It depends on your definition of Created

The CBO has scored the health care bill. I'll be looking to get you some input tomorrow after I've read it. In the meantime, while CNN is productively fact checking SNL and the AP is doing the important job of fact checking Sarah Palin, the Washington Examiner is fact checking something that matters. Obama's saved and created jobs. They have pooled all the bogus saved and created news reports and made an interactive map. It's very interesting.

So far 10% of the jobs saved and created are bogus and this is strictly what has been reported. It is not a full audit.

Obama brings back terrorism to NYC

I try hard to stay away from the topics of law and foreign policy. A wise man knows his strengths and weaknesses. I’ve been through several law classes in my endless collegiate career and my grades in those classes never revealed legal genius. Despite my better judgment, I’m going to jump right into both subjects in the same post. With all the analysis and discussion over KSM being tried in NYC, I couldn’t let the subject pass without a few sage words. In short, many are missing the most important paradigm being established in the White House’s recent move (you can read the foolishness here and here)

The arguments for a civilian trial has been regurgitating from the left for years. I believe the following letter to the editor in a NJ paper sums up the standard leftist argument:

“Dismiss any of the hogwash people are spewing that bringing Khalid Sheikh Mohammed, the self-described mastermind of the horrific 9/11 attacks, and four other Guantánamo detainees to trial in New York is foolish. The overdue legal proceedings are an opportunity to showcase America at its best.

Our justice system is built on the bedrocks of due process and rule of law, which sadly have been put aside for terrorist suspects languishing for years in Gitmo. It’s time to bring those principles front and center again.”

Doesn’t it just fill you with warm, fuzzy feelings of America? There is always some meany to cut down to size or some victim to be saved, but this kind of rhetoric from the leftist machinery is a charade for the simple. I have always enjoyed how arguments from the left come rapped in pretty, pink bows, while inside the box is a totally different beast. So let’s open the box and take a look at the monster we have been regifted.

The cold, hard reality is that the upcoming KSM trial will be an exhausting mockery of our constitution and the whole world will be watching it. Are we going to throw out evidence, because KSM was not read Miranda Rights? Are we going to allow evidence not obtained through the specific due processes established over 200 years of case law? What would be the appropriate jury of peers, certainly not 12 US citizens? Was a warrant issued for KSM’s detention? How could a judge even consider hearing the case of a man who was not indicted timely? These are the procedures and rights provided by the constitution in civil trials. Is the left now demanding that these rights be subverted?

The hypocrisy of the left can be exposed in a simple question. Under what circumstances, do we exonerate KSM? If we are going to subvert all the procedural rights granted under the constitution, then you are making a mockery of yourself and the constitution. Many in Obama’s administration have all but assured that these procedural constitutional land mines would not be countenanced by the judge hearing the trial. What we are guaranteed is a show trial, which by definition is both unconstitutional and a horrific example of America at its worst (not best as the author above has opined).

I have no doubt that there are many well intentioned people that buy into the argument presented by the left above. That is why the Obama administration has wrapped the constitution wrecking ball KSM trail in flowery wrapping paper for the masses, a clever ruse indeed. The lapdog media is sure to follow suit. You on the other hand, shouldn’t.

Read More on this Topic @

And So it Goes in Shreveport: "It is a presidential decision—one about the hard, ever-present trade-off between civil liberties and national security."

What will be the Jobs Summit’s proposed solution? I know the answer.

I am baffled by the predictability of the Obama Administration. Many are weighing in on what the administration plans to accomplish with the upcoming Jobs Summit and many are incorrect in their assumptions that this is merely a media, PR stunt. Yes, it is a media stunt, but it will also be a signal that the gears of the leftward moving political machine are about to jumpstart in a new direction and away from health care (ATTENTION EVERYONE! This is a sign that the administration is confident about passing health care soon, not that it is throwing in the towel).


The media is already signaling the change in focus. Just look at all the recent interest in unemployment and the budget. Wouldn’t it have been nice to get all this discussion in relation to health care legislation? Progressive politicians gave away the ball game a long time ago. Remember…, “We need to pass health care so that we can focus on the economy.” With health care nearly behind them, it’s time to shore up that pesky economy problem. The only question left to ask is what will be the strategy coming down from the White House in regards to the Jobs Summit? I believe I can provide you with some insight on this.


Luckily, I have a long memory. Does anyone else remember the last summit? You know the fiscal responsibility summit? The solution to all our fiscal responsibility problems was Pay-Go and…HEALTH CARE. For the next eight months, the left has been ramming their health care legislation monstrosities down American’s throats.


So what will be the result of the Jobs Summit? Haven’t you guessed it? It will be green jobs and Cap and Trade right behind it. The solution is retraining, green infrastructure, and green jobs. Why are we holding onto TARP funds? Why have we barely spent any stimulus funds? There is a little red answer painted in green and it is as the President promised, transformational.


I have some ideas on how Obama plans on playing this game out and I’ll share them with you should my prediction come to fruition. You may think this strategy seems obvious and that few are likely to fall for it. You underestimate the mind numbing power of Democrats backed fully by the media.


CBO director Doug Elmendorf told the Politico that he believes Obama will need to nix his Cap and Trade plans. This is because Mr. Elmendorf has integrity and understands the nature of the legislation. The leftists behind the levers of power in Washington are not in the same mindset. They are concerned about legislating ideology, creating a permanent leftward shift in America and the problems be damned.


Few leftists in congress seemed concerned about fiscal responsibility when they passed the congressional health care bill last week, despite the fact that eight months ago, health care was offered as a budget solution. Just to give you an idea of how unconcerned the left is with fiscal responsibility, the Senate health care plan collects taxes for ten years to cover seven years of benefits. Now does that sound like a plan that will pay for itself in the years to come? Yet the media, politicians, and supporters all act as though the ten year deficit scoring from the CBO is transparent and legit. If they can pull this off, just imagine what they will do with green jobs.

If you want to get my attention, post a graph

H/T to Tao

For those of you who get bored very quickly with graphs and econ-speak, please stop reading now. I rarely write and indulge in the following types of discussions on my blog, because no one understands it, it can’t be explained without boring people to sleep, and most people don’t care. If you aren’t interested, just skip to the next post.

However, my good friend Tao had an interesting post a week or two ago and I’d be crazy not to mention it since it made the economist section of my brain cringe in pain. Anything that awakens my desire to engage in an economic discussion is worth mentioning. To date, Tao is the only one aside from President Obama who has been successful in doing so. Congratulations Tao (I apologize for the delay in this post)!

Below is a graph posted by Tao last week in his post “Back to the Farm” It shows Year-to-Year changes in Real Private Investment in Software and Equipment.



From it, two things can be learned. First, if you want to get my attention, post a graph. After living in the economics world for so long, I love graphs. Second, according to Tao:

“The 1990s saw a remarkable period of sustained, high levels of investment in equipment and software. In contrast, a sustained period of very low interest rates during the current decade was barely able to coerce firms to invest in the high single digits. This, is a critical problem, reflecting low expected returns to capital investment.”

I’m on board. This makes sense! But, in classic Tao-Conservative Generation paradox, we agree on premise and come to two totally different conclusions.

“If you are not making investments in equipment and software you are basically saying that current productive capacity is good enough for the future. This should have been a sure sign that there was trouble ahead.”

Tao goes on:

“You see, during the Bush Administration you had very low interest rates and very low taxes and still you could not entice people or companies to investment in equipment and software to grow their own capabilities. Thus, as long as investment growth remains constrained, as we have saw throughout this decade then withdrawing monetary stimulus would be a significant policy error. In fact, it would lend additional credence to reports that the Fed needs to do much, much more - a massive, unsterilized expansion of the balance sheet - should they even hope to stimulate sufficient investment demand to absorb underutilized labor.”

My guess at Tao’s conclusion, which is murky, would be; Since investment has not been sustained over the last decade, companies are either obtuse in failing to invest or unable, in which case big government/big bank Fed should come in and save the companies from their stupidity or immobility or maybe even replace private investment with government investment. This is pretty much the standard song and dance from the planned economy crowd. However, our recent economic situation is telling us something completely different.

One of the biggest problems with Tao’s argument is that it fails to take into consideration a recent nuance with regard to interest rates and big government spending, which is most likely the result of a common misunderstanding between how the Fed controls long term and short term interest rates.

When companies invest in capital it is through long term interest rates and not short term. When we hear that the Fed has cut interest rates, they are cutting short term interest rates, the result of which generally has no effect on the long term rate. The Fed often tries to influence the long term interest rates through open market transactions by buying and selling stores of US treasuries. Treasuries are a major factor in long-term rates since they represent the risk-free portion of the rate of interest. Generally speaking, when the Fed buys securities, the long term rate drops and when they sell, the long term rate increases. This is the general rule when you don’t take into account the current fiscal/monetary policy. The problem with our current situation is the massive and unhealthy fiscal spending coming out of Washington, which, if left unchecked, can and will crowd out the market, negate the Fed’s ability to influence the long term rates and send interest rates soaring.

Oh, before I forget…Tao, there was something missing from your CBO graph the day before this farm post. It was President Obama’s fiscal policy, so I decided to give the full picture below.



Don’t worry folks, Obama’s definitely not as bad as Reagan or Bush or 40 years of past President’s. He’s way beyond worse. I suppose my concerns are irrational and motivated by my conservative bias. It has nothing to do with the graph above, so don’t even look at it.

President Obama’s fiscal policies leave us with a “do one of two things” dilemma. Either we don’t pass a ton of massive spending increases finally giving the little guy what he deserves and repeal the joke of stimulus Obama signed into law so that we can open up private investment in capital, or we can have government investment in capital. Please, note that this is not a short term decision. If the US government crowds out the market with high interest rates, we are not likely to see a rebound in private capital investment for years. For those of you who have faith in government capital investment…I agree, a more mobile turtle force is going to bring us into the 21st century!

Another issue that Tao, Keynes and many other economists often neglect is the company’s second source of capital funding, equity financing, which is also known as “selling stock.” Below, is a side by side comparison of the change in the S&P 500 and the change in Real Private Investment. Looks similar, doesn’t it? This is why many, including Larry Summers, have argued (and yes many have also disputed) that lowering the capital gains tax can boost Real Investment, but that would require a “lower taxes” kind of solution that just makes the rich, richer.



In short, Tao is right! There is no way us smaller-government, lower-taxes types have any solutions to grow Real Investment. Central planning is doing a great job. Especially, with turtle mobility! How silly can we be? I’ll just sit here and wait for President Obama to assign me to my farm. Like the many philosopher-king types, I look forward to the return of serfdom.

Quick note to Tao: I’m not sure where your investment graph came from, but when I pulled the data from govstats.org, I could not reproduce the same large double digit changes in the 90's. Not sure if the problem is my data or yours.

I’m not Bush either, but where is my Nobel Peace Prize?

Do you remember all the controversy over the Obama SNL skit? Well the boys at SNL may have been a few steps ahead of the entire world. Today’s announcement that Obama has won the Nobel Peace Prize has started the international cannons firing. What can be worse than getting the Nobel Peace Prize when you haven’t done anything to earn it? How about countless from around the world coming out to tell you how underserving you are?

Here is the UK Guardian (more liberal than the Times):

“Which is all very well, except that Obama is fighting wars in two Islamic states – Iraq and Afghanistan – and his efforts at international diplomacy, notwithstanding his powerful desire to achieve quick results, has thus far shown almost no progress in pushing forward peace talks in the Middle East and only very partial progress on Iran. It is true that he has made real advances in "resetting" US-Russian relations, not least over his decision to cancel an anti-missile shield that was to be based in eastern Europe, but the consequences of that engagement are too early to judge.
The reality is that the prize appears to have been awarded to Barack Obama for what he is not. For not being George W Bush. Or rather being less like the last president. The question now is whether having being anointed perhaps too early by the committee, a Nobel prize earned so cheaply and at so little cost will help him in his efforts on the international stage or rather be an albatross around his neck. Something against which all his future efforts will be judged – and perhaps found wanting.”

Or the UK Telegraph:

“The only possible explanation for the judges' decision to reward Mr Obama is that they are betting on his future achievements. They think he might secure an epoch-making settlement between the Israelis and the Palestinians as well as a sweeping disarmament treaty with Russia. Having previously given the Nobel Peace Prize to leaders who have made real agreements to resolve real conflicts, the judges now appear to be rewarding effort and possible future accomplishment.” (Emphasis mine)
Ouch.

Here AP says the committee was favoring Chinese dissidents. Could it be Obama was chosen so as to avoid offending China? A Nobel Peace Prize for the Nobel Peace Prize anyone? Obama gets sloppy seconds? Double ouch.

My take? Two points really.

The first is why should the committee wait to give Obama a prize? Those on the left are rewarded for intentions, not results. Look at Hillary Clinton’s election campaign where she touted her health care reform credentials and stated that few had done as much as her for health care reform. That was the clincher for many on the left, not the fact that few had failed so miserably at health care reform. Even if Obama ends up creating WWIII he will be heralded from the left as someone trying to calm the tumult of an international maelstrom.

The second is that I seriously have trouble reading such critical pieces from the international press regarding a US President. Even if it is Obama and much of it is true. We don’t need our Presidents, right or left, belittled by half-hearted, insincerities. By awarding an award without the weight of legitimacy to back up their decision, this particular award will be little more than a ball-in-chain. Obama should have rejected it, insulted. On a personal note, I would have accepted it. I could use the money.

Via Left Coast Rebel

Via The UK Guardian

Via The UK Telegraph

A Tale of Two Presidents

Big hat tip to Legal Insurrection for digging up this old Bush clip.

When Bush handled critics



When Obama handles critics



I'm not trying to dig up old wounds, I just find it interesting the stark contrast between how George W. and Barak Obama handled critics. People were angry at Bush for not listening and doing whatever his heart desired on issues. Obama does the same, but shouts you down at the same time. Just ask Joe the Plumber.

An Intervention for Obama's Debting

It’s time to hold an intervention for Obama. We need to get him into Debtors Anonymous as quick as possible. With the economy on the ropes and hopes of economic recovery bleak, Obama has decided it’s time to spend more money, a lot more money. Obama’s health care will cost $1 trillion dollars. I’ve long been warning that our options available for stabilizing the economy have been dwindling over the last few months and new developments have been buried under the news of the Sotomayor confirmation hearings. Obama’s health care initiative was always a bad idea, but given recent economic news, moving forward with the legislation has never been more foolish.

An example of the program Obama should follow thanks to SNL.


Let me begin by summarizing the White House’s and Fed’s strategy for stabilizing the economy. The Fed has slashed interest rates to zero to lower the cost of borrowing and boost capital expenditures. At the same time the White House has been spending and sending trillions of dollars to political cronies in boxes with blue ribbons. To fund Obama, the Fed has the money printers working overtime. In short, the policy is to expand the money supply as large and fast as possible. The effects of which create inflation. Generally, no one worries about inflation during a recession because prices are usually deflating.

Great, the boring part of the post is out of the way.

So the economic wisdom in Washington has been, we can keep the economy limping along so long as we keep spending. Sounds like a party when you’ve got your hands on America’s credit card. No one seemed to ask, “What happens if things get worse?” You can’t cut interest rates when they are zero (Hat tip to Nick). Two months ago, Paul Krugman would have responded, “Well, we may not be able to cut interest rates, but since there is no such thing as inflation, we can just keep spending more.” Last month, we saw the largest increase to the CPI in a year, a jump of .06 percentage points to .08. Normally, this wouldn't be cause for alarm except, inflation is not supposed to occur when the economy is still retracting. The FOMC came out this month and is predicting that it will continue to retract throughout the rest of the year.

Let me sum this up for you. We can’t cut interest rates anymore, because they are at zero. We can’t continue to deficit spend, because our economy is so sensitve to inflation, that inflation is increasing when it shouldn't be. Inflation would have a terrible impact on people in the middle of an economic recession and a time where 16.5 percent of people are unemployed or underemployed. How are we going to keep pushing those great Obama policies without tacking onto the deficit?

Congressman Rangel gave us the answer earlier this week. We are going to raise taxes and we are going to raise them so high we are going to beat out Clinton. Everyone in the left, please take a sigh of relief. It looks like we may have Pay-Go. It looks as though Obama is not going to blindly spend our country into an inflation avalanche that buries us all (he already has). Oh, I forgot to mention that dramatically raising taxes causes higher unemployment (see my post on tax incidence). What was that figure I said again? Yes, 16.5 percent unemployed and underemployed. The best part is that raising taxes has a negating effect on stimulus when your strategy is deficit spending, which happens to be Obama's plan. So Obama’s first major bill was to stimulate the economy and his second major bill will be to cancel his first bill out.

It’s not too late to stop the madness. Please support the Obama spending intervention and tell your representatives to oppose all Obama spending sprees for the rest of his Presidency. Remember, when the addict is the President, they don’t hurt themselves, they hurt everyone else around them.

Young Oliver Twist Voters

As many young voters laud Obama and his policies with complete reverence and adulation, I am reminded of a book written by Charles Dickens. The outcry from the young for Obama health care and cap and trade is almost the equivalent of Oliver Twist’s famous quote, “please sir, I’d like some more.”

I have long been confused by polling numbers regarding Obama support by age demographic. The Washington Post and ABC recently came out with a new poll regarding Obama’s approval rating. Now, this poll is wrong and heavily skewed to favor Obama. However, I doubt that an honest poll would show much difference as far as which age demographics support Obama the most. According to the poll, 71% of those polled between the ages of 18-29 approve of Obama and 66% of those between the ages of 30-39 approve of Obama. These two age demographics represented the largest amount of support for Obama. The real question is why are younger voters out of their minds?

In truth, Obama policies are going to place a large burden on the younger generations. Let me rephrase, Obama policies are going to squeeze the younger generations so tight that they will never enjoy the lifestyle or financial securities that their parents enjoyed. My progressive friends keep telling me I’m not looking at the “long term” benefits to Obama’s vision. However, I seriously doubt they’ve considered the reality of what Obama policies will bring in the “long term.”

To understand the idea of generational theft, you must understand the promises made, the promises being made, and the sacrifices you will be forced to make (I’m talking your average guy, NOT JUST THE RICH). You also need to understand the economies that each generation has/is facing and what that means. My point in this post is not to say we need to cut the older generations off, but that we need to be careful about programs we are reforming and ensure that great new promises aren’t going to bankrupt the young.

Currently, we the people have promised to provide assistance to retirees in the form of income. We also have promised health care assistance to the elderly and poor. Previous generations, especially the Greatest Generation, have and will benefit greatly from this while you pick up the tab. Please remember that those of the Greatest Generation have enjoyed many perks to employment such as pensions, free health care, and full retirement benefits under social security. Baby Boomers have been seeing these benefits paired back as they look to retire, but most people in the generation have enjoyed at least some or all of these benefits at sometime in their working lives. Add the fact that these generations worked at a time of US economic dominance and it is no wonder most are able to retire before the age of 60.

As the ranks of retirees begin to swell with the Baby Boomer generation, we in the generations remaining in the work force are on the hook to support these promises made. Why? Because we are taxed on our income and to earn income you generally have to be working. We are left following through on the promises that were made by a congress that voted long before we were born. As it stands, social security and Medicare/Medicaide are broke. To add to the Gen X and Millenial working woes, these two generations will never see the job perks of the past. Pensions and employer paid health care are a thing of the past. Our only retirement plan is simply, save everything you can.

Now Obama and the progressives are on the scene and they argue that not enough promises are being made. He wants to promise to cover everyone’s health care and reduce the average temperature of the planet by .5 degrees Celsius. The young people of this country cheer. Finally, they have a candidate that speaks for them or do they? What is that one question they all answer “the rich?” It happens to be, “who is going to pay for all of these promises?”

Well my young friends, below is a graph of Obama’s policies. It shows totals over the next ten years. First is the amount of revenue generated by implementing Obama’s tax on the rich. The second is the deficit of Obama’s health care by itself. The third is the deficit incurred by the entire Obama budget. Data was pulled off of the OMB and NY Times.



To the young readers of this post:

To believe that the rich are going to pay for you to live your wildest dreams is naïve. If health care costs spiral out of control, you are going to pay them and you will pay them for the next 30 years. The funny thing is that you will not even need to use the health care you are paying for. The Baby Boomers will thank you for all the hard work you are doing so that they can have cheaper health care. Cap and trade is coming out of your retirement fund. I hope that the .5 degrees Celsius is worth it.

The next question would have to be: how will government fix these failing programs by the time you want to retire? The favorite for social security is increasing the retirement age from 65-75. This won’t start until after the Baby Boomers. How are you going to finance 10 extra years of income on your own? Surely, you aren’t thinking that you are going to make more money over the next 30 years to pay for it? Not while you pay for retiree’s health care and global temperature reduction? I wish I had an answer for you.

An Open Letter to Obama

I'd say this pretty much sums up most of the concerns of the average conservative.

Below is an authentic open letter written to Obama from Lou Pritchett, former VP of Proctor & Gamble and a legend in change management.

Dear President Obama:

You are the thirteenth President under whom I have lived and unlike any of the others, you truly scare me.

You scare me because after months of exposure, I know nothing about you.

You scare me because I do not know how you paid for your expensive Ivy League education and your upscale lifestyle and housing with no visible signs of support.

You scare me because you did not spend the formative years of youth growing up in America and culturally you are not an American.

You scare me because you have never run a company or met a payroll.

You scare me because you have never had military experience, thus don't understand it at its core.

You scare me because you lack humility and 'class', always blaming others.

You scare me because for over half your life you have aligned yourself with radical extremists who hate America and you refuse to publicly denounce these radicals who wish to see America fail.

You scare me because you are a cheerleader for the 'blame America' crowd and deliver this message abroad.

You scare me because you want to change America to a European style country where the government sector dominates instead of the private sector.

You scare me because you want to replace our health care system with a government controlled one.

You scare me because you prefer 'wind mills' to responsibly capitalizing on our own vast oil, coal and shale reserves.

You scare me because you want to kill the American capitalist goose that lays the golden egg which provides the highest standard of living in the world.

You scare me because you have begun to use 'extortion' tactics against certain banks and corporations.

You scare me because your own political party shrinks from challenging you on your wild and irresponsible spending proposals.

You scare me because you will not openly listen to or even consider opposing points of view from intelligent people.

You scare me because you falsely believe that you are both omnipotent and omniscient.

You scare me because the media gives you a free pass on everything you do.

You scare me because you demonize and want to silence the Limbaughs, Hannitys, O'Relllys and Becks who offer opposing, conservative points of view.

You scare me because you prefer controlling over governing.

Finally, you scare me because if you serve a second term I will probably not feel safe in writing a similar letter in 8 years.

Lou Pritchett

I'd say I'd agree with most, but not all of Lou Pritchett's points.

PEW poll shows Obama’s numbers linked to Sanjaya

During the 6th season of American Idol in 2006, Sanjaya Malakar caused uproar in pop culture by advancing to 7th place. For those of you who may not know, American Idol is a reality TV show where young contestants complete in a singing contest and viewers vote on who they thought did the best job. What made this event in reality TV history so monumental was how Sanjaya managed to accomplish this feat. Nearly all other contestants had advanced on singing talent and stage presence. Sanjaya on the other hand advanced because people liked him.

Reality TV’s shtick is to publicize every contestant’s background story. The viewers then get to watch those stories play out on their TV. If the show is good, people feel as though the contestant’s life story has resulted in a reciprocal outcome on the show. There is more to it of course. Story alone is not everything. Watchers also make judgments regarding how the contestants carry themselves on camera and interact with the other contestants.

I apologize for my digression into the realm of pop culture. However, after over 10 years of reality TV our culture has become obsessed with being involved in completing and finishing their favorite celebrity’s life story.

So how does this relate to politics? Despite overwhelming public opposition to nearly all of Obama’s policies, Obama’s approval ratings remain around 60%. If you don’t believe me that many people do not agree with Obama, here is a little expose:


* 45% of American’s (a majority of those surveyed) believe the rest of Obama’s stimulus should be canceled
* 62% of American’s feel that economic recovery is more important than transfer of wealth
* 49% of American’s (a majority of those surveyed) believe that health care reform should wait
* 62% of American’s believe Iran should halt nuclear development before Obama meets with them
* 45% of people opposed the government auto loans, 80% feared that the government would get too involved and 72% opposed Obama getting more involved in February
* 49% oppose closing Guantanamo and 56% oppose bringing detainees to the US

Not all polls have been negative for Obama. Most people approve of his Supreme Court pick, Sotomayor, and believed that he should have done some type of stimulus plan. So what’s keeping his numbers up?

Those I’ve talked to on the left believe that the election of Obama points at a shift to the left in the country and an acceptance of the leftist agenda. Polling doesn't seem to indicate this argument holds water. I have a different take.

Obama truly has an amazing story. He was shuffled around as a child, was not born into the US elite, and from what we can guess (because no one will let us look at actual documentation), Obama is a self-made success. I propose that there is a large number of Americans that voted for and continue to support Obama, because they want to see a positive completion to the Obama story.

Now I can’t complain about Obama promoting himself for political gain. After all, that’s what politics is about. However, a recent PEW survey shows why Obama has been and continues to be successful in promoting himself over and above of the negative public opinion of his agenda. According to the article, the media coverage of Obama has been largely skewed in the favorable direction, 42% favorable coverage versus 20% unfavorable. The more convincing fact in this study is the nature of the stories. News stories of Obama’s personal and leadership qualities and not Obama’s policies are at an astounding 44% of media coverage.

Could it be that the media wants the public to continue to focus on helping the story of Obama end in success as opposed to pointing out that a majority of people do not agree with Obama? Hard to believe when this same playbook for Obama is being used to push Sotomayor’s confirmation. When she was announced the media was abuzz about her story, not her qualifications.

There are consequences to all actions and although the media may be pulling the wool over the eyes of the public where Obama's policies is concerned, that coverage does not extend to congress. For those of you who believe that the Republicans are irrelevant and will continue to dwindle in the 2010 elections, take a look at the new poll from Rasmussen pictured below. It shows America's trust on issues by party.



What is most interesting about the poll is a shift in public support away from the Democrats and towards Republicans. Left Coast Rebel has an excellent commentary on this new trend entitled "Tides of Opinion - Candles Burning Half as Long".

It’s true! Inflationary government policies still cause inflation

As Obama’s advisors and Obama talking heads like Paul Krugman laugh at the idea that inflation can occur while in a recession, inflation is taking root. This proves two points. Everything Obama is doing right now is wrong and the laws of economics will not change simply because Obama is a gifted speaker.

While the left was busy offering Bush as the straw man for deficit woes, the stock market tumbled today because of increasing oil prices and a poor showing at a Treasury bond sale. Both of these issues are leading to the same looming problem, inflation. This was not unexpected. Neither is the fact that Obama plans to fight inflation with more inflationary spending.

Meanwhile, the Bush straw man argument does not hold much water. The reason the US government can carry any deficit has to do with foreign confidence in US currency. That confidence in the currency often translates into how the world views our nation’s ability to ensure a strong economy. The truth is that although Bush spent (and I’m not saying I agree that he should), the rest of the world had faith in Bush and that he would not push the economy into insolvency. Obama on the other hand came out of the gate like a teenager with their first credit card. He quickly quadrupled Bush’s deficit and made several half hearted attempts at being fiscally responsible. He is still doing it and has lost his credibility. Yet, I seem to recall the Republicans kicking and screaming for Obama to address the deficits for the last 5 months. By not addressing how he would realistically control the deficits caused by himself and Bush, Obama is solely responsible for what economic woes await us.

In the end, it doesn’t matter who outspent who. What matters is which President’s arrogance led to the lack of credibility. The answer is Obama. If you think it was Bush, tell me who is still pushing their spending agenda, Bush or Obama?

Jobs: It’s the Chink in Obama’s Armor

With President Obama and the Democrats steamrolling their agenda, conservatives have never been more energized. With 2010 midterm elections coming into view conservative bloggers, commentators and pundits are looking for a theme or a message for an opposition platform that will lead to election victory. My take is that many conservatives are searching to bring the Republican Party back in touch with their principles. While I agree with them, I think we need something a little more tangible for a national platform. We need a single or a couple of specific issues to rally around. I suggest that the perfect opposition to President Obama and the Congressional Democrats will be jobs.

Both the White House and Congress are careless, if not flippant in respect to job creation. Sure, Obama talks about unemployment and job creation all the time, but he really hasn’t put his money where his mouth is. Obama’s stimulus is the perfect example of his insincerity. At the beginning of May, only 6% of the stimulus funds had been spent. Obama touted at creating and saving 150,000 jobs, while sending the same number of already employed people working at dealerships to the unemployment line. The stimulus is basically a three year spending bill and all the spending is in areas not likely to promote or create a sustainable number of jobs. For example, NY has finally decided to spend some of the stimulus by extending unemployment benefits for 13 weeks. The spending may be a worthy effort on NY’s part, but where’s the job savings or creation?

Two simple facts will dramatically hurt Obama and the Democrats. Obama promised to save and create 3.5 million jobs (the OMB already has forecast that his stimulus is likely to only save or create 2.5 million jobs). Unemployment is going to get worse and is not going to ease anytime soon. That is not just my prediction, which I’ve been saying for a while. That is also the prediction of the Federal Open Market Committee.

According to their April minutes, all members of the FED Committee were in agreement that it will take 5 or more years for unemployment to recover. What is interesting in this statement is that the opinion was unanimous for all the committee members.

Obama has nothing in the works to deal with this issue. Obama’s budget agenda and policies were written with a different economic landscape in mind. You see, Obama crafted his budget plans during his primary race, which was most of 2007. Did Obama revise his plan when the 2008 recession hit? Of course not! What might have been good policy in a 2007 economy must also be good in a 2009 economy, right? Did anyone else find it weird that the same ideas Obama thought out in 2007 were then touted as the solution in 2009?

Truthfully, there is nothing about job creation in Obama’s budget. In fact, much of it is going to cause more job losses than spur job creation. Ideas like cap and trade will put many more millions out on the unemployment line. This is a huge opportunity for opponents to the President’s agenda. It was economic unrest and uncertainty that led to Obama’s election. However, it is the disillusionment of that choice that can lead to the Democrats defeat.

The President Comes Down with MPD

I've finally figured the President out. He has multiple personality disorder. The proof is below.

President Barak Working to Defeat President Obama’s Stimulus

President Barak, who acquired and took over management of GM and Chrysler in March, is working hard to defeat his arch nemesis President Obama by destroying jobs even as his opponent President Obama creates and saves them. According to recent news, GM plans to close 2,000 dealerships while Chrysler will close 789 dealerships. The average number of employees in a dealership is 62. This means that the government controlled auto makers will cut 172,918 jobs. This just tops out over President Obama’s self proclaimed 150,000 jobs created statistic. Meanwhile, the unemployment rate has reached 8.9% and GDP shrinks. Stay tuned to this blog to see who will ascend to victory.

Speaking of the battle between President Barak and President Obama…

President Obama Warns that President Barak’s Policies Will Wreck the Economy

Bloomberg reported the following from a town hall President Obama held last night:

“President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.

“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt." Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.””

I’ve been saying this for months (the borrowers have already stopped buying our debt. It would be nice for President Obama to notice this since he’s trying to run the economy). President Barak’s policies and budget which includes a $1.8 trillion deficit are completely unsustainable and I couldn’t agree more. What is worse is that President Barak is trying to convince the people of the US, that fixing health care is the answer to his devastating deficit spending. What’s the problem with this argument? Although health care does need reform the government spent $427 billion in 2007 on healthcare, even if we wiped out all government health care costs (which we won’t, we’ll increase them. I know this because it’s what happened in Mass when they tried the same thing), we are still left with unsustainable spending in the amount of $1.4 trillion. This also happens to be the same amount of deficit that President Barak originally predicted two months earlier and then realized his numbers were rosy.

President Obama has this blogger's full support in defeating President Barak’s poor policies.

Speaking of President Obama thwarting President Barak…

President Obama Nixes President Barak’s Plan to Release Detention Photos

This headline has nothing to do with economics, nor will I really comment. I just like to see headlines where President Obama is winning the battle against President Barak. The paradox of the political battle between President Obama and President Barak seems to have infected the media as well.

Speaking of media press paradox…

Media!!! So which is it? Is the economy turning around or getting flushed down the toilet?

If you thought the President seemed schizophrenic these days, it’s nothing compared to the articles in the news about the economy lately. Either Rham has been having communication problems regarding Obama’s talking points in his daily meeting with the press, or the media is just as confused over the Obama-Barak infighting as I am.

Below is an article from the AP regarding the economy (To cut down on reading time, I gave you the judge’s decision regarding who won the paragraph; Obama or Barak):

Fresh reminders that the recession likely has passed its peak, but hasn't ended, emerged Thursday in reports that first-time claims for jobless aid and wholesale prices rose more than expected. Economy is in bad shape. 1 point Barak

Economists said the jumps, while bitter reminders of the country's weak economy, were not cause for great concern. Jobless claims should ease after layoffs in the automobile industry are complete, while inflation remains under control. Economy is turning around. 1 point Obama

The Labor Department said the number of new jobless claims rose to a seasonally adjusted 637,000, from a revised 605,000 the previous week. That's above analysts' expectations of 610,000. Economy is in bad shape. 1 point Barak

Economists focused on the fact that initial claims remain below the peak reached in late March, a sign that the wave of mass layoffs announced earlier this year has crested. Economy is turning around. 1 point Obama

"This is yet more evidence that we are now past the worst," Paul Dales, U.S. economist at Capital Economics, wrote in a research note. Economy is turning around. 1 point Obama

Separately, the department said wholesale prices climbed 0.3 percent last month, larger than the 0.1 percent gain economists had expected. The biggest jump in food costs in more than a year offset a second monthly decline in the price of energy products. Economy is confused. Tie! .5 points to Obama and .5 points to Barak

Even with the larger-than-expected gain in the Producer Price Index last month, wholesale prices over the past year have fallen 3.7 percent, the biggest 12-month decline since 1950. While falling prices can raise fears about deflation, economists believe the efforts by the Federal Reserve to combat the recession will prevent a dangerous bout of falling prices. A little more print on bad economy than good. 1 point Barak

Wall Street brushed off the reports and stocks rose modestly. The Dow Jones industrial average added about 40 points in midday trading, while broader indices also increased. Economy is turning around. 1 point Obama

Most of the increase in jobless claims was due to auto layoffs, a department analyst said. Economists estimate Chrysler LLC has laid off 27,000 workers in the wake of its April 30 bankruptcy filing. Chrysler on Thursday told a bankruptcy court it plans to eliminate 789 of its dealers — or about 25 percent of them — nationwide as part of its restructuring process. And General Motors Corp. has said it will temporarily shut 13 factories beginning later this month through July, potentially affecting 25,000 workers. Economy is bad. 1 Point Barak

Still, many economists expect the downward trend in jobless claims to return once the impact of the auto industry's job cuts has passed. Economy is turning around. 1 point Obama

In another sign of labor market weakness, the tally of people continuing to receive benefits increased to 6.56 million from 6.36 million, setting a record for the 15th straight week and worse than analysts expected. The continuing claims data lags initial claims by one week. Economy is bad. 1 point Barak

Abiel Reinhart, an economist at JPMorgan Chase & Co., said the increase implies that the unemployment rate, which reached 8.9 percent in April, is continuing to rise. Many economists expect it to reach 10 percent by year's end. Economy is bad. 1 point Barak

The large number of people on the jobless benefit rolls is a sign that unemployed workers are having difficulty finding new positions. Economy is bad. 1 point Barak

Economists are closely watching the health of the labor market. If layoffs continue at a rapid pace, consumers could cut back further on spending and prolong the recession. Economy is bad. 1 point Barak

New applications for jobless benefits have declined since reaching 674,000 in late March, the highest level in the current recession. But claims remain elevated. Weekly initial claims were 375,000 a year ago. Economy is confused again. Tie! .5 points Obama and .5 points Barak

The four-week average of claims, which smooths out volatility, rose to 630,500, after falling for four straight weeks. Still, the average remains nearly 30,000 below its high in early April, a drop that economists at Goldman Sachs and JPMorgan Chase & Co. have said indicates that the economic downturn is bottoming out. Economy is turning around. 1 point Obama

There have been other signs the pace of job cuts is moderating, though still brutal. Employers eliminated 539,000 jobs in April, the fewest in six months and below the average of 700,000 in the first quarter of this year. Economy is turning around. 1 point Obama

Still, more than 5.7 million jobs have been lost since the recession began in December 2007. Economy is bad. 1 point Barak

More job cuts have been announced recently. Steel giant ArcelorMittal said Wednesday it will eliminate nearly 1,000 positions at an Indiana steel plant in July, while DuPont said last week it will cut 2,000 jobs. Economy is bad. 1 point Barak

Among the states, Illinois reported the largest increase in initial claims, which it attributed to layoffs in the construction and manufacturing industries. The next biggest increases were in Kansas, Puerto Rico, Indiana and Ohio. Economy is bad. 1 point Barak

New York reported the largest drop in claims of 13,386, which it said was due to fewer layoffs in the transportation and service industries. The next largest drops were in Michigan, North Carolina, Massachusetts and Connecticut. The state data is for the week ending May 2, one week behind the initial claims data. Economy is turning around. 1 point Obama

Final score: 11 points Barak to 9 points Obama. Perhaps this is why Obama has come out so strongly against Barak this week? I just hope Obama can somehow make up the ground Barak has gained. Thanks to schizophrenia, both progressives and conservatives now have a President we can support.

How Chrysler's Bond Holders Can and Will Trump Obama

I wasn’t going to post on this, but after hearing all the spin going on about Chrysler I felt as though I had a more down to earth analysis on the subject. While Obama supporters tout the recent events and Obama’s decision regarding Chrysler as a success and those of Rush’s ilk tout Obama’s moves as a page out of the Peron playbook, I feel there are a few moving parts to this story that aren’t being talked about. Make no mistake; this is a clear Obama failure!

To begin with, we need to identify exactly who the parties involved are:

Obama and the Tax Payers – The federal government has loaned $4 billion dollars to Chrysler. In theory, Obama is acting in the tax payer’s “interest” (I say in theory, because he had other options that would have been more prudent in serving our interests). Please note that the loan made was the most recent and unsecured. This is very important in the matter of law.

UAW – This is the autoworkers union for blue collar jobs only. They have contracts with Chrysler giving benefits to auto worker employees and retirees far above and beyond anyone else in the auto industry or the entire US. This includes decades old programs like the job bank, 100% health care coverage, and huge hourly wages.

Bond Holders and the Bond Holder Board – The bond holders have lent Chrysler $6.9 billion dollars. The group that Obama has singled out (the hedge funds) are part of the bond holder board and represent many, many, many (probably millions) of investors in Chrylser bonds. You are probably a bond holder and you don’t even know it. Hedge funds have holdings from teachers unions, state pensions, 401ks, 403bs, and insurance companies. The Bond Holder Board is representing everyone with a stake in owning this debt in Chrysler. They do not manage Chrysler in an way.

Shareholders – These are the owners of Chrysler and are in no way associated with the bond holders. The shareholders picked the management of Chrysler. They partly responsible for the poor UAW contract agreements that have bled the company dry.

Trade creditors – Trade creditors are the suppliers that have lent products such as metal, rubber, glass and so on with trade credit. They have last standing in a bankruptcy and the debt is unsecured.

Here is the background leading up to the Chrysler Bankruptcy

When Obama first seized the auto industry, the progs jumped out and justified the action stating that, “we (the tax payers) lent them (the shareholders…not the bond holders) money, there should be strings attached.” Remember this argument as it is very important! I believe that the take over was to enable Obama to both hide the severity of the situation and work behind closed doors. This has been the case with the banks. However, the strategy that Obama chose was a huge mistake. In taking over these companies, Obama is now responsible for turning them around. Even if he doesn’t want to run them, as he claims, he will be held responsible for their fate. This position is quickly becoming a no win situation for Obama.

Although Obama got on stage and declared victory with a Fiat deal, the real situation is further from the truth. You see, there is another party with interest in Chrysler and that is the bond holders. To a large degree, the media and Obama has been portraying the government’s stake in the company as supreme. In fact, Obama’s hand is much, much weaker than the bond holders. Why is that? While Obama has claimed de facto ownership of the stockholders, the bond holders have the rights to all of Chrysler’s assets according to USA Today. The government’s loan is unsecured. To illustrate, Obama has seized the rights to live in an apartment. However, the bond holders are the landlords and they have the right to evict Obama at anytime.

We know over the last month that Chrysler and the government went into negotiations with Fiat, the UAW, and the bond holders. We don’t know what deal was made with the UAW. According to the UAW in a FoxNews article, the concessions were huge. We do know a few things. The UAW is keeping their 100% healthcare for current blue collar employees and retirees and is receiving a 35% share in Chrysler. I submit that the UAW had to make very small concessions and would have been the second biggest winner had all deals been done. We know Fiat was to pay off all the tax payer money before they took any ownership. Please take note that the tax payer debt is to be fully restored making Obama and the tax payers, the biggest winner. If bankruptcy is avoided, theoretically the trade creditors would be fully restored.

Analysis

Last night, Obama angrily stated:

“Now, while many stakeholders made sacrifices and worked constructively, I have to tell you, some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout.

They were hoping that everybody else would make sacrifices and they would have to make none. Some demanded twice the return that other lenders were getting.

I don't stand with them. I stand with Chrysler's employees and their families and communities. I stand with Chrysler's management, its dealers, and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars.” (Please note that there was no mention of the specifics of the UAW last night. None! We are told they made a great sacrifice, but not told what it was).

Now, I can only speculate that the UAW concessions were small. I think I have good reasoning for this assumption since the UAW and Obama are not giving the specifics on the deal. Obama’s argument is that everyone was making huge sacrifices except the bond holders. Nothing could be further from the truth.

The bond holders have the biggest poker hand in this game. They have a larger loan to Chrysler than the government and have the rights to the assets. The government is almost dead last in the eyes of bankruptcy. The only difference is they have a big microphone.

The truth is that the government’s deal with the bondholders was very poor. Paying bond holders 30 cents on the dollar is a pretty poor deal. The government originally offered 10 cents on the dollar. To give you an idea; the bond holders held $6.9 billion dollars and was offered $2 billion dollars. Meanwhile, the government was to get back all of their $4 billion dollars. No, the bond holders have the strongest hand so logically they should get the best and strongest deal. They were looking for $50 cents on the dollar and a 40% stake in Chrysler. I’ll bet that’s slightly better than the UAW.

Why shouldn’t they get it? The progs argue that there should be strings attached. The bond holders have much bigger strings than the President. They have more invested and invested before the government did, yet they were offered a worse deal than the government. If there shouldn’t be strings attached for the bond holders, then there shouldn’t be for the government either. According to the law the bond holders have a higher right.

Whenever government gets involved the bureaucracy wants to create winners and losers. Obama wanted to secure his political capital by getting reimbursed for the tax payer loan. I speculate that he made the UAW’s interest second on the list. He couldn’t get a deal with Fiat without having to pair down the UAW contracts, but I’d also bet their deal wasn’t as sour as Obama and the UAW have tried to make out. The bond holders were to come out third. However, when you venture into the private world, you can’t make these amateur mistakes. Obama thought and probably still thinks he has a winning hand (by the way, there is no one on his auto advisory board that has run a company), but in reality he’s close to last on the list. The question is, “what will happen in chapter 11?” You better believe that the bond holders will be getting better than $.30 on the dollar or you will see a move to push it all into chapter 7 liquidation of Chrysler. That means that the bond holders will win and the UAW, Obama, and the tax payers are going to lose big. Do you wonder why the CEO’s didn’t want to go into chapter 11? I think there is a serious case to be made that the bond holders were threatening to take the company to chapter 7, which is their right should they choose to exercise it.

If that happens, Obama will try and vilify the bond holders. He will try and equate them to CEOs and corporations, just like the normal progressive template. He’s already tried to do it in his speech. In actuality, this was a huge error on Obama’s administration. This is an error likely to blow up in everyone’s faces. You cannot go into a negotiation, hold a losing hand and then expect to win. Luckily the bond holders (remember that’s you and me), will likely get our money back. Funny how at the same time, we will also lose (thanks Obama).

Check out Obama’s transcript from his speech.

Driving the Economy with Your Eyes Closed

On April 14th, Obama himself touted that there were “signs of economic progress." Now, I’m not a Nobel Prize economist or even a vaunted one. In fact, I'm a disgrace because I work in the real world as opposed to sitting in a college office running complex and unrealistic econometric models. For what it's worth, I believe we are sitting in the eye of an economic hurricane and whether the next half of the storm hits us up to the President.

Let’s dissect what has happened and what could happen. To do so, I will break down this recession into 2 phases. We are at the end of phase 1 and inching close to phase 2.

Phase 1:

At phase 1, the recession was mostly in the financial industry. Bad mortgages and increasing foreclosures caused banks to run out of money to lend businesses. This is called a problem of liquidity. The timing of the economic downturn is important. You see, phase 1 really started to impact economy in the 4th quarter. In response, companies sought to tighten their financial screws to salvage their financial statements for the year. Being that the whole year was not a bad year, the financial wizards in most companies saw an opportunity to make quick sweeping moves to pad the only quarter that looked abysmal, their last quarter. As a result, we saw large increases in unemployment, but not many companies closing their doors. The problem for companies right now is there are no more screws to turn. Companies threw all their eggs into 2008 in the hopes that the recession will subside by the end of 2009. Why wouldn’t CEOs have a bullish outlook on the future? They see that their consumers still want their products and are still buying, they are just buying less. Keep in mind, many of today’s CEO has never had to steer their company through a serious recession. In fact, if you look at the MBA programs of today and there is an overwhelming focus in managing market competition, not market collapse.

The Calm before Phase 2:

Right now we see consumer spending dropping, but not as quickly. This is being padded in part by the time of year. Many people are receiving their tax refunds. Also, this is the time of year that most companies give raises and bonuses. It’s common to see spending pick up a little in the retail business this time of year. We’ll need more than a seasonal boost to pull out of this recession.

Phase 2:

In this phase the recession seeps into the consumer market. Yes, we’ve seen consumer spending fall, but there is still a long way to go. When you loose millions of jobs in a few months, you are most certainly going to see a sudden drop in consumption. In 1929, consumer spending ground to a complete halt instantaneously. This was because most people only had access to cash. So far consumer spending has been greatly padded by credit cards. If you are paying attention to news stories, there have been a number of articles on the beginning of a consumer credit crunch.

Smartmoney.com has an article regarding the growing credit balances that card companies are seeing. According to the article, credit card balances have nearly doubled from 4% lows over the last 4 years to 7% today. It sounds small, but it is huge! With unemployment on the rise and no equity in their homes, people are turning to their credit cards to finance their spending. The problem is that credit card companies are running out of money to give to consumers. Part of the problem is that Obama and Geithner have been doing a poor job of fixing the first part of phase 1. We are starting to see a battle between companies and consumers over who will get the little cash still flowing out bank vaults. The article, incorrectly downplays the problem, but at least recognizes the storm brewing.

Phase 2 will either be triggered by an increasing unemployment rate or a persistently higher than normal unemployment rate. As I stated in phase 1, people are buying, just not as much. The trouble with current levels of unemployment is that we can sustain our current level of consumer spending for only so long. Once consumers run out of cash, spending stops. Once spending stops, companies are going to fail. Thus begins a never ending chain where companies fail and lay people off, causing further drops in consumer spending, causing more companies to close their doors and so on.

Recent polling data shows that of the people currently approving of the Obama administration, their approval is based primarily on his economic policies. This shows two things. First of all, Obama now owns what happens in the economy (He has instituted policies and he is getting credit for them). However, it also shows his downfall. Although he has most certainly taken actions regarding the economy, he has not enacted, proposed, or taken any action that would stem this recession in a meaningful way. His stimulus plan is an utter failure. In fact, I was surprised to see how quickly it could fail. The $13/week “tax cut” is on the chopping block for his budget and has done nothing to change and increase consumer spending. Infrastructure spending is turning into a nightmare. Sure there is spending on infrastructure programs, but not new programs. No, the spending is going to programs that States were going to fund in the first place, but are using government funds instead as a way to fill in their budget gaps. The green jobs investment has also been proven a failure. Vestas, the largest wind power company in the world and the sole supplier of wind blades to the US has gone out of business. Even in the face of UK subsidies, the promise of US green jobs stimulus spending, and Cap and Trade the company has decided that there is no money to be made in wind energy (read the UK Guardian Article). In the US, the same story is being played out. In fact an Ohio company who makes wind turbine bolts and was visited by Obama himself to promote his stimulus, laid off workers in February (read the article).

Where Obama’s stimulus was a poor effort to create jobs, his budget agenda is aimed at eliminating jobs. Cap and Trade will result in lost jobs from coal miners and carbon based power companies and manufacturing. The higher energy costs passed on to businesses as a result of Cap and Trade will be offset by companies in the form of unemploying labor. Arthur Laffer estimates a family of four will pay about $10k/year for Cap and Trade, further stifling spending. Likewise, Obama’s healthcare will cost thousands of jobs in healthcare. Obama’s education will create new jobs in education, but how many? Education is already saturated with consumers since all children go to school and most people go to college. The gains will be more than offset by losses from Healthcare and Cap and Trade.

Early in his Presidency Obama stated, “We can handle multiple problems at the same time.” However, the real question is, “should he tackle them at the same time?” It’s the equivalent of building 10 bridges halfway across the Grand Canyon. Sure there are now ten bridges, but we still end up jumping off the cliff at the end. The time is running out for Obama. Every policy he enacts brings us closer to a “phase 2” recession. It’s already on its way and Obama is responsible.

Read my earlier post on why Obama's stimulus plan won't work.
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Update:
I found this little nugget of a story on MSNBC. Proof that occasionally they do have interesting stories. The article talks about the problem of counting stimulus jobs. Of course, the administration can inflate the job number as much as they want, having the stimulus work is what is most important.

Obama Shouldn’t be Blamed for What Happened When He was 3 Months Old. Neither Should We.

In his response to Daniel Ortega’s excoriating remarks to Obama in front of the Summit of Americas nations at last weeks meeting, Obama curtly replied “I’m very grateful that President Ortega did not blame me for things that happened when I was 3 months old.” However, Obama left the rest of America out on the curb.

It turns out that more than half of Americans were born after Obama. According to 2007 census bureau information 100.9 million people were born in 1962 and later and 97.3 million were born 1961 and before. Since most of the population in the US was not yet born, we too should not be blamed.

I don’t blame Obama if he didn’t know the age demographics of the population. I did not know until I did the math and looked up the population of the nation. However, something must be said regarding how Obama has been going on about his “listen and lead” foreign policy. He needs to realize that the US is at least as guiltless as himself.

The most important omission in Obama’s policy (not defending America) is the most dangerous omission from his policy. This is especially true in South America, where dictators like Ortega and Chavez have maintained their oppressive governments through distraction created by blaming their country’s poor living standards on “oppression” from the North.

I’m not saying Obama needs to be defensive on the accusations being leveled, but he should at least be a voice for all the good that America has done in the world. There has been at least as much good done by America as there has been bad. He does both America dishonor in not vigorously advocating these positives as he does damage to the citizens in the countries run by Ortega and Chavez and leaves the people in these country’s hanging out to dry in more ways than one.

Obama correctly pointed out in Europe that we are a nation of “principles and ideas,” but those ideas are not welcome in the dictatorships in this world because they offer their subjects a life of independence, free of their rule. There are many in these oppressive countries that do in fact agree with our way of life. These peoples are working in their countries to bring about the freedom that we so lavishly enjoy. In ideology, they are our allies. The dictators hate us, because they hate them. In failing to herald the good in the US, he has not only left America down, he’s let the world down and made it easier for these dictators to continue their regimes.

If you don’t believe me, Chavez declared victory on Tuesday. The result, is obvious to those who oppose Chavez in Venezuela, they will get no support from the freest nation in the world. This is yet again another example of the unintended consequences of progressive thought.

Lefties Missed the Point of Tea Parties

While the progressives and the media would rather distract and silence the message of the Tea Parties, the truth of their message is still evident. The left can’t understand the protests. In their minds, Obama’s going to lower taxes and Obama’s going to remake the country better. In their minds, they are off the hook. Well you’d need to have your head in the sand to believe that reckless government spending is going to bring all this about.

March 20th seems like ages ago, but let’s turn back the time and highlight some of the key quotes of the AP article “Obama budget could bring $9.3 trillion in deficits.” Keep in mind that this budget does not include the stimulus, the omnibus, TARP and proposed TARP2 bill.

“In his White House run, Obama assailed the economic policies of his predecessor, but the eye-popping deficit numbers threaten to swamp his ambitious agenda of overhauling health care, exploring new energy sources and enacting scores of domestic programs.”

I made the mistake once of saying, “Obama is doing what he said he would do.” I quickly amended that statement. Obama promised us fiscal responsibility. He promised to go line by line and remove wasteful spending. He said he would not sign legislation with earmarks. He blasted Bush’s spending only to more than triple down on that spending. Spending which all Americans (right and left) agree were irresponsible.

“The dismal deficit figures, if they prove to be accurate, inevitably raise the prospect that Obama and his Democratic allies controlling Congress would have to consider raising taxes after the recession ends or else pare back his agenda.”

What? Did Susan Roesgen not hear any of this at CNN before her meltdown in front of yesterday’s Chicago Tea Party? This was reported nearly a month ago. AP points out the biggest reason why the coveted Obama Tax cut (thanks for the $13 a week, Obama) is going to end in 2 years. Interesting how $13 bucks matters to Obama now, but it didn’t over the summer when gas tax relief was proposed.

"Deficits in the, let's say, 5 percent of GDP range would lead to rising debt-to-GDP ratios that would ultimately not be sustainable," Orszag told reporters.

Deficits so big put upward pressure on interest rates as the government offers more attractive interest rates to attract borrowers.”

What do I have to say? Obama’s own budget chief said it all, the numbers aren’t sustainable. I love the investment in the future argument, but how are we to get there if spending is not sustainable?

“Obama's $3.6 trillion budget for the 2010 fiscal year beginning Oct. 1 contains ambitious programs to overhaul the U.S. health care system and initiate new "cap-and-trade" rules to combat global warming.

Both initiatives involve raising federal revenues sharply higher, but those dollars wouldn't be used to defray the burgeoning deficit and would instead help pay for Obama's health plan and implement Obama's $400 tax credit for most workers and $800 for couples.”

So the tax on the 5% has nothing to do with paying off Obama’s deficits? So who’s going to pay for it all? I know it’s hard to believe, but you cannot confiscate $9.3 trillion dollars from the rich, they don’t have it. Perhaps, trillion sounds like too small of a word, so here is what $9.3 trillion looks like, $9,300,000,000,000. Yes, I am getting $400 a year from Obama and in return he is giving me a bill for $67,971 (that’s $9.3 trillion divided by 138 million tax payers) and the progressives can’t understand why people are protesting. Who’s going to pay the bill? We all are and that means you too. Progressives! It will either be in the form of higher taxes or in the form of an economic calamity.

I’ve only covered Obama so far! I didn’t even get into Bush. I’ll leave the progressives to level the spending charges there. Even before Obama the US had the 2nd highest corporate tax rates, which are not too expensive to cut as some would say. Obama has proposed the 2nd highest capital gains taxes. The government has squandered our social security funds. I live in NY, which means I pay the highest state income taxes, the highest state sales taxes, the highest gas taxes, Patterson’s proposed the highest state energy taxes, and I live in an area that has the highest property tax rate in the country (mostly thanks to unfunded state and government programs).

I’m surprised the left’s surprised that this right wing crazy is upset. When Obama said he was going to bring back “spend as you go” and cut wasteful spending, he didn’t count on people holding him to it. I see he was right about the left giving him a pass, but there were some paying attention and those some got together in huge masses yesterday to remind him of his promises.

Government Economic Policies: Ready, Fire, Aim

I’ve been railing on Obama’s and Bush’s responses to the economic crisis. Thanks to recent events, there are a few stories out there that I felt were eye raising. The links are on the side bar dated 4/13. They reminded me that I had been meaning to do a piece on who is responsible for the current crisis and who is benefiting.

I felt like doing a little finger pointing today. I used to have a job assigning blame so here are the winners, losers, the innocent and the guilty in the housing bubble.

1) Loan originators – Despite everyone’s hatred for the evil big banks and their predatory lending, most of these predatory loans were originated by someone else. Most loans these days originate with a group of companies who specialize in originating loans (think Quicken Loans), then sell them off to banks. When I worked with Citimortgage, almost all loans originated through these origination specialists. Guilty! They had no trouble lending to whomever because they were not the one receiving payments for the loans, just the origination fees paid at closing. Winner! They made a ton of money and no one seems to be concerned with how they made it.

2) Big Banks – They are one of the few that are innocent, guilty, winners, and losers all in one. Innocent Was greed involved? Yes! Are they getting bailed out? Yes! Are they mostly responsible? Yes and No. A Little Guilty! They bought these toxic assets from loan originators and bought up a lot of other banks loans that were toxic as well. The motivation was to make the company a behemoth instead of making smart business decisions. Citibank, Chase, and Wells Fargo were in a giant race to see who could hold more mortgages. The bit about predatory lending is ridiculous here (that falls on the loan originators). No, these banks were just stupid. Loser! Like hot potato, they were stuck holding the potato when the music stopped. They deserved it of course. They were acquiring loans to build their kingdoms, not to make money for their shareholders. Winner! Thanks to Bush and Obama, one does not need to live with poor decision making, they can get a bailout.

3) Borrowers with Unconventional Mortgages - Guilty! There are all kinds of interesting stories on these people. There was the heart sobbing story of the women with an $80k conventional mortgage who was tricked into a $400k refinance that she couldn’t afford. Now she’s being threatened with foreclosure. Why is no one asking where the $320k she received from the refinance went? There is an article on the side bar on how street gangs were making profits on these. Even those who are now underwater got a taste of the high life if only for a while, living in a house they could not afford. Winners! They got the house they wanted and the attention of President Obama, who is going to help them pay those evil mortgages. They are able to live in their house payment free twice as long as usual. I believe they should also be bigger winners too, because banks should be writing down the principle due on these mortgages. This may not make sense to you, but being in accounting I believe in having balance sheets reflecting what the value of an asset is. This means writing down the mortgage principles in my opinion. However, these mortgage holders should not get government help or special treatment. If they still can’t make the payments they should be kicked out.

4) People in foreclosure because they lost their jobs - Innocent They did everything right. Had the money needed and had a job. They made their payments and were responsible with their loans. Losers There’s nothing in the Obama plan for these people because they are probably not underwater. Surprisingly, it is these folks most likely to be in foreclosure according to AP (see the article on the side bar).

5) The Presidents Bush and Obama - Guilty! They have horribly assessed the situation above and made sinners and saints out of the wrong people. Obama continues to miss what needs to be done to make serious changes to avoid this occurring again. Winners! They both got to enjoy new executive power all without any of the trappings of the crisis. They even managed to reach out and rescue the wrong parties without scrutiny from the media. It’s not likely they will lose their homes or suffer in any way from the harm of this crisis. It’s nice when a President says they feel the pain of the people. It would be another thing if they actually did feel the pain of the people. Politicians 2 – Citizens 0 in this crisis.

6) The American Tax Payer - Innocent The average person played by the rules and did not get caught up in the bubble. Losers We’ve paid for all the stupidity and then some. Our retirements were hit hard and our national debt is going sky high.

Do you still feel like Obama is doing a great job here? Common sense says that when there is a problem you try and fix it. That usually includes not punishing the innocent and fixing the problem. When you make it all about the greed of the banks, you miss the big picture.

Obama’s Economic Group Think

Over the weekend I read a very enlightening article in New York Magazine (I admit it. I was in a waiting room). The article was a think piece on the three main minds in Obama’s economic think tank, namely Geithner, Summers, and Volker. The article was pretty fair in my opinion, although disturbing in it’s omission to point out the serious implications regarding the problems of these three. It may seem moot since they are already in their positions, but I wanted to give account to those whom have Obama’s ear.

I was originally going to go through each of these guys’ resume, but realized that I would only be repeating myself. Therefore, I will enlighten you on the important aspects on or missing from their truly impressive resumes. The first of which is their resumes themselves.

I’m not going to give you spin on this one. These men have impressive resumes. Volker a former FED Chief, Summers a former President of Harvard, and Geithner one of the youngest FED Chairman of New York, the most important FED location. What’s most important about their resumes is not what is in their resumes, but what is missing. Neither Geithner, Summers, nor Volker have any experience in the private sector. They all are academics, who worked for universities and government agencies since graduating college and all with a degree in government economics. Now I have a degree in economics and am quite familiar with the academia behind the study. It is one of the most fractured fields of study you can find. You’ll find those that believe in fiscal and monetary policy, those that believe in monetary policy only, those the believe in fiscal policy only, those that believe in demand side fiscal policy, those that believe in supply side fiscal policy, and those that believe in no fiscal or monetary policy. All of these schools of thought with their own Nobel Prize Laureates. You can see already the trouble in picking a winning economic model to follow. That is why it is important to understand economics from the market perspective by taking place in the market. Those on the outside can only guess, but in the end economic theory needs to be applied and you only get to understand that where the rubber meets the road. How is Geithner supposed to run the Auto Industry and the Banking Industry? At the same time no less? He has never been at the reigns of similar companies, nor does he have any understanding outside his governmental paycheck.

New York pointed out that Summer’s is almost solely Obama’s economic brain. Regardless Obama’s think tank has some serious issues with group think. Volker was a Harvard professor and so was Summers. Geithner served under Summers when Summer’s was Treasury Secretary in 1999. With all of them from the same school of thought, is it any wonder why the same idea is being trumpeted? The idea of control more and spend more, is a product of academics overconfident with their theories of economics. Think USSR here. No government controlled industry has ever proven efficient. We’ve already seen it ourselves over the last six months.

Geithner’s a completely new face, but Summers and Volker have been around. Volker may have been one of the worst FED Chiefs we’ve ever had. He’s the one that sent interest rates up to 20% to stop inflation, sending the country into a recession. It is no surprise that the government is not worried about inflation with all the spending going on. You can be sure that Volker style inflation fighting is likely in the future from this administration. Don’t worry though, Obama is not giving Volker or his vaunted economic council the time of day. It’s all on Geithner and Summers. Summers wanted to be Treasury Secretary, but was denied because of his well known ego. It was this same ego that cost him his Presidency at Harvard for his sexist comments regarding how women can’t do math.

Now Obama does not have a clue about how to run an economy. There can be no denying it. I’ve been told that Obama is great at holding sessions where he gets multiple opinions on the economy, but I’m not impressed. I’m not impressed, because the private sector is far better than Obama at creating these sessions. Any corporation in the US will have a diverse group of ideas when making decisions. Ideas from executives in law, accounting, finance, engineering, economics, law and business are all easy to find in the board rooms of your standard company. It’s no wonder why US private companies are so much better at running things then the government. The CEO of one of my own company has a music degree from Julliard and an MBA as well as 30 years of experience in the industry. Our CFO’s are accomplished CPAs. Where are these points of view in Obama’s think tank? Obama has three academics in the field of government economics. It is not only likely good ideas will be missed, it is a certainty.