Really as Bad as You Think

“One of the most important skills for political success is the ability to make confident assertions of absurdities or lies.” -Thomas Sowell

If you think I am some rethuglican, guess again. I opposed the Bush tax cuts. I opposed the Iraq War. I opposed the Bush stimulus in early 2008. I opposed TARP 1. I also opposed Obama’s stimulus. Why? I see ineffective and dangerous governmental policy behind each one. I look beyond the short-term effects to the long-term consequences. Looking at the result of the first four I can state with some confidence that I was right in opposing each and every one of them.

The stimulus touted by Obama to create 3.5 million jobs (funny how that number keeps increasing) provides a paltry $16 extra per paycheck this year ($400 dollar credit divided by 26 paychecks) which drops to $8 per paycheck next year. NPR was interviewing some so-called expert. The interviewer asked if the “expert” really thought that extra $16 per paycheck would be stimulating. The “expert” actually said that he thought it would. You have got to be kidding; what freaking planet was this idiot from? The only thing an extra $16 per paycheck will stimulate is McDonald’s. Don’t get me wrong, I am all for creating jobs. But this is not the way to do it.

The stimulus is nothing more than a spending stop gap to hide the underlying issues of our economy and delay the inevitable real pain (You can put your finger in the dam to stop the leak…). It does very little to stimulate innovation which creates real jobs. True stimulus would have been a massive $500 billion+ investment in energy of the future and a rehab of our electric grid - I could have supported that because I understand the need for it and I can see how it would benefit our economy. The little dribs and drabs towards an investment in infrastructure in the current stimulus plan fall far short of providing a healthy footing for an economy beyond the next election cycle. As one comment put it: “[The stimulus is] like eating more food to lose weight!”

We had the tech bubble, the housing bubble and next we will have the government spending bubble. When the government money runs out, what then? Will we be told that we need another porktastic spending spree because the first one was not large enough? Can’t we see that this is simply no longer sustainable? And here I thought the progressives were all about sustainability. It is obvious that their idea of what sustainability is does not translate to the pocket book. Of course, if they really adhered to the idea of a sustainable society they would kill themselves because the majority of what humans do is not sustainable. But I digress.

Do not believe for one instant the pundits when they say that the national debt is still only a percentage of the gross domestic product (GDP). They forget to add in the debt held by business and you and me. That total is $52 trillion – three times the GDP of around $14 trillion. Adding more debt is a very bad idea. Some pundits want us to do what Japan did in the 1990s. If only it were that simple. We would have to have a stimulus package worth more than $20 trillion to match what Japan did because we have a much larger economy. And I am not including the unfunded liabilities of social security and Medicare that is an estimated $60 trillion.

Even scarier is what the Federal Reserve (Fed) is doing to straighten out the mess the banks are in. The Fed has committed trillions to the bail out of insolvent financial institutions. Robert Reich in his blog recently wrote:

“To date, the Fed has already committed some $2.5 trillion to rescuing the financial ystem, yet no one outside the Fed knows exactly how or where this money went. The Fed is subject to almost no political oversight. Yet if the trillions of dollars the Fed has already committed and the trillions more it's about to commit can't be recouped, the federal debt explodes and you and I and other taxpayers are left holding the bag.

In other words, Geithner and Fed Chair Ben Bernanke continue to do pretty much what Hank Paulson and Bernanke did: They hide much of the true costs and risks to taxpayers of repairing the banking system.”

And we should trust Turbo Tax Tim? Why am I and others like me marginalized for speaking out? We are raising the alarm and the sheeple simply would rather watch American Idle. Congress voted on nearly a $1 trillion spending plan that contained more than 1,000 pages of text and had less than 24 hours to look it over before voting on it. We are simply to take on faith that politicians are looking out for our best interests?

The dumb are leading the dumber towards the cliff. The sheeple look idly by without a clue as to what is going on. We the Idiots deserve every bit of what we have sown.

Question everything and everyone. Trust no one.

Photo by KCThinker, Butterfly at Ohama Henry Doorly Zoo

Repeating Mistakes of the Past

Probably one of the most frustrating things about the financial crisis we are in is that the response is eerily familiar to past crises. Yes, I am talking mainly about the Great Depression. The history we learned in school that FDR’s New Deal brought us out of the Great Depression is patently false.

World War II did end the Great Depression, as revisionists are apt to claim, in a manner of speaking, but not in the way you may think. The U. S. did benefit from the massive war building effort, but after the war was over all that manufacturing had to be turned somewhere else, it simply could not keep churning out guns and ammo for a war that did not exist. When WWII finally came to a close the majority of countries with industries similar to ours before the war were in shambles. The U. S. was intact, had the manufacturing infrastructure and was able to quickly start producing. Another key was that the war effort led to considerable innovations which spurred more job growth. In conclusion, FDR’s New Deal did nothing. In fact, Henry Morgenthau, FDR’s Treasury Secretary, testified before the House Ways and Means Committee in May 1939:

“We are spending more money than we have ever spent before and it does not work. I want to see this country prosperous. I want to see people get a job. We have never made good on our promises. I say after eight years of this administration we have just as much unemployment as when we started and an enormous debt to boot.”

Of course the economists today (and even presidents) don’t let the truth stop them from making idle claims. It is interesting to note that, like psychologists, economists adhere to different schools of thought (or ideology if you will). There are the Keynesians, the Austrian School, and others. Frederic Bastiat, a French politician in the 19th century wrote:

“Essentially, economics is the science of determining whether the interests of human beings are harmonious or antagonistic.”

In a way, economics is like psychology because much of it is based on human emotion and interaction, so it should not come as a surprise that economists rally around different schools of thought than reality.

The idea that the government is like Superman coming to save the day is absolutely ludicrous. Time and time again, history has shown us that the government is inept. Yes, they are necessary, but only to a point. The role of government is not to be some big brother making sure you don’t fall and if you happen to fall not only picking you up, but dusting you off and carrying you to bed to rest. Government may provide some programs for people to better themselves by, but for the most part it is not government’s responsibility to make sure you have a roof over head and food on your table – that is called personal responsibility, something that seems to be a foreign concept nowadays. The role of government is to provide a safe environment for life, liberty and the pursuit of happiness; to ensure there are sufficient, but not burdensome, laws to protect society. Government is at its best when it gets out of the way of commerce. Government also wastes a lot of our tax-payer funded time on moral issues like homosexuality, abortion, and gay marriage, and non-political issues like steroids in baseball and the NCAA football championship.

What is now going on is the perversion of the idea of government. President Bush presided over a doubling of our national debt and was at the helm of largest expansion of federal government in decades. Republicans insisted that regulations on financial institutions be relaxed. Democrats forced banks to make bad loans. The Federal Reserve cut interest rates to rock bottom levels. You and I spent more money than we had. Everyone wanted everything now. People borrowed against a home with an inflated value. They ran up their credit cards. People bought houses with no credit, no job, and no money down. Financial instruments like Credit Default Swaps were created. Banks bundled the loans and sold them off only to be sold again by others. The result: a combined $56 trillion debt - $12 trillion for the government and $44 trillion for businesses and individuals. That is approximately four times our annual gross domestic product. How is something like that sustainable? It simply is not.

The government’s response? Pump billions (soon to be trillions, mark my words) into insolvent banks. Spend nearly $1 trillion to get the economy going. It did not work in the 1930’s and it won’t work today. Why? Even though the circumstances are somewhat different, the fundamentals are the same. The banks also don’t trust anyone, especially government, after they got burned for making stupid decisions. They are rightfully (and finally) tightening up credit again. There is no credit crunch. Banks are just getting back to fundamentals. If you don’t have a job you should not be given a loan for a car, let alone a house. The government refuses to understand that the last couple of decades have been built on personal and public debt. The government tries to prop up businesses that should be allowed to fail because they are poorly run (banks and American car companies). The government also refuses to understand that government spending projects do not grow an economy. There needs to be real demand and not more artificial demand based on borrowed money no one has. Once the money is spent to build a road, there is no incentive for that employer to employ that person any more. Once the food stamps are spent, more are needed. Yet, the government, in its infinite wisdom (more like denial), is galloping to the rescue of an empty burning building.

As usual, the government is blind to the consequences of its actions. It cannot think beyond Stage One. “In the Economic Sphere,” Frederic Bastiat wrote:

“An act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.”

To prove his point, Bastiat described what happens when a vandal breaks a shopkeeper’s window. The seen effect is that repairing the glass creates economic value in the payment to the glazier, who then has money to buy a new suit or hire a part-time employee. What is unseen is that the shopkeeper has to pay the glazier with money that he would otherwise have used to buy a suit or add an employee. “The broken-window fallacy, under a hundred disguises, is the most persistent in the history of economics,” wrote the economic journalist Henry Hazlitt in 1946. Another similar parable is Uncle Sam, Cousin Maynard, and the miracle seeds.

There is a hidden cost to everything. It is in the stimulus package and it will be in other legislation that the Obama administration will try to ram through Congress. This so-called stimulus will cost each and every household approximately $6,700 in additional debt, paid for by our children and grandchildren. That does not include the $12 trillion of debt we already have - add each citizen's share of that debt is more than $35,000!

The longer government keeps its blinders on, the more likely the real problems will never get solved and the more likely the future integrity of the U. S. is in doubt. Of course, historians will probably take creative license with Obama’s story and undoubtedly shape it in positive nature, much like they have with Lincoln and FDR.

Photo by KCThinker. My daughter walking along the beach.

Why the Stimulus is a Bad Idea

I may just be a simpleton from "fly over country" who sees this stimulus as an utter waste of money. Only about $100 billion is for true infrastructure. You might as well as throw the rest in the fire along with the TARP money. That’s trillions of dollars we will never see any benefit from and that my children will have to pay for now. Why is no one asking how this largesse will be paid for? They simply take it on face value that we need to rush headlong into unwisely spending nearly a trillion dollars. The same crap was pulled with TARP and the Patriot Act and look at where it got us. I am tired of the fear mongering. I thought that would be over when President Bush left office. However, President Obama obviously took a page out of Bush’s playbook and is using fear to get this travesty of a spending bill passed.

What will creating a massive spending government spending bubble actually do? The way I see it, once the money is spent the jobs go away. Government spending as a means to create jobs is not sustainable from my perspective, especially when you have to borrow that money in the first place. How does the stimulus provide long-term sustainable job growth, if at all? That is not change I can believe in.

A good number of jobs were created under during the Clinton Administration because there was innovation in the form of the internet boom. Innovation leads to positive job growth. Under the Bush Administration there were far fewer jobs created because there was no innovation behind the government’s deficit spending. The majority of the stimulus is deficit spending. Little in the stimulus package is geared towards innovation. Sure there is a portion directed to renewable energy and increasing broadband accessibility, but the vast majority of the $800+ billion package is directed to short-term jobs with absolutely no innovation.

The whole idea of getting back to where we were is ridiculous. It was all artificial in the first place. Just when we are finally coming to our senses after decades of spending like sailors in a whore house and now everyone wants to once again spend money no one has. Have we learned nothing? How can that possibly be a good idea when we have so much debt in the first place and we are nowhere close to addressing the long-term fiscal problems associated with social programs such as Medicare?

My gut tells me that this is a bad idea and we will regret it. I look at it and I shake my head because it seems common sense has left the building. You can quote all the economists you want, cite all the job creation numbers from one president to another, and compare it to Sweden or Japan, but ask yourself if you can truly make those apple to apple comparisons. Something tells me that the situation we are in is far worse, much deeper, and far more complex than any of those other situations. Throwing money at it is not necessarily the answer to every problem. Taking a step back and coming up with the right response is always better than merely responding quickly.

We need to feel some true pain. And an unemployment rate of 7.6% is not true pain (yes, those without a job would disagree, but let’s be realistic and look at historic jobless rates and we must also consider ourselves fortunate when looking at the state of the rest of world). All we are doing is providing temporary pain relief but not looking at the symptoms. We want to give aspirin when we may have to amputate a leg.

Please keep in mind I am no economist, I am just a simple civil/environmental engineer who has not knowingly cheated on his taxes so obviously I am not qualified to have made any of the comments above.

Photo by my daughter. Winter weather in Iowa.

Living Beyond Our Means - A Short Story

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship." - Unattributed

The curator sighed. After 36 years working for the Smithsonian he was filled with sadness. This is not how he wanted to end his career. This would be the last piece of artwork that would be boxed up from this gallery. It was one of his favorites from the early 1900s – a beautiful painting from the Arts and Crafts era of the Snake River with the Grand Teton mountain range in the background.

Under the Debt Reconciliation and Repayment Act all valuable artwork was categorized and sold off in large lots to countries holding the United States’ massive $43 trillion national debt – even after making payments it was now still 127 times the current estimated gross domestic product. Most of the extremely valuable pieces had already been packed up and sent away. Even priceless artifacts were given an estimated value. The majority of the Library of Congress had been divided up and sold to collections in Europe, Asia, Africa, and South America. The most horrifying acquisition was the sale of the Declaration of Independence to China. He supposed that everything had its price in the end. He wondered why America was still suffering when the rest of the world had returned to ecomonic normalcy more than 6 years ago.

The less valuable pieces and displays were merely discarded or burned rather than being placed in long-term storage. During a recent trip to a Smithsonian Warehouse to catalog a number of items destined to Venezuela, he had even caught a glimpse of a minor modern piece of art being used as a roof in one of the many shanty towns outside of Washington, D.C. The Emergency Homeland Austerity Measures Act called for strict budget expenditures. They had no choice; the International Monetary Fund and World Bank had stepped in to mediate the settling of the America’s debt in the aftermath of the collapse of the dollar. Under the terms of the agreement, the United States had to enact the EHAMA. Such trivial things like preserving history were ignored in favor of feeding Americans.

His thoughts drifted to the many times he discussed the economy with friends. They all assured him that everything would be fine. He was convinced that America could no longer afford to live beyond its means. His friends told him that he was overreacting, that the trillions spent in financially securing the banks and the many stimulus packages would finally set America on the right course. Of course, no one in the government considered how all that spending would be paid for. They were all surprised when foreign investors stopped buying U.S. Treasury Bills. With no funding, the bottom finally fell out from under the unsustainable initiatives. He grimaced with a pang of guilt at being right. He felt the heat in his head rising as his anger of what had been done to his country surfaced.

Five years ago a ragtag contingent of Iraq and Afghanistan war veterans disabled security and managed to storm the Capital. They demanded real change and ended up killing 15 senators and 53 congressmen before being killed themselves in the standoff. The government fearing another act like that quickly instituted martial law, disbanded the armed forces, formed the National Police, and passed The Firearm Prohibition Act. It took over three years but the majority of firearms had been confiscated. Rumor had it that there were some serious firefights between the National Police and the last holdouts who loudly proclaimed “…From My Cold, Dead Hands.” Well that is exactly what ended up happening. The metal from the guns was melted down and sold to countries to pay down the debt. The remaining gun stocks were initially destroyed in huge public bonfires vaguely reminiscent of the infamous Nazi book burning pyres. Later they were quietly destroyed after some environmentalists complained about the pollution. Now and then there was a report of someone who had slipped through the system and was caught with a firearm – mainly hunters trying to feed their families – and were sent to prison work camps without a trial. It was hard labor. Many in the camps died.

The official government press was tightlipped during the firearm prohibition campaign. The main news providers quickly towed the government line. Those that did not where conveniently shut down by the Federal Communications Commission under an emergency law. What real news was available from the internet was quickly silenced when Congress passed The Fairness in Media Act in an attempt to control what was being said in the media. The act essentially shut down the internet. They felt that too much negative news would incite more violence and demoralize Americans.

He stared at the blank walls around him. After so many years of providing the public with a venue to see, hear, and touch the history of the United States and the world one more Smithsonian Museum would be closed. Not that the public had been allowed access to the National Mall in several years; the entire area around the Capital and White House was cordoned off and only accessible to government employees on official business. The public was not allowed to enter the area because of security concerns.

The painting he was packing up was part of a collection destined for Brazil and their new museum of North American Art History. Not much he could do about it now. He called his wife and told her that he was leaving soon. It would be the last call made from the building. The workers were coming tomorrow to salvage the wiring and gut the building of anything of worth. The windows and doors would be bricked over and the yet another government building would be mothballed. He doubted the interiors would ever see any daylight except when the roof finally caved in. There was no money in the budget for even simple maintenance. The only living things to step in these halls again would likely be rats, spiders, and other insects.

Over the phone his wife told him that the elderly man next door had died that day. One of the more heinous parts of The Emergency Homeland Austerity Measures Act was the refusal of medical care for anyone over 65 years of age. The man next door had a history of cancer. Ten years ago at the age of 63, he had survived colon cancer. He was supposedly in remission, but he had not been feeling well of late and many of the same pains he had when he had first been diagnosed with cancer were returning. The hospital turned him away saying there was nothing they could do for him. They told him that he had no right using up valuable medical resources. His wife could not afford any outside treatment. They were left to suffer. To add insult to injury, dead bodies were discarded on the streets because no one could afford burial or cremation. The government came around and collected the bodies and dumped them in large pits. He was thinking of setting fire to his house just before he died to save them the trouble. At least he would go out on his terms.

He hoped that he would not have to wait long to get his rations today; one piece of hard bread, a bit of meat with questionable origin, rice or potatoes and if he was lucky a piece of fruit or vegetable. A tear rolled down his cheek as he turned from the building and walked down the overgrown and unkempt National Mall to his government-issued home.

An original short story by KCThinker. The story pretty much sums up how I feel right now – hopeless.

Give, Give, Give... for a party of all things?

One would think that spending nearly $1 billion on a political campaign is enough, now they want the most lavish inauguration funded off the backs of the people. How absolutely shameless. Where is the humility - where is a tame event in light of the financial mess the country is in? You lead by example Mr. Obama.

Will he start asking for donations to decrease the national debt? Unlikely.

Will he start asking for donations to help get Medicare back in the black? Doubtful.

No, we should give money for a party. That money won't even go to starving kids in South America or a potable water program in Africa. It will go for a celebration. This is what we can expect from an Obama presidency? That is not change I can believe in.

Below is an actual email my wife, an Obama supporter, received recently:

On January 20th, our journey to bring change will officially begin.

We're organizing the most open and accessible inauguration in our nation's history. And we're doing it without contributions from Washington lobbyists or big corporations.

Just like we did on the campaign, we're relying entirely on supporters like you -- ordinary people giving whatever they can afford to make this an event for all Americans.

I know we've asked a lot of you. But changing the way business is done in Washington will take a commitment from all of us. Right now, you can help give this administration a strong start [by throwing a huge party?].

And if you make a donation of any amount before midnight tonight, you could be selected to come to Washington, D.C., and be part of the welcome ceremony, the swearing in, the Inaugural Parade, and the Inaugural Community Ball.

Will you make a donation of $100 or more and be part of the historic moment you made possible?

We have a long road ahead of us, and we're going to face some major challenges as soon as we start. But I know I can count on you every step of the way.

Thank you for everything you've done and happy New Year,

Barack

P.S. -- You could be there for this historic moment even if you cannot make a donation. You can show your support by sharing what this inauguration means
to you.

Photo by KCThinker, Batey outside of La Romana, Dominican Republic.

Madoff: Not the Biggest Ponzi Scam Ever

Sure Bernard Madoff ripped people off for more than $50 billion. In one of the largest Ponzi schemes to date Mr. Madoff bilked investors ranging from individuals to charities (yes, even charities – what a scum bag) out of large sums of money. The losses which will likely be more than $50 billion, are more than the MCI Worldcom and Enron debacles.

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

After the Hangover Wears Off

On Wednesday morning, after the long night of drinking to celebrate or lament, we will wake up and guess what – nothing has changed. We are still the same country with $11 trillion in debt and $54 trillion unfunded liabilities. We are still the same country with unpopular wars in the Middle East. We are still the same country with a crumbling infrastructure. We are still a country that sends more than $700 billion a year offshore for its energy. Most importantly, we are still the same country with an egotistical political establishment; one that would prefer to pander than lead.

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

A Simple Request

I only have a few simple requests of our politicians:

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.

Welcome President, er, Chairman Obama

Senator and future President of the United States of America Barack Obama promises a change from the last 8 years of Bush. I believe he will deliver that change. It is just not the type of change that you and I are really expecting. It is not the type of leadership this country needs in the face of an unprecedented economic turmoil. Not that that old guy would be any better. We basically have a leadership and intellectual vacuum in D.C.; unfortunately I am ninety percent certain that Obama will be elected because cultural change is more important than substantive issues like debt, deficits, and fiscal responsibility.

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.

Undecided; Leaning Towards Ambivalence

I can’t take it anymore. Listening to the presidential debate makes my head want to explode. First, McCain needs to shut his pie hole and stop sounding like a broken record. He used the same washed up arguments from the other debates tonight. Can’t you come up with anything new and better, McCain? One thing is for certain, and that is that McCain lost the election tonight.

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.

VOTE
NONE OF THE ABOVE

FOR PRESIDENT 2008

Photo by KCThinker, Beach near La Romana, Dominican Republic - a little tranquility in an otherwise turbulent and uncertain world.

Poison is still poison no matter how much sugar you add…

Despite a large majority of American people telling them that they opposed the bail out (oh sorry, McCain, I meant rescue plan), Congress passed and President Bush signed the Emergency Economic Stabilization Act of 2008 into law. Our two presidential candidates both voted for it. Obama and McCain voted for perhaps the worst legislation ever, maybe even worse than that wonderfully crafted piece of crap Prescription Drug Plan. Despite the alarm and speedy passage of the bill the DOW continues to drop. Everyone with common sense knows we need a correction. Common sense left Washington, D.C. long ago.

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.”

Under Cover of Darkness...

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

The Bail Out to End All Bail Outs?

Soon our elected representatives will vote for an extremely large plan to help the struggling financial markets in the United States. The urgency has been made clear by Treasury Secretary Paulson and President Bush. It is obvious that such a plan is needed in order to make sure that businesses can continue operating as intended. However, there should be sufficient concern with the haste that this plan is being put together. Through this urgency and typical partisan politics a great opportunity to make sure we do this the right way the first time will surely be missed.

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

The (un)Likeliest of Consequences

While I was in Haiti recently, I was discussing politics and economic issues with several Haitians at a clinic in Les Cayes. This was early September before the recent calamity in the banking industry took center stage after having a minor billing previously. The signs of the coming economic turmoil were there – it is just plain obvious that when you create a bubble from nothing, back to nothing it must go. It seems that the “smart” people running the show are having a hard problem comprehending this fact.

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.

This November 4 Check “None of the Above”

Now more than ever this country needs a leader that understands the complex and vexing issues that face this country. We have a financial crisis created by our lawmakers and greedy bankers that has bankrupted numerous banks and financial companies. We have a seemingly never ending war against terror. We have an energy crisis. We have a vacuum of leadership. The so-called leaders refuse to address the looming fiscal crisis of Medicare, Medicaid, Social Security and the massive debt piled up as a result of failed government policies. In a campaign where all the talk is about “change” the real thing we need is massive reform.

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.

Are you disgusted? I am.

The recent bail outs of financial giants are unconscionable. The government should not be bailing these institutions out of the mess they created. By providing this support the government delays the necessary and painful correction that must occur. All that is being done is propping up a house of cards with used toothpicks. Reckless, short-term policies and the interference with the natural evolution of such things are creating the conditions for a major collapse that will have dire consequences. There is no such thing as an institution that is “too big” to let fail.

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.

The Convenient NAFTA Scapegoat

All too often trade agreements like the (NAFTA) are used to explain the job losses in manufacturing. It is politically convenient to blame one thing (i.e., NAFTA) when there are really many issues at play. I hear Hillary Clinton and Barrack Obama bemoan free trade agreements on the campaign trail.

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.

Photo by KCThinker, Roman ruins in the middle of town.

Senate Rejects Earmark Moratorium for 1 Year

The senate rejected a 1 year moratorium on earmarks by a vote of 71 to 29. According to Senator Harry Reid (D - NV) earmarks are only a drop in the bucket of the federal budget – only $17.2 billion in fiscal year 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.

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
life."

Photo by KCThinker, alley in Village of Simiane la Rotonde, Provence, France, October 2007

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.

Sincerely,

[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.