Thursday, February 26, 2009
Wednesday, February 25, 2009
"We will rebuild, we will recover, and the United States of America will emerge stronger than before." Barack Obama
If I were to grade Obama's speech last night, I would give him a 95. I do not know who the speechwriter was, but he wrote one heck of a speech. There was an optimistic tone in Obama's speech, a change of pace from his usual blame-bush, talking-down-the-economy diatribe that has been the hallmark of Obama's press conferences. I guess he took Bill Clinton's advice. I even became a little choked up when he spoke of Leonard Abess, the bank president in Miami who in this era of greed took a 60 million dollar bonus and gave it out to all 399 employees or Ty'Sheoma Bethea who went to the Public Library and wrote a letter to Congress describing the decrepit state of her school, and how they have to stop teaching six times a day because of the ceiling leaks. The cameras panned over to Michelle Obama as she beamed a smile to young Ty. Republican or Democrat, you had to be touched by those scenes.
There was of course one huge distraction as Obama delivered his speech. Obama did look presidential, but that lady in back of him, you know the one I am speaking about, the one who rarely stood up during any of Bush's speeches, the one who looked like she wanted to jump in Obama's lap – yes that's the one – Nancy Pelosi. Didn't someone have a rope? Could we not have tied that lady to the chair? When Obama talked about healthcare or any one of a myriad of Nancy's pet projects, she jumped up like a giddy schoolgirl and began clapping her hands. When Bush left office, Pelosi said that it felt like a 10-ton anvil had been lifted. I guess she wasn't kidding. There is just something wrong watching Pelosi be so happy.
If I were sitting in the joint sessions of congress (still waiting for my invitation), I would want to make sure I was alert, attentive and mouth closed because you never know when the cameras are going to be watching. The cameras panned the audience and stopped at Rep. Charles Rangle. It looked like he was waiting to catch flies as he sat with his gaping mouth wide open.
The underlying theme of Obama's speech, of course, was that Government not the individual is the solution to the ills of society. "This plan will require significant resources from the federal government - and yes, probably more than we've already set aside." We all know that Obama believes the government is the solution – an about face from the Reagan perspective that the government is the problem not the solution.
Obama spoke about living in an era with a lack of regulation. "Regulations were gutted for the sake of a quick profit at the expense of a healthy market. People bought homes they knew they couldn't afford from banks and lenders who pushed those bad loans anyway. And all the while, critical debates and difficult decisions were put off for some other time on some other day." Of course, it was the Republicans who for three years warned of Fannie Mae and Freddie Mac, and pushed for regulations of these institutions, and it was Chris Dodd and Barney Frank, two high ranking Democrats, who blocked every form of regulation and it was Clinton who repealed the Glass-Steagall act that separated the different forms of banking. It worked for fifty years. There has to be a balance with regulation. Regulation cannot be too onerous as to prevent business from competing on a global scale, but yet it has to be enough to provide oversight because of the human condition. I am sure everyone has heard of that little vignette of man's fall from grace in the Garden of Eden."Because we cannot consign our nation to an open-ended recession. And to ensure that a crisis of this magnitude never happens again. Inherent in any capitalistic system is the tendency towards greed and corruption. There will never be enough regulation to stop it. A recession of this magnitude will happen again. When? No one knows, but be assured it will happen again. How long it lasts depends in large part on how government reacts to it.
Obama said he was going to be transparent, and to prove it, he cited his website which will tell us where the money is going, recovery.org. I have a hard time believing anything about Obama's transparency when he puts Biden in charge, "we've all seen how quickly good intentions can turn into broken promises and wasteful spending. And with a plan of this scale comes enormous responsibility to get it right. That is why I have asked Vice President Biden to lead a tough, unprecedented oversight effort - because nobody messes with Joe." Now, does that instill confidence knowing that Vice President Biden is in charge of oversight? Is that The fox guarding the hen house? The Obama administration has been keeping Biden under lock and key because they are afraid of his next gaffe. Of course, how does this transparency resonate when a more than 1,000 pages of spending pork is shoved down our throats that Congress has not even read? We were promised 48 hours before the final vote of the Senate, but it appeared on the net all marked up, not even a clean document, six hours before the final vote. If this is transparency, I think we are in trouble.
Obama then repeated his statement that this trillion dollar bill (with interest) has no pork. I guess that depends on what your definition of pork is – similar to Bill Clinton's definition of sex. Factcheck.org reports the following:
Obama said the bill doesn't contain "a single earmark." But whether one calls them "earmarks" or not, the Senate certainly added items that will benefit particular states. For example: $50 million for programs under the California-Bay Delta Act and $500 million for National Institutes of Health facilities in Bethesda, Md.
Obama talked about the massive debt he inherited, and he wants to cut it in half. He talked about going line by line through the budget and cutting wasteful spending. He even mentioned cutting subsidies to agriculture. That is a nice idea – does that include the massive subsidies he gives to the corn industry for corn ethanol. In the month Obama has been in office he has spent more than Bush has on the Iraq war, the Afghanistan war, and the entire war on terror in Bush's eight years in office. When Obama first entered office, he signed an executive order for 400 million dollars for abortion overseas. Even if you are pro-choice, you have to know that that was a dumb move. He just passed a trillion dollar porkulus bill. Congress is going to pass porkulus 2, 410 billion dollar omnibus bill with over 9,000 earmarks, and a billion dollars to the Palestinian authority to rebuild Gaza after Israel's defense of its citizens, a result of the interminable bombing of Katyusha rockets by Hamas. The Obama administration says it will not end up in the hands of Hamas – yeah right, and I have a bridge to sell you. There is also health care that Obama will undoubtedly spend massive amounts of money on. So, how again is Obama planning to cut the deficit in half? The Obama administration is planning to spend us into oblivion – Bush on steroids.
We cannot forget the checks he said he is going to give to 95% of Americans, "the recovery plan provides a tax cut - that's right, a tax cut - for 95% of working families. And these checks are on the way." First of all, these are not checks, it is 13 dollars a week beginning Apr 1 (reduced in Jan) that will appear on your paycheck. The only thing that this picayune amount will stimulate is the foam on the two extra lattés you can now buy at Starbucks. Of course, if you live in California, the terminator will take even those 13 bucks away and then some. What the Lord giveth, the Lord taketh away. And, if the economy seems to be coming out of its doldrums, Obama will then increase the tax on those making over 250K a year just to make sure the economy doesn't quite recover. One percent of Americans already pay 40% of the tax bill. Where is Joe the plumber when you need him?
What truly demonstrates that ideology trumps common sense is Obama's energy policy. He ordered congress to pass a market-based cap on carbon pollution because of the climate change myth. Market-based cap is an oxymoron. Cap and trade schemes are by definition anti-market. Cap and trade has been tried in the European Union, and carbon emission reductions have had mixed results. Obama continued his diatribe on solar power, wind power, suntan lotion and anything else that might generate energy except nuclear power. If Obama were serious about climate change, he would begin construction of nuclear power plants. Imagine how the market would react to that. That would create thousands of jobs and reduce the cost of energy. France not only provides over 70% of their energy from Nuclear power, but every plant is standardized. Every plant is like the other and parts can be interchangeable from one plant to another. During Obama's campaign, Obama told Bill O'Reilly he believed in nuclear power, but again he lied. He has no intention of building nuclear power plants. Just imagine how building nuclear plants would stimulate the economy.
The Livermore lab is involved in improving the efficiency of wind farms, turbine designs and wind farm operations. The lab reports:
Many U.S. wind parks are yielding up to 20 percent less energy than predicted because of uncertain forecasts. This loss of energy can have complicated financial consequences, such as significant penalties if operators under-produce their forecasts or no payment for extra power they generate that is more than what was estimated.
It will take decades before any viable form of alternative energy can be used, but Obama ignores our own natural resources, nuclear energy and natural gas. All three of these would make us energy independent sooner rather than later. We can still continue research on other viable forms of alternative energy.
Obama's oratory skills cannot be denied. He is able to deliver a speech as well as anyone, but the content of his speech conceals a frightening power grab and more spending beyond anything we have seen in our lives. What could Pelosi be thinking as she jumps up and down in euphoric delight while Obama enumerates one by one Nancy's Christmas list? Obama's administration hinges on the success or failure of his spending plan. Our economy has proven to be resilient, so it is possible that the economy will recover in spite of Obama's porkulus bills. In that case, however, the result would be hyperinflation, because there would be too much liquidity in the markets chasing too few goods. History has proven in the past that Obama's trajectory is a recipe for disaster. We will recover – of that I am sure. The Great Depression did not have to last ten years and it did not have to be Great. It was because of government policy that made it the Great Depression. I just hope it doesn't take ten years to get this economy moving again.
Note: In early trading, the Dow was down more than 150 points, but recovered somewhat down 80 points and now sits at 7,270 points.
Friday, February 20, 2009
California is on its way to self-destruction. The Budget which was just passed by both houses means that a family of four will be paying approximately $1,500.00 more in taxes at time when California can least afford it and in an economy that Obama has repeatedly equated to a quasi-Great Depression.
Why doesn't California understand that when you raise taxes, the ones you want to stay, leave? The ones who leave are the job creators, and those with resources who are tired of California's confiscatory tax system. The ones who stay are the illegal immigrants or those who clamor for the social services California provides. California's unemployment rate is 9.3% and climbing. Its budget deficit is 42 billion dollars, and this tax increase will not solve the deficit – it will make it worse.
There is an exodus from California. Millionaires in California dropped from 44,000 in 2000 to 29,000 in 2002. They are leaving in droves. In addition 1.5 million people have left California more than entered in the past decade. People are leaving because of the onerous tax burden California imposes on its citizens.
Tax revenue is decreasing not because the state doesn't tax enough, but because people leave for greener pastures where they don't have to worry about the government confiscating their hard earned money to support a state that cannot manage its own affairs because of prolifigate spending by an out-of-control legislature. Retirees take their 401ks and IRAS with them depriving California of a source of tax revenue. Businesses relocate outside the state depriving California of even more tax revenue. Anyone would be crazy to retire in California with California's tax burden. I know several people who would not come to California for that reason. two-thirds of the economy is from consumer spending. This tax increase will only cause consumers to spend less. So, what is the answer to California's ills – Raise taxes.
Yesterday California passed its budget after a grueling 48 hour stand-off. California voted in a so-called "temporary" sales tax of one cent. Nothing is more permanent than a temporary tax. Vehicle registration fees will increase from the current level of .65% to 1.15%. How is that for destroying an automobile industry already on the brink? And then we have a .25% percent surcharge on personal income tax. Aw – but that would be cut in half if we receive more federal stimulus funding than expected. Here is the kicker - California will only allow annual expenditures to increase 5% annually. Why are they allowing expenditures to increase at all when tax revenue is failing to keep pace with expenditures? Any business would slash costs when it fails to meet its goals. Tax revenues do not materialize, but California continues to spend. When tax revenues fail to materialize, the state will try and raise taxes again.
The Wall Street Journal stated the following:
It's sad to watch. The Golden State -- which a decade ago was the booming technology capital of the world -- has been done in by two decades of chronic overspending, overregulating and a hyperprogressive tax code that exaggerates the impact on state revenues of economic boom and bust. Total state expenditures have grown to $145 billion in 2008 from $104 billion in 2003 and California now has the worst credit rating in the nation -- worse even than Louisiana's. It also has the nation's fourth highest unemployment rate of 9.3% (after Michigan, Rhode Island and South Carolina) and the second highest home foreclosure rate (after Nevada).
Political Vanguard reports that the California budget was a mere $50 billion in the early 1990s. It more than doubled since then and in the last five years, it increased over 40%. That constant growth matched against a fluctuating revenue stream is the anatomy of our current crisis.
All Democrats and three Republicans from the Senate and three Republicans from the House voted for passage of the Budget. Republicans who voted for this should be voted out of office. The Republicans who should be voted out of office are: The Senate: Roy Ashburn of Bakersfield, Dave Cogdill of Fresno, and Abel Maldonado of San Luis Obispo. The three Republicans in the Assembly are Anthony Adams of Claremont, Roger Niello of Sacramento and Mike Villines of Fresno.
California is racing to be number one, number one in the highest state taxes in the country.
Who will be the last man standing in California?
The Dow is down another 172 points at 7,293, and there is no bottom in sight. Again, how does the market like Obama's stimulus package?
Wednesday, February 18, 2009
Bill Clinton, Nancy Pelosi and a myriad of Democratic pols have been pushing for reinstating "The Fairness Doctrine." "The Fairness Doctrine" is anything but fair. It is just a way of suppressing free speech. It is the liberal's way of muzzling conservative talk radio. Of couse, that begs the question, what about MSNBC? PBS? the New York Times? Different view points from the entire political spectrum should be allowed, but certain speech should not be foisted on different media by the government. If "The Fairness Doctrine" were reinstated, there would be such a backlash, that it would be a war I do not think the Democrats would want.
Whatever the reason, to Barack Obama's credit, he told Fox News today that he was against the reinstatement of "The Fairness Doctrine." I give credit where credit is due. Hopefully, this will silence members of congress who continue to call for Reinstatement of "The Fairness Doctrine", and the suppression of free speech.
Tuesday, February 17, 2009
The stock market continues to tank as President Obama signs his massive generational theft act. Today it is almost 300 points down since the market opened. Keynesian economics has never worked, and it won't work this time. On November the 4th, the day a gullible public elected a radical leftist to the White House, the Dow Jones stood at 9654. Today the Dow sits at 7,552, a drop of 2,102 points, a 21% decline. This is reflective of the confidence the markets have in an Obama presidency.
In my entry The Theft of America by Barack Obama, I stated the following:
Buy American – Whether the Buy Provision stays in the bill is yet to be determined. The Buy Provision is similar to the Smoot-Hawley act in that it requires iron, steel and manufactured goods to be purchased in the U.S. The European Union has already promised retaliatory action if the provision stays in. Where have we seen that before?
The reason I had said that it had yet to be determined was because Barack Obama had stated the provision would be removed. He told Fox News the following:
But, Barack Obama duplicitous as always has fooled the public once again. Sunday on 60 minutes, Lesley Stahl reported on the "buy provision" which was not removed from the stimulus package. The European Union had already threatened retaliation for the clause.
Watch CBS Videos OnlineThe economic stimulus package includes a "Buy American" clause many U.S. industries lobbied for. Lesley Stahl reports that businesses that export overseas fear foreign governments will retaliate and keep U.S. products out of their market. They will initiate their own "Buy provision clauses" in their own stimulus packages.
The steel industry lobbied hard for this clause. Why doesn't the administration get it? As 60 minutes stated, the CEO of Caterpillar, Jim Owens said that 75% of products are sold overseas, and retaliation from other countries would hurt workers more than it helps. In 1934, Franklin Delano Roosevelt tried the same thing with the Smoot-Hawley Act, and the world did indeed retaliate causing a 66% decline in world trade at a time when we needed our global partners. We are about to repeat the same mistake. Will there be a trade war? This is just one other lie of the litany of lies of Barack Obama.
Now, remember how 95% of people are going to get a tax cut. How does that work again? Barack Obama's website states the following:
Obama and Biden will restore fairness to the tax code and provide 95 percent of working Americans the tax relief they need. They will create a new "Making Work Pay" tax credit of up to $500 per person, or $1,000 per working family.
This was one of the centerpieces of Obama's campaign, but oops another falsehood. Those rebate checks he originally promised have been reduced to 800 dollars per couple and 400 dollars per individual, oh but wait – they are not rebate checks, It is to be doled out in your paychecks beginning in June. You will see an additional thirteen dollars a pay check to be reduced to eight dollars a week in January. How is that for stimulating the economy? Maybe you will be able to buy a couple of extra lattés from Starbucks. But don't get too excited about it if you live in California. If the terminator has his way in raising the gas tax, the sales tax and the registration fees on automobiles, you will have a net loss.
This is the change you can believe in. I think it is time for revolution.
Monday, February 16, 2009
The worst fear of a parent is the loss of a child. As a parent of an 18 year old daughter, I understand how hard it is to keep your daughter safe when she sometimes does not understand the dangers of society. I cannot imagine losing a child. The disappearance and tragic death of 17 year old Marta del Castillo has shocked the country of Spain. Her disappearance has been dominant in the Spanish media for the last three weeks.
Marta left her house at five in the afternoon where she lives in Seville, Spain on January 24th. She was going to spend the afternoon with her friends. She was supposed to come home by 10:30 or 11:00 that evening. Her boyfriend, Miguel Carcaño said he dropped her off around 9:30, but she never returned. Her parents became worried. Marta's parents had already been very suspicious of Miguel. They did not trust him. After a series of calls to Marta's friends, a report was filed with the police.
As the days passed, Marta's parents fear for their daughter grew into desperation as would happen to any parent with the disappearance of a child. As each day passed with no news, Marta's parents became even more worried. The parents had previously called Marta's friends and discovered she had been with them. Marta's father appeared on Spanish television and made a plea for her life, "If someone has her, I ask you to let her go." Marta did not return. Marta's boyfriend Miguel Carcaño was the prime suspect in her disappearance. The parents did not approve of the boyfriend, but what could they do? According to the blog, una polilla alrededor de la luz, (a moth around the light), Miguel Carcaño comes from a dysfunctional family and had a violent temper. As parents we try to protect our children, but sometimes we are unable.
Before Miguel confessed, flyers were passed out, and concerned citizens set up facebook profiles and youtube videos with the slogan, "Todos Somos Marta." "We are all Marta." Two weeks after her disappearance, 3,500 people marched in solidarity in hopes that she would be found. The professional soccer team, "Racing de Santander" played their next game February 15th with her picture on their jerseys. February 10th, around five hundred motorcyclists took to the streets with Tea-shirts emblazoned with "Todos Somos Marta" - horns blaring to show their solidarity. When signing on to Radio Teletaxi, on the Internet, a music station located in Barcelona, the photograph of Marta appears with the now recognized slogan, "Todos Somos Marta". A blog has been following the most recent news concerning Marta. Miguel and his accomplices also helped in distributing flyers in an attempt to divert suspicion away from him. In one way or another, the entire country of Spain was emotionally involved in the search for Marta del Castillo.
After three weeks of searching, the ugly truth of what happened to Marta surfaced. The ex-boyfriend of Marta del Castillo confessed to the crime. The family had thought from the beginning the boyfriend had something to do with it. Although authorities had suspected him previously because of contradictory statements he had made, thousands of volunteers helped in the search. On February 13th, 20 year old Miguel Carcaño finally recounted the coldness of the act. Marta was apparently killed the same night she disappeared. Miguel hit her over the head several times apparently with an ashtray after an argument ensued. He then called a friend who helped him remove the body. They put the body on their Motorcycle drove to a bridge made for pedestrians. They then put the cadaver on a wheelchair and rolled the wheelchair over the footbridge. They then dumped the lifeless body in the River Guadalquivir. Four friends of Marta have now been arrested in her murder, and as the blog, una polilla alrededor de la luz, (a moth around the light) states, "with friends like that who needs enemies." As the four were taken into custody, the anger was palpable among the multitudes as shouts of "asesino" "murderer" could be heard. The body has yet to be found.
Capital punishment isn't legal in Spain, but if ever there were a case that merited the death penalty this would be it.
The authorities continue to dredge the Guadalquivir river, but the fact remains. Her body may never be found. Finding the body may be of little solace, because the hurt of losing a child in this manner will never go away.
Tuesday, February 10, 2009
An era of progressive change is within reach, no longer an idle dream, just look at the new lay of the land, a friend of labor and its allies sits in the White House. Sam Webb, Chair of the Communist Party, USA
Lie of the day: "This Bill does not have a single earmark in it." Barack Obama
We are about to witness one of the greatest tragedies in American History – the fleecing of America. We are witnessing a government out of control, a government that cannot tell the difference between welfare and tax cuts or a government that cannot tell the difference between economic stimulus and government spending. This government is broke yet the government wants to spend almost one trillion dollars on a stimulus plan that will do absolutely nothing. Does anyone really believe this plan will raise 2 to 3 million jobs? Of course, in Obama's press conference that figure went to four million jobs. He keeps changing the goal post. Barack Obama tells us if we do not pass this stimulus plan, we may not be able to reverse this economic slowdown. Watch me pull a number out of my hat? The truth is, if history is our guide, and we pass this stimulus plan, we may prolong this recession possibly making it longer and deeper.
On Fox News, Joe Biden said, "there is a 30% chance we will get it wrong." We are spending almost a trillion dollars $1,000,000,000,000 with only a two-thirds chance of getting it right, hmmm, we are in trouble. Imagine you are a financial analyst, and you tell your boss, "I have the revenue numbers but there is a 30% chance we will not hit them." I think he would tell you to start over. I will say this to Joe Biden - we have a virtual 100% chance of getting it wrong if we pass this theft act. If one trillion dollars is suppose to give 3 million people a job, why doesn't Obama just give 3 million people 300,000 dollars (which equals three trillion dollars for the mathematically challenged) to start their own businesses. How is that for getting the economy started? That would have a better success rate then throwing money at every pet project under the sun.
Obama tells us economists across the nation tell us that we need to pass this stimulus plan or we will end up in another Great Depression. When President Hoover was about to pass the Smoot-Hawley act, (a tariff on foreign imports), one thousand twenty-eight economists wrote a letter to Hoover urging the president to veto the legislation. Countries around the world threatened to retaliate. Hoover proceeded undaunted and signed the legislation, Smoot-Hawley became law, and all the predictions came true. By 1934, world trade had declined 66% at a time when we needed the trade. The United States became an isolationist country, and the effect was to deepen the Depression. As with Hoover, hundreds of economists and here have signed a letter warning against Obama's stimulus plan, but Obama and his co-conspirators Nancy Pelosi and Harry Reid have ignored the warnings because it doesn't match up to their preconceived ideas. As with Hoover, it will prove to be their downfall.
Here are just a few provisions of this bill. The entire bill is similar to the items enumerated below.
- Tax cuts – 100 billion dollars of these so-called tax cuts are in the form of checks for people who do not pay taxes. If you do not pay taxes, how is this a tax cut? Checks are also not tax cuts no matter how you slice it even if you did pay taxes. President Bush gave tax rebates twice and they did not work. President Bush also required social security numbers to be eligible for the tax rebates. In the stimulus bill, you only need a tax ID number. Tax ID numbers are issued to illegal immigrants so they can pay taxes. Illegal immigrants have been going home because of the economy. This is the reason for the decrease in remittances to Mexico as reported by Western Union. So, now we are going to encourage the illegal immigrants to stay by sending them checks. Most of these checks will be sent to Mexico anyway. How is this supposed to stimulate the economy?
- Buy American – Whether the Buy Provision stays in the bill is yet to be determined. The Buy Provision is similar to the Smoot-Hawley act in that it requires iron, steel and manufactured goods to be purchased in the U.S. The European Union has already promised retaliatory action if the provision stays in. Where have we seen that before?
- E-Verify - Harry Reid has blocked e-verify, the program that ensures that legal Americans obtain jobs from the stimulus package, not illegal immigrants. So, on the one hand, the government tries to keep American jobs in the U.S. by cutting off global trade, and on the other hand, we block a program designed to ensure that Americans are the ones being employed by the so-called stimulus plan, not illegal aliens.
- Health Information Technology - 20.2 billion dollars goes to automating medical records. My first question is why is the government involved in this? Automation is a good thing if you are trying to make an office more efficient, but how does it create jobs? Automation actually eliminates jobs. Automation in private enterprise is part of the creative destruction process of capitalism. It displaces workers – it does not create jobs. This is a database for the government to begin its socialized health care - the trojan horse.
- Global Warming – There are all kinds of provisions for unproven technologies for the man-made global warming myth. There is even global warming research. How is that suppose to stimulate the economy? For all Obama's rhetoric, there is nothing about nuclear energy even though he said he was supposed to be pro-nuclear during the campaign, the cleanest form of energy. Of course, anyone with sense should have known he was lying. Sweden is the latest country to lift its ban on nuclear power. And, what about natural gas which we have in abundance?
Dr Bill Wattenburg estimates that all the wind, water and solar energy would only amount to 10% of the U.S. energy needs.
Obama says we cannot continue the failed policies of the last eight years. That was part of Obama's campaign rhetoric – did he forget he is now president? President Bush was reelected because the economy and the country were going strong. The economy was going strong because of his tax cuts. The economy continued to grow for six years. Bush's tax cuts worked and the recession that began in the US economy after the dot-com crash and the tragedy of 9-11 was quickly reversed. This economic crisis began with the mortgage crisis from lenders lending to people who couldn't afford to buy a house and had no business in buying a house, and the government encouraging such practices. It was because of fraud and deceit on both the lender and borrower egged on by federal laws such as the community reinvestment act and quasi-government agencies like Fannie Mae and Freddie Mac. Even Barack Obama said during his press conference that it was due to exorbitant and wild risks by the banks. So, does Barack Obama really know what he is talking about?
Recently we have heard a lot about deflation concerns. Deflation is when currency becomes more valuable every day, rarer and scarcer. We see deflation right now in the housing industry. Credit has become tighter, and consumers believe prices will continue to fall so they hold on to their cash. As more and more houses foreclose, housing inventories rise and consumers hold on to their wallets. Hence, currency becomes more valuable relative to houses. This was the problem in the Great Depression but on a much wider scale. Money virtually ran out. Hoover's economic policies at the onset of the Great Depression were devastating. He kept tightening the money supply preventing banks from lending money. He kept wages high at a time when wages wanted to come down. This ate into the profits of companies and the eventual result was more layoffs. He then cut off global trade with the Smoot-Hawley act. All these actions resulted in shutting off the currency valve allowing deflation to take hold and the economic downturn to deepen.
Inflation of course is the converse of deflation where products become more valuable than currency. In a growing economy, inflation of a couple of percentage points is not only acceptable but desirable, because it is indicative of a growing economy. The Fed can control inflation by tightening or loosening the money supply. By keeping a strong dollar and government spending in check, inflation can be controlled. There are three ways a government can raise revenue; taxing its citizens, borrowing money, or printing money. The government should not raise taxes in a faltering economy because that will deepen an economic slowdown. The government lends money by issuing treasury bills. China and India are the two biggest borrowers of U.S. debt but those economies are slowing down rapidly. China currently holds 1 trillion dollars of US debt, and it has shown signs of slowing down its purchasing of U.S. treasuries. That of course doesn't even account for what it costs to service the debt. The other alternative is to print money. If you don't have the money, you print it. When times are tough financial institutions, companies, and individuals hold on to their cash because they feel uneasy about the future. When the economy does right itself, and companies begin to spend, and individuals begin to spend, any excess capital the government has printed will cause rapid inflation. Too few products will be chasing too much capital resulting in hyperinflation and higher interest rates (high interest rates are imposed in vain attempts to curb the inflation). This is no different than what happened in Argentina or in Germany's Weimar Republic. You cannot keep printing money without consequences.
Huge infrastructure spending has been tried to no avail to lift up economies. Both Hoover and Roosevelt poured money into infrastructure and it did little to lift the economy out of the Depression. Herbert Hoover spent more in infrastructure during his four years than in the 20 years prior. In 1931 the unemployment rate was 17.4% and in 1940 the unemployment rate was 14.6% - virtually the same. Obama says the lessons of the Great Depression have been resolved, then why is he repeating the same mistakes? The question of the Great Depression should not be did World War 2 get us out of the Great Depression? The question should be should be why did it last ten years? Japan is the most recent case of infrastructure spending throughout the 1990s, and it's spending did nothing. The 1990s in Japan is referred to as the lost decade. In 1989, the Nikkei 225 index stood at 38,916, by April 2003 it bottomed at 7830, and today it stands at 7969. Barack Obama even mentioned the lost decade of Japan at his press conference. This should have been an argument against spending not for spending. He said Japan never did any bold action to reverse its recession. Huh? Japan quadrupled their debt on infrastructure. The spending and borrowing in Japan did absolutely nothing. The idea that the government throws money at indiscriminate projects in hopes of lifting an economy is a pipe dream. It has never worked. We do not learn from history or the experience of other nations.
We should not be surprised of this outcome however. When Barack Obama was elected president I hoped against hope that he would indeed be a different kind of president than his campaign suggested. But, he is proving to be the socialist he has always been. We knew who Obama was, and he made no qualms about it. He is a populist leftist president with extraordinary oratory skills and that is the danger. This is truly Bush's legacy. By Bush's own actions, we have been left with a neophyte who understands nothing of history or the fundamentals of economics, and he will in the end leave this country in shambles. This so-called stimulus act is not intended to grow the economy. The purpose is to spread the money around to every kind of special interest group to keep the Democrats firmly entrenched in power. If you are receiving money from the government dole, why would you vote that party out of office? What will this generational theft act of 2009 do to your savings? When hyperinflation sets in, and it will certainly be guaranteed to do so. Your 401ks, your savings and anything else you counted on in retirement will devalue at unprecedented rates. Your children will have the burden of paying this off. Our country will no longer be the country it once was. Barack Obama says "doing nothing is not an option." That is where he is wrong. Doing nothing is probably the best option if this stimulus package is an example of government intervention.
The Dow Jones fell 358 points as of this writing. The market does not like this stimulus package
Wednesday, February 4, 2009
How has this nation even survived? If we don't pass Barack and Nancy's non-stimulus stimulus plan 500 million Americans lose their job a month (source: Nancy Pelosi)Well how about this - if we pass the non-stimulus stimulus plan, a billion Americans will lose their job a month (source: Me). Wait - stop the presses, Isn't the population of the US around 300 million people. So according to Pelosi, in one month without this stimulus package, the entire country will be out of work. Well, at least in that case. Nancy will be out of a job.
Apparently, Nancy has made this claim before. Newsbusters has the story.
Tuesday, February 3, 2009
And so it was, in these times of economic woe, we gazed in wonderment at the Denny's free Grand Slam Breakfast ad that was aired during the third quarter of the Super Bowl. Was it true? Was Denny's really going to give out free breakfasts? Come in for a free Gran Slam Breakfast the ad would say as it beckoned fans of all ages. Free breakfast – now that is an advertisement. An estimated one billion people watched this ad, and ads during the Super Bowl are not cheap? Denny's paid between two to three million dollars for the ad according to news sources. What could Denny's be thinking?
I ventured out to dine at Denny's on Mowry Blvd off of 880 in Fremont. I mean, "come on" who can resist a free Breakfast. I arrived at Denny's and I saw a line of people that went out the door and around the corner waiting for a free breakfast. The line was orderly, but every once in a while someone would yell some kind of statement to let us know he was there. "Hey Buddy! Turn off that camera!" and "Obama really did come through" were some of the curt sentences I heard.
I thought to myself, "What could a Grand Slam cost if you had to pay for it?" – Five or six dollars at the most. Was it worth standing in line for a couple of hours to eat a free breakfast? By the time you get inside, you would be famished and order more food. Perhaps Denny's was counting on that. Apparently, everywhere you went to find a Denny's, there were long lines. I didn't think it was worth standing in line, so I left and went elsewhere to eat.
I still remember the Grand Slam Breakfast ad with its catchy phrase, "a dollar ninety-nine, are you out of your mind." My mother would repeat it incessantly. I think she liked the ad. I am waiting for a comeback. I think I will be waiting for a long time. But, I guess in this time of uncertainty, where thousands have lost their jobs, a free breakfast at Denny's just might have been what the doctor ordered. So, whatever their motive – Kudos to Denny's.