This story from theChicago Tribune details The very profitable 14 month stint of President Obama's chief of staff at Freddie Mac. (He netted over $320,000 in 14 months.)
http://www.chicagotribune.com/news/politics/obama/chi-rahm-emanuel-profit-26-mar26,0,5682373.story?page=1
While other directors had responsibilities on board committees, Mr. Emanuel did not. They met no more than six times per year. During his "service" on the board, the board was made aware of accounting tricks used to push income out to future years (misleading shareholders, and making the company seem profitable for years to come ... while ensuring the large bonuses for management.) They also were presented a "political risk assessment" that outlined a plan to mute calls for increased governmental oversight. Emanuel also received financial support (often from legally prohibited company campaign activities) after leaving the board.
In Congress, Emanuel served on the Financial Services Committee, and sat on a sub-committee that directly oversaw Freddie Mac. At least that failed organization can claim that in this instance, they got what they paid for!
The Obama administration (which promised us transparency and openness) rejected a freedom of information act request for board minutes and e-mails (a lawyer for the Federal Housing Finance Agency ruled they amounted to "commercial information" exempt from disclosure.
The Obama administration is living up to their commitment to set a new standard for ethics ... a new low. Tax cheats, political insiders, and lobbyists have all been welcomed with open arms.
We were promised better than this. We deserve better than this. We can hold these "public servants" accountable for their votes, misdeeds, and broken commitments. Vote for REAL change!
Thursday, March 26, 2009
Wednesday, March 25, 2009
Not-so-creeping Socialism
The administration is pushing Congress to enable an overarching regulatory authority (such as the Federal Reserve) to take over non-bank financial companies whose failure could topple the entire financial system.
That is nationalization of our financial system.
The real issue here is that the process would be politicized. Whether or not the company was in danger of imminent failure, and whether or not the failure of that company would jeopardize the economy would be come decision made by administration appointees. Once the government controls the financial system of the country, they have control of everything.
Look at the TARP mess. That started as an injection of capital to stabilize the banks. (Some were forced to take the funds, whether or not they wanted them.) That was followed by increased regulation of executive compensation, additional oversight, and more restrictions on those companies. Several of them have notified Treasury they want to pay back the TARP loans, and have not been permitted to do so.
All this, and Obama thought a reporter was joking when he was asked if he's trying to move us toward socialism?
It's real, and it's not a joke!
That is nationalization of our financial system.
The real issue here is that the process would be politicized. Whether or not the company was in danger of imminent failure, and whether or not the failure of that company would jeopardize the economy would be come decision made by administration appointees. Once the government controls the financial system of the country, they have control of everything.
Look at the TARP mess. That started as an injection of capital to stabilize the banks. (Some were forced to take the funds, whether or not they wanted them.) That was followed by increased regulation of executive compensation, additional oversight, and more restrictions on those companies. Several of them have notified Treasury they want to pay back the TARP loans, and have not been permitted to do so.
All this, and Obama thought a reporter was joking when he was asked if he's trying to move us toward socialism?
It's real, and it's not a joke!
Reconciliation process
President Obama is trying to slip his proposed cap-and-trade policy into the reconciliation process.
The reconciliation process is designed to permit quick action on financial measures, in the vote on the compromise (or reconciliation) of the House and Senate versions of a bill. There are some rules ... it's supposed to only be used in cases where the economic impact to the U.S. is positive (reduction in spending, or increase in revenue.) However, debate is limited, and no filibuster is permitted. That makes items submitted through the reconciliation process difficult to stop.
This was the path used by President Bush to push his tax cuts through Congress.
The use of this procedural device to avoid fully vetting and debating something of this magnitude is underhanded and wrong. This is not the bi-partisan, transparent government the voters thought they were getting!
The reconciliation process is designed to permit quick action on financial measures, in the vote on the compromise (or reconciliation) of the House and Senate versions of a bill. There are some rules ... it's supposed to only be used in cases where the economic impact to the U.S. is positive (reduction in spending, or increase in revenue.) However, debate is limited, and no filibuster is permitted. That makes items submitted through the reconciliation process difficult to stop.
This was the path used by President Bush to push his tax cuts through Congress.
The use of this procedural device to avoid fully vetting and debating something of this magnitude is underhanded and wrong. This is not the bi-partisan, transparent government the voters thought they were getting!
Hold Onto Your Wallets!
President Obama's budget is facing serious opposition, even in the Democratically-controlled Congress. (It seems there may be some remnants of sanity still present in that body after all!)
First, Obama went on a "sales trip" to try to garner public support for his budget (an extension of his "perpetual campaign.") That included his website pledge project, attempting to mobilize his supporters to promote his budget to friends and contacts, and appearances on TV entertainment and infotainment programs. It didn't work. (Seems the electorate is less enthusiastic about his specific programs than they were about his nebulous "Hope! Change! Improve! Invest!" rhetoric.)
Now that it's become evident to him that spending at these levels, generating deficits at these levels, has no potential for passage, he's focused on increasing the government's revenue. Today, they announced they will attempt to close the "revenue gap" (the difference between taxes owed, and taxes collected.) He also has appointed a commission to overhaul the tax code. This group has been given broad latitude ... claiming "the only constraint" is that taxes should not be increased in 2009 or 2010, and that taxes should not be increased on families making less than $250,000.
Watch out!
During the campaign, Obama defended his plan to deliver "tax relief" to 95% of the public, even though a substantial portion of the public pays no income tax. He claimed payroll taxes (including Social Security and Medicare, as well as other direct and indirect taxes) counted toward who received "relief."
Now, that position seems to be shifting ... only income taxes count when "no increase" is the standard.
The cap and trade proposal (which will almost certainly NOT be passed) is nothing more than a tax on carbon. That means everyone who consumes energy (gasoline, natural gas, electricity) will pay higher prices to offset the new 'tax' levied on the energy companies. (Personally, I would rather have them keep their $13 per week in "tax relief" than see gasoline, and all other forms of energy increased in price!)
The higher taxes (either through rates, reduction in deductions and "loopholes", etc.) that businesses will pay will be passed on to consumers (including those who previously qualified for "relief.") Corporations do not pay taxes; their owners and/or their customers do. Shareholders will demand a certain rate of return, and sell the stock to invest elsewhere if they don't get it. Companies don't want to see their stock price (and market capitalization) reduced, so the higher cost from the higher taxes is passed on to consumers.
We will ALL be paying higher taxes, whether we pay them directly to the government, or indirectly in higher prices so that companies can pay the government.
With respect to those making more than $250,000, the plan to return those rates to "the same ones paid during the Clinton administration" is no longer the complete story. Additionally, families in that bracket will see reduced (or eliminated) deductions for mortgage interest and charitable deductions. The effective tax rate they pay will be far greater than under Clinton.
These moves are, according to our President, "the right thing to do." However, little sense can be made from eliminating the mortgage interest deduction on those most able to buy new homes (especially when the housing market is in serious trouble in much of the nation.) Reducing the incentive for the wealthy to contribute to charity is also counter-productive. Charitable organizations provide a wealth of services to their communities (more efficiently and less expensively than government.)
In an attempt to play the populist, and appear to not favor businesses or the wealthy, President Obama is:
Punishing corporate trips and retreats (especially for "bail-out" recipients) - which had the unintended consequence of punishing resorts, conference centers, and the travel industry.
Reducing mortgage deduction- suppressing home sales and new (performing!) mortgages.
Reducing charitable deductions - inhibiting community services by non-governmental entities.
Raising business costs - increasing prices and suppressing employment.
We simply can't afford President Obama's budget, and we'll all pay more under his policies. It's becoming evident that the "change" we need refers not to his reform plans, but to the small portion of our income we'll be able to spend on what we want!
First, Obama went on a "sales trip" to try to garner public support for his budget (an extension of his "perpetual campaign.") That included his website pledge project, attempting to mobilize his supporters to promote his budget to friends and contacts, and appearances on TV entertainment and infotainment programs. It didn't work. (Seems the electorate is less enthusiastic about his specific programs than they were about his nebulous "Hope! Change! Improve! Invest!" rhetoric.)
Now that it's become evident to him that spending at these levels, generating deficits at these levels, has no potential for passage, he's focused on increasing the government's revenue. Today, they announced they will attempt to close the "revenue gap" (the difference between taxes owed, and taxes collected.) He also has appointed a commission to overhaul the tax code. This group has been given broad latitude ... claiming "the only constraint" is that taxes should not be increased in 2009 or 2010, and that taxes should not be increased on families making less than $250,000.
Watch out!
During the campaign, Obama defended his plan to deliver "tax relief" to 95% of the public, even though a substantial portion of the public pays no income tax. He claimed payroll taxes (including Social Security and Medicare, as well as other direct and indirect taxes) counted toward who received "relief."
Now, that position seems to be shifting ... only income taxes count when "no increase" is the standard.
The cap and trade proposal (which will almost certainly NOT be passed) is nothing more than a tax on carbon. That means everyone who consumes energy (gasoline, natural gas, electricity) will pay higher prices to offset the new 'tax' levied on the energy companies. (Personally, I would rather have them keep their $13 per week in "tax relief" than see gasoline, and all other forms of energy increased in price!)
The higher taxes (either through rates, reduction in deductions and "loopholes", etc.) that businesses will pay will be passed on to consumers (including those who previously qualified for "relief.") Corporations do not pay taxes; their owners and/or their customers do. Shareholders will demand a certain rate of return, and sell the stock to invest elsewhere if they don't get it. Companies don't want to see their stock price (and market capitalization) reduced, so the higher cost from the higher taxes is passed on to consumers.
We will ALL be paying higher taxes, whether we pay them directly to the government, or indirectly in higher prices so that companies can pay the government.
With respect to those making more than $250,000, the plan to return those rates to "the same ones paid during the Clinton administration" is no longer the complete story. Additionally, families in that bracket will see reduced (or eliminated) deductions for mortgage interest and charitable deductions. The effective tax rate they pay will be far greater than under Clinton.
These moves are, according to our President, "the right thing to do." However, little sense can be made from eliminating the mortgage interest deduction on those most able to buy new homes (especially when the housing market is in serious trouble in much of the nation.) Reducing the incentive for the wealthy to contribute to charity is also counter-productive. Charitable organizations provide a wealth of services to their communities (more efficiently and less expensively than government.)
In an attempt to play the populist, and appear to not favor businesses or the wealthy, President Obama is:
Punishing corporate trips and retreats (especially for "bail-out" recipients) - which had the unintended consequence of punishing resorts, conference centers, and the travel industry.
Reducing mortgage deduction- suppressing home sales and new (performing!) mortgages.
Reducing charitable deductions - inhibiting community services by non-governmental entities.
Raising business costs - increasing prices and suppressing employment.
We simply can't afford President Obama's budget, and we'll all pay more under his policies. It's becoming evident that the "change" we need refers not to his reform plans, but to the small portion of our income we'll be able to spend on what we want!
Monday, March 23, 2009
Cult of Personality Continues
President Obama doesn't seem to realize he's no longer campaigning. He continues to make the news circuits, hold events, and otherwise attempt to dominate the 24-hour news cycle ... exactly the behavior one would expect in a campaign.
His campaign website is still up and running strong, too. In fact, he's trying to use his incredible campaign machine to drum up support for his "plan." (Put in quotes because it is more a hope than a plan ... certainly far less than a strategy.)
On his site, he outlines the "plan" as follows:
"President Obama's plan will rebuild and renew America by creating jobs and investing in the three areas most critical to our future:
Energy — Transforming America's economy to run on clean and renewable energy in order to create new American jobs and industries
Health care — Comprehensively reforming health care so that families, businesses, and government are relieved from the crushing costs that impede economic growth and prosperity
Education — Reforming and investing in America's education system so that citizens are prepared to compete in a global economy."
To the right of that, there is a sign-up block that invites users to pledge their support:
"I support President Obama's bold approach for renewing America's economy
I will ask friends, family, and neighbors to pledge their support for this plan
First name: *
Last name: *
Email: *
Zip: * "
I cannot recall any President asking citizens to "pledge their support" to the president's broad goals (isn't that what elections are for?) This sounds more like the adoration required of the populace of Hitler's Germany, North Korea, or some South American dictatorships than anything seen in the U.S.A.
Enough of the "transforming" and "reforming" broad strokes, Mr. President! If you're going to ask Americans to support your plans, at least be honest enough to tell us what they really are. That "transforming America's economy to run on clean renewable energy" really means that gas, oil, and coal will be taxed into unaffordability. That "comprehensively reforming health care" means the end of private health insurance (perhaps not immediately, but that will be the outcome.) That "investing in education" means building new schools in cities where they're already closing existing schools due to declining enrollment.
There is a ray of hope in all this: even the Democratic Senators who are questioning Obama's budget say they haven't felt any pressure from his "army" of supporters.
Perhaps our fellow citizens are starting to wake up to the reality that we made a poor choice.
His campaign website is still up and running strong, too. In fact, he's trying to use his incredible campaign machine to drum up support for his "plan." (Put in quotes because it is more a hope than a plan ... certainly far less than a strategy.)
On his site, he outlines the "plan" as follows:
"President Obama's plan will rebuild and renew America by creating jobs and investing in the three areas most critical to our future:
Energy — Transforming America's economy to run on clean and renewable energy in order to create new American jobs and industries
Health care — Comprehensively reforming health care so that families, businesses, and government are relieved from the crushing costs that impede economic growth and prosperity
Education — Reforming and investing in America's education system so that citizens are prepared to compete in a global economy."
To the right of that, there is a sign-up block that invites users to pledge their support:
"I support President Obama's bold approach for renewing America's economy
I will ask friends, family, and neighbors to pledge their support for this plan
First name: *
Last name: *
Email: *
Zip: * "
I cannot recall any President asking citizens to "pledge their support" to the president's broad goals (isn't that what elections are for?) This sounds more like the adoration required of the populace of Hitler's Germany, North Korea, or some South American dictatorships than anything seen in the U.S.A.
Enough of the "transforming" and "reforming" broad strokes, Mr. President! If you're going to ask Americans to support your plans, at least be honest enough to tell us what they really are. That "transforming America's economy to run on clean renewable energy" really means that gas, oil, and coal will be taxed into unaffordability. That "comprehensively reforming health care" means the end of private health insurance (perhaps not immediately, but that will be the outcome.) That "investing in education" means building new schools in cities where they're already closing existing schools due to declining enrollment.
There is a ray of hope in all this: even the Democratic Senators who are questioning Obama's budget say they haven't felt any pressure from his "army" of supporters.
Perhaps our fellow citizens are starting to wake up to the reality that we made a poor choice.
Friday, March 20, 2009
Deficit promises ... not the "change we need!"
During the campaign, Barak Obama vowed to cut the deficit in half by the end of his first term. The budget he presented to Congress purported to do that, based on the administrations economic projections.
Today, the non-partisan (whatever) Congressional Budget Office released their analysis. Here's the quote from the Breitbart article:
______________
WASHINGTON (AP) - President Barack Obama's budget would generate deficits averaging almost $1 trillion a year over the next decade, according to the latest congressional estimates, significantly worse than predicted by the White House just last month.
The Congressional Budget Office figures, obtained by The Associated Press Friday, predict Obama's budget will produce $9.3 trillion worth of red ink over 2010-2019. That's $2.3 trillion worse than the White House predicted in its budget.
Worst of all, CBO says the deficit under Obama's policies would never go below 4 percent of the size of the economy, figures that economists agree are unsustainable. By the end of the decade, the deficit would exceed 5 percent of gross domestic product, a dangerously high level.
______________
Please let your non-representative representatives know that we don't want the runaway inflation, spiraling interest rates, declining dollar, and crushing taxes the proposed budget will bring. Regardless of your stand on the "goodies" in the President's plans, we simply cannot afford them.
Today, the non-partisan (whatever) Congressional Budget Office released their analysis. Here's the quote from the Breitbart article:
______________
WASHINGTON (AP) - President Barack Obama's budget would generate deficits averaging almost $1 trillion a year over the next decade, according to the latest congressional estimates, significantly worse than predicted by the White House just last month.
The Congressional Budget Office figures, obtained by The Associated Press Friday, predict Obama's budget will produce $9.3 trillion worth of red ink over 2010-2019. That's $2.3 trillion worse than the White House predicted in its budget.
Worst of all, CBO says the deficit under Obama's policies would never go below 4 percent of the size of the economy, figures that economists agree are unsustainable. By the end of the decade, the deficit would exceed 5 percent of gross domestic product, a dangerously high level.
______________
Please let your non-representative representatives know that we don't want the runaway inflation, spiraling interest rates, declining dollar, and crushing taxes the proposed budget will bring. Regardless of your stand on the "goodies" in the President's plans, we simply cannot afford them.
Thursday, March 19, 2009
Another TRILLION dollars created yesterday
While we were all following the story of the A.I.G. $165 million bonuses, yesterday the FED "created" another $1 TRILLION ... which they will spend to buy long-term treasury securities (a first for them ... always bought the short-term ones to control the money supply) and buy mortgage securities.
This is uncharted territory ... no one has tried anything like this before (such a massive government money creation at this point in a recession.) Many have tried it later, and to date NONE of them have succeeded. We all need to pray this works, or the future of our children will be changed forever. (The markets are not confident ... the dollar is dropping in value, and gold increased $75 in 18 hours.)
How much is a trillion? It's so huge it's a really difficult concept to grasp. Let's look at something we do understand ... a one pound box of salt.
A trillion boxes of salt would be 500,000,000 (yes, 500 million) TONS of salt.
A trillion boxes of salt would take 25,000,000 trucks to haul (if each truck carried 40,000 pounds of salt.)
A trillion boxes of salt laid end-to-end would stretch over 94,000,000 miles. (For comparison, the sun is 93,000,000 miles from the Earth.)
And our elected representatives spend that like it's nothing!
And that's not the end of it. The supposedly non-partisan Congressional Budget Office released a report today that the budget submitted by President Obama will result in $1 trillion more deficit than the administration projected.
We simply can't afford all the debt our government is piling up! Write your Senators and Representatives, and let them know they've already gone too far ... the insane cycle of spending and bail-outs need to stop, now. If it does not, the 10%+ unemployment, 10%+ inflation, and 17% mortgage rates during the Carter years may look like the "good old days!"
This is uncharted territory ... no one has tried anything like this before (such a massive government money creation at this point in a recession.) Many have tried it later, and to date NONE of them have succeeded. We all need to pray this works, or the future of our children will be changed forever. (The markets are not confident ... the dollar is dropping in value, and gold increased $75 in 18 hours.)
How much is a trillion? It's so huge it's a really difficult concept to grasp. Let's look at something we do understand ... a one pound box of salt.
A trillion boxes of salt would be 500,000,000 (yes, 500 million) TONS of salt.
A trillion boxes of salt would take 25,000,000 trucks to haul (if each truck carried 40,000 pounds of salt.)
A trillion boxes of salt laid end-to-end would stretch over 94,000,000 miles. (For comparison, the sun is 93,000,000 miles from the Earth.)
And our elected representatives spend that like it's nothing!
And that's not the end of it. The supposedly non-partisan Congressional Budget Office released a report today that the budget submitted by President Obama will result in $1 trillion more deficit than the administration projected.
We simply can't afford all the debt our government is piling up! Write your Senators and Representatives, and let them know they've already gone too far ... the insane cycle of spending and bail-outs need to stop, now. If it does not, the 10%+ unemployment, 10%+ inflation, and 17% mortgage rates during the Carter years may look like the "good old days!"
Protect and Defend, or Ignore and Abuse?
Today, our House of Representatives passed (in record time) a bill to tax at 90% any bonus paid in excess of $250K for any employees of companies receiving at least $5 billion in bail-out funds.
Every House member takes this oath prior to being seated:
"I, (name of Member), do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign or domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter. So help me God."
The Constitution of the United States, Article 1, Section 9 reads, in part:
No Bill of Attainder or ex post facto Law shall be passed.
No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.
The representatives who supported this bill, that clearly violates at least two of the Constitutional provisions, either haven't read the document, don't understand what it says, or simply don't care. In any case, they have violated their oath, and should be sent home.
Every House member takes this oath prior to being seated:
"I, (name of Member), do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign or domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter. So help me God."
The Constitution of the United States, Article 1, Section 9 reads, in part:
No Bill of Attainder or ex post facto Law shall be passed.
No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.
The representatives who supported this bill, that clearly violates at least two of the Constitutional provisions, either haven't read the document, don't understand what it says, or simply don't care. In any case, they have violated their oath, and should be sent home.
Wednesday, March 18, 2009
What really caused the financial market crisis?
Two acts by our government caused the massive disruption we see in the capital market. They are the Sarbanes-Oxley Act, and the “mark to market” regulations.
Sarbanes-Oxley was passed in 2002, in response to the irresponsible accounting procedures of Enron, Tyco, and others. It places significant additional cost on publicly traded companies and accounting firms, along with another government bureaucracy to oversee compliance. While this was seen as “reforming” the rogue accounting used by some corporations, it also adds huge compliance costs to U.S. companies.
Mark-to-market is the requirement that assets be carried on company books at their market value. On the face if it, that seems reasonable. In “normal” times, that may even be true. When the times aren’t anywhere close to “normal”, this rule needlessly destroys equity.
Consider a loan agreement you might have with someone you know. The payments have always been made, and there is collateral. If the loan has outstanding principal of $10K, naturally you would carry this loan on your balance sheet as a $10K asset. (That’s what a reasonable buyer would pay for it, and the interest earned would represent their profit on the purchase.)
However, now consider that same loan in today’s economy. The payments are still being paid, but now your borrower’s future isn’t at all secure. They could lose their job, and the collateral is no longer worth enough to cover the balance if he defaults. (To make it worse, there is no ready market for the collateral in this economy, so understanding the amount of principal that could be recovered in a worst-case situation is unknown.) If the best offer you could get for that loan is now $4K, then your $10K asset just suffered a $6K write-down on your balance sheet. None of this means you’re not going to get paid on time in the future. However, the “market” for the loan is now much weaker.
That’s what happened to our financial institutions. Mark-to-market caused $600 billion to be written off their balance sheets. Most of these loans are still being paid (yes, delinquencies are up, but not to critical levels.) However, the market for both the loans, and the commercial and residential real estate that collateralize them has dropped … so the financial institutions “lost” that equity from their balance sheets. (Part of the “troubled loans” that are causing us all trouble are the loans to lower-income borrowers banks were forced to make to satisfy their government-imposed Community Reinvestment Act responsibilities.)
On top of that, banks have to maintain reserves against possible loan losses (which have increased as delinquencies increased). That means they need more cash in the vault than before … at the same time their equity has vanished. Banks, then, have no choice but to avoid making loans (to preserve the cash they have, and avoid having to add more cash to their reserves for new loans.)
Rather than admit that “mark-to-market” is not reasonable in a struggling economy, our government has tried to find a way to “take the ‘toxic assets’ off the banks’ books.” That sounds nice, but even the government can’t put a valuation on those mortgage-based securities. (Those are typically $100 million worth of mortgages all wrapped up together … which have been sold and re-sold … and about which no one knows what percentage of the loans are performing, troubled, or in default.) Instead, we’re making no-interest loans to banks (or buying their stock) to provide cash. To date, we’ve pumped in $300 billion to offset the $600 billion write-downs … and can’t understand why credit isn’t flowing as it did in the past.
I believe it would be smarter (and far less expensive!) for the government to:
- Suspend Sarbanes-Oxley – which would dramatically reduce accounting expense for U.S. companies (and make them more competitive, globally)
- Suspend mark-to-market – which would restore billions in equity to U.S. financial institutions
- Eliminate the cap on FDIC insurance for all deposits – which would eliminate risk of capital loss for large depositors (and keep them from finding “safer” places for their money) – further capitalizing the banks
- Guarantee some of the loans that are troubled – protecting the banks that continue to try to collect on their loans from risk of failure if they prove to be uncollectable.
These relatively simple steps would restore the credit markets quickly (which would go far toward restoring the overall economy.) They would also cost far less than the hundreds of billions of dollars we’re spending, today. Over time, and after the current crisis is over, reasonable restrictions on “Enron-style” asset valuation could be restored. However, this hasn’t happened because no one in government has the backbone to call for eliminating or suspending these restrictions.
The result is that we all get to pay: higher taxes to pay for the government spending; higher inflation that always follows such wild spending; less access to credit for people who are credit-worthy; and prolonged recession because businesses can’t get operating capital.
Finally, this housing / credit crisis was not caused by a lack of regulation, irresponsible corporate behavior, and greed. It was caused by government interference in the mortgage market, and knee-jerk accounting rules that were imposed on businesses. The market works, when government gets out of the way and LETS it work.
How big were those A.I.G. bonuses?
Congress and the President are in complete agreement, and urging all of us to be outraged by the huge $165,000,000 in bonuses paid out by A.I.G.
Remember, this is the same Congress and the same President who told us the earmarks (which totalled a whopping $8,000,000,000 ... 50+ times the A.I.G. bonuses!) were insignificant ... nothing to worry about.
It's a sad state of affairs when the voters are told what to be outraged about, and what to ignore ... and comply without a whimper.
I will vote against any Congressman or Senator who voted for T.A.R.P., regardless of party. Too long we've been told "we had no choice; we didn't like having to do that, but the alternative would have been worse; and besides, look how bad the other guy is!" ... and believed it!
We need to hold these people accountable for their votes that are in opposition to our wishes; stop forgetting their wrongs because they're the "right" party; and send a clear message:
Represent the values and positions of the people who sent you there, or go home!
Remember, this is the same Congress and the same President who told us the earmarks (which totalled a whopping $8,000,000,000 ... 50+ times the A.I.G. bonuses!) were insignificant ... nothing to worry about.
It's a sad state of affairs when the voters are told what to be outraged about, and what to ignore ... and comply without a whimper.
I will vote against any Congressman or Senator who voted for T.A.R.P., regardless of party. Too long we've been told "we had no choice; we didn't like having to do that, but the alternative would have been worse; and besides, look how bad the other guy is!" ... and believed it!
We need to hold these people accountable for their votes that are in opposition to our wishes; stop forgetting their wrongs because they're the "right" party; and send a clear message:
Represent the values and positions of the people who sent you there, or go home!
How "progressive" are you?
OK, this quiz is from the Center for American Progress, an admittedly left-of-center group. However, it's interesting: it rates how "progressive" or "conservative" you are, based on your answers to 40 questions. You don't have to provide any personal information, so taking the quiz won't get you on any distribution lists.
To take the quiz click here.
I have to admit, I scored a 54 ... "extremely conservative" according to their ratings. (To make sure that wasn't an error, I re-took the quiz a couple days later ... and actually scored slightly lower.)
After you take the quiz, be sure to look at the results they offer. It shows the mean score for various demographic groups. Interestingly, "conservative Republicans" scored an average of 161, and "liberal Democrats" scored an average of 247.
To take the quiz click here.
I have to admit, I scored a 54 ... "extremely conservative" according to their ratings. (To make sure that wasn't an error, I re-took the quiz a couple days later ... and actually scored slightly lower.)
After you take the quiz, be sure to look at the results they offer. It shows the mean score for various demographic groups. Interestingly, "conservative Republicans" scored an average of 161, and "liberal Democrats" scored an average of 247.
Congressional and Administration Priorities
Fox News has been on in the background all day. In the midst of what the party in power deems to be the "worst economic crisis since the Great Depression", our Congress and the Obama Administration have spent the day trying to figure out how to take back $165 million in (contractually obligated) bonuses from A.I.G. employees.
One would think they could find one or two things more important right now ... like shoring up the economy! They could tackle border security, what to do about increasing employment, stopping some of their own wasteful spending, doing something about Social Security, or any number of important issues. Instead, they spent their day grousing about bonuses that they would have known about, had they read the bill they enacted and signed in the first place.
The former CEO of Allstate came out of retirement 6 months ago to run A.I.G. as it unwinds these incredibly complex deals. He works for $1 per year. Congress grilled him mercilessly over these bonuses, although a few of them did offer a passing 'thank you' to him for his selfless service in this workout.
If we continue to elect people whose priorities are that messed up, we will have the government we deserve!
One would think they could find one or two things more important right now ... like shoring up the economy! They could tackle border security, what to do about increasing employment, stopping some of their own wasteful spending, doing something about Social Security, or any number of important issues. Instead, they spent their day grousing about bonuses that they would have known about, had they read the bill they enacted and signed in the first place.
The former CEO of Allstate came out of retirement 6 months ago to run A.I.G. as it unwinds these incredibly complex deals. He works for $1 per year. Congress grilled him mercilessly over these bonuses, although a few of them did offer a passing 'thank you' to him for his selfless service in this workout.
If we continue to elect people whose priorities are that messed up, we will have the government we deserve!
Those who live by the teleprompter ...
President Obama is known for his brilliant oration, but also for his reliance on teleprompters. That doesn't work so well when the operator messes up his side of things.
On saint Patrick's Day, the teleprompter operator forgot to switch from Obama's remarks to those of the Irish Prime Minister (who quickly realized the error, turned to Obama, and said "I think this is your speech.") When Obama re-took the podium (and the operator had made the change), Obama began reading the Prime Minister's speech. He ended up thanking himself for inviting everyone.
Check the story at Sky News http://news.sky.com/skynews/Home/World-News/Barack-Obama-Thanks-Himself-In-Teleprompt-Blunder-During-Address-With-Irish-PM-On-St-Patricks-Day/Article/200903315243932?lpos=World_News_First_World_News_Article_Teaser_Region_1&lid=ARTICLE_15243932_Barack_Obama_Thanks_Himself_In_Teleprompt_Blunder_During_Address_With_Irish_PM_On_St_Patricks_Day.
Yet another example of our crack media in the U.S., and their biased coverage. Remember how they could never tire of pictures and video of President Bush making a mistake? It seems they've decided mistakes made by President Obama aren't important enough for the American public to see.
More important, though, is President Obama's constant need for the teleprompter. While all recent presidents have used them for major addresses, few had to rely on them for tasks as mundane as providing a press briefing, or welcoming invited guests to the White House.
On saint Patrick's Day, the teleprompter operator forgot to switch from Obama's remarks to those of the Irish Prime Minister (who quickly realized the error, turned to Obama, and said "I think this is your speech.") When Obama re-took the podium (and the operator had made the change), Obama began reading the Prime Minister's speech. He ended up thanking himself for inviting everyone.
Check the story at Sky News http://news.sky.com/skynews/Home/World-News/Barack-Obama-Thanks-Himself-In-Teleprompt-Blunder-During-Address-With-Irish-PM-On-St-Patricks-Day/Article/200903315243932?lpos=World_News_First_World_News_Article_Teaser_Region_1&lid=ARTICLE_15243932_Barack_Obama_Thanks_Himself_In_Teleprompt_Blunder_During_Address_With_Irish_PM_On_St_Patricks_Day.
Yet another example of our crack media in the U.S., and their biased coverage. Remember how they could never tire of pictures and video of President Bush making a mistake? It seems they've decided mistakes made by President Obama aren't important enough for the American public to see.
More important, though, is President Obama's constant need for the teleprompter. While all recent presidents have used them for major addresses, few had to rely on them for tasks as mundane as providing a press briefing, or welcoming invited guests to the White House.
Tuesday, March 17, 2009
The Obama Budget
Well, we've seen the "change" that Obama has in store for us. Early in the budget document, there is a chart that shows the share of wealth held by the top 1% of the population. Check out the story on opinionjournal.com (http://online.wsj.com/article/SB123681860305802821.html) about the chart, it's origin, and meaning.
Basically, the Democrats believe the wealth distribution should be more level. They don't seem to grasp the concept that equal opportunity does not mean equal outcome. (Races are fair when all the runners start at the same place and time, not when they all finish at the same time!)
We're already hearing about no tax increase on 95% of the population, and all the wonders we'll see from alternative fuels, "green" jobs, guaranteed health coverage, and all the other "goodies" in the budget. What they don't tell us is how much additional debt will result from this massive spending. (John McCain has at least that much right ... he calls it "generational theft!")
Obama's deficit projections are predicated on a 4% growth rate, beginning in 2010. Even the Congressional Budget Office believes that to be wildly optimistic. (And, of course, if the growth is lower than anticipated, the deficits will be greater than advertised.)
Second, the "cap and trade" plan to cut carbon emissions is nothing more than a tax on everyone who consumes energy. The price for carbon credits will force some older plants to make massive investment in modernizing, or go out of business. ALL these costs will be passed along to consumers. (Shareholders will not lower their return expectations because the government decides we need to be "green." If their returns slip, they'll move their investments to more attractive companies, industries, and countries. Companies will pass those costs along to preserve their shareholders' value ... as they should.) The result is, we'll all end up paying more for gasoline and diesel fuel, electricity, natural gas, etc. That's the direct cost. Indirectly, the higher energy costs will raise the price of goods and services ... everything else will go up, too. Mr. Obama, that is a "tax" ... a taking of citizens' money to fund government operations (even if there are one or more "companies" helping collect those funds in the form of higher prices.)
We can't spend our way out of trouble. We can't "tax the rich" enough to pay for all the "goodies" for those who expect them for free.
The problem with taxing the rich is that it doesn't help the economy (or, in the longer term, help the government.) Taxes are the "price" of economic activity. The higher the price, the less we'll get of it. If taxes become too high in the U.S., the wealthy will stop investing in companies and creating jobs ... they'll move their wealth to tax-sheltered investments, or move them to a country where capital receives better treatment. (That's why Kennedy, Reagan, and Bush saw that tax cuts led to increased tax revenues. Counterintuitive, yes, but proven three times in our not-so-distant past.)
In short, this budget will spend like mad (leading to inflation), and slow down the economic recovery. Some of this can be undone, with a change in the make-up of Congress. However, some of it will become new "entitlement" programs that are next to impossible to get rid of.
That's not the "change we need!"
Basically, the Democrats believe the wealth distribution should be more level. They don't seem to grasp the concept that equal opportunity does not mean equal outcome. (Races are fair when all the runners start at the same place and time, not when they all finish at the same time!)
We're already hearing about no tax increase on 95% of the population, and all the wonders we'll see from alternative fuels, "green" jobs, guaranteed health coverage, and all the other "goodies" in the budget. What they don't tell us is how much additional debt will result from this massive spending. (John McCain has at least that much right ... he calls it "generational theft!")
Obama's deficit projections are predicated on a 4% growth rate, beginning in 2010. Even the Congressional Budget Office believes that to be wildly optimistic. (And, of course, if the growth is lower than anticipated, the deficits will be greater than advertised.)
Second, the "cap and trade" plan to cut carbon emissions is nothing more than a tax on everyone who consumes energy. The price for carbon credits will force some older plants to make massive investment in modernizing, or go out of business. ALL these costs will be passed along to consumers. (Shareholders will not lower their return expectations because the government decides we need to be "green." If their returns slip, they'll move their investments to more attractive companies, industries, and countries. Companies will pass those costs along to preserve their shareholders' value ... as they should.) The result is, we'll all end up paying more for gasoline and diesel fuel, electricity, natural gas, etc. That's the direct cost. Indirectly, the higher energy costs will raise the price of goods and services ... everything else will go up, too. Mr. Obama, that is a "tax" ... a taking of citizens' money to fund government operations (even if there are one or more "companies" helping collect those funds in the form of higher prices.)
We can't spend our way out of trouble. We can't "tax the rich" enough to pay for all the "goodies" for those who expect them for free.
The problem with taxing the rich is that it doesn't help the economy (or, in the longer term, help the government.) Taxes are the "price" of economic activity. The higher the price, the less we'll get of it. If taxes become too high in the U.S., the wealthy will stop investing in companies and creating jobs ... they'll move their wealth to tax-sheltered investments, or move them to a country where capital receives better treatment. (That's why Kennedy, Reagan, and Bush saw that tax cuts led to increased tax revenues. Counterintuitive, yes, but proven three times in our not-so-distant past.)
In short, this budget will spend like mad (leading to inflation), and slow down the economic recovery. Some of this can be undone, with a change in the make-up of Congress. However, some of it will become new "entitlement" programs that are next to impossible to get rid of.
That's not the "change we need!"
The A.I.G. Bailout
Much has been in the news lately about A.I.G., and the bailout. The current "red flag" being waved by Congress and the Obama administration is outrage over the bonuses that were paid to A.I.G. executives.
I do not believe in rewarding incompetence. However, these bonuses were "retention" bonuses (not based on performance), and were included in the employees' contracts. These were disclosed (to the government, and to the investment community) ... they should not have come as a surprise.
Several points about the bonuses:
First, they amounted to $175 million. That's an immense amount to you and me, but amounts to less than 1% of the amount of OUR money the government has invested in A.I.G.
Second, our Treasury Secretary, Tim "Turbo Tax" Geitner, was the chief architect of the A.I.G. bail-out (which Congress approved.) Either we have to accept that Geitner and Congress were too ignorant to notice the bonuses, or too inept to do anything about them.
Why all the attention on the bonuses? Again, several reasons:
- It is a populist issue that most everyone will support. It's an "easy sell" to the public, and makes it appear our Congressmen are looking out for us.
- More importantly, the bonus issue deflected public notice that $120 billion (yes, with a "B") has been paid by A.I.G. to other companies (including over $20 billion to European companies.) Our government has effectively used our stake in A.I.G. to funnel "bail-out" funds to other companies here and abroad. If we fall for the "Stop the Bonuses!" hysteria, the massive wealth transfer (with minimal disclosure or scrutiny) will slip through unnoticed.
Should A.I.G. have been bailed out at all? My gut reaction is "no." Companies, and their shareholders, should benefit from their wise choices and suffer from their poor ones. However, with A.I.G. as huge as they were, their collapse would have crashed our economy worse than ever. These guys insured banks, municipalities, cars, homes, etc. for an overwhelming percentage of the country, in addition to their backing of mortgage-based securities. If they failed, no other companies could have been compelled to provide coverage for all those companies. Banks, towns, businesses, and individuals who had paid their premiums would have had no insurance, and no premium refund. They would have to pay again, with someone else, and hope nothing happened before they got coverage to bankrupt them. In short, the economic disruption their failure would have precipitated would have been a disaster.
There's also the matter of public policy (in place since Carter, dramatically expanded under Clinton, and not corrected under Bush) that pushed risky mortgages on the markets. Since the government was at least partly responsible for the "housing bubble", it seems wrong to me that the government should escape some of the culpability for it's collapse.
Personally, I would have preferred that the government guarantee the policies for other companies to take them (indemnifying those companies against catastrophic loss for the first year), and let the market take care of A.I.G. That would have resulted in it being broken up into parts (some of which could be profitable), and avoided the "open checkbook" situation we have been thrown into.
I do not believe in rewarding incompetence. However, these bonuses were "retention" bonuses (not based on performance), and were included in the employees' contracts. These were disclosed (to the government, and to the investment community) ... they should not have come as a surprise.
Several points about the bonuses:
First, they amounted to $175 million. That's an immense amount to you and me, but amounts to less than 1% of the amount of OUR money the government has invested in A.I.G.
Second, our Treasury Secretary, Tim "Turbo Tax" Geitner, was the chief architect of the A.I.G. bail-out (which Congress approved.) Either we have to accept that Geitner and Congress were too ignorant to notice the bonuses, or too inept to do anything about them.
Why all the attention on the bonuses? Again, several reasons:
- It is a populist issue that most everyone will support. It's an "easy sell" to the public, and makes it appear our Congressmen are looking out for us.
- More importantly, the bonus issue deflected public notice that $120 billion (yes, with a "B") has been paid by A.I.G. to other companies (including over $20 billion to European companies.) Our government has effectively used our stake in A.I.G. to funnel "bail-out" funds to other companies here and abroad. If we fall for the "Stop the Bonuses!" hysteria, the massive wealth transfer (with minimal disclosure or scrutiny) will slip through unnoticed.
Should A.I.G. have been bailed out at all? My gut reaction is "no." Companies, and their shareholders, should benefit from their wise choices and suffer from their poor ones. However, with A.I.G. as huge as they were, their collapse would have crashed our economy worse than ever. These guys insured banks, municipalities, cars, homes, etc. for an overwhelming percentage of the country, in addition to their backing of mortgage-based securities. If they failed, no other companies could have been compelled to provide coverage for all those companies. Banks, towns, businesses, and individuals who had paid their premiums would have had no insurance, and no premium refund. They would have to pay again, with someone else, and hope nothing happened before they got coverage to bankrupt them. In short, the economic disruption their failure would have precipitated would have been a disaster.
There's also the matter of public policy (in place since Carter, dramatically expanded under Clinton, and not corrected under Bush) that pushed risky mortgages on the markets. Since the government was at least partly responsible for the "housing bubble", it seems wrong to me that the government should escape some of the culpability for it's collapse.
Personally, I would have preferred that the government guarantee the policies for other companies to take them (indemnifying those companies against catastrophic loss for the first year), and let the market take care of A.I.G. That would have resulted in it being broken up into parts (some of which could be profitable), and avoided the "open checkbook" situation we have been thrown into.
Welcome to American Pride!
This is a site devoted to those of us who love the U.S.A., and don't believe it needs to be turned into a European-style socialist state to be great. It's a site for the majority of Americans who believe we have the right to benefit from our labors, win or lose from the risks we take, need secure borders and a strong defense, and don't need to apologise to the rest of the world for our success.
Discussion is welcomed! Honest debate permits the best ideas to prevail. However, let's not participate in personal attacks against those we disagree with ... disagree with the idea or actions, but don't attack the person.
Discussion is welcomed! Honest debate permits the best ideas to prevail. However, let's not participate in personal attacks against those we disagree with ... disagree with the idea or actions, but don't attack the person.
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