The New Mafia is headed by the Obama Family

Thursday, May 28, 2009

The most appalling, egregious move on Obama’s part has been in the treatment of Chrylser and GM’s bondholders. The recent wheeling and dealing (or however you say it in Austrian) going on with the GM bondholders give us an even clearer picture of what occurred with Chrysler and how Obama uses and operates the government. While the media turns their heads. While the media spins Obama’s garbage. Obama is running the government like a mafia godfather using his executive power to rob ordinary citizens. It is Obama’s most recent war in the name of fairness that brings hard evidence to light on how morally bankrupt Obama truly has become.

There are three undisputable facts that have been made evident by Chrysler and GM restructuring plans. First, Obama is willing to reward political cronies at all cost. Second, Obama has no qualms gambling with the US economy to do so. Third, Obama has no respect for the rule of law or any American who operates outside of the political groups who supports him.

To start out, I must expose the standard media template that is being irresponsibly repeated in the media like a broken record. We have been spun a host of stories on how the bondholders are greedy and trying to get more money from the government than they deserve. Most importantly, the actions of the bondholders are going to send the country into depression.

The problem with the coverage is this; why isn’t anyone questioning Obama’s leadership in the matter? According to the media and everyone in Obama’s administration, this is the only possible plan that could be hatched from his think tank. All the while, no one really questions why the UAW is making out so sweet on the deal. Obama offered the UAW 17.5% GM and 45% of Chrysler. This offer was not made to save jobs, to save wages, but to ensure the safety of the UAW worker’s pension, while at the same time giving control of the companies to political allies. As I’ve pointed out before, the UAW supported Obama big time with campaign contributions and with paid commercials. Why give the bondholders the short end of the stick? As I’ve also mentioned in previous posts, the bondholders were not involved in management decisions and they do not hold stock like an investor does. The purpose of a bond is to be safe in that bondholders will not lose their investment. Bondholders bought automaker debt, which was to be secured by first lien status against the company’s assets.

Let’s take a look at these evil bondholders who must be robbed so that the UAW can have a large interest in owning the automakers. There is Jim Modica. He and his wife are retirees who have all their life savings in GM bonds a total of $700,000. They live off of the yearly interest of $80,000. Normally, this is a good and secure investment as they would be able to recoup their investment in bankruptcy. That was until Obama got involved. Now Jim may loose his entire life savings while Obama tramples on contract law like he did with Chrysler. There is Chris Crowe a 50 year old home inspector who had bought bonds to pay for his son’s education and upcoming property taxes. Once again, a good safe investment until Obama decided to reward his UAW cronies. Obama has offered these bondholders 10% and rumored today 15% of GM stock, which is worthless. Sorry Jim and Chris, if only you ran the UAW Obama would have broken the law on your behalf.

What is more reckless is that Obama is gambling on the fact that his mafia style politics will be able to overcome all bondholder opposition. His gambling chip is nothing less than the US economy. There is a chance Chrysler’s bankruptcy may take a turn into chapter 7 liquidation as a federal judge listens to arguments and complaints from the Indiana State Treasurer who is looking to recoup losses to the state road fund and the teachers/police pension funds. Those funds lost millions when Obama robbed the state in the Chrysler chapter 11. It may be unlikely that this judge will rule in Indiana’s favor, even though the law of the land is on Indiana’s side. What happens if the case goes to the Supreme Court? I find it unlikely that they would side with Obama on this issue. As the debate rages many believe Fiat will withdraw if the bankruptcy is not concluded by June 15th. With thousands of Chrysler jobs and the economy at stake, one must ask what Obama was gaining in his actions? Did the UAW have a legal claim higher than the State of Indiana? No! Would it have been against the law if the Chrysler pensions were given the bondholders deal in reverse? No! Is what Obama did against the law and therefore robbery? Yes!

The bondholders are not only robbed, but many were also bullied. Three people from three different hedge funds claimed that they were bullied by Obama’s Car Czar. Not hard to believe when the following occurred after the AIG bonuses:

"Arrayed around a long mahogany table in the White House state dining room last week, the CEOs of the most powerful financial institutions in the world offered several explanations for paying high salaries to their employees — and, by extension, to themselves.

“These are complicated companies,” one CEO said. Offered another: “We’re competing for talent on an international market.” But President Barack Obama wasn’t in a mood to hear them out. He stopped the conversation and offered a blunt reminder of the public’s reaction to such explanations. “Be careful how you make those statements, gentlemen. The public isn’t buying that.” “My administration,” the president added, “is the only thing between you and the pitchforks.”

This is a clear threat from the President of the US against his own citizens.

Threats are nothing new to this President. He threatened to rescind stimulus money if Arnold lowered Union employee wages in the state. It’s rare the Obama administration makes any policy without a threat.

Rewarding political allies is also nothing new as there is mounting evidence that the Chrysler dealership closing were also politically motivated.

Where is the media? Where is the outrage from the left? Those who had hearings over Valerie Plame's ruined carreer and those who cheered over the prosecution of Scooter Libby. Where are the investigations? We had months of media coverage and hearings regarding Plame. How many months of hearings and coverage over the firing of a few dozen federal prosecutors? How much more should we investigate the robbing of more than a 1,000 Chrysler and GM bondholders?

The following Time article is a perfect example of the Obama spinning, propaganda dribble coming out of the media on the automaker’s restructuring. It paints those opposing Obama as boardroom cronies, plays up Obama’s risk taking, car board’s brilliance, and all those hard sacrifices being taken by the UAW. It also tries to promote the bankruptcy of Chrysler as all part of the grand plan. The article also down plays the contract law being broken by Obama, the bullying of the Treasury Department, Obama's hand in making these automakers recovery more difficult as a result of his new emmision standards, the political relationship with the UAW and shrugs at the losses being suffered from soon to be closed dealerships. The author calls the autoworkers underdogs and in the next paragraph tells us the days of “mom and pop” dealerships are over. At the same time fails to explain why the bondholders had to go to the whipping post instead of the UAW. Why indeed? If Obama is going to break contract law, why do it for the UAW instead of the bondholders? Don't kid yourself Obama Media, this is all politics.

Left Coast Rebel has an excellent post giving another example of the mafia style government Obama is running. Check it out here.

What Happens when the Rich are Taxed? They Leave!

Wednesday, May 27, 2009

I keep hearing how the rich need to pay their fair share. I’m dying to know what that fair share is. What’s the magic enumerated amount that moves a productive person from the evil column to the fair column? I wonder what my own fair share is and if I could get it in writing, pay off the debt, and be left alone. It seems every day that fair share number seems to be moving higher and higher. Don’t kid yourself when it comes to taxation, because any increase in any tax has very real consequences.

WSJ reports of the great State of Maryland:

“Maryland couldn't balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy. Politicians in Annapolis created a millionaire tax bracket, raising the top marginal income-tax rate to 6.25%. And because cities such as Baltimore and Bethesda also impose income taxes, the state-local tax rate can go as high as 9.45%. Governor Martin O'Malley, a dedicated class warrior, declared that these richest 0.3% of filers were "willing and able to pay their fair share." The Baltimore Sun predicted the rich would "grin and bear it."”

What was the result? According to the article 1/3 of the state’s millionaires left the state. As a result, the amount of revenue raised by the state came in $100 million less than they did before they created their millionaire’s tax bracket.

NY saw a similar occurrence when a more progressive income tax was promised this year and Billionaire Tom Golisano uproot himself from NY to move to Florida as opposed to paying $14,000/day in state income taxes. How much must Golisano pay to the government before he’s reached his fair share and when you are busy calculating that how much is founding Paychex and creating over 7,000 jobs worth? How much is his millions in contributions to hospitals and colleges worth?

The problem when trying to soak the rich is that wealth is very mobile. It is not hard for the rich to move elsewhere and be rich somewhere else. It is not hard to switch from intelligent productive American workers to intelligent productive Indians. I know this for a fact having previously worked on efforts to outsource to India. As the economies of the world become more interconnected, how much harder will it be to hold wealth hostage to a burdensome tax system?

To phrase Governor David Patterson, the problem with NY was that “We made too many promises with too few sacrifices.” Obama has proposed a $1.8 trillion dollar deficit, which nearly doubles the amount of Federal promises versus sacrifice ($3.5 trillion budget vs. $1.7 trillion total in revenues), who is going to make up the difference? How much are you personally willing to sacrifice? Are you willing to give away 50% of your income, 60%, all of it? How much?

With taxes on workers frozen for over a decade now, the American worker has been lulled into a dream world where tax increases are only to be going to the rich. However, when the rich step out of the way of the Obama train is still standing on the tracks? As wealth leaves this nation as they left MD, the only one left to make sacrifices are people like you and me. You are welcome to pay my share.

Jobs: It’s the Chink in Obama’s Armor

Thursday, May 21, 2009

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.

Why does President Obama Hate Retired Teachers/Policemen so Much?

In an earlier post I wrote about how investors in Chrysler bonds were your everyday people and not greedy capitalists out to stop the Obamatrain. Do you remember this Obama quote?

“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.”

Last week we saw that Obama didn’t really stand for the dealers like he said. He put over 60% of them out of business. It turns out he also doesn’t stand with the Indiana state pension fund for teachers and policeman. According to a WSJ article, the state pension fund lost millions due to the Chrysler restructuring as a bondholder. Another fund that was penalized was their state road and bridge construction fund.

What? Obama was going after those greedy hedge funds right? That’s correct, if you think that retired teachers and policemen are greedy. Millions of Americans invest in bonds because they want a safe investment for their retirement. A bond fully secured by the Chrysler’s assets seemed safe enough, right? Nope! You see Obama needed to give the UAW 55% of Chrysler. Why, because the UAW gave Obama almost $2 million in contributions, plus another $3 million in advertising.

This is truly a low moment in Obama’s Presidency and he’s only 5 months in. I cannot believe the cronyism propped up by this President. I cannot believe the left complained so long about Bush, but turn their heads at Obama’s brutish administration which is so much more brazen.

The law of unintended consequences must now be satisfied. First, Obama and the government now get to deal with a lawsuit from the state of Indiana. I just hope Indiana is willing to go all the way in their pursuit of the money that is rightfully due to the teachers and police. These people deserve every penny from their pension. Second, hedge funds have determined that the risk of loss due to politics is so high, that they will not be investing in any company that receives government aide. The UAW shouldn’t worry however, I’m sure one of Obama’s banks will be forced to give them money.

I’ve stayed out of the personal attacks on Obama so far, but after this I’ve decided to step into the ring. Obama truly is a tyrant and a petty one at that!

A Poetry Post

Monday, May 18, 2009

I thought I'd take a break from the usual post for some political poetry.

I Know His Name is Sammy

I saw him as I stepped out of my car at work
He looked like he was down on his luck
I knew that his name was Sammy
I saw that his pockets were empty
I saw that his eyes were empty
I saw that his smile was empty and his teeth were white
“Could you spare Sammy some change?” He asked.
I reached into my pocket, pulled out my wallet
It was empty save the last five dollars I had for food
I thought, “I’ve eaten enough for today.”
I gave it to Sammy who smiled and walked away

The next day I saw Sammy
As I stepped out of my car at work
He still looked down on his luck
I still knew that his name was Sammy
I saw that his pockets were empty
I saw that his eyes were empty
I saw that his smile was empty and his teeth were white
“Could you spare Sammy some more change?” he asked.
I reached into my pocket, pulled out my wallet
It was empty save the last five dollars I had for gas
I thought, “I could get gas on another day.”
I gave it to Sammy who smiled and walked away

The next day I saw Sammy
As I stepped out of my car to go to the store
He was with a friend and they were down on their luck
As they walked by I reached in my pocket
I pulled out my wallet
It was empty save two five dollar bills to buy my daughter a book
Without hesitation, I pulled one of the bills out to hand to Sammy
He asked, “What else is in that wallet?”
I froze
I saw that their pockets were empty
I saw their eyes were empty
I saw that their smiles were empty and their teeth were white
Then I knew that they were both named Sammy
So I put the money back in my wallet and walked away

I still see Sammy
When I step out of my car
His pockets are still empty
His eyes are still empty
His smile is still empty and his teeth are still white

Is the RNC Trying to HiJack the Tea Party Movement?

Saturday, May 16, 2009

This past week I received an Email through one of the many blogs that I belong to. It was an invitation from the Republican Party, IE., "The Republican National Committee" to join them in
Washington, DC for a Tea Party".

I have decided NOT to attend this function.

Here are my reasons:

* I have been a member of the Republican Party since I was old enough to vote. While I support the Republican candidates at the local and state levels (most of the time) something happens at the Federal level. My thinking is that successfully elected candidates are either suddenly struck by lightning while traveling to Washington which causes a form of amnesia where they forget where they came from and who they are there to represent, or there is an invisible "force field" around Washington, DC that causes brain damage. Whatever it is it seems to be a reoccurring phenomena because as soon as they leave Washington and return to their districts at election time they somehow regain their memories only to loose them again once they return.

* The fact of the matter is that no matter which party they are from, they seem to check their convictions and values at the door of Congress and bow to those who control the power base within the Party and the National Committees that they belong to. Unfortunately, I have come to the sad conclusion that like the Democratic party the Republican party has become a "PART OF THE PROBLEM & NOT PART OF THE SOLUTION".

* The "Tea Parties" are a "grass roots" effort to change politics as usual in Washington. They are made up of concerned Americans on both sides of the isle. Democrats, Liberals, Republicans, Conservatives, Libertarians, from all walks of life, races, and ages and all have come to the same conclusion. "That the current crap coming from the government in Washington is NOT serving the best interests of the citizens and voters of this country.

Our nation is facing serious problems that are NOT unsolvable but have become a basis for power plays by both sides. Neither party is serving the "people" but are more interested in serving the special interest groups and lobbies that control Washington.

The Republican's are trying to re-energize their party by reaching out to those within the Tea Party movement. It is the considered opinion of this writer, that if it is allowed to happen, the movement will die.


Because the common thread that binds the movement together will be lost. The thread is simply this. It is not about parties or agendas, something that neither party seems to understand. Its about a run away government that has become so blatantly corrupt that those in Washington don't even bother to hid it anymore. Its about those who have shown true arrogance in abiding by the Constitution and the rule of law. Its about taking back our government and electing leaders who will again put the interest of "We the People" ahead of partisan politics and actually try to work together to find common ground to solve problems and issues rather than use them to gain life time power.
These are people who believe strongly term limits, a flat tax, running government within its
spending limits, state's rights and will stop throwing money at every single pet project that comes along.

If you take a few minutes to research both the Constitution and the "Federalist Papers", written by those who understood the principles behind the Constitution you will find that term limits actually did exist and that representatives were not elected but to be appointed by the states for a limited amount of time and were to serve without pay.

If the Republican party is allowed to hi-jack this effort it will kill the movement and the status quo will remain and continue unchecked as our country slowly sinks to third world status.

Frankly, I think that are founding fathers, if they were alive today, would be leading the charge and would be both proud and supportive of this effort. Its the same principles that they fought and in some cases died for.

Please continue to support the objectives of the movement, and the party be damned.

God Bless

The President Comes Down with MPD

Friday, May 15, 2009

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.

Voting for Barack Obama Causes Unemployment: An introduction into the world of Modeling 1 of 3 on global warming

Thursday, May 14, 2009

When we think of science, we think of educated men in high tech, state-of-the-art labs conducting experiments that will bring about the discoveries of tomorrow. These scientists spend their days with beakers in hand, carefully pouring various chemicals, and spending countless hours in front of a chalk board searching for the key that will complete a complex mathematical formula. Unfortunately, this picture is inaccurate to describe the science behind global warming. The science behind global warming is not in a lab with chemicals or at a chalk board with formulas, but at a computer conducting regression models based on statistics. Our culture is used to the firm formulas of Einstein and Newton, what does regression modeling mean and what are its limits?

I am not a scientist, although I’d like to think of myself as an amateur one. However, the same modeling used in global warming “science” is the same I’ve used on many occasions to make economic models. In fact, I created one to illustrate how modeling works. My model is how voting for Obama causes unemployment. Below is the mathematical output of my model. The model was created by using the April unemployment rates from the 50 states and comparing that to whether or not that state swung for Obama. For those of you who know something of modeling and want to know a little about my methodology; I set up dummy variables to establish the mathematics needed for the “did the state swing for Obama in the election” variable. States that voted for Obama were assigned the number 1 and states that voted for McCain were assigned the number 0. All of this is statistically sound. However, please note this is an example only. I’m not actually going to try and make the argument that this model actually proves voting for Obama causes unemployment.

First thing is first, how does modeling work? In the case of global warming, variables (average global temperatures and measurements of carbon dioxide in the atmosphere) are placed side by side in a mathematical comparison to determine if there is a similarity between the increases and decreases in these variables. The strength of this relationship is determined by a statistical measurement called R square. It must be noted that the R square for global warming models that I’ve seen tend to be over 60%, which is a good strong relationship in the statistical sense and is part of the reason why the models have gained a lot of support. My model has an R square of 66% (pretty strong relationship). There are other statistical tests that need to be reviewed such as P-Value, F significance, and assumption testing (residual analysis). I won’t go into these because this is a political blog and not a science blog and it would probably put you to sleep. The P-Value and F significance for my model look very good. I did not do a residual analysis.

Regression modeling is not in and of itself science, it is statistics. Modeling is a tool used to help determine relationships between variables and how strong those relationships are. Modeling does not spit out scientific law, but requires scientific analysis to interpret. It is not all that different from one of global warming’s most favorite tool, the thermometer. The thermometer can measure the temperature of a single location, at a particular altitude, at a particular point in time. As a tool, the thermometer has certain limitations and operating requirements that must be followed for accuracy. For example, don’t place your thermometer in direct sunlight if you want an accurate measurement. Like the thermometer, modeling has its own limitations.

As stated above and I reitterate, statistical modeling in and of itself does not establish a cause and effect relationship. You cannot say, “My global warming model has over a 50% R square value, therefore carbon dioxide causes global warming.” I cannot say based on my model that voting for Obama causes unemployment. Instead, it shows that there is some kind of relationship. It is then left to scientists to interpret and reason what that relationship is. The cause and effect relationship must be established from this reasoning. It is in this interpretation and reasoning of the results that muddy the waters of objective science. I’m sure I could think up a couple of theories for explaining how voting for Obama could in fact lead to unemployment. For example, there were many people who voted and supported Obama who thought, “They would no longer have to worry about putting gas in their cars or pay for their mortgage (a direct quote from a zealous supporter).” States that swung for Obama probably had large populations of these types of supporters. Once Obama was elected, they followed through with their misguided beliefs and decided to stop working, since they believed Obama would take care of their every need.

For global warming, we know that carbon dioxide is a green house gas and could be a factor in global temperatures, but what about the variables that affect carbon dioxide? Could the dependant and independent variables be inverted? This would mean that increasing temperatures may be affecting and causing an increase in carbon dioxide. Perhaps, there is a third variable (like the sun), that may be affecting both global temperatures and the amount of carbon dioxide in the atmosphere at the same time. These are just two of thousands of possibilities that would cause problems for the global warming models.

My model argument that explains my model could be threatened by the fact that unemployment was increasing before Obama was elected. Perhaps, the relationship is coincidental. Perhaps, there is another variable that is making it look like there is a direct relationship. For example, Dick Cheney got together with all the corporations that he secretly runs and they conspired to fire millions of people to make Obama look bad. Maybe high levels of unemployment at the time of the election became a leading reason why people voted for Obama?

Another issue is the accuracy of measurement? Most models prefer taking data from a conglomeration of 2,100 temperature stations around the world. The data at these stations are constantly being found to be overstated. For example, last October Russia’s temperatures were the exact same temperatures recorded in September. Is the methodology for determining average global temperature sound? There is a great deal of variation in temperature from one location to the next in both distance and altitude and these could have a large affect on the accuracy of the data.

The model I chose above is a sample of states and does not actually hold water in the real world. If I took all 50 states my R square would be 16%. I decided to try a population and roll the dice to see if I could get a better result with a sample model instead. Since global warming models are using sample data, the methodology for calculating average global temperature needs to be sound or else you will come up with an inaccurate model like I did.

The issues above are problems with the science that should be reported to the public and openly discussed. Doomsday predictions, on the other hand, are entirely dishonest. Using modeling to make predictions 100 years away is not only wrong, but completely outside of the acceptable use and methodology of mathematical modeling. Modeling is useful for making predictions in the short term. However, global warming alarmists are predicting temperatures for nearly more years in total than the number of years used in their data set. Scientists seem to get a pass on this rule, because they are dealing in “science.” I do not agree, there is absolutely no reason or logic that could defend these predictions as being mathematically accurate and in making these predictions, the credibility of their models must be questioned.

There are other possible issues with the science of global warming, but I’ll deal with those in my next two posts on global warming. As I stated in my last post on Science, I’m not trying to debunk or promote global warming. Instead, I’m trying to highlight on the issues that is not being discussed honestly in the media and in some cases being explained by scientists.

Restoring Science to its Rightful Place

Tuesday, May 12, 2009

Who’s against reforming health care? Who’s against reforming education? Who’s against energy independence? These are the foundations of Obama’s policies. Why doesn’t everyone support his presidency? It is because many people do not agree with how Obama wants to solve these problems. Remember Obama’s little line in his inaugural address; “We are going to restore science to its rightful place.” Anyone trying to hold science down must be quite ignorant, right? However, as with anything Obama says we must ask, “What does Obama really mean?” “Anyone against science must be ignorant,” says your standard media template. I ask, “What science and by what do you define as science?” Is it science that we are restoring, or selecting ideas in science that support your political point of view?

For example, one of the first acts of our new President was to repeal Bush’s ban on embryonic stem cell research. Wait, Bush didn’t ban embryonic stem cell research, he forbid executive funding of stem cell research. The issue presented a moral dilemma at the time, Bush side stepped the issue by refusing government funding, but left the playing field open for private funding. The conservatives cheered and the liberal left was livid because the conservatives were happy. “George Bush is ignorant and holding back science,” the liberals argued. Obama’s removal of this ban was a master stroke for the liberals. Finally, embryonic stem cell research can be restored to its rightful place. Thanks to Obama, any new government spending on embryonic stem cell research falls into the category of most Obama spending, wasteful (ok, investing for you libs). That’s because the “science” on embryonic stem cell research was already settled. It does not work. Doctors cannot stop embryonic stem cells from turning into cancer and so the science is useless. Below is a video of Dr. Oz explaining this position on Opra.

In removing the ban, he was not restoring science, but propping up old, disproven theories that appealed to his political world view. Is Obama truly the person to be judging what science needs to be restored?

I say let the science speak for itself. If it has merit, it will prevail.

I am a science skeptic. That doesn’t mean I believe science is a bunch of lies. To me, it means that I don’t jump on the bandwagon of belief every time the media decides to publicize a new popular scientific theory. The reason is because science is rarely settled in a brand new theory or discovery. In fact, it takes years of testing and study before you can realistically close the book on a scientific discovery.

When I was a child, my favorite dinosaur was the brontosaurus. I liked that it didn’t scare the crap out of me and it was supposed to be the biggest of all dinosaurs. Do you remember this dinosaur? The brontosaurus does not exist. The head of one dinosaur was mistakenly placed on the body of another dinosaur. This is one of many examples of science making a mistake.

Scientists are also human beings. Despite one of the tenants of science being objectivity, it is impossible for humans and all humans to be objective. There are at least a dozen of proven frauds in the science of evolution (example only. I’m not arguing one way or another on evolution). For example, Piltdown man found in England in 1912, proved to be a modern human that had been stained to look aged and had the teeth filled down. These things do happen. Objectivity is also threatened by other factors such as funding, job security, and the location you received your education.

I believe that science does need to be restored, but not by picking one theory to win over another because of political expedience. Instead, let’s have the science speak for itself. I plan on doing a few posts on global warming in the days to come. My intention is not to refute or promote it, but to deal with serious issues facing the science, which are not being discussed or revealed to the general public. I know that global warming is not the topic of political debate at the moment, but as Obama looks to cap and trade and ideas to help solve our energy dependence, it is important to deal with the science Obama is trying to restore.

What Happens When Your Philosophy is Fairness and Not Efficiency?

Monday, May 11, 2009

An AP article by Matt Apuzzo and Brett Blackledge highlights a trend we are going to see more and more in the future. The article “Stimulus Watch: Road money skips over needy areas,” highlights a fervor and danger in opening the redistribution of wealth box. According to the article:

“Although the intent of the money is to put people back to work, AP's review of more than 5,500 planned transportation projects nationwide reveals that states are planning to spend the stimulus in communities where jobless rates are already lower.”

“One result among many: Elk County, Pa., isn't receiving any road money despite its 13.8 percent unemployment rate. Yet the military and college community of Riley County, Kan., with its 3.4 percent unemployment, will benefit from about $56 million to build a highway, improve an intersection and restore a historic farmhouse.”

There are so many philosophical issues that need to be addressed when taking the role of a god and deciding who will get what. What are your standards? Who gets what and how much? Obama left these questions to be answered by state and congressional politicians. However, when you promise relief to those that are hurting most, what is the likely mindset to those listening? The answer is that those that feel they are hurting in any way; feel they are hurting the most.

Let’s put this article into perspective. On the whole, one unemployed person is the same and hurts as much as the next unemployed person, right? So what does it matter if we are helping the unemployed from an area of 3% unemployment versus one with nearly 14%? It matters because it doesn’t sound fair to those living in the area where there is 14%, pay taxes as much as everyone else, yet they do not receive assistance. Does it still sound reasonable?

Once the promise is made and the door to redistribution is open there is no end to what would be the fairest outcome. For example, the BLS shows that 15% of those unemployed are black males. This is the demographic hardest hit by the recession. Logically, the stimulus funds should go to aid districts with high rates of black male unemployment regardless of the overall unemployment rate of the area. Surely, this is an even better measure to distribute the stimulus than the unemployment rate of the geographic area?

I could go on creating examples of the fairest distribution of the stimulus package and each one will probably sound reasonable. The point however, is that there is no end to the debate of fairness. In truth, the fairest outcome in an economy is one where people have the greatest opportunity to gain wealth as opposed to one that tries to dictate and calculate the worth of an individual then send that individual their supposed fair share. The answer to the distribution question is capitalism.

American Economy Backed into a Corner: What Obama is not Interested In

Friday, May 8, 2009

I contend that our country’s economy is in dire circumstances. Two news stories that have recently come out highlight the dichotomy and complexity of the situation we are in. One was today’s release of the unemployment figures and the second is that China is still buying gold, lots of gold. I strongly contend that we will either be thrown into a devastating long term recession or inflation that will have us begging to be back in the days of Carter.

I understand that there is a lot of press talking about how we are coming out of this recession. They may be true, though I do not believe it. Regardless of whether I am correct or not, we will not be out of the woods until the unemployment rate tapers off. It is not. According to a WSJ article, the rate dropped another .4% bringing us to 8.9%, the same level as 1983. At this rate we would be up at 12% by the end of the year. Forecasters predict it around 10%, but trending shows it could go as low as 18% by next year. This is huge in significance, because so far we haven’t seen a dramatic number of companies going out of business. However, with every job lost we are one more step closer to consumer spending jumping off a cliff. Once that happens we will be in an economic free fall where unemployment breeds a drop in consumer spending, leading to companies closing their doors, which leads to more unemployment. I believe the positive economic news lately has created confidence in consumers and is encouraging people to not reduce their spending behavior. This confidence cannot be sustained if people are continuing to be laid off or continue to be unemployed.

If that isn’t the worst of our problems, China is buying gold, lots and lots of gold. Thanks to the Canadian media, I have this quote from the Montreal Gazette:

“It is a chilling statement from an expert on both gold and China. But he is just speaking truth to power: In a G2 world (the United States and China), the piper calls the tune and China holds a US$2-trillion mortgage on the United States and is not happy. This country, along with others who lend money to the United States such as Saudi Arabia, will determine the value of the U.S. dollar and gold. And they have spoken. They are not buying more U.S. treasuries and are buying gold as a new as set class. China announced that it was doing so quietly and recent reports are that the Saudis and others have been buying bullion and hocked gold jewelry from around the world to be melted down in Middle Eastern refineries.”

I actually applaud China and think they are brilliant. China is looking to emerge from this crisis as the strongest economy in the world. As the US government destabilizes our currency with rampant government spending and money printing, China is looking to stabilize their currency with large holdings in gold. This will make China’s currency extremely attractive. This is especially true after US banks dropped the ball with the mortgage crisis. Our currency is far and away the biggest reason why our country is so prosperous. China's investment in the dollar may be the biggest factor to our country's economic successes over the last 10 years. China holds about $2 trillion in US debt, which has funded the money expansion of our monetary policy since 2001.

The problem is that China is ditching the dollar for gold. With the US printing money at the same time, high levels of inflation are on the way. However, dollar devaluation is not the only thing that will mean inflation for the US. What if China succeeds in replacing the US as the world’s strongest economy? It means that China's goods will be more expensive in the US. Now where was it again that we buy all our goods?

If you think my prognostication is dire, read the conclusion to the Canadian article:

“It is an irreversible trend that China and others will continue to dis-invest and diversify out of U.S. dollars and that inflation will further impair the U.S. dollar's value.

That's because the U.S. monetary/economic rescue hasn't fooled anyone and is simply Washington's version of the excesses and overleveraging that led to the need for a rescue in the first place.”

I'm proud to say that Obama didn't fool me. His stimulus plan was a complete farce.

It is times like these that I dislike being right (I predicted this in March). Obama needs to get on the train fast and start putting the machinery together that will make our economy competitive again. Invest his time and political capital in fiscal responsibility, bringing us closer to a gold backed dollar, and supply-sided economics. Unfortunately, he is not interested in the economy. He never has been. No, it’s time to loot the economy and give to those he and the progs feel have been kicked around. That’s the mission, no matter what the cost.

When Your Spin Fails Again

Thursday, May 7, 2009

The last time Obama tried to sound “fiscally responsible” it was a big joke. This time Obama’s effort is tragic. I exposed Obama’s agenda in my post “When Your Spin Fails” as an effort to create media coverage about fiscal responsibility to offset spending coverage. Today, Obama announced he was cutting $17 billion from his $3.44 trillion dollar budget. This time it is the Republicans exposing the effort as half-hearted.

The spin on this little gem is not solely on the amount, that is of course part of it and $17 billion is much more money than $100 million. No, the big spin on this one is to hype up the number of programs getting a cut. The purpose of which is to try and show how hard Obama worked to come up with the cuts. You see he was only looking at 3 departments in his $100 million dollar savings, that's truely not as much of an effort as 121 programs. He even detailed these cuts in a 1,300 page document to prove his effort (according to an AU source. Sorry I lost the link). Below is from the AP:

“President Barack Obama asked Congress on Thursday to eliminate or trim 121 federal programs for a savings of $17 billion in the coming budget year.”

This time it was Obama and not Robert Gibbs echoing:

“Some of the cuts we're putting forward today are more painful than others. Some are larger than others. In fact a few of the programs we eliminate will produce less than a million dollars in savings. Outside of Washington, that's still a lot of money.”

So let’s put this number into perspective. His cuts are 170 times higher than his last attempt of $100 million. However, he would need to make 85 cuts of the same size to cover the deficit he is proposing in his budget. For the purpose of perspective, he would need to make this cut 35 times to cover Bush’s deficit.

The best part of the story is that some of Obama’s cuts mirror those that Bush requested, but were rejected by house democrats. The President has changed, but not the congress as his own congressional counterparts have already rejected many of Obama’s cuts.

The area that Obama will cut the most is defense. However, he and the house are proposing a $130 billion spending bill for defense later this year. Tell me, if you cut $10 billion from the budget, but are working on a $130 billion spending bill outside the budget for next year, has any cut really happened?

The true test to whether Obama is serious about fiscal responsibility will be in how hard he's willing to fight with congress to get the cuts passed. I'm willing to bet it won't even make it to round 1. However, I suppose the media will have to give him credit for all the hard work in thinking it up.

A Tale of Two Cultures of Corruption

It looks like the phrase “culture of corruption” refers specifically to the Democrat party these days. As a Republican, I’m proud to say that the party has been largely successful in weeding out the bad apples over the last 3 years. As a result, we are left with a political party that controls the house, senate, white house, and all of the criminal activity. However, I must take the time to highlight the differences between the current “culture of corruption” and the old one.

The Republican culture of corruption was carried out in the full light of the press. There seemed to be no end to the articles regarding Ted Stevens, Tom Delay, and the Abramoff scandal. In fact, Hollywood is making a movie with Kevin Spacey depicting the Abramoff Scandal. You can easily google these topics and quickly find new stories. What about all the democrat scandals so quickly swept under the carpet? It may surprise you that my googling efforts found more recent press on Tom Delay than recently embedded Roland Burris.

In actuality, I couldn’t write a post long enough to cover all the corruption being investigated in congress. Jonah Goldberg covered many of the stories in an LA Times piece called “Democrats wallow in a ‘culture of corruption.’” Devrim, a regular reader and commenter on this blog had this to say on Senator John Edwards Scandal:

"Senator John Edwards is a man of my heart. He is under investigation for misallocation of funds from his campaign. In my belief, Sen. Edwards should appear in front of the court, in his best souther gentleman voice declare that "funds spent on a mistress are well allocated, not misallocated, therefore the prosecution has no case".” Check out his full comments in his Hijack Thread.

Just in case you can’t find press about corruption in the Democratic Party, here is a brief refresher. We have 6 tax cheats that were appointed to Obama’s cabinet, tax cheat Charlie Rangel, Diane Feinstein’s billion dollar hubby deal, Roland Burris’ perjury, Edwards and Spitzer’s love triangle and cover up, William Jefferson’s money in the freezer, John Murtha the earmark machine, Blago and Richardson’s play to pay scandals and Pelosi’s missing memory in regards to the enhanced interrogation meetings she attended. Why don’t I hear about these scandals day after day and all day?

Another point must be made regarding the validity of all the Republican scandals. Charges regarding Ted Stevens’ ethics violations were dropped last month. Tom Delay was indicted, but the charges never went to court. It is not beyond the realm of belief that charges could be manufactured for political gain. Remember Palin's Troopergate? That was big news in the fall, but I dare you to try and find all the news stories where she was cleared in the investigation, that the firings were legal and there was no probable cause for an ethics violation.

I maintain that political corruption is not something owned by one party or another, but a culture inherent in all politics. This is a truth more evident to the American public every day regardless of the efforts of the media and Democrats to brand it a Republican problem.

A Nation of Cold Cheese Sandwich Eaters

Monday, May 4, 2009

If you've followed my blog, you know I rarely post someone else's article in its entirety. I read this article and felt it spoke to Obama’s entire budget agenda. It speaks to everything that is wrong with today’s entitlement mentality. Below is an article by Jeannie DeAngelis that was published in the American Thinker (The link is under 5/3 on my article list).

The "village" is dishing out free lunch. Unfortunately, the natives are restless because the only provision on the collective cauldron is a "cold cheese sandwich." School districts all across America are under attack over the sandwich, fruit and carton of milk provided gratis for students without lunch money or those who fail to pay the tab for charged lunches. The initiative is called the "cheese sandwich policy" implemented as an effort to prevent children from going hungry, while insuring the district's budget remains unstrained.

Tearful mothers pleaded with school districts to stop singling out children by feeding them cheese sandwiches. Students are vowing, they "...will never eat sliced cheese again" after having to eat them as a "courtesy meal." Cheese sandwich anger is palpable and is being interpreted as a "singling out or punishment" of poor children.

One example is the Albuquerque New Mexico school district, which is the fifth largest in the country and should serve as an example to the rest of us of what happens when governmental type entitlement programs are instituted to meet needs that are deemed "rights" for large groups of people. What occur are "cold cheese sandwich" programs considered adequate by dispensers of the privilege, but below the expectations of recipients?

We live in a deluded state of entitlement in this country. Our perceptions of what we deserve don't quite line up with our bottom line. Not being able to meet the expense of a house doesn't stop some of us from purchasing one, forgoing the mortgage payment, blaming predatory lenders for our predicament and expecting the government to come up with the monetary solution. This type of attitude is indicative of the practice of sending children to school without lunch, running up a delinquent tab, expecting kids to be eligible for free hot pastrami on rye and then protesting when all they get is a "cold cheese sandwich".

We were once a nation that assumed responsibility for the needs of our own family. Never would we expect our food or housing to be provided by anyone other than ourselves and we worked hard as proud providers. Over the last twenty years, we're become a country that views itself as "entitled" and deserving of governmental provision of shelter, transportation, education and of course health care. We're sucking our thumb, curled up in the fetal position on the lap of a lactating Nanny state. However, when the government provides what is standard government colostrums we're shocked, appalled and dissatisfied with the stipulations.

We've eagerly elected politicians who are "changing" America into something against the grain of who and what we've historically been, yet we're still expecting what we've been used to -- just minus a monthly statement of any kind. Sorry comrades it doesn't work that way. American's are about to find out that "cold cheese sandwiches" are government cuisine and like it or not we're going to have to gag down dry sandwiches, warm WIC milk and a mealy, rotten apple if we don't wake-up in a hurry.

It is going to be very interesting to see the reaction of American's, who are eagerly awaiting single-payer Universal Health Care and who falsely imagine that for "free" they will have the same access and quality they presently enjoy These are same hoodwinked individuals who think they can skip mortgage payments and remain in their homes or overlook lunch tabs but still demand personal size pizzas and Acai-Blueberry-Pomegranate Vitamin Water without charge.

We are an impatient nation griping on deli lines, exhibiting road rage when caught in traffic, avoiding the inefficient DMV, walking out of the diner if the waitress dawdles and buying stamps online because it takes too long at the US post office. Surprisingly, this is the same group that thinks Universal Health Care is a panacea in waiting.

Wait until Americans get a "cold cheese sandwich" slapped onto the lunch tray of reality.

"Many Americans look to Canada's Medicare program ...ignoring the very real costs that system imposes ... long wait times that can stretch into months or even years of painful and detrimental delay. Chronic conditions can become acute, with increased morbidity and mortality, and curable malignancies may become incurable" (Waiting Your Turn, Studies in Health Care Policy, Fraser Institute, October 2008).

If parents are complaining to school boards about children's free lunches wait until curable cancers become incurable because of rationed treatment.

The same citizens who are complaining about "government cheese" sandwiches will be begging for the right to eat one when Universal Health Care restrictions decide the menu. Wait until loss of personal freedom is driven home to dying people who, while waiting for treatment, crave a gooey, grilled cheese sandwich and are then forced to pay increased taxes on the meal because butter, cheddar and white bread are considered detrimental to health and responsible for putting undue strain the health care system. We are in grave danger of finding ourselves sitting around gumming government "cheese sandwiches" because a socialistic Sugar Daddy reprimanded us for the candy stuck in our teeth costing us our dentures.

The witch doctors are entering the village and we're on the precipice of giving government unprecedented control over our lives, which I promise will nurture a response similar to Danessa Vigil's over her free cheese sandwich when she said, "... it makes me feel like I want to throw up"

Wouldn't it be better to insure that the choices available to us are dictated only by our own resources, driven by personal responsibility and initiative? The American people should reevaluate the cost of what the federal, state or local government considers free and if they don't want to have their entire life transformed into a giant, "cold cheese sandwich" maybe they should bag their own lunch and accept responsibility for their lives.

Where I felt the article did not go far enough is explaining why people become unhappy with their free lunches. When government provides, there is no one to thank (maybe Obama in the US of today, but you see, Obama didn’t give the tax payers did). There is no shame. There is no sense of indebtedness. In today’s compassionate government, taxes are taken from people against their will and sent in the mail to someone else. There is no spirit of giving or compassion in the exchange. It’s completely sterile. When a poor child is donated a lunch from an actual person, there is a feeling of obligation and thankfulness towards that generous person. There is a feeling that one must take that investment of generosity and create a return; to work towards a day where the one that received the donation is in a position to donate in order to repay the act of kindness.

In our past, people in communities used to look out for each other. When individuals helped individuals, there was a face to the charity and compassion given. That gave the system of welfare stability. If we want to bring entitlement to an end, we need to walk away from a compassionate government and bring back individual compassion.

How Chrysler's Bond Holders Can and Will Trump Obama

Friday, May 1, 2009

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.


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.