Wednesday, December 31, 2008

Cover-Up?

What's Bush hiding here? And considering how P-Oed everyone is about all this bailout nonsense, why aren't more people interested in getting this information? Once again, MSM asleep at the wheel. Do the reporter's for the MSM actually DO any actual investigating? Ever?

Fox Business Network suing Treasury
Seeking bailout documents under FOIA
By Paul J. Gough
Dec 18, 2008, 05:45 PM ET
NEW YORK -- The Fox Business Network is suing the U.S. Treasury Department in federal court under the Freedom of Information Act after the Bush administration failed to hand over details about the bailout.Fox Business Network said that the Treasury Department ignored two separate requests on what it calls "actual data" on the bailouts of American International Group and Citigroup as well as the role of Bank of New York Mellon in the government-funded bailout. Bank of New York Mellon was named the custodial firm to oversee the bailout.The data included the assets that were purchased, collateral and restrictions. But Steven Mintz of Mintz & Gold, who is representing the network, said FBN journalists have received nothing more than a form letter in response."The American public is entitled to know that information and what we'd like to get them (the Treasury Department) responding to it," Mintz said.A U.S. Freedom of Information Act request was made Nov. 25 involving AIG. A separate request Dec. 1 had to do with Citigroup."We never received a substantive response," Mintz said. "The deadlines have passed." The lawsuit is being filed in U.S. District Court for the Southern District of New York against the U.S. Department of the Treasury in Washington.On air, FBN had been threatening that they would take the Treasury Department to court. The case has been assigned to federal judge Richard J. Holwell, himself a Bush administration appointee. There is no court date set.The Treasury Department didn't return a phone call seeking comment. Mintz said that the Treasury Department would be served with the papers within a day or so.

Ode to 2008

A variation on "My Favorite Things"....

Patriots blow a SO perfect season
Real estate markets collapse for some reason
Fannie and Freddie and Barney and Dodd
Madoff's exposed as a rob-the-rich fraud

McCain and Obama run a strange race
Media bias a slap in the face
Caribou Barbie riles up the crowds
Wright hates the US and yells it out loud

Terrorists, Pirates, and Hurricane Ike
Joe asks Barack all about his tax hike
Iran's getting Nukes and Putin's real cranky
Edwards the Hypocrite likes hanky-panky

Meltdown on Wall Street, $700 billion bailouts
Bush and Congress, OMG they're such sell-outs!
Mumbai and Plaxico, where does it end
Dems are UAW's very best friend

GM and Chrysler and Ford all with their hands out
Blagojevich puts Senate-For-Sale out
Gas and oil prices go through the roof
Kenyan Obama won't show us the proof

When I watch stocks fall, and more bailouts,
and I'm feeling mad
I simply remember I'm not going insane
And then I don't feel so bad.

Tuesday, December 30, 2008

It's About Time

The Republicans are finally getting the message that the taxpayers are furious at the exhorbitant sums of money being thrown about on the hill. In Bloomberg today, Senate Minority Leader Mitch McConnell said he wants to slow consideration of the economic stimulus package Democrats are drafting, warning that the measure sought by President-elect Barack Obama invites wasteful spending.

" “A trillion-dollar spending bill would be the largest spending bill in the history of our country at a time when our national debt is already the largest in history,” McConnell, a Kentucky Republican, said in a statement. “As a result, it will require tough scrutiny and oversight. Taxpayers, already stretched to the limit, deserve nothing less.”
McConnell called for giving lawmakers and the public at least one week to review the legislation once it has been written. He also said he wanted Senate committee hearings on the measure, rather than immediate floor consideration.

“We must make distinctions between what is ‘stimulus’ -- defined by Speaker Pelosi earlier this year as ‘timely, targeted and temporary’ -- and what is merely more government spending on favored projects we don’t need with money we don’t have,” McConnell said.

House Republican leader John Boehner of Ohio said today he has reservations about the size of the plan. He also called for hearings on it and at least a week of publicly available text for taxpayers to review. In the House the minority party doesn’t have as much power as in the Senate to stall legislation. "

Let's hope that the small band of fiscally conservative legislators can force some prudent thought about how our money will be allocated onto the rest of the slap-happy spenders.

Sunday, December 28, 2008

Shot in the Rear

Americans are not prepared for the necessary pain of withdrawal from the virtual reality lifestyle to which they have become accustomed. But unless a full catharsis is allowed to take place, all of the government intervention of propping up failed companies and failed individuals will result in nothing more than rebuilding a house of cards. The pain has to come. Does Obama get this, and will he act in the best interest of the nation, or with 2012 on his mind? I think that answer is clear. We've either got to take a quick painful shot in the rear, or hold off until we need extensive surgery and a long, painful recovery. As much as I hate needles, I opt for the shot.

This op-ed from WSJ lays it out ever so clearly.
http://online.wsj.com/article/SB123033898448336541.html

Wednesday, December 24, 2008

Rebooting America

In his NYT op-ed column today, Thomas Friedman discusses the need for America to "reboot"and renew it's focus on core infrastructure improvement and utilization of 21st century technologies, education, and innovation. Mr. Friedman opines about the fabulous airport, trains, and wireless services in Hong Kong as compared to that which is available in New York. While I agree with Mr. Friedman's vision for a new America, the problem will be the manner in which the new government coming in next month will attempt to reboot the country.

Instead of capitalizing on the great innovative enterprise of its citizens by offering creative tax incentives and then getting out of the way, our government will no doubt take the polar opposite approach. Obamalamadingdong and the doowops in Congress will continue to spend vasts amounts of money creating new entitlements and propping up failed businesses and unions, none of which creates jobs or provides the necessary incentives for American ingenuity to thrive. Enabling the destructive behavior which has gotten us to this point is a surefire way to prolong the problem. Consumers have started the painful withdrawal from living above their means on credit they cannot afford. Most businesses have cut out any remaining fat in their budgets. Government at all levels needs to do the same, and quit reckless spending and rewarding failure. As painful as it may be, we've got to hit bottom before we can build again. Otherwise we'll be rebuilding on a pile of sand. Government doesn't need to reboot. It needs a boot in the ass.

Saturday, December 20, 2008

Moving House and Such

I apologize for the dearth of new posts whilst I am in the midst of our house move. Clearly moving is not something recommended during the Christmas season, but sometimes choices are limited and we must work with what we are given. There are so many issues which I have been dying to write about: Bush's bailout of the automakers (how dare he?), Caroline Kennedy's run for the Senate (isn't the inherited passing of power something we attempted to rid ourselves of with the American Revolution?), Bubba of Arabia, Frankenstein steals the Senate, and so much more. Painting, cleaning, hanging pictures, and more cleaning will eventually become less restrictive of my time and I promise to come back with more prescient viewpoints than ever.

Until then, wishing you a Happy Hannukah and a very Merry Christmas!

Sunday, December 14, 2008

Our First Socialist President

It's 2016. The Presidential election is coming up and the talking heads, economists, and political analysts write books and chatter on tv about the great socialist expansion of the United States of America. Industries have been nationalized, and the country carries a dangerous amount of debt, much of it held by the other major global power, China. But the focus is not on Obama. It is on our 43rd President, George W. Bush.

In recent months, Bush has presided over the largest expansion of government into private industry in the history of America. We are all acutely aware of his and the Congress' penchant for spending; the deficit has spiraled upwards during his presidency, throwing out all of the old ideals of Republican fiscal restraint. But this latest intrusion of government into having a stake in so many private industries is not just another spending bender. It sets a new precedent for the nationalization of any industry the government deems necessary. In a capitalist society, this has downright ruinous implications for our future.

Capitalism thrives on free markets in which there is inherent risk and reward. The higher the risk, the higher the chance for great reward. Many innovators fail, but for the chance at grabbing the brass ring, many entreprenuers continue to strive, sometimes at great peril to their financial and personal circumstances. In a country where the government swoops in and artificially props up certain businesses and prices at taxpayer expense, risk and reward are diminished. There is only so much money the taxpayers can reasonably afford before the incentive to work harder is thwarted. And because innovators in a government funded environment cannot expect great reward, there is less incentive to go above and beyond to create that new world changing technology. If, for example, the new technology creates a life saving medicine, and government runs healthcare, there will either be price controls placed on the drug or it will be rationed to keep expenses down. The end result is less innovation, and a slower growing economy. Without new ideas and creation, the pie never grows. In countries in which government does not allow businesses to fail, taxpayers shoulder the greatest burdens, and risk and reward are mimimized, the same old worn out pieces of the pie are just shuffled around again and again.

I cannot imagine why George Bush believes this is the best road for our country to take. Perhaps he does not understand the ramifications, particularly with the looming inauguration of a President who believes down to his core that this is the direction our country should take. Perhaps he does not want the failure of so many huge businesses tarnishing his legacy. But in reality, Bush is doing the most damage to his legacy with these very actions. He is setting us about on a dangerous path, making it easier for Obama to come in and finish the job, all under the auspices of a national emergency. When we look back in 2016, we'll wonder how our country changed so fundamentally, so quickly, and with nary a peep from we the people.

Friday, December 12, 2008

Is Rahmbo in Trouble?

The Chicago Sun Times caught up with Emanuel Rahmuel at city hall this morning, where he was reportedly to watch his kids in a music performance. When the reporter from the Sun Times asked Rahm if he was the Obama advisor named in the criminal complaint against Governor Bleep-ovich, who had a two hour conference call on November 11th to discuss the Gov's expectations for payoffs for Obama's Senate Seat, Rahm refused to answer.

Blagojevch was caught on tape saying that he wanted the Obama advisor in question to know what Blagojevich wanted in exchange for the Jarrett appointment.
Blagojevich said, “He asks me for the fifth CD thing, I want it to be in his head.” Emanuel represents the 5th Congressional District in Illinois.

Obama is learning firsthand that when you hone your political skills in a snake pit, eventually one of them is going to rise up and bite you in the ass.

Wednesday, December 10, 2008

What If...

Headlines scream of looming deficits and ongoing, seemingly never ending new stimulus programs proposed and dreamed up by the Democrats in their quest to nationalize every industry in the USA, and I wonder what the consequences will be. What will the USA look like when my kids are adults? What kind of tax burdens will they shoulder in order to ensure that everyone gets their "fair share", with no regard to their contribution to society? Will they ever know of the opportunities to attain prosperity for which America has been known for 200 years? Or will their efforts be for naught in a country which will eagerly strip them of their earnings should they desire to go above and beyond to educate themselves, work harder, and provide more for their own families?

If indeed the USA of tomorrow looks more like the France or Denmark of today, (minus the beautifully preserved historic cities and towns), then would I, or my children choose to live here? What other options exist for a fruitful existence based on one's personal responsibility and desire to achieve, to reach farther down into the human spirit to create, to strive, to provide a better life for one's family? What if huge numbers of educated people with a strong work ethic got so fed up that they just....left? Went to Mexico or Tazmania or Kenya or wherever to start a new life? Doctors, lawyers, accountants, teachers, engineers, computer geeks, scientists, entreprenuers, manufacturers. For a moment, forget the issues related to visas and attaining citizenship and whatnot. Just imagine a mass of the (relatively) richest, most educated, and entreprenuerial people on the planet moving to some other place to start a new life, based on the principles espoused by the America they once knew. The America which rewarded creativity and work ethic and education and risk taking rather than rewarding only abject failure. The kind of America our ancestors left their homelands for in search of opportunity. Would a developing country willingly throw this great human capital away? Perhaps some would welcome their traditional American can-do spirit and allow them to create an existence which would better the lives of all. Without having to own them all.

Let Your Voice Be Heard

One of the comments I received on my last blog post suggested that I list the links to our government leaders on the blog. I thought that was a superb idea, and now you can easily access your US Congressman or Woman and your Senators by clicking on the links to the right. We can complain all we want about how inept, corrupt, or out of touch our leaders may be, but unless we make our opinions known to them, nothing will change. Thus I urge you to contact your government leaders as often as you feel necessary and Let Your Voice Be Heard! Do nothing and you will change nothing.

Tuesday, December 9, 2008

I've Been Thinking

As I watch and read about Congress grilling the CEO's of the Big Three Automakers, some questions keep popping into my mind.

1) The CEO's rightfully took it on the chin for flying to Washington to beg for money in their private corporate jets. They have failing companies, and yet they still flew in those things, which cost $20,000 each for a round trip from Detroit to Washington. The leaders of Congress also have failed miserably in their jobs, and have approval ratings in the toilet. Why doesn't someone grill Nancy Pelosi about her taxpayer funded jumbo jet, which flies her non-stop to California and back every week at an estimated cost of over $5 million per year? Of OUR money? In THIS economy?

2) Barney Frank has also been front and center in the debate about how to spend bailout money. Why doesn't someone ask him about the part he played in the collapse of the economy with his demands to allow non-qualified buyers to buy houses?

3) Chris Dodd is asking for the ouster of failed GM CEO Richard Wagoner as part of the auto bailout deal. Why doesn't somone ask for his ouster for his part in the Fannie and Freddie debacle?

4) Sniveling Senate leader Harry Reid complains about the stinky tourists in Washington. Why doesn't someone ask him to go home where he will not have to put up with the unwashed masses he purports to stand up for?

The outright hypocrisy of our Congressional leaders boggles the mind. They don't even bother to hide it. Do they think that we are really that stupid? Apparently so.

Saturday, December 6, 2008

Rhode Island Innovation

I've got to hand it to the big thinkers in Rhode Island. When it comes to taxes, the lawmakers of L'il Rhody are as innovative as Bill Gates and Steve Jobs rolled into one. Clearly, brilliant minds are at work here, spinning out new ideas to chase people and businesses away from the state with a single-minded determination.

This week, a Blue Ribbon Panel pulled together by Governor Carcieri came out with a set of ideas to raise funds for our crumbling roads and bridges. While the Governor hasn't said anything yet, my bet is he's not thrilled with the panel's recommendations. Among the host of new fees and taxes suggested by the panel was a mileage fee, in which RI drivers would be charged a yearly fee for every mile that they drive. It could be half a cent or a cent, so for someone who drives 10,000 miles per year, a one cent fee amounts to a $100. Mileage would be verified during the required annual auto inspections. Other ideas include tolls on I-95 at the Connecticut and Massachusetts borders, increased registration fees, a higher gas tax, and a tax on any petroleum based product, which includes everything from paint to plastics.

With the highest unemployment rate and per person deficit in the country, perhaps the RI Government should put their innovative thinking to work and come up with ways to make the state more attractive to higher wage earners and businesses. I have a funny feeling that the business-as-usual approach of increasing taxes isn't the answer to growing our economy.

Thursday, December 4, 2008

Someone to Watch Over Me

Someone at the US Department of Justice seems to really dig my blog. I'm not sure who, but I'm guessing it's the FBI who's been checking in more often than my own mother. While I would like to think that their unfettered loyalty is because of my brilliant commentary, I have a hunch it has to do more with the rather snappy name I chose for the blog. As a firm believer in the right of the government to monitor and wiretap to smoke out potential terrorist activities, I don't find the interest of law enforcement in what I have to write disconcerting. I'm hoping that they are as diligent in locating actual terrorists on the internet, and have the tools and rights necessary to do it.

This brings me to the real point of my concern, which is the nomination of Eric Holder as US Attorney General. Obama sure picked a winner for this post. By now, everyone knows about Holder's role in Clinton's pardon of the biggest tax evader in history, Marc Rich. But Holder also had his hand in pardoning of 16 Puerto Rican terrorists, part of the FALN group, and during his illustrious career represented the sandinistas and many other unsavory characters. Many are greatly concerned that he will make unavailable to law enforcement many of the tools necessary to prevent another 9/11. And good luck to Obama in finding someone to head up the CIA. That person will be a sitting duck for Holder and his mountain of new rules tying the hands of those who seek out terrorists. After 9/11, Holder changed his tune about how to deal with enemy combatants, but in the years since he seems to have gone all soft and fuzzy again. With the recent headlines of the likelihood of a biological attack on US interests by 2013, God help us all if he does not use all the tools available to track down, capture, and interrogate those who would gladly snuff us out. This is no time to play nice.

Wednesday, December 3, 2008

Support the Taxpayer Bailout

Rep. Louis Gohmert, Republican from Texas, has proposed that Paulson use the remaining $350 billion from the $700 Billion TARP for a Taxpayer Holiday, instead of bailing out more failed businesses and Congressional cronies.

If you agree with his proposal, please pass the information along so that citizens may contact their congressional leaders and demand that it's OUR TURN for a bailout. And then be sure to contact your congressmen.

Convert Paulson’s Last $350 Billion
into Tax Holiday, says U.S. Congressman
"Billions of Dollars for Taxpayers, but Not One More Penny for Executive Bailouts"

WASHINGTON, D.C. - As millions of Americans are hoping to maximize their holiday shopping budgets on today's Black Friday bargains, one U.S. Congressman is fighting to prevent more outrageous spending sprees by Washington with taxpayer dollars going to executive cronies.
With $350 billion of the $700 billion bailout still available to Paulson pending Congressional approval, a conservative Texas lawmaker is proposing to put that money towards a tax holiday from both personal income tax and FICA tax for Americans during January and February of 2009.
He stated, "By instating a temporary tax holiday, we could electrify the American economy and provide overwhelming relief to taxpayers, all for less than the cost of the current failed Paulson-Pelosi bailout system."
"We need to give this money to the people who earned it. I am sick of Washington millionaires trying to decide which of their cronies should get the next wad of taxpayer money," Rep. Louie Gohmert continued. "Think about how much you would have if you didn't have any social security or income tax withheld from your pay check, or if you didn't have to pay those taxes for January and February! Americans could take and invest their own money where they believe it should go - to paying down mortgages, buying a new car, making credit card payments. The economy would get relief where it is needed the most. Why try to decide how to prevent foreclosures? Just give taxpayers their own money to catch up on their payments. Those in lower income brackets who are hit the hardest by the FICA tax would see huge money back, and then THEY could choose who should benefit from their hard earned money. Even the self-employed and small business owners would receive a fantastic amount of their own much-needed money, and they will be able to invest that back into their businesses and even create the ability to hire more people.”
Gohmert is currently preparing a bill to declare the tax holiday for January and February of 2009 and is also gathering support at the same time. He said, “We can save more home mortgages, increase employment, and boost economic growth for a lower price tag with this plan than with any centralized bureaucratic program, all by giving the power back to the taxpayers. I am demanding that not another penny goes to executive bailouts, but these billions of taxpayer dollars should go to the taxpayers who earned them."
According to American Solutions, a conservative think tank founded by former Speaker of the House Newt Gingrich, Americans pay $101.6 billion per month in personal income tax and $65.6 billion per month in FICA tax. Under Gohmert's proposed plan, all of these taxes would not be paid during January and February of 2009, and the money would stay in the hands of American taxpayers - the ones who best know where economic stimulus should be targeted. Gohmert's two month tax holiday would stimulate the economy while costing less than the remainder of the Paulson-Pelosi bailout plan.
Rep. Louie Gohmert (TX-01) has also recently proposed returning all 2008 income taxes to American taxpayers as a solution to boost the ailing economy, as he believes taxpayers, rather than the government, should be using their hard-earned money to choose the economy's winners and losers.
If you'd like to support Rep. Gohmert's plan and tell Congress to put an end to the government's excessive bailouts, sign the online petition at RedState.com by clicking HERE, or paste https://redstate.kimbia.com/taxholiday into your web browser.

Tuesday, December 2, 2008

Throwing Mud Against the Wall

It appears that nobody has any clue as to whether the billions of dollars spent on easing the financial crisis is working or will work at all. Whilst we put our faith in the masters of the financial universe to turn this Titanic of a crisis around, it seems that they are almost as clueless about what to do to solve the issues at hand as my grandmother residing in her assisted living facility. And forget about Congress. If the A students in finance don't get it, how can we expect the C students with all of their grandstanding and focus on self promotion to get it, or to actually do the right thing?

Today in the NYT an article leads off with "The head of a new Congressional panel set up to monitor the gigantic federal bailout says the government still does not seem to have a coherent strategy for easing the financial crisis, despite the billions it has already spent in that effort.
Elizabeth Warren, the chairwoman of the oversight panel, said in an interview Monday that the government instead seemed to be lurching from one tactic to the next without clarifying how each step fits into an overall plan.
“You can’t just say, ‘Credit isn’t moving through the system,’ ” she said in her first public comments since being named to the panel. “You have to ask why.”"

I previously posted an article which put the number of Fed dollars being used for economic stimulus at $7.4 TRILLION dollars. That's $24,000 per man, woman, and child in this country. Why doesn't anyone answer some basic questions for the taxpayers, instead of just ramming through bailout after bailout with our money? I'd like to know:
1) How much money does the Fed actually have?
2) Where does it come from?
3) Is anyone to be held accountable for this spending spree? I mean REALLY accountable.
4) What are the future ramifications of all this spending? If you are not sure, please provide various scenarios.
5) What if it doesn't work?

I have felt from the beginning of this craziness that in 10 years, analysts will look back at the government reaction to this crisis and conclude that at least half of our money was wasted. Yet we will still be stuck with the bill. When you throw enough mud against the wall, some will inevitably stick, but this particular mud is OUR money and OUR future. I for one would like some explanations.

Friday, November 28, 2008

A New Era in Iraq

To all the naysayers and opponents of the Iraq War, see Exbibit One: the Iraq's new democratic Parliament has approved, by a vote of 149 to 35, to what they refer to as "The Withdrawal Agreement", which sets a timetable of 3 years for the complete withdrawal of US troops in the country. Other American forces may remain for healthcare, economic, and education purposes after that point. But the remarkable thing about this document is the show of democracy at work in this country of sharply divided sects, whose animousity towards each other goes back thousands of years.

Here in our parochial American bubble, it is easy to protest vehemently about the war we have fought in Iraq, which toppled a dictator infamous for mass killings of his own people, and who defied UN Security resolutions for years. 4200 American troops have given their lives in the conflict, and while many believe they have died for naught, the reality is that history will tell a much different tale. History is objective, not emotional, and the actions taken in Iraq by the US and coalition troops will be a bright shining spot of which both Iraqis and American's will be proud. A conflict which built a democracy, set against the ancient timeline of this country's tumultuous history and sectarian rifts, will be seen as a new era. An era when the all of the people, and all of the sects, finally have an equal say in how they can live their lives. That, my friends, is something to celebrate this holiday season.

Wednesday, November 26, 2008

The Effects of Credit Gluttony

An interesting commentary on the free market system:

THE FREE MARKET CONSENSUS 1989-2008: RIP
By DICK MORRIS & EILEEN MCGANN
Published in the New York Post on November 26, 2008

The subprime mortgage crisis is only the Sarajevo which caused the financial collapse. The real reason is the massive explosion of debt at all levels and in all forms that has engulfed the world. Since 1992, the total of debt in the world has gone from a level equal to global GDP to a level that is now 3.7 times as much as global GDP. This debt explosion, explained in Charles Morris' book (no relation) The Trillion Dollar Meltdown, consists not only of mortgages, but bonds for corporations that can't repay them, credit cards for consumers who are neck deep in debt, car loans for drivers who can't meet the payments, student loans that are swamping young couples, and default insurance sold by companies that can't make good on their commitments. This massive debt has to be sweated out of our global economic system like a heroin addiction. But we won't have to go cold turkey. Governments around the world are committed to mitigating the pain. They are not about to ask us to go through the agony of another Great Depression. They have learned the lessons of the 30s. So government will ease our pain with stimulus packages and corporate bailouts to protect us and the companies that sustain our employment base. These bailouts and stimuli will not solve the problem. They are simply pain killers - methadone - designed to mitigate our suffering. It is only the private sector shakeout, "creative destruction" in the words of Joseph Shumpeter, that can eradicate the bad debt and bring the economy back to health. To fail to go through this process would put us in the same situation as Japan, which evaded a reckoning with its bad debt crisis and has suffered with twenty years of stagnation as a result. But to go through withdrawal, even with methadone, will be a long and painful process. Liberals -- demand siders -- and conservatives -- supply siders -- disagree on the remedies for the crisis. The demand siders feel that we need to stimulate demand by passing out checks and cutting middle class taxes. The right points out that this will only be a drop in the ocean of global demand and that much of the money will be used for debt reduction and to buy Chinese products. The supply siders plead for a cut in corporate taxes and capital gains levies. Critics say that the current lack of confidence in the economy inhibits investment no matter how much the tax code incentivizes it. Both solutions and both criticisms are correct. The proper medication - the right methadone - is a balance between the two. But, conceptually, what is happening is the end of the consensus around free market economics engendered by the fall of communism. The era of free market consensus lasted from 1989 through 2008. It is now over. Bush and Obama will leave us with a legacy of government regulation, at a minimum, and control, at the maximum, over the economy. When the Republican version of the bailout, calling for loans and insurance instead of outright grants of money to corporations, was rejected (thanks to John McCain), the fate of the free market era was sealed. With the bailout cash came the reasonable demand for "equity for the taxpayers" in return. Enter the government. Now the federal government is the major shareholder in most of our important financial and insurance companies and in many of our manufacturing corporations. Now we hear this leverage articulated in reasonable demands for limits on corporate executive bonuses and compensation. But soon it will metastasize into calls for a public voice in lending policies and government management and control. Obama and a top heavy Democratic Congress will accelerate this trend and there is nothing the Republican Party will be able to do about it. In the meantime, Obama will pass his entire radical agenda by dressing up the expansion of health insurance and his other schemes as part of a "stimulus package." Thus sanitized, the most massive pork barrel in history will be rubber stamped in a matter of days by the new Democratic Congress. Obama will be freed from the discipline of the balanced budget. With a bi-partisan consensus t hat deficits are vital in fighting the crisis (or mitigating the pain) there is no constraint on Obama and his party. The sky is the limit on spending. Indeed, spending is now a national duty. The inevitable result is massive inflation. And since the deficit spending will have been simply to reduce the pain of the depression and not to cure its cause, it will be a stagflation beyond anything we have ever known. A depressflation. Then the question will be: When will we realize that government controls are magnifying, not solving the problems that caused the depression? When will the patience of the public with Obama's remedies run out? When will we realize that the inflation the deficits are causing are more painful than the unemployment they are mitigating? Eventually all this will come to pass. Our guess is 2010. But maybe it won't be until 2012 or alter. In the meantime, the era of big government is back!

Tuesday, November 25, 2008

Wolves at the Door

The numbers being thrown around by the Fed to bailout various entities is staggering. I'm not sure how many zeros are involved anymore; I simply can't keep up. Our current leader, Bush, tells us there will be more where that came from, while our future leader, Obama, is busily crafting another $500-$700 billion stimulus package which he plans to sign on Inauguration Day. While we are in the midst of a significant financial crisis, this country has been through it before, and has survived.

My concern is that Obama and his posse of Democrats in Congress see this as an opportunity. An opportunity to push through the biggest changes in our government since it's inception. They are licking their chops at the opportunity to drastically alter the landscape by using our fear and our panic. "Don't worry, we'll take care of it. We're really, really smart, and we know better than you. Don't you worry your pretty little heads about this." In times of deep stress, particularly when the situation is complicated, most people will hunker down and let their leaders do what they may. They put their faith in their leaders out of lack of confidence in themselves and their ability to effect change. To do that in the current environment would be a huge mistake, and create irrevocable damage to our country.

Step into the future for a minute. Hopefully, we've weathered the storm, a little bedraggled, but still here. What will our country look like in terms of it's economic principles? With the government owning stakes in banks, insurers, homeowner's mortgages, automakers, and God knows what else, along with a government run healthcare system, tighter government regulations, and a massive redistribution of income, what will we call ourselves? Certainly not capitalists. The principle of liberty, which our founders wrote in stone in our Constitution, will be thwarted, because without the individual ability to control our own destiny, we lose our freedom. We lose our freedom to pursue happiness through our own endeavors. Our nation will lose the very essence of what makes it great.

Monday, November 24, 2008

Snookered: $24,000 Per Man, Woman, and Child

Eye-Popping Numbers from Bloomberg today:

Fed Pledges Top $7.4 Trillion to Ease Frozen Credit (Update1)
By Mark Pittman and Bob Ivry

Nov. 24 (Bloomberg) -- The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.
The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.
When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.
“Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”
Too Big to Fail
Bloomberg News tabulated data from the Fed, Treasury and Federal Deposit Insurance Corp. and interviewed regulatory officials, economists and academic researchers to gauge the full extent of the government’s rescue effort.
The bailout includes a Fed program to buy as much as $2.4 trillion in short-term notes, called commercial paper, that companies use to pay bills, begun Oct. 27, and $1.4 trillion from the FDIC to guarantee bank-to-bank loans, started Oct. 14.
William Poole, former president of the Federal Reserve Bank of St. Louis, said the two programs are unlikely to lose money. The bigger risk comes from rescuing companies perceived as “too big to fail,” he said.
The government committed $29 billion to help engineer the takeover in March of Bear Stearns Cos. by New York-based JPMorgan Chase & Co. and $122.8 billion in addition to TARP allocations to bail out New York-based American International Group Inc., once the world’s largest insurer. Yesterday, Citigroup Inc. received $306 billion of government guarantees for troubled mortgages and toxic assets. The Treasury Department also will inject $20 billion into the bank after its stock fell 60 percent last week.
“No question there is some credit risk there,” Poole said.
Exposure
Congressman Darrell Issa, a California Republican on the Financial Services Committee, said risk is lurking in the programs that Poole thinks are safe.
“The thing that people don’t understand is it’s not how likely that the exposure becomes a reality, but what if it does?” Issa said. “There’s no transparency to it so who’s to say they’re right?”
The worst financial crisis in two generations has erased $23 trillion, or 38 percent, of the value of the world’s companies and brought down three of the biggest Wall Street firms.
The Dow Jones Industrial Average through Friday is down 38 percent since the beginning of the year and 43 percent from its peak on Oct. 9, 2007. The S&P 500 fell 45 percent from the beginning of the year through Friday and 49 percent from its peak on Oct. 9, 2007. The Nikkei 225 Index has fallen 46 percent from the beginning of the year through Friday and 57 percent from its most recent peak of 18,261.98 on July 9, 2007. Goldman Sachs Group Inc. is down 78 percent, to $53.31, on Friday from its peak of $247.92 on Oct. 31, 2007, and 75 percent this year.
‘Snookered’
Regulators hope the rescue will contain the damage and keep banks providing the credit that is the lifeblood of the U.S. economy.
Most of the spending programs are run out of the New York Fed, whose president, Timothy Geithner, is said to be President- elect Barack Obama’s choice to be Treasury Secretary.
The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages.
“It’s unprecedented,” said Bob Eisenbeis, chief monetary economist at Vineland, New Jersey-based Cumberland Advisors Inc. and an economist for the Atlanta Fed for 10 years until January. “The backlash has begun already. Congress is taking a lot of hits from their constituents because they got snookered on the TARP big time. There’s a lot of supposedly smart people who look to be totally incompetent and it’s all going to fall on the taxpayer.”
New Deal
President Franklin D. Roosevelt’s New Deal of the 1930s, when almost 10,000 banks failed and there was no mechanism to bolster them with cash, is the only rival to the government’s current response. The savings and loan bailout of the 1990s cost $209.5 billion in inflation-adjusted numbers, of which $173 billion came from taxpayers, according to a July 1996 report by the U.S. General Accounting Office.
The 1979 U.S. government bailout of Chrysler consisted of bond guarantees, adjusted for inflation, of $4.2 billion, according to a Heritage Foundation report.
The commitment of public money is appropriate to the peril, said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. and a former economist at the New York Fed. U.S. financial firms have taken writedowns and losses of $666.1 billion since the beginning of 2007, according to Bloomberg data.
“This is the worst capital markets crisis in modern history,” Harris said. “So you have the biggest intervention in modern history.”
Federal Lawsuit
Bloomberg has requested details of Fed lending under the U.S. Freedom of Information Act and filed a federal lawsuit against the central bank Nov. 7 seeking to force disclosure of borrower banks and their collateral.
Collateral is an asset pledged to a lender in the event a loan payment isn’t made.
“Some have asked us to reveal the names of the banks that are borrowing, how much they are borrowing, what collateral they are posting,” Bernanke said Nov. 18 to the House Financial Services Committee. “We think that’s counterproductive.”
The Fed should account for the collateral it takes in exchange for loans to banks, said Paul Kasriel, chief economist at Chicago-based Northern Trust Co. and a former research economist at the Federal Reserve Bank of Chicago.
“There is a lack of transparency here and, given that the Fed is taking on a huge amount of credit risk now, it would seem to me as a taxpayer there should be more transparency,” Kasriel said.
$4.4 Trillion
Bernanke’s Fed is responsible for $4.4 trillion of pledges, or 60 percent of the total commitment of $7.4 trillion, based on data compiled by Bloomberg concerning U.S. bailout steps started a year ago.
“Too often the public is focused on the wrong piece of that number, the $700 billion that Congress approved,” said J.D. Foster, a former staff member of the Council of Economic Advisers who is now a senior fellow at the Heritage Foundation in Washington. “The other areas are quite a bit larger.”
The Fed’s rescue attempts began last December with the creation of the Term Auction Facility to allow lending to dealers for collateral. After Bear Stearns’s collapse in March, the central bank started making direct loans to securities firms at the same discount rate it charges commercial banks, which take customer deposits.
In the three years before the crisis, such average weekly borrowing by banks was $48 million, according to the central bank. Last week it was $91.5 billion.
Lehman Failure
The failure of a second securities firm, Lehman Brothers Holdings Inc., in September, led to the creation of the Commercial Paper Funding Facility and the Money Market Investor Funding Facility, or MMIFF. The two programs, which have pledged $2.3 trillion, are designed to restore calm in the money markets, which deal in certificates of deposit, commercial paper and Treasury bills.
“Money markets seized up after Lehman failed,” said Neal Soss, chief economist at Credit Suisse Group in New York and a former aide to Fed chief Paul Volcker. “Lehman failing made a lot of subsequent actions necessary.”
The FDIC, chaired by Sheila Bair, is contributing 20 percent of total rescue commitments. The FDIC’s $1.4 trillion in guarantees will amount to a bank subsidy of as much as $54 billion over three years, or $18 billion a year, because borrowers will pay a lower interest rate than they would on the open market, according to Raghu Sundurum and Viral Acharya of New York University and the London Business School.
Bank Subsidy
Congress and the Treasury have ponied up $892 billion in TARP and other funding, or 12 percent.
The Federal Housing Administration, overseen by Department of Housing and Urban Development Secretary Steven Preston, was given the authority to guarantee $300 billion of mortgages, or about 4 percent of the total commitment, with its Hope for Homeowners program, designed to keep distressed borrowers from foreclosure.
Most of the federal guarantees reduce interest rates on loans to banks and securities firms, which would create a subsidy of at least $6.6 billion annually for the financial industry, according to data compiled by Bloomberg comparing rates charged by the Fed against market interest currently paid by banks.
Not included in the calculation of pledged funds is an FDIC proposal to prevent foreclosures by guaranteeing modifications on $444 billion in mortgages at an expected cost of $24.4 billion to be paid from the TARP, according to FDIC spokesman David Barr. The Treasury Department hasn’t approved the program.
Automakers
Bernanke and Paulson, former chief executive officer of Goldman Sachs, have also promised as much as $200 billion to shore up nationalized mortgage finance companies Fannie Mae and Freddie Mac. The FDIC arranged for $139 billion in loan guarantees for General Electric Co.’s finance unit.
The tally doesn’t include money to General Motors Corp., Ford Motor Co. and Chrysler LLC. Obama has said he favors financial assistance to keep them from collapse.
Paulson told the House Financial Services Committee Nov. 18 that the $250 billion already allocated to banks through the TARP is an investment, not an expenditure.
“I think it would be extraordinarily unusual if the government did not get that money back and more,” Paulson said.
‘We Haircut It’
In his Nov. 18 testimony, Bernanke told the House Financial Services Committee that the central bank wouldn’t lose money.
“We take collateral, we haircut it, it is a short-term loan, it is very safe, we have never lost a penny in these various lending programs,” he said.
A haircut refers to the practice of lending less money than the collateral’s current market value.
Requiring the Fed to disclose loan recipients might set off panic, said David Tobin, principal of New York-based loan-sale consultants and investment bank Mission Capital Advisors LLC.
“If you mark to market today, the banking system is bankrupt,” Tobin said. “So what do you do? You try to keep it going as best you can.”
“Mark to market” means adjusting the value of an asset, such as a mortgage-backed security, to reflect current prices.
Some of the bailout assistance could come from tax breaks in the future. The Treasury Department changed the tax code on Sept. 30 to allow banks to expand the deductions on the losses banks they were buying, according to Robert Willens, a former Lehman Brothers tax and accounting analyst who teaches at Columbia University Business School in New York.
‘Wells Fargo Notice’
Wells Fargo & Co., which is buying Charlotte, North Carolina-based Wachovia Corp., will be able to deduct $22 billion, Willens said. Adding in other banks, the code change will cost $29 billion, he said.
“The rule is now popularly known among tax lawyers as the ‘Wells Fargo Notice,’” Willens said.
The regulation was changed to make it easier for healthy banks to buy troubled ones, said Treasury Department spokesman Andrew DeSouza.
House Financial Services Committee Chairman Barney Frank said he was angry that banks used the money for acquisitions.
“The only purpose for this money is to lend,” said Frank, a Massachusetts Democrat. “It’s not for dividends, it’s not for purchases of new banks, it’s not for bonuses. There better be a showing of increased lending roughly in the amount of the capital infusions” or Congress may not approve the second half of the TARP money.

Sunday, November 23, 2008

Barack's Brainiacs

In his recent column, New York Times writer, David Brooks writes "Jan. 20, 2009, will be a historic day. Barack Obama (Columbia, Harvard Law) will take the oath of office as his wife, Michelle (Princeton, Harvard Law), looks on proudly. Nearby, his foreign policy advisers will stand beaming, including perhaps Hillary Clinton (Wellesley, Yale Law), Jim Steinberg (Harvard, Yale Law) and Susan Rice (Stanford, Oxford D. Phil.).
The domestic policy team will be there, too, including Jason Furman (Harvard, Harvard Ph.D.), Austan Goolsbee (Yale, M.I.T. Ph.D.), Blair Levin (Yale, Yale Law), Peter Orszag (Princeton, London School of Economics Ph.D.) and, of course, the White House Counsel Greg Craig (Harvard, Yale Law).
This truly will be an administration that looks like America, or at least that slice of America that got double 800s on their SATs. Even more than past administrations, this will be a valedictocracy — rule by those who graduate first in their high school classes."

Obamaniacs are euphoric over the Obama team's intellect factor. Lest they forget, it was a bunch of valedictorians on Wall Street who came up with the brilliant new financial markets of derivatives based upon mortgage backed securities which sent the economy into it's downward spiral. Intellect alone does not guarantee common sense or good policy making. From my persective, Obama's picks so far have been somewhat comforting, not based on their Ivy League pedigrees, but simply for the fact that they are not a group of left wing loons. While they are not conservative, each one is at least a bit more centrist in their views than their leader. (It will also be so entertaining to see Barry and Hil and Bill playing in the same sandbox!)

Obama's pick of Tim Geithner as Secretary of the Treasury sent a reassuring message to the markets on Friday, at a time when confidence is sorely needed. Since the election, the Dow had dropped 16% before rebounding with the leak of Geithner's name as the man who will hold the money bags. But the big elephant still stands in the room, hovering over the markets like a blanket of doom. If the economy is to recover, and not falter into a deep recession or even a depression, simply naming a team is not going to cut it. Neither will promising to invest billions of dollars into infrastructure improvements and green autos to create new jobs, as Obama mentioned in his weekly radio address. The government alone cannot jump start this jalopy. Obama must come out soon and say that he will NOT raise taxes on anyone in this economy. That message alone will pump up confidence, sooth the market jitters, and help get small businesses back on track to create the jobs Americans need. Come on, Obama, do the right thing. JUST SAY IT.

Update: Good news from the NYT- it seems he has said it!

November 23, 2008, 11:00 am — Updated: 11:08 am -->
Obama Considers Delaying Tax Increase
By Sharon Otterman
U.S. President-elect Barack Obama is considering delaying his proposal to repeal the Bush tax cuts for the wealthiest Americans in light of the economic downturn, two aides said on Sunday.
Bill Daley, an adviser to Obama and commerce secretary under former President Bill Clinton, said on NBC’s “Meet the Press” that it “looks more likely than not” that President Obama will delay any tax increase until after 2010, when the Bush cuts for those making more than $250,000 are due to expire.

New Update: David Axelrod, Obama's chief campaign advisor, when interviewed by Chris Wallace on Fox News, waffled on the issue of whether Obama will let the Bush tax cuts simply expire in 2010, or raise taxes in 2009. So again, no certainty about this issue.

Thursday, November 20, 2008

Life On Mars

Have you seen that new tv show in which the cop hits his head in a car accident and wakes up from a coma in 1973? He has no idea why or how he got there. I'm kind of feeling the same thing these days, as if I am living in some sort of alternate reality, in which everything I took for granted has been turned on its head. For instance:

1) I see Barney Frank on tv in his dandy striped suits lisping his socialist, "thank God I'm here to save the little guy" nonsense, and who is now saying that perhaps the automakers will need a $100 billion loan. Isn't this the same guy who refused to regulate Fannie Mae and Freddie Mac, and who "wanted to roll the dice with the housing market" some more? You know, the same subprime housing market which has sunk us into the worst financial crisis since the Depression? And this guy was promptly voted back into office by the geniuses in Massachusetts with 60% of the vote.
2) Bankers, Insurers, and Big Three Automakers are lining up to receive their share of the gazillions of dollars of taxpayer money because they took advantage of the system, and failed miserably. Some bankers have stated that they would give up their giant bonuses this year and (gasp) take only $600,000 in pay. AIG, the nation's big insurer, has taken our money and gone on executive spa retreats. And the Big 3 CEO's flew to the HILL to beg for money in their individual corporate jets at a mere cost of $20,000 per trip. That's Detroit to Washington, DC, a $300 round trip ticket on a commercial airline.
4) Homeowners who bought more house than they could afford, with no money down, and who are now defaulting on their mortgages, are clamoring for part of the $700 billion dollar bailout. Sure, give the delinquents a reduction on their principal owed (basically a free down payment on their house). After all, Christmas is coming and they need to buy a new flat screen tv for the family.
5) Blue states and municipalities with their overbloated budgets and union strangleholds are lining up for some moola too. Sure, let's pay for some more overlapping, unnecessary services and money draining contracts. Don't bother cutting back on spending. That would be a bit Grinch-like at this time of year.
6) Students are getting in on the act. Why not? Why should they actually have to pay for school? And homebuilders are asking for a $22,000 per home tax credit for homebuyers next year, as well as a government subsidized 2.99% mortgage rate. Golly, if I'd only known that, I'd have waited a year to buy my new fixer-upper.
7) Obama, the man who shouted "CHANGE" from the rooftops for his 22 month campaign, is filling his White House with a bunch of Clintonistas. Perhaps I'm actually living in 1992?
8) Pirates have emerged as a big international threat in the waters off of Somalia. Only instead of cannons and swords, they use AK47's and speed boats. I wonder if there will be a movie with Johnny Depp.
9)Iran's ready to build a nuke and Israel is standing on alert. Our good buddies in Russia, China, Cuba, and Venezuela are all playing nicey-nice with each other in our own backyard.

Meanwhile, those people who played by the rules, saved some money, and lived within their means have lost half of their investments over the past 2 months, are losing their jobs, and are living paycheck to paycheck.

Am I missing something here? Is this the United States of America, the country which prides itself on working hard for the chance to get ahead, self reliance, personal responsibility, and innovation? Why is failure being so eagerly rewarded by our government? Where the heck am I?

Tuesday, November 18, 2008

Heading for a Primary Care Train Wreck

From Reuters:

"Primary care doctors in the United States feel overworked and nearly half plan to either cut back on how many patients they see or quit medicine entirely, according to a survey released on Tuesday.
And 60 percent of 12,000 general practice physicians found they would not recommend medicine as a career.
"The whole thing has spun out of control. I plan to retire early even though I still love seeing patients. The process has just become too burdensome," the Physicians' Foundation, which conducted the survey, quoted one of the doctors as saying.
The survey adds to building evidence that not enough internal medicine or family practice doctors are trained or practicing in the United States, although there are plenty of specialist physicians.
The Physicians' Foundation, mailed surveys to 270,000 primary care doctors and 50,000 practicing specialists. The 12,000 answers are considered representative of doctors as a whole, the group said, with a margin of error of about 1 percent. It found that 78 percent of those who answered believe there is a shortage of primary care doctors.
More than 90 percent said the time they devote to non-clinical paperwork has increased in the last three years and 63 percent said this has caused them to spend less time with each patient.
Eleven percent said they plan to retire and 13 percent said they plan to seek a job that removes them from active patient care. Twenty percent said they will cut back on patients seen and 10 percent plan to move to part-time work. Seventy six percent of physicians said they are working at "full capacity" or "overextended and overworked". "

Why does this matter to you? Obama and the Democratic Congress will at some point address the issue of healthcare reform, and their plan is to provide insurance to 47 million new patients, including illegal immigrants. Most of these already get free care, although their primary care tends to come from the emergency room MD. Once these 47 million new patients are insured, they will get their primary care where the insured do- with a primary care doctor in their community. With PC's leaving the profession in droves, who is going to absorb all of these new patients?

There simply are not enough incentives for medical students to choose primary care as their profession. Most choose a specialty, which offers much greater pay (in many cases double or triple what primary care doctors make). Part of this choice is dictated by the enormous costs of medical education, which can leave a new doctor $250,000 in debt. That's a tough burden when you are 30 or more years old and are at the point where you might want to start a family and buy a house. Part of the choice to choose a specialty over primary care is that it is stressful, and requires one to keep up on a huge range of medical topics from infectious disease to cardiology. As the gatekeepers of medicine, they have to know enough about every disease in order to provide the correct care or triage to the appropriate specialist. Not an easy task. Over time, the burden and stress simply wears down even the most idealistic and enthusiastic doctors.

If Obama wants to reform healthcare, he'd better realize that electronic record keeping is not going to solve the problem of what is driving doctors from primary care. Because if he doesn't, we'll all be waiting in very, very long lines to see our doctors.

If Only Liberals Were As Smart

Today I have to go and paint the house we are renovating, so I'm posting a little Republican humor for the day (sent to me by my father- Happy Birthday, Dad! And brother, Johnny, too).

I was talking to a friend of mine's little girl, and she said she wanted to be President some day. Both of her parents, liberal Democrats, were standing there, so I asked her, "If you were President what would be the first thing you would do?" She replied, "I'd give food and houses to all the homeless people." "Wow - what a worthy goal!" I told her. "You don't have to wait until you're President to do that. You can come over to my house and mow, pull weeds, and sweep my yard, and I'll pay you $50. Then, I'll take you over to the grocery store where the homeless guy hangs out, and you can give him the $50 to use toward food or a new house." She thought that over for a few moments because she's only 6 years old. And while her Mom glared at me, the young child looked me straight in the eye and asked, "Why doesn't the homeless guy come over and do the work, and you can just pay him the $50?" And I said, "Welcome to the Republican Party.

Monday, November 17, 2008

Thinkin' He's Lincoln

It is now so clear. It turns out that our President-elect, a tall, skinny guy from Illinois with great oratory skills and a cool, detached demeanor, thinks he's got a heck of a lot in common with Abraham Lincoln, another tall, skinny guy from Illinois with great oratory skills and a cool, detached demeanor. Both came from humble beginnings, and shared the sense that their position was one of destiny to unite a divided country. And clearly, one cannot miss the irony of the fact that Lincoln's Emancipation Proclamation set the course for Obama to eventually reach the pinnacle of government in a nation that once enslaved African Americans. I'm willing to bet that during the campaign when he was sarcastically referred to by the far right as the second coming of Jesus Christ, Obama thought, "No, you idiots, I'm not the Messiah, I'm the second coming of Lincoln! And I'm gonna finish what he started."

Aside from the superficial coincidences, does Obama really share similarities and philosophies with Lincoln? Healthwise, Lincoln suffered deeply from what was referred to at the time as "melancholia", and is now know as depression. Since Obama has refused to release his medical records, we do not know if he too suffers from depression, or any other condition, for that matter. And while Obama makes much ado of his belief in Lincoln's leadership skills, we know nothing of Obama's abilities in that regard, as he has never held an executive position. His intent to create a Team of Rivals in his cabinet and amongst his advisors looks more and more like a Team of His Rival's Husband's Old Buddies. Virtually everyone named thus far has a connection to the Clinton White House. Are they really rivals the likes of whom Lincoln choose for his cabinet?

Lincoln, lest we forget, was also a Republican, with very conservative philosophies regarding the notion of redistribution of income. He would never have gone for Obama's proposed tax plan. This is where Obama must believe he is finishing off what Lincoln started. Lincoln freed the slaves, and now Obama wants to pay the African American community back for those past injustices by spreading the wealth around. Since blacks have a lower median income than whites, a higher percentage of them would enjoy the benefits of such a plan. Take from the rich whites, the surrogates of slave owners of years past, and give to the poor blacks. Obama undoubtedly believes that this is for the good of the country, just as Lincoln strongly believed keeping the union whole and freeing the slaves was worth all of the blood shed during the Civil War. Of course, Lincoln repeatedly demonstrated honesty and good judgement, something which Obama clearly lacks based on his fringe element associations and the fact that he has repeatedly lied about these connections. Thankfully, Abe's good character led us through an extremely precarious time in our country's history. We now face another huge challenge. Will the character of Barack Obama be enough to get us through this difficult time?

Saturday, November 15, 2008

Barackonomics Effect on the Markets

The Wall Street Journal featured an op-ed piece this week discussing the impact of the looming Obama presidency on investors. It states that "No President-elect in post-war history has been greeted with a more audible hiss from Wall Street". Indeed, since the election, the Dow has lost 1128 points, almost 12% of its value. Much of this is due to other factors, including dismal earnings reports from the corporate sector, but Obama's stated economic agenda has certainly contributed to pushing the markets lower.

Obama's plan, which he reiterated in his post election press conference, is to raise incomes on those making over $250K, as well as to raise corporate, capital gains, and dividends taxes. As the market reacts with a sell-off to lock in today's lower capital gains taxes, households see their nest eggs shrinking, and panic. The result is lower consumer spending, which is a significant factor in our economy. When businesses make no profits, they close or lay off workers, causing more angst and bad economic news which in turn effects the markets. It's like a Circle of Doom, spiralling ever downward.

Obama had a perfect opportunity to throw the markets a bone during his press conference. When specifically asked whether in this current economic climate he plans to raise taxes, he dodged the question and tapped danced back to his tried and true campaign rhetoric, saying that his plan was for an overall tax cut, and he still believes it is the best plan for the economy. He never answered the question. In some cases, uncertainty is worse than knowing, and this is especially true of the stock market and consumer spending. Uncertainty creates loss of confidence and fear for the future. Obama should have taken the opportunity to reassure markets by saying that he would hold off on any plans for raising taxes, which would effectively stimulate the economy by pricking the balloon of uncertainty which currently hovers over Wall Street.

Thursday, November 13, 2008

Bamboozlization

In the spirit of our 43rd President, I will occasionally create new words to reflect this brave new world we face. Or, should I say, this farcical new world we face. Today's word is "bamboozlization" or the act of bamboozling. This is exactly what the myriad banks, insurers, former credit card companies, mortgage companies, defaulting mortgage holders, and now manufacturers are doing in an attempt to swindle as much of our money into their coffers as possible. It's like the '49 Gold Rush, with wild eyed prospectors racing across the country to collect their piece of the pie. Except instead of the land being pillaged, it is the responsible American who gets up and goes to work to pay his taxes and his mortgage, and resisted living high on the hog in the heady years of easy credit for everyone, who is taking it on the chin. It is these people whose retirement savings, college funds, and home equity have taken a whalloping hit, from which they may never recover.

From the $700 billion bailout, thus far, 52 financial institutions have reportedly received preliminary or final approval for about $172 bn of the $250 bn available under the government’s capital-infusion program, according to Keefe, Bruyette & Woods, with another 23 companies that have submitted applications for an additional $4.6 bn. We've got the Big Three Automakers looking for another $25 million in addition to the $25 million in loans they just received, American Express looking for $3.5 billion, $150 million pumped into AIG (apparently to support executive spa retreats, but hey, it's been a tough year), and now Fannie Mae is looking for more moola. Home builders have proposed $268 in tax credits for homebuyers in 2009. As if that is not enough, the new mortgage rules instituted to help homeowners are geared specifically for those who have already defaulted, not for those people on the edge who are doing everything possible to pay their mortgages on time. Gee, I wonder what effect that will have? In this tough economic climate, do you suppose that a homeowner struggling to make payments might just think "I'll take a 3 month break from paying my mortgage, keep the cash for Christmas, and then let the government restructure my loan so it'll be easier to handle in the future"? Seems like a no brainer that this is the tact that many people will follow, thus resulting in a landslide of restructured, government assisted mortgages.

Face it folks, we were bamboozled by a corrupt Congress, Wall Street, Fannie and Freddie, ratings agencies, insurers, the SEC chairman, The Fed, and that was BEFORE the financial meltdown. We were bamboozled into handing over $700 billion pronto, or the country would implode. Now new bamboozlers are lining up in droves for handouts, because they know this is a free for all, that there is NO accountability for anyone's nefarious behavior (witness the re-election of all of the major Congressional bamboozlers who had their fingerprints all over the sub-prime mess which created this house of cards). We just stand there, mouths agape, wondering who is on our side. Nobody is on our side. We have to affect change ourselves, because the swindlers think we are sheep. It's time to revolt. It's time to get our "revolution" t-shirts and go to the Hill.

Wednesday, November 12, 2008

Let Them Fail

In a capitalist society, there are great risks and great rewards. America's capitalist nature is a result of the outlook and mindset of the people who live here: it's in the genes. People from all over the world chose to come here, usually at great peril to themselves and their families for the possibility of great opportunity. They left their more risk averse friends and relatives back in the homeland, bringing with them little else besides optimism, faith in their ability to succeed, and a propensity to throw the hail mary pass in hopes for a big return. This is what we are made of. We are a nation of doers, always striving, and with great expectations.

This expectations thing is part of what separates our overall outlook from our European friends. Most of Western Europe falls under the umbrella of a Social Democracy: nanny states with high taxes, and cradle to grave care for all. Under this system, the benefits to all citizens are more equalized, but innovation is suppressed. Large amounts of the countries' GDPs are spent on government programs, and people do not expect much upward mobility. Denmark recently topped the list of having the happiest people in the world. It turns out that their expectations are lower, so they do not face disappointment as readily as in the USA, where one often has to fail in order to succeed.

Most successful people, particularly business owners, will tell you that they have failed more often than they have succeeded. What sets them apart is their ability to get back in the saddle, put everything on the line, and try yet again to attain success. They learn from their failures, and consequently their innovative skills are honed, so each time they fail, they learn what to avoid and how to best move forward. This very American concept needs to be applied to the Big Three Automakers.

The Big 3 are clamoring on the Hill for more government funds from the $700 bailout bill, in addition to the $25 billion loans they just received. The bailout was specifically designed to buy up troubled assets and infuse capital into financial institutions to grease the credit market and get cash flowing. There was no part of the bill designed to assist any other industry or group.
The fact is, the Big 3 are losing money at breakneck pace due to lack of innovation, and lack of ability to control overbloated union benefits. The taxpayers should not support a bailout of an industry which does not learn from its mistakes. This would be tantamount to a handout to unions and inept politicians from Michigan. Indeed, there are upwards of 3 million people associated with the auto business in some way, but if the Big 3 were to fail, either big foreign automakers or other more innovative companies would move in to provide jobs for the unemployed. Nature abhors a vacuum, and this is especially true in a capitalist country. To an entrepreneur, a vacuum is an opportunity.

Tuesday, November 11, 2008

A Tribute to Our Veterans

On this Veteran's Day, 2008, I would like to pay a special tribute to all the men and women who have served our country both here and abroad in the US Armed Forces. They have sacrificed more than the rest of us could ever imagine to protect our life and liberty, and we remain forever grateful to them for that. May God Bless them in this tumultuous time in our history, and May God Bless America.


To honor our Veterans, please click on this rendition of God Bless America by Martina McBride which will be sure to make even the most stoic among you a bit teary-eyed.


http://www.youtube.com/watch?v=vJNqep77vBw

Monday, November 10, 2008

Swansong of the American Entrepreneur

Just a little letter from a guy in Texas...

October 25, 2008

Mr. Obama,

Given the uproar about the simple question asked you by Joe the plumber, and the persecution that has been heaped on him because he dared to question you, I find myself motivated to say a few things to you myself. While Joe aspires to start a business someday, I already have started not one, but 4 businesses. But first, let me introduce myself. You can call me "Cory the well driller". I am a 54 year old high school graduate. I didn't go to college like you, I was too ready to go "conquer the world" when I finished high school. 25 years ago at age 29, I started my own water well drilling business at a time when the economy here in East Texas was in a tailspin from the crash of the early 80's oil boom. I didn't get any help from the government, nor did I look for any. I borrowed what I could from my sister, my uncle, and even the pawn shop and managed to scrape together a homemade drill rig and a few tools to do my first job. My businesses did not start as a result of privilege. They are the result of my personal drive, personal ambition, self discipline, self reliance, and a determination to treat my customers fairly.

From the very start my business provided one other (than myself) East Texan a full time job. I couldn't afford a backhoe the first few years (something every well drilling business had), so I and my helper had to dig the mud pits that are necessary for each and every job with hand shovels. I had to use my 10 year old, 1/2 ton pickup truck for my water tank truck (normally a job for at least a 2 ton truck). A year and a half after I started the business, I scraped together a 20% down payment to get a modest bank loan and bought a (28 year) old, worn out, slightly bigger drilling rig to allow me to drill the deeper water wells in my area. I spent the next few years drilling wells with the rig while simultaneously rebuilding it between jobs. Through these years I never knew from one month to the next if I would have any work or be able to pay the bills. I got behind on my income taxes one year, and spent the next two years paying that back (with penalty and interest) while keeping up with ongoing taxes. I got behind on my water well supply bill 2 different years (way behind the second time... $80,000.00), and spent over a year paying it back (each time) while continuing to pay for ongoing supplies C.O.D..

Of course, the personal stress endured through these experiences and years is hard to measure. I do have a stent in my heart now to memorialize it all. I spent the next 10 years developing the reputation for being the most competent and most honest water well driller in East Texas. 2 years along the way, I hired another full time employee for the drilling business so that we could provide full time water well pump service as well as the well drilling. Also, 3 years along the path, I bought a water well screen service machine from a friend, starting business # 2. 5 years later I made a business loan for $100,000.00 to build a new, higher production, computer controlled screen service machine. I had designed the machine myself, and it didn't work out for 3 years so I had to make the loan payments without the benefit of any added income from the new machine. No government program was there to help me with the payments, or to help me sleep at night as I lay awake wondering how I would solve my machine problems or pay my bills. Finally, after 3 years, I got the screen machine working properly, and that provided another full time job for an East Texan in the screen service business. 2 years after that, I made another business loan, this time for $250,000.00, to buy another used drilling rig and all the support equipment needed to run another, larger, drill rig. This provided another 2 full time jobs for East Texans. Again, I spent a couple of years not knowing if I had made a smart move, or a move that would bankrupt me. For the third time in 13 years, I had placed everything I owned on the line, risking everything, in order to build a business.

A couple of years into this, I came up with a bright idea for a new kind of mud pump, a fundamentally necessary pump used on water well drill rigs. I spent my entire life savings to date (just $30,000.00), building a prototype of the pump and took it to the national water well convention to show it off. Customers immediately started coming out of the woodworks to buy the pumps, but there was a problem. I had depleted my assets making the prototype, and nobody would make me a business loan to start production of the new pumps. With several deposits for pump orders in hand, and nowhere to go, I finally started applying for as many credit card as I could find and took cash withdrawals on these cards to the tune of over $150,000.00 (including modest loans from my dear sister and brother), to get this 3rd business going. Yes, once again, I had everything hanging over the line in an effort to start another business. I had never manufactured anything, and I had to design and bring into production a complex hydraulic machine from an untested prototype to a reliable production model (in six months). How many nights I lay awake wondering if I had just made the paramount mistake of my life I cannot tell you, but there were plenty. I managed to get the pumps into production, which immediately created another 2 full time jobs in East Texas. Some of the models in the first year suffered from quality issues due to the poor workmanship of one of my key suppliers, so I and an employee (another East Texan employed) had to drive across the country to repair customers' pumps, practically from coast to coast. I stood behind the product, and made payments to all the credit cards that had financed me (and my brother and sister). I spent the next 5 years improving and refining the product, building a reputation for the pump and the company, working to get the pump into drill rig manufacturers' product lines, and paying back credit cards. During all this time I continued to manage a growing water well business that was now operating 3 drill rig crews, and 2 well service crews. Also, the screen service business continued to grow. No government programs were there to help me, Mr. Obama, but that's ok, I didn't expect any, nor did I want any. I was too busy fighting to make success happen to sit around waiting for the government to help me. Now, we have been manufacturing the mud pumps for 7 years, my combined businesses employ 32 full time employees, and distribute $5,000,000.00 annually through the local economy. Now, just 4 months ago I borrowed $1,254,000.00, purchasing computer controlled machining equipment to start my 4th business, a production machine shop. The machine shop will serve the mud pump company so that we can better manufacture our pumps that are being shipped worldwide.

Of course, the machine shop will also do work for outside companies as well. This has already produced 2 more full time jobs, and 2 more should develop out of it in the next few months. This should work out, but if it doesn't it will be because you, and the other professional politicians like yourself, will have destroyed our countrys' (and the world) economy with your meddling with mortgage loan programs through your liberal manipulation and intimidation of loaning institutions to make sure that unqualified borrowers could get mortgages. You see, at the very time when I couldn't get a business loan to get my mud pumps into production, you were working with Acorn and the Community Reinvestment Act programs to make sure that unqualified borrowers could buy homes with no down payment, and even no credit or worse yet, bad credit. Even the infamous, liberal, Ninja loans (No Income, No Job or Assets). While these unqualified borrowers were enjoying unrealistically low interest rates, I was paying 22% to 24% interest on the credit cards that I had used to provide me the funds for the mud pump business that has created jobs for more East Texans. It's funny, because after 25 years of turning almost every dime of extra money back into my businesses to grow them, it has been only in the last two years that I have finally made enough money to be able to put a little away for retirement, and now the value of that has dropped 40% because of the policies you and your ilk have perpetrated on our country.

You see, Mr. Obama, I'm the guy you intend to raise taxes on. I'm the guy who has spent 25 years toiling and sweating, fretting and fighting, stressing and risking, to build a business and get ahead. I'm the guy who has been on the very edge of bankruptcy more than a dozen times over the last 25 years, and all the while creating more and more jobs for East Texans who didn't want to take a risk, and would not demand from themselves what I have demanded from myself. I'm the guy you characterize as "the Americans who can afford it the most" that you believe should be taxed more to provide income redistribution "to spread the wealth" to those who have never toiled, sweated, fretted, fought, stressed, or risked anything. You want to characterize me as someone who has enjoyed a life of privilege and who needs to pay a higher percentage of my income than those who have bought into your entitlement culture. I resent you, Mr. Obama, as I resent all who want to use class warfare as a tool to advance their political career. What's worse, each year more Americans buy into your liberal entitlement culture, and turn to the government for their hope of a better life instead of themselves. Liberals are succeeding through more than 40 years of collaborative effort between the predominant liberal media, and liberal indoctrination programs in the public school systems across our land.

What is so terribly sad about this is this? America was made great by people who embraced the one-time American culture of self reliance, self motivation, self determination, self discipline, personal betterment, hard work, risk taking. A culture built around the concept that success was in reach of every able bodied American who would strive for it. Each year that less Americans embrace that culture, we all descend together. We descend down the socialist path that has brought country after country ultimately to bitter and unremarkable states. If you and your liberal comrades in the media and school systems would spend half as much effort cultivating a culture of can-do across America as you do cultivating your entitlement culture, we could see Americans at large embracing the conviction that they can elevate themselves through personal betterment, personal achievement, and self reliance. You see, when people embrace such ideals, they act on them. When people act on such ideals, they succeed. All of America could find herself elevating instead of deteriorating.

But that would eliminate the need for liberal politicians, wouldn't it, Mr. Obama? The country would not need you if the country was convinced that problem solving was best left with individuals instead of the government. You and all your liberal comrades have got a vested interested in creating a dependent class in our country. It is the very business of liberals to create an ever expanding dependence on government. What's remarkable is that you, who have never produced a job in your life, are going to tax me to take more of my money and give it to people who wouldn't need my money if they would get off their entitlement mentality asses and apply themselves at work, demand more from themselves, and quit looking to liberal politicians to raise their station in life.

You see, I know because I've had them work for me before. Hundreds of them over these 25 years. People who simply will not show up to work on time. People who just will not work 5 days in a week, much less, 6 days. People always looking for a way to put less effort out. People who actually tell me that they would do more if I just would first pay them more. People who take off work to sit in government offices to apply to get free government handouts (gee, I wonder how things would have turned out for them if they had spent that time earning money and pleasing their employer?). You see, all of this comes from your entitlement mentality culture.

Oh, I know you will say I am uncompassionate. Sorry, Mr. Obama, wrong again. You see, I've seen what the average percentage of your income has been given to charities over the years of 2000 to 2004 (ignoring the years you started running for office - can you pronounce "politically motivated"), you averaged less than 1% annually. And your running mate, Joe Biden, averaged less than ð% of his annual income in charitable contributions over the last 10 years. Like so many liberals, the two of you want to give to the needy, just as long as it is someone else's money you are giving to them. I won't say what I have given to charities over the last 25 years, but the percentage is several times more than you and Joe Biden. combined (don't you just hate google?). Tell me again how you feel my pain.In short, Mr. Obama, your political philosophies represent everything that is wrong with our country. You represent the culture of government dependence instead of self reliance; Entitlement mentality instead of personal achievement; Penalization of the successful to reward the unmotivated; Political correctness instead of open mindedness and open debate. If you are successful, you may preside over the final transformation of America from being the greatest and most self-reliant culture on earth, to just another country of whiners and wimps, who sit around looking to the government to solve their problems. Like all of western Europe. All countries on the decline. All countries that, because of liberal socialistic mentalities, have a little less to offer mankind every year.

God help us...

Cory Miller
just an ordinary, extraordinary American, the way a lot of Americans used to be.

P.S. Yes, Mr. Obama, I am a real American... http://www.cmillerdrilling.com/