29 February 2008

The Stupidity of It All

It is Friday evening. My wife and I both did not feel like cooking so we did the slovenly thing and went to CiCi’s Pizza. I knew from the moment I stepped out of the car that I was going to be depressed. I saw the overweight people going to the feeding trough and caught the reflection of myself in the glass and was reminded that I am one of them. We sat down and I looked around at the people there. What were their lives like? Do they worry about the same things I do? Do they know how bad it really is and how bad it will become? Are they ready for it?

I wish I could be optimistic about the future of this country. I want to have hope for my children. I just cannot. I see what is happening and I think about a car accident one witnesses in seemingly slow motion. You know it is going to happen but there is nothing you can do to stop it except watch and marvel at the ensuing carnage.

Now you may be wondering what the heck I am talking about. I am talking about the economy, the devaluing dollar, the credit crunch, the overwhelming national, state, and local debt, and the understated incompetence of our leaders at every level of government.

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

Thank you Congress. You are the best at what you do!

The senate passed the Fiscal Unstimulus Package yesterday. I am absolutely disgusted by this for a number of reasons. First, they have no clue about economics and the so-called experts testifying in front of these senators have even less understanding of the economy in my opinion. Second, the economy really does need any stimulus in the first place. All this bill does is provide people with the ability to buy more crap from China with money we had to borrow from China in the first place. Did we not learn a thing from Bush and his “go shopping” attitude? And yes, I am pissed that I will not get a rebate. What? Don’t think I could use some money? Instead I just have to pay for everyone else to get one.

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

Why I will never vote for Hillary Clinton

I will not vote for Hillary Clinton because she is a woman. I am not some sexist bastard. It is not because she does not have enough "experience." There are plenty of experienced women I would vote for. Senator Clinton is not one of them.

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.
Photo by KCThinker, stone archway in Goult, France, 2007