAGED, you're not paying attention". This was on a Toyota Prius, the official automobile of the "Let's Ignore Economics and Do The Right Thing" crowd. I remarked to my wife "I'm outraged, too, but probably not about the same thing. I just want more control over my life." She quipped "Oh, no, they want the same thing as you: more control over your
Photo by KCThinker, alley in Village of Simiane la Rotonde, Provence, France, October 2007
08 February 2008
I have already taken the opportunity to share my thoughts with my esteemed senators on this borrow and spend measure. See how your senator voted here. Please share my outrage with your senator.
Dear Senator _______:
I would like to thank you for voting for the fiscal stimulus package (H.R. 5140). Even though I will not benefit from the stimulus package because of its income thresholds it is good to know that Congress has acted in increasing the level of national debt for such a noble cause. Regardless of the fact that such a "stimulus" will actually do nothing for the economy or long-term fiscal stability I am reassured that my government still does not have the foggiest idea when it comes to real economic policy.
Please keep up the good work. I am sure future generations of Americans will be happy to know that you supported dubious measures and short-term political gain over long-term planning and fiscal responsibility.
[Insert your name here]
Photo by KCThinker, subsidence pit in Kansas – much like the one I would love to shove all the politicians in Washington, D.C. into.
02 February 2008
When I listen to Senator Clinton speak this is what I hear:
You know, we've got an economy that is increasingly interconnected with the global economy. It is shaped each day, not just by the billions of decisions that 300 million Americans make, but by billions more that are made around the world. TAKE OUT THE GARBAGE BEFORE YOU SIT YOUR FAT ASS DOWN IN THAT LAZY BOY. And something that now happens far away from Iowa can have a ripple effect that impacts the quality of life and the standard of living for Americans. PUT AWAY THE DISHES. Our economy in recent months has been the subject of increasing worry. CAN'T YOU DO ANYTHING RIGHT? We've got rising oil prices; we've got a deepening housing crisis; we have a falling dollar, in terms of its value; we have a ballooning national debt; and we have weakening consumer onfidence. STOP GETTING CRUMBS ALL OVER THE COUCH. So we understand that we've got real problems, but we see nothing happening under this president to address those problems. HEY, USE A BEER COASTER YOU MORON. Unfortunately, the president either doesn't see them or refuses to deal with them. DAMMIT! I TOLD YOU TO PICK UP YOUR UNDERWEAR! And the net effect of it all is that the economy is not working for middle-class families. IF YOU CAN'T PICK UP YOUR UNDERWEAR I AM GOING TO MAKE YOU WEAR THEM ON YOUR HEAD. Now, we all hope that the economy will remain resilient, and we know that, if we make the right choices, the American economy can, once again, create millions of jobs and lift up the middle class. YEAH, YOU HEARD RIGHT - MAKE YOU WEAR THEM ON YOUR HEAD IN FRONT OF YOUR FRIENDS! But instead of positive policies aimed at making that happen, we've had the opposite: reckless fiscal policies and a president with a tragic habit of ignoring problems until they become crises. MY MOTHER WAS RIGHT ABOUT YOU. The next president will be a steward of our economy at a time when the bills from eight years of neglect and mismanagement will be coming due. The next president will have to turn around our nation and our economy. I SHOULD HAVE LISTENED TO MY FRIENDS. YOU ARE SO STUPID.And on and on it goes while she blathers on about some very important policy issues. She comes off as a super abusing nag. Now parts of the above excerpt were taken from an important speech on the economy Senator Clinton gave in Iowa on November 19, 2007. Of course, I missed the important parts because all I could hear was her constant nagging and the fact that when it comes to fiscal restraint she does not have a clue either. When have the democrats ever talked about fiscal restraint aside from the war in Iraq and defense spending?
That alone is probably not enough reason to not vote for her. Here is the second and probably more compelling reason not to vote for her: she has poor judgment. After nearly 8 years of poor judgment in the form of President Bush we do not need 4 to 8 more of someone else with poor judgment. Experience may matter, but judgment is more important. I am sure you want some examples to bolster my argument. I will give you two important ones: 1) her vote on the Iraq war and 2) her husband Bill Clinton.
She voted for the Iraq war. No matter how you cut she voted for it. Anyone with half a brain knew that we should not invade Iraq. Saddam was contained and posed no real threat. Anyone with any common sense knew what would happen when an iron fisted dictator was ousted and replaced with politically correct armed forces. Senator Clinton along with a number of other democrats and republicans voted for the war. That was bad judgment.
She remains married to a man that has cheated on her time and again. He even did it in the Oval Office. Sure, forgive and move on, but any normal woman would have left the cheating bastard. That she remains married to him after all that can only mean one thing: she cares more for attaining power than doing the right thing. That’s bad judgment. Former President Clinton did fairly well in his eight years despite some of his “distractions”. But this country does not need the distractions that he will likely bring to the White House for 4 to 8 years.
DO NOT VOTE FOR SENATOR HILLARY CLINTON. She and what she brings is no change. It is merely a continuation of the tired same-old-same-old.
16 January 2008
I am listening to Senator Chuck Schumer on C-SPAN. He is talking about an economic stimulus package. His naivety is plainly obvious. Senator Kennedy promptly outlines a litany of government spending. He does not get it. Representative Phil English is clueless. Everything they do is merely putting a band aid on a gushing wound. They trot out supposed experts on the economy like Lawrence Summers, Lawrence Mishel and William Beach that do not address the real issue. They want more tax cuts and more spending. They want a rebate. Now that we need a “stimulus” they want spending on infrastructure as a stimulus. They want the tax cuts to be permanent. Nothing is said about reigning in spending habits and debt. They dance around the real issue of their complete and total incompetence. They have no realization that the government should not be micromanaging the economy. They cannot even manage the government properly.
The last thing the nation needs now is more intervention from lawyers who, in general, have never run a business. The last thing this nation can afford is a policy based purely on political gain. Short-term rebates and small injections of money will not solve this problem. ALL of these problems come back to stupid people. Greedy bastards giving out loads have caused this. Ill-informed and ill-prepared homeowners have caused this.
The housing market was artificially created through low interest rates and poor loans. The truth is that the people getting sub-prime loans should have never been given them in the first place. Truth hurts. Greedy banks have oversold what these people can afford. These people are generally poor savers and cannot weather even a small emergency. Any small emergency and an increase in mortgage payment results in them not being able to afford their homes anymore and consequently they default on their loans. This should hardly come as a surprise to anyone.
When my wife and I went to buy a house the bank told us we could afford a much more expensive house based on our income and some other factors. But we knew better and looked at less expensive houses. Our mortgage payment on our 30-year fixed loan was reasonable. Due to poor information where our property taxes were concerned our payment increased by $500 a month last year. No interest rate change – just a screw up by the bank. We were able to weather that increase because we were reasonable when we went down the road of the single biggest liability one typically takes on in their life (notice how I do not say investment – home ownership is a LIABILITY – you have maintenance, taxes, interest on loan, etc. etc. – it is generally NOT an investment). Many people defaulting now simply cannot weather an increase because they were over leveraged to begin with.
America is spending and spending and spending. On the federal, state, local, and personal levels America is in massive debt. The dollar is falling because of ill-thought out policies from the Federal Reserve, the massive debt at all levels nation wide, and NO PLAN for sound long-term fiscal or energy policy. One bright spot in all this is that it looks like exports are up because the dollar is down. Home prices are falling because the demand is down and the market is flooded. Supply and demand folks. The falling home values have far reaching consequences where local property taxes are concerned. Many of the localities count on increasing property values to keep their coiffeurs flush with more cash.
A comment on a left-leaning blog recently equated the typical republican plan for the economy as: 1) cutting taxes, 2) massive borrowing, and 3) massive spending. Funny, but the democratic plan is typically: 1) increasing taxes, 2) massive borrowing, and 3) massive spending. The only realistic and responsible plan that will work and provide long-term economic security is: 1) increasing taxes, 2) stop borrowing, and 3) massive spending cuts. Sure there will be an initial hurt, but it is a long time in coming anyway. We need a reckoning for the unsustainable path we have led before we can right the ship.
NONE of the presidential candidates are looking at the realistic and responsible plan. And that should concern everyone. Meanwhile the word of the day is stimulus without realizing how short sighted of an economic policy that really is.
08 January 2008
If you are at all following fiscal policy you know that the national debt is around $9.1 trillion (Bush has increased the national debt by an on the books amount of $3.4 trillion). If you had no idea what the national debt is you should now be outraged at the utter irresponsibility of our federal government. Now the other shoe drops – the real debt is much, much more. What the morons running this country do not want you to know is that there are no trust funds for Medicare and Social Security – only a bunch of worthless IOUs in a “lock box”. The accountants for the federal government make the accountants at Enron and Worldcom blush. The sheer scope of the fraud that is occurring in Washington, D.C. when it comes to the keeping of our nation’s books is absolutely mind boggling. The real debt is more than $50 trillion according to David Walker, Comptroller General of the United States of America.
While the presidential candidates are busy debating who the real candidate for change is, Mr. Walker is coming out and talking about the important issues. While Senator Hillary Clinton and Senator Barack Obama were stumping in some diner in New Hampshire Mr. Walker was talking to CBS and raising the alarm. While former Governor Romney was schmoozing at an Iowa farm Mr. Walker was talking to USA Today. While Mike Huckabee was trying not to evolve Mr. Walker was. While Senator John McCain was developing yet another miserable failure of a bill, David Walker submitted testimony to the U.S. Senate Committee on the Budget. While former Senator John Edwards was getting a hair cut for $400 and giving a speech about two America’s the Washington Post said the following:
"The largest employer in the world announced on Dec. 15 that it lost about $450 billion in fiscal 2006. Its auditor found that its financial statements were unreliable and that its controls were inadequate for the 10th straight year. On top of that, the entity's total liabilities and unfunded commitments rose to about $50 trillion, up from $20 trillion in just six years.
If this announcement related to a private company, the news would have been on the front page of major newspapers. Unfortunately, such was not the case -- even though the entity is the U.S. government."
If you think what I am talking about is unimportant take a look at the federal budget and where our money goes. It shows a troubling trend. Medicare/Medicaid, interest on Debt, defense, and Social Security make up the majority of the money the United States spends every year.