Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts

Sunday, May 22, 2011

Critiquing Mish's "Better Way"

Mike ("Mish") Shedlock observes that the recent set of protests in Greece, Spain, Wisconsin, Ohio, Illinois and now Oregon are symptomatic of a belief in legalized theft.

The protests in the US and Europe have a common theme "gimme gimme gimme".

Everyone wants something, and they want to take it from someone else to get it. In the US, the SEIU is right at the top of the list in wanting to pick the pockets of everyone else for their own self-serving benefit...

...Public union members [in Oregon] want to preserve the status quo, just as they do in Greece and Spain... Well the status quo is broken, and proof is easy to find: Public union wages and benefits have bankrupted many cities and states. The way to fix the problem is to get rid of public unions not increase their power.

Shedlock observes that austerity measures are absolutely necessary, but so too are real repercussions for the bankers whose bad decisions are still being backstopped by taxpayers.

The SEIU and their Greek counterparts want no part of the pain. Unfortunately untenable wages and benefits helped wrecked Greece and they have bankrupted many cities and states in the US.

So, yes there is a "better way". The "better way" is to stop the bailouts of banks and stop handouts to unions as well.

The Better Way

  1. Implement Rand Paul's national Right-to-Work proposal
  2. Scrap Davis-Bacon and all prevailing wage laws
  3. Get rid of Fannie Mae, Freddie Mac, HUD, and the FHA
  4. Stop the bailouts of banks at the expense of taxpayers
  5. Implement Paul Ryan's Voucher Proposal for Medicare (see Who’s Right on Medicare Reform, Ryan and Rivlin or Obama and Gingrich? for details.)
  6. Reduce military spending substantially
  7. Stop attempting to be the world's policeman
  8. Kill the student loan "debt-slave" program
  9. Pass a Balanced Budget Amendment
  10. Audit the Fed then end the Fed

That is the better way. It will be difficult to pass those measure because each proposal has a mob of naysayers and constituents all clamoring "gimme gimme gimme".

We need a leader willing to spell out the serious situation the nation faces, what must be done about it, and the sacrifices that must be made for the nation to get out of its hole.

President Obama is clearly not that leader. Indeed he fails on every point.

I like the sentiment, but Mish's list has a couple of clearly defective points:

6. Reduce military spending substantially - How? Where? Should we cut carrier battle groups in the age of a nuclearized Iran, which seeks the return of the Twelfth Imam? Cut missile defense as Iran builds missile bases in Venezuela? Slash cyber-defense while China wages open information warfare against the West? Eviscerate NASA, now that Obama has largely defunded it and pillaged many of its capabilities?

China is on the move. Iran is on the move. Islamist terror groups are sprouting in cities all over the world, including our own.

Slashing defense in this environment is tantamount to national suicide. Besides, our military is about the only damn piece of the federal government that works the way it's supposed to. And it's almost the only piece of the current federal government authorized by our nation's highest law: the Constitution.

10. Audit the Fed then end the Fed - only a partial ding: auditing the Federal Reserve is long overdue. But, as for ending the Fed? What's its replacement for facilitating inter-bank lending?

There have been central banks in the U.S. since 1791. The Fed, in its current incarnation, was intended to help prevent banking panics, a long series of which had precipitated its creation.

The problem is that the Fed's mission has continually expanded to the point where Ben Bernanke, the Fed's Chairman, openly states that he believes his mission is to directly influence the economy.

I'd be satisfied with returning the Fed to its original mission.

Other than these two items, I think Mish's list is a damn good start.


Saturday, May 21, 2011

Civil Society Frays in California as Teachers Are Arrested During 'Occupation' of Capitol Building, Demanding Even Higher Taxes

California is one of the highest-taxed states in the land. Its gasoline taxes are second highest of all 50 states. The state's business tax climate is the second worst in the U.S., ranked 49th by the Tax Foundation. Its state and local tax burden of 11.8% of income is the sixth-highest in the country. And California's progressive income tax pegs the top individual rate as third-highest in the land.

With all that said, California is still running a $10 billion deficit. Standard and Poor's is warning that the state's credit rating -- already worst in the nation -- is "at a crossroads".

But that hasn't stopped California's teachers unions from demanding even higher taxes.

The California Teachers Association declared a state of emergency and launched statewide actions May 9-13 to dramatize the threat to schools and public services posed by the state’s deep budget crisis.

...On our first day, dozens of Cal State University students launched an occupation of the Capitol building at closing time, and 65 were arrested, with several teachers who joined them in solidarity. CTA would carry out its own no-business-as-usual action later in the week...

...This year, with federal stimulus money no longer filling the budget gap, things were going to be worse.

...While teachers from CTA’s 1,100 local associations led the state-of-emergency week, we were not alone. Our sister union, the California Federation of Teachers, joined us... “Unity Day” in Sacramento brought members of the Service Employees, AFSCME, UNITE HERE, and Firefighters.

Here's a news flash for the union bosses: spending is too high, businesses are fleeing and taxpayers are struggling with a horrible economic environment compounded by a huge tax burden and insanely complex regulations.

If California wants to survive, it must break the backs of the public sector unions once and for all.


Wednesday, May 18, 2011

Nomura Equity Research: Batten Down the Hatches -- Obama Is Making the Same Mistakes Roosevelt Made During the Great Depression

Richard Koo of Nomura Equity Research has some bad news for investors. The end of the Obama administration's "QE2" program of money-printing, in Koo's opinion, will likely have devastating effects on the stock market.

When a central bank provides liquidity to the market, it buys government debt or other securities in exchange for cash. The previous owners of those securities, typically financial institutions, take that money and attempt to turn a profit by loaning it out...

...What actually happened, however, is quite different. Market liquidity in the US and the UK almost tripled. But the money supply, which represents funds actually available for use by the private sector, has increased little if at all since the financial crisis in 2008... ...Despite this reality, many investors in both the US and the UK appear to labor under the misconception that an increase in the liquidity supply due to quantitative easing will inevitably boost the money supply...

...The decline in private-sector credit in the US and the UK is attributable to both the unwillingness of banks to lend and the unwillingness of the private sector to borrow. The two factors are rooted in balance sheet problems and are indications that both countries remain in balance sheet recessions...

...In effect, the money supplies of both the US and the UK are being supported by government borrowing. If the two governments chose to embark on fiscal consolidation, their money supplies would contract...

...When the situation is viewed in this light, we come to the realization that Mr. Bernanke’s QE2 was in fact a major gamble. It was a gamble in the sense that the Fed tried to raise share prices with QE2. If the wealth effect resulting from those higher prices led to improvements in the economy, the higher asset prices would ultimately be supported by higher real demand, thereby demonstrating that prices were not in a bubble...

...Recent growth in the US economy also presents a danger in that it is making people complacent. Relatively strong economic indicators—data showing the economy created more than 200,000 jobs in the latest month for which data are available—have encouraged talk of fiscal consolidation. But the economy is far from achieving a self-sustaining recovery.

As indicated in the discussion of the money supply above, private-sector credit is not only not expanding but continues to shrink... That the money supply and GDP are still posting modest growth is only because the government continues to borrow and spend.

...This is identical to the phenomenon observed in the US in 1933–36 and in Japan after the collapse of the Heisei bubble... In other words, the US economy is being supported solely by massive fiscal stimulus amounting to 9% of GDP. It is not growing [in the] private sector.

...This pattern of expansion in the money supply and the economy despite an absence of private-sector credit growth was also observed in 1933–36 as the US economy emerged from the Great Depression. President Franklin D. Roosevelt was unaware of the importance of this relationship and, believing that the economy was already on a self-sustaining growth path, embarked on a path of fiscal consolidation in 1937...

...The US economy consequently fell into a severe recession characterized by sharply lower production and drastically higher unemployment. It took the Japanese attack on Pearl Harbor for the US economy to recover from the resulting damage...

Furthermore, Koo asserts that the US economy may be left "in far worse shape than if QE2 had never been implemented".

I've said it before and I'll say it again: these Democrat politicians are destroyers, not creators. Everything they touch -- whether in states like California, Illinois and New York or at the federal level with Fannie Mae, TARP, HAMP, Cash-for-Clunkers, Stimulus, and so on -- turns to fecal matter.

They are ideologues, not intellectuals. And we are all paying the price for their ignorance.


Newly released complaint: How Countrywide Financial, conspiring with Democrat hacks, helped to destroy the housing market

Countrywide Financial was arguably the lynch-pin of the entire financial crisis.

And to keep government officials at bay, it offered a program called "Friends of Angelo" (referring to Angelo Mozilo, chairman of Coountrywide) that offered special deals to powerful Democrats in government and in government-sponsored entities like Fannie Mae.

Recipients of these unique mortgage deals included Sen. Chris Dodd (D-CT), Senate Budget Committee Chairman Kent Conrad (D-ND), former HUD Secretary Alphonso Jackson, former HHS Secretary Donna Shalala, former ambassador Richard Holbrooke and former Fannie Mae executives James Johnson, Franklin Raines and Jamie Gorelick.

Just how sleazy was the Countrywide operation? There are some great details in a newly released legal complaint (PDF) that dissects the alleged activities and asserts that Auric Orangefinger -- my nickname for the pumpkin-skinned Angelo Mozilo -- was well aware of the skulduggery.

...Mozilo was further driven by his belief that Countrywide’s riskier loans faced imminent default. In a June 1, 2006 email regarding pay-option adjustable rate mortgages (“ARMs”) Mozilo warned Sambol and other executives that borrowers “are going to experience a payment shock which is going to be difficult if not impossible for them to manage.” Mozilo warned that “[w]e know or can reliably predict what’s going to happen in the next couple of years.” Mozilo acknowledged internally (but never disclosed to MBS investors) that the majority of pay-option ARMs were originated using stated income, and that evidence suggested that borrowers were misstating their incomes...

...Countrywide’s Chief Risk Officer John McMurray testified that his credit risk department “would reject proposals for new products but the people in sales nevertheless used the exceptions procedure to achieve the same result.” He was “surprised, angry, and disappointed,” for instance, when he found out Countrywide had advertising fliers promoting loans that had low FICO requirements, only required a stated (non-documented) income, and provided 100% financing even though the credit risk department had previously rejected those flyers...

...[an] internal review conducted around the same time concluded “approximately 40% of the Bank’s reduced documentation loans . . . could potentially have income overstated by more than 10% and a significant percent of those loans would have income overstated by 50% or more.”

...despite the fact that almost all of [the purchased] Certificates started out with AAA or Aaa ratings -the same rating given to treasury bills backed by the full faith and credit of the United States government - 94% of them are now not even considered to be investment grade...

...Countrywide had a policy of matching individual terms of any mortgage product that a competitor was offering. A former finance executive at Countrywide explained that: “To the extent more than 5 percent of the [mortgage] market was originating a particular product, any 29 new alternative mortgage product, then Countrywide would originate it…. [I]t’s the proverbial race to the bottom.”

...To conceal its greatly increased volume of subprime loans, Countrywide employed an internal, undisclosed definition of prime versus subprime, and thus, in its public reports, Countrywide Financial classified loans as “prime” that clearly were subprime under well-established industry standards. A former senior underwriter at Countrywide reported that Countrywide regularly classified loans as “prime” even if they were issued to non-prime borrowers, including people who recently went through bankruptcy. According to the SEC, Countrywide included in the prime category risky loans with FICO scores below 620, which did not meet industry standards for “prime” loans, and further included loans with increasing amounts of credit risk such as reduced or no-documentation loans and pay-option adjustable-rate mortgages (“ARMs”)...

...According to the SEC, Countrywide’s culture of “exceptions” started at the top, with Mozilo personally approving loans by way of guideline exceptions pursuant to a “Friends of Angelo” program...

The "Friends of Angelo" program was, in truth, a sleazy operation designed to reward Democrat politicians in oversight roles and former Clinton administration officials who carried significant sway.

In turn, these useless Democrat hacks allowed federal policy and the GSEs -- Fannie and Freddie -- to get away with murder. The end result was the collapse of the GSEs and the resulting mortgage meltdown.

I urge you to remember in 2012 what these Democrats have done to you, your family and this country.


WTF? Your tax dollars helping Government Motors sponsor movie celebrating birth of Chinese Communist Party

Well, this certainly appears to be a wise use of your tax dollars, Sparky.

Cadillac is a beloved American brand. So why is it starring in a propaganda film about the birth of the Chinese Communist Party (CCP)? The U.S. government-backed General Motors (GM) has offered the car up for use in a new film celebrating the CCP’s 90th birthday, “The Birth of a Party.”

GM’s sponsorship of this celebration is appalling, considering the bloody history of the Chinese Communist Party and the role it has played in China’s dismal human rights record. The film covers events leading up to the CCP’s creation in the early 1900s. Cadillac announced itself as a “chief business partner” of the communist propaganda film the same year China refused to release democracy and human rights advocate Liu Xiaobo from prison to receive the Nobel Prize. Xiaobo was represented at the ceremony by an empty chair.

...There are certainly nobler causes to sponsor. For example, Heritage’s Dr. Lee Edwards chairs the Victims of Communism Memorial Foundation. The Memorial commemorates the more than 100 million victims of communism and is represented by a replica of a statue erected by Chinese students in Tiananmen Square, Beijing, China in the spring of 1989. An estimated 65 million died as a result of communist brutality just under Mao Zedong. Surely this slaughter will not be part of the film GM is sponsoring...

I hear Iran and Syria are also big growth markets.

Perhaps GM can sponsor a movie about the glory of Jihad, too.


Hat tip: TrendingRight.

Sunday, May 15, 2011

White House approves 200 more Obamacare waivers; but, unfortunately, won't tell us whose applications were rejected

Will the few remaining defenders of Obamacare finally capitulate when the total number of people receiving waivers exceeds those still in the program?

The Obama administration approved 204 new waivers to Democrats' healthcare reform law over the past month, bringing the total to 1,372.

The waivers are temporary and only apply to one provision of the law, which requires health plans to offer at least $750,000 worth of annual medical benefits before leaving patients to fend for themselves. Still, Republicans have assailed the waivers as a sign of both favoritism and of major problems with the law.

"The fact that over 1,000 waivers have been granted is a tacit admission that the healthcare law is fundamentally flawed," Energy and Commerce Chairman Fred Upton (R-Mich.) said in March...

...Upton is one of three House committee chairmen who has used new oversight powers to investigate the annual limit waivers...

There is a movement afoot that would allow you to apply for your own, personal waiver.

I wonder what would happen if, say, 75 million people applied for one?


No, it's not a story from the Onion: Zimbabwe worried about U.S. dollar as reserve currency, urges move to gold-backed standard

How bad are the dollar's prospects now that President Obama has bankrupted the Treasury with "Stimulus" programs, "Cash-for-Clunkers", "Green Jobs", the auto bailout, HAMP, HEMP, and everything in between? This bad.

THE central bank says the country must consider adopting a gold-backed Zimbabwean dollar warning that the US greenback’s days as the world’s reserve currency are numbered.

Government ditched the Zimbabwe dollar in 2009 after it had been rendered worthless by record inflation levels and adopted multiple foreign currencies with the US dollar, the South African Rand and the Botswana being the most widely used.

“We need to re-think our gold-mining strategy, our gold-liberalisation and marketing strategies as a country. The world needs to and will most certainly move to a gold standard and Zimbabwe must lead the way.”

Gono said the inflationary effects of United States’ deficit financing of its budget was likely to impact other countries to leading to a resistance of the green back as a base currency.

... “The events of the 2008 Global Financial Crisis demand a new approach to self reliance and a stable mineral-backed currency and to me, Gold has proven over the years that it is a stable and most desired precious metal,” Gono said.

“Zimbabwe is sitting on trillions worth of gold-reserves and it is time we start thinking outside the box, for our survival and prosperity.”

Zimbabwe is only the latest in a series of countries, whose leaders are to the right of President Obama (like Red China, for instance), who are demanding an end to America's insane levels of deficit spending.

Given the Cloward-Piven Strategy the Democrats are implementing, said advice is certain to fall on deaf ears.


Linked by: Ace o' Spades. Thanks!

Saturday, May 14, 2011

TurboTax Tim Geithner's Apocalyptic Debt Ceiling Rhetoric: 100% Pure Lies

Just moments ago, our beloved, tax-challenged Treasury Secretary issued his latest salvo in the debt ceiling propaganda campaign.

With the government about to hit its $14.3 trillion debt limit, Treasury Secretary Timothy Geithner has warned of "catastrophic" consequences and a new recession if Washington is not able to borrow more.

A divided Congress has run out of time to raise the debt limit before Monday's deadline, forcing Geithner into an emergency reallocation of funds so the government can meet its obligations, including payments to Treasury bondholders.

Those measures are only expected to give the government until August 2 before it will start defaulting on payments including those on Treasury debt, an event that could trigger chaos in world financial markets.

"A default would inflict catastrophic, far-reaching damage on our nation's economy, significantly reducing growth and increasing unemployment," Geithner said...

Real 'wrath of God'-type stuff. Fire and brimstone coming down from the skies! Rivers and seas boiling! 40 years of darkness! Earthquakes, volcanoes. The dead rising from the grave! Human sacrifice, dogs and cats living together... mass hysteria!

Legendary investor Stanley Druckenmiller says Geithner is a fool and a liar. Or at least, that's how I interpreted his debunking of Timmay's apocalyptic rhetoric.

Mr. Druckenmiller had already recognized that the government had embarked on a long-term march to financial ruin. So he publicly opposed the hysterical warnings from financial eminences, similar to those we hear today...

...He recalls that then-Secretary of the Treasury Robert Rubin warned that if the political stand-off forced the government to delay a debt payment, the Treasury bond market would be impaired for 20 years. "Excuse me? Russia had a real default and two or three years later they had all-time low interest rates," says Mr. Druckenmiller.

...In the future, he says, "People aren't going to wonder whether 20 years ago we delayed an interest payment for six days. They're going to wonder whether we got our house in order." Which begs the question: if interest rates are so low today, is the market not appreciating the current path of "financial ruin"?

...Asked if the future is not so bad judging by today's low bond rates he says, "Complete nonsense. It's not a free market. It's not a clean market." The Federal Reserve is doing much of the buying of Treasury bonds lately through its "quantitative easing" (QE) program, he points out. "The market isn't saying anything about the future. It's saying there's a phony buyer of $19 billion of Treasurys a week."

...Of course, there is another name for this type of arrangement and so far only Bill Gross has used it: Ponzi Scheme.

Got that, Boehner and McConnell?

The whole house of cards is set to collapse if we don't start cutting the size of the swollen behemoth known as the federal government.

The market wants huge spending cuts. So let Obama choose where to cut. Don't raise the debt ceiling.

Don't. You. Dare. Raise. It.


More Good News for California: Card Check About to Be Signed Into Law By Governor Union Toady

Is there a more exciting, relevant news journal than Dairy Herd Magazine? When it comes to the Democrats' latest attempts to implement socialism, probably not.

ThIf SB104 passes, it could have major ramifications for California agriculture... The card-check bill, sponsored by the United Farm Workers Union, effectively eliminates secret ballot elections for union certification. A labor organization would be certified as the workers’ bargaining representative by submitting cards bearing the signatures of a majority of the employees...

Opponents of the bill believe eliminating secret ballot elections will give a green light to worker intimidation, coercion and bullying from union leaders...

...Eliminating secret ballot also takes a fundamental right away from employees. “In this country, we believe when people have to make decisions they do so in the form of secret ballot from electing officials at the local level to federal election and even in business,” says Anthony Raimondo, agriculture labor law attorney with McCormick Barstow in Fresno, Calif. “Think about who we are. We teach our children these same values, that the best way to vote is in a secret ballot election. The union wants to take this away from workers – it’s just not right.”...

At the end of the day the card-check bill is the worst thing that could happen to dairy farms in terms of labor problems.“Right now, if the union shows up a dairyman still has a chance. Without secret ballot election, in most cases it will be over before it starts,” he says.

No word has come from Gov. Jerry Brown’s office if he will sign SB104; opponents of the bill believe that he will. SB104 was approved by the senate and is currently sitting in the state assembly.

Of course he will: how else can he satisfy his most powerful group of backers, other than perhaps the foreign-controlled, pro-illegal immigration, separatist front groups?


Friday, May 13, 2011

What Democrats Believe

Democrats believe that you are legally permitted to break into an empty home if you need a place to stay.

Democrats believe that stealing furniture from someone's home -- if it's in the best interest of your family -- is a legally acceptable practice.

Democrats believe that you are within your rights to crash a rich man's party if you're hungry, because he's got plenty of extra food.

Democrats believe that any person, should they require access to clean facilities like showers, toilets, and towels, must be legally permitted to break into a health club.

And because Internet access is a human right, Democrats believe that those without it are legally allowed to break into office buildings to obtain web access.

I know all this to be true.

Because Democrat politicians believe that millions of foreigners have every right to enter our home -- our sovereign republic -- to use our schools, our health care system, our roads, and our infrastructure. Democrats believe that immigration laws aren't laws at all; for, in fact, they are suing states for enforcing the very immigration laws that Congress passed!

These temporary politicians -- these useless Democrats hacks -- no longer represent the people. They represent illegal aliens, who are trespassing in our country; who are entering our land without any background checks or vetting procedures; who are driving up unemployment among citizens; who often come for free health care services or schooling or more nefarious reasons; who do not understand the history or traditions of this country; and whose presence here will ultimately Balkanize this country in ways no one can possibly foresee.

For Democrats, clinging to political power trumps the Constitution; it trumps the laws they have passed; it trumps the concerns of the citizenry; it trumps every moral and ethical tenet of this country. But their appetite for raw power is so insatiable, and it is so naked and malevolent, that they are willing to sacrifice future generations so they can climax on their unchecked power.

Therefore I urge you, America's citizens, to remember the permanent damage these temporary politicians are doing to this country. I urge you to remember in 2012 and to obliterate the Democrat Party politically -- at every level of government.


Wednesday, May 11, 2011

Super: Speaker Boehner Wants to Nominate Another Maverick

As if you needed more proof that we need a new House Speaker, the barely coherent John Boehner has endorsed the John McCain-like RINOs Mitch Daniels and Chris Christie.

House Speaker John Boehner didn’t watch last week’s Republican presidential debate, but he knows whom he wants to see in the next one: Govs. Chris Christie and Mitch Daniels...

...without prompting, Boehner brought up the Indiana governor, who has been slightly warmer to a candidacy than Christie. “I think Mitch Daniels is looking at this seriously … [a] person with a track record of reform in his state, the kind of reforms we need in Washington, D.C.”

I can't stress this enough: we don't need a proxy for the pathetic Dick Lugar (Mitch Daniels), nor a pro-global warming, pro-amnesty "maverick" (Chris Christie).

We need high fidelity to our highest law. Michele Bachmann, Herman Cain, Sarah Palin and Tim Pawlenty are the only candidates I see that qualify as constitutional conservatives (Marco Rubio and Allen West would definitely make the list if they ever throw their hats in the ring).

We have the right playbook. It's called the Constitution. Now we need a leader who embraces it -- 100% of the time. Mavericks need not apply.

Oh, and before I forget: we need a new Speaker of the House. Perhaps Allen West would consider that job.


Hat tip: TrendingRight.

NLRB sues Arizona again, this time over its constitutional amendment requiring secret ballots for union elections

First they sued Arizona for following federal immigration law. Now, the Obama administration has sued the border state again, this time because its citizens passed a constitutional amendment that requires the use of the secret ballot in union elections. Yes, the secret ballot is considered -- at least by the Obama administration -- "controversial".

Federal labor regulators have sued the state of Arizona over a state constitutional amendment that limits how workers can choose whether they want union representation.

The amendment passed by voters last year requires workers to hold secret ballot elections before a company can be unionized.

The National Labor Relations Board says the amendment interferes with federal law. Current law gives employers the choice of recognizing a union if a majority of workers sign cards, a process known as card check.

Arizona's attorney general has vowed to fight the lawsuit. Business groups that pushed the ballot measure say they fear Congress will require all businesses to recognize card check... The NLRB says it plans to sue South Dakota in the coming weeks over a similar constitutional amendment.

At a time where real unemployment is estimated at 22%, the Obama administration is bound and determined to attack the private sector.

The president, chairman and CEO of Boeing penned an excellent op-ed in yesterday's Wall Street Journal in response to the NLRB preventing it from opening a plant in South Carolina, a right-to-work state. It reads, in part:

Washington's actions have assaulted the capitalist principles that have sustained America's competitiveness since it became the world's largest economy nearly 140 years ago.

...The NLRB is wrong and has far overreached its authority. Its action is a fundamental assault on the capitalist principles that have sustained America's competitiveness since it became the world's largest economy nearly 140 years ago. We've made a rational, legal business decision about the allocation of our capital and the placement of new work within the U.S. We're confident the federal courts will reject the claim, but only after a significant and unnecessary expense to taxpayers...

...The world the NLRB wants to create with its complaint would effectively prevent all companies from placing new plants in right-to-work states if they have existing plants in unionized states. But as an unintended consequence, forward-thinking CEOs also would be reluctant to place new plants in unionized states—lest they be forever restricted from placing future plants elsewhere across the country.

These Democrats are ideologues. They could care less what happens to business and, by extension, "the middle class". They are out to destroy capitalism. And they've said as much, over and over again.


California's new Obamacare health exchange has only two problems: there's no money and it's guaranteed to be an abysmal failure

What do you call easy access to welfare, unchecked illegal immigration and failing government-run health care? Decades of unchecked Democrat rule, or California, for short.

California, which has had a long, sometimes-tortured history of trying to overhaul its health care markets, beat every other state last year when it passed a law creating a health insurance exchange – an online marketplace where millions of uninsured residents will be able to get insurance...

Now the board overseeing the exchange must ensure that coverage on the exchange, which must be up and running in 2014, is affordable and easy to buy...

One problem:

“The state has no money,” Kimberly Belshe, a member of the board and secretary of the California Health and Human Services Agency under former Republican Gov. Arnold Schwarzenegger,

Gee. How will they operate the exchange?

The antidote is “to get millions of people enrolled and start drawing down federal dollars on Day One,” said Anthony Wright, executive director of Health Access, a statewide health care consumer advocacy coalition.

Brilliant. Democrats in action: a bankrupt state will suck money from a bankrupt federal government. Why didn't I think of that?

...Steven Lindsay, lobbyist for the California Association of Health Underwriters, which represents 2,500 insurance agents and brokers... is pessimistic. More exchanges have failed than succeeded, said Lindsay.

“We do not believe that the exchange website will get significant numbers of users,” he said. “The vast majority of people who will be in the exchange don’t have a college education. Health insurance is not in their cultures. They pay for care when needed. Now we go out and say to these folks, ‘You have to give us between 3 and 9 percent of your income for insurance.’ They might not even use computers.”

He also said that the board must figure out how to get as many people as possible enrolled in the exchange, and should provide financial incentives to agents and community groups to help with the enrollment. “If you don’t get enough people to sign up,” he said, “it will fail.”

Of course it will. Central planning always fails.

Just like the old Soviet Union.

Which explains Democrats -- you know, that old definition of insanity.


Tuesday, May 10, 2011

Cavalcade of Failure

"...the more the plans fail, the more the planners plan." --Ronald Reagan

When it comes to Barack Obama and the 111th Congress, where is the media summary of the Democrats' vast central-planning schemes and the results thereof? Where is the retrospective analysis?

That's a rhetorical question, drones. With that as context, please consider:

HOUSING Home Market Takes a Tumble, Wall Street Journal, 9 May 2011
Turnaround More Distant After 3% Drop, Steepest Quarterly Decline Since 2008

Home values posted the largest decline in the first quarter since late 2008, prompting many economists to push back their estimates of when the housing market will hit a bottom.

Home values fell 3% in the first quarter from the previous quarter and 1.1% in March from the previous month, pushed down by an abundance of foreclosed homes on the market, according to data to be released Monday by real-estate website Zillow.com. Prices have now fallen for 57 consecutive months, according to Zillow...

Last year, the housing market showed signs of improving as price depreciation slowed in some markets and stabilized in others. In response, a number of economists began forecasting that housing would hit a bottom in late 2011, then begin to recover. But the improvements, spurred by federal programs that gave buyers up to $8,000 in tax credits, proved fleeting. Sales collapsed when the credits expired last summer, and prices in many markets have been falling ever since.

While most economists expected sales to decline after tax credits expired, the drag on the market has been greater than many anticipated... Zillow estimates that more than 28% of borrowers owe more than their homes are worth nationally. Those numbers are much higher in hard-hit markets such as Phoenix, where more than two-thirds of borrowers owe more than their homes are worth.

AUTOS Used-car demand jumps, but the supply is down, Scripps News, 9 May 2011
Economic pressures of the last few years have pushed many consumers out of the new-car market in search of a cheaper alternative, good news for used-car dealers, if only they could find enough cars to sell.

But reduced production of new cars, federal incentive programs, exorbitant gasoline prices, natural disasters and other factors have conspired to reduce the supply of used cars on the market to a trickle and, as a result, drive prices through the roof...

"It's pretty crazy right now," said Tom Hughes, of San Bernardino, Calif., a used-car dealer for 27 years. "I've never seen anything like it." ... Hughes said prices and availability have never been this bad -- not by a long way. A car that would have cost $5,000 wholesale six months ago might cost $6,500 today, he said. And if it's a Toyota or a Honda, "it's insane"...

Joe Wiesenfelder, senior editor of Cars.com, said price increases have been the norm since the economy turned in 2008. It's all a matter of supply and demand, he said, but there are many factors at work... the federal Cash for Clunkers program that offered drivers incentives to trade in their old cars, removed nearly 700,000 used cars from the market...

ENERGY Washington vs. Energy Security, Wall Street Journal, 11 May 2011
Even former President Clinton calls the Obama administration's deep water drilling policy 'ridiculous.'

...In the year since the Deepwater Horizon spill, the Obama administration has put in place what is effectively a permanent moratorium on deep water drilling. It stretched out the approval process for some Gulf-region drilling permits to more than nine months, lengths that former President Bill Clinton has called "ridiculous."

...Then there's tax policy. Why, when gas prices are climbing, would any elected official call for new taxes on energy?...

...We won't achieve energy security by restricting our own companies from drilling or singling them out for punitive taxes. We're talking about an industry that provides millions of jobs and, for the foreseeable future, the power for our economic growth... [And] let's stop demonizing Big Oil to score political points. It does nothing to encourage the new talent, new ideas, and new entrepreneurs who are most likely to make breakthroughs in new sources of energy.

UNEMPLOYMENT Real Unemployment Hits 22%, ShadowStats.com, May 2011
The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment...

Of course, we've borrowed trillions of dollars to spend on a "Stimulus" program (trillions because it was built into subsequent baseline budgets), which Democrats promised would keep unemployment under 8%.

Housing. Automobiles. Energy. Unemployment.

President Obama and Congressional Democrats are utter and complete failures.

They are like King Midas in reverse. Everything they touch turns to crap.

They are ideologues, not economists. They are, by definition, economic illiterates. Nothing they've done has worked. Actually, everything they've tried has made things provably, measurably worse.

They are walking, talking clusters. Remember in 2012, before it's too late.


The Big Unsustainable Apple: With 16,000 fewer employees than in 2001, salaries are up 300%, pension costs up 700%

Marc Cenedella dissects New York City's 2012 budget summary and discovers some, eh, anomalies:

This graph is the most distressing in the entire budget deck -with declining headcount, pensions are now almost equal to what we pay current employees:

...New York City has 16,000 fewer employees than 2001...

...but spending on salaries and wages has increased from $3.8 bn to $10.8 bn; and spending on pensions has increased from $1.3 bn to $8.3 bn over that same period.

...Education expense has increase[d] at three times the rate of inflation despite the same number of teachers (113K teachers in ‘02 vs. 109k now)...

...New York City’s Pension Costs have grown 5x since 2002...

...It[']s expenses that are killing us: over the past decade, New York City hasn’t really grown its population but has increased expenses from $28.8 bn t $49.7 bn.

...”New York City needs a new pension plan for new employees.” [Ed: Gee, ya think?]

Perhaps someone can alert Bloomberg. I mean the idiot mayor, not the news service.


Hat tip: JTT.

Monday, May 09, 2011

O-pression: Experts Put Real Unemployment At Between 18% and 22%

Mike Shedlock crunches the numbers and comes to an inescapable conclusion: real unemployment is far, far worse than official government statistics reflect.

60% of 6,484,000 = 3,890,000
Civilian Labor Force: 153,421,000 + 3,890,000 = 157,311,000
Unemployed: 13,747,000 + 3,890,000 = 17,637,000
Unemployment Rate = 11.2%


According to the BLS [Bureau of Labor Statistics], there are now 8,600,000 workers who want a full-time job but instead are working part-time. The BLS labels this group "part-time for economic reasons". The number of rose by 167,000 last month.

...If you factor in those working part-time for economic reasons the unemployment rate rises to 15.9%, and if you factor in students and those in forced retirement who really would rather be working, it is likely another 1-2 points higher still.

In other words, it's probably in the 18% range.

ShadowStats thinks things are even worse: a little over 22%.

The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.

Let's just compromise and call it 20%.

Either way, this president's bankruptcy-inducing policies have set this nation on a course for an unprecedented fiscal calamity. We are seeing a preview of coming attractions in Europe, the results of unchecked deficit spending and the spread of socialist welfare programs that can't work and have never worked throughout human history.

And yet Democrats lobby for more: more spending, more deficits, more unchecked wealth redistribution schemes. They know they are unsustainable, yet they plow ahead, bankrupting future generations for some mirage of a Utopian society where everyone is equal, no matter how hard they work.

And that, my friends, truly is the definition of insanity.


Sunday, May 08, 2011

TurboTax Tim Wants a $2 Trillion Debt Cap Raise, Coincidentally Enough to Keep Borrowing Through the 2012 Election

Gee, and all this time I thought Tim Geithner wasn't a political hack.

The Treasury has told lawmakers a roughly $2 trillion rise in the legal limit on federal debt would be needed to ensure the government can keep borrowing through the 2012 presidential election, sources with knowledge of the discussions said.

Obama administration officials have repeatedly said that it is up to Congress to decide by how much the $14.3 trillion debt limit should be raised... But when lawmakers asked how much of an increase would be needed to meet the government's obligations into early 2013, Treasury officials floated the $2 trillion working figure, Senate and administration sources told Reuters.

...A Reuters analysis of Treasury's borrowing needs forecast Congress would have to raise the debt ceiling by more than $2 trillion to get through next year's election without having to revisit the issue. According to the Treasury, the government borrows on average about $125 billion per month.

Say, I have an idea!

How about the federal government stops spending $125 billion a month that it doesn't have? Start with the $343 billion in cuts recommended by the Heritage Foundation. And then go further. We have a blueprint. It's called "the Constitution".


Obamacare poised to put the stake in the heart of Illinois' bankrupt Medicaid program

It isn't well-publicized, but the only reason Illinois was able to pay its Medicaid bills over the last three years was the vast spigot of "Stimulus" spending offered by you, the American taxpayer. And that money has officially run out.

With a state budget quagmire still complicating business, providers of health care services and products reimbursed by Medicaid are wondering what new plan Illinois officials will scrape together in the coming months to continue — or continue to delay — paying them.

The state has hundreds of millions of dollars in backlogged Medicaid bills, and its new fiscal year starts July 1. Officials can’t agree on a budget cure for the state’s ailing debt, and an $8.75 billion borrowing plan favored by Gov. Pat Quinn appears to be going nowhere.

Hospitals, doctors and nursing homes experienced some relief during the past two years because state officials started expediting reimbursements to them so the state could benefit from increased matching money offered by the federal stimulus package. But that increased money — and the incentive to pay on time — expires June 30.

So state officials are scrambling for a solution and may rely on a backup plan tested last fall that would “sell” Medicaid vendors’ debt to banks and financial institutions willing to front vendors the money they’re owed and wait to be repaid by the state... hospitals are being paid now in less than 60 days, but in the past the state has delayed payments as long as eight or nine months.

Far from creating jobs, $158 billion in "Stimulus" spending was used to help balance state budgets, of which Medicaid represents roughly a third.

And Obamacare is poised to make the Medicaid burden on states far, far worse.

So it's quite fitting that Obama's home state of Illinois will be the first domino to fall in the Democrats' bizarre, Soviet-style central planning exercise known throughout history as socialized medicine.


Greece: Between a Rock and Hard Place

European economists are issuing dire warnings of what will transpire should Greece exit the Euro.

Commerzbank AG (CBK) Chief Economist Joerg Kraemer said it would be “economic suicide” for Greece to return to the drachma, which would prompt a run on local banks to withdraw euros, Welt reported, citing an interview.

Thomas Mayer, chief economist at Deutsche Bank AG, said a Greek exit from the euro region would lead to a crisis in Europe’s political and currency union and could cause a bank run in some EU countries, the newspaper said.

Thomas Straubhaar, head of the Hamburg-based HWWI economic institute, told the newspaper a euro exit could force Greece into bankruptcy and cause a “domino effect” like the collapse of Lehman Brothers Holdings Inc.

So why is Greece threatening to leave the Euro? Because it took a $157 billion bailout loan last year from the European Union and the IMF. And the payments to the troubled Mediterranean country are contingent upon successfully passing a series of audits.

Greece heads for another audit of its battered finances this week after European officials closed ranks to quash fears of an inglorious Greek exit from the euro cited in a German online report.

A high-level team of experts from the EU, the IMF and the European Central Bank will pore over plans by the Greek government to economise some 26 billion euros over three years to help bring down the country's enormous debt.

..The delivery of a 12-billion-euro instalment from that loan hinges on the audit but Greece so far has struggled to meet its deficit-reduction targets because of a deeper-than-expected recession at home.

Problem is, the market thinks that the Grecian-formula bailout has little likelihood of ever being paid off.

The cost of insuring Greek sovereign debt for five years using derivatives rose 5.6% Friday from the previous close, reaching 1,370 basis points [Ed: 13.7%] on unconfirmed reports that Greece is considering exiting the euro currency, according to data provider Markit.

...Now quoted at 1,370 basis points, the cost is equivalent to $1.37 million a year to cover the same amount of sovereign debt for five years. This is not yet an official closing price, but if it were it would be a record high, Casey said.

Prices on the five-year protection now imply a 70% chance of default, up from 66% in mid April, according to Markit.

Greece will never be able to pay off its massive deficits. It just hasn't admitted it yet.

Yet, here in the U.S., the Democrat-Media complex continually lobbies for more deficit spending and more insane redistribution schemes, which can't work and -- in fact -- have never worked throughout human history.

Which is all the proof you need that liberalism is, as Ann Coulter once said, a mental disorder.


Saturday, May 07, 2011

Paging Mister Boehner... Mister Boehner... You Have a Telephone Call at the Front Desk

I'm not an expert at interpreting poll results, but this appears to be compelling evidence that Americans want action on the debt. Right. Now.

As the federal government rapidly approaches the $14.3 trillion debt ceiling, 96 percent of Americans say it is important to reduce the national debt, according to a new Reason Foundation-Rupe poll. Of those surveyed, 69 percent believe reducing the national debt is “very important.”

With the debt piling up, it is also clear that taxpayers do not trust the federal government to live within its means. In fact, the Reason-Rupe survey finds 74 percent of Americans support implementing a spending cap that would prohibit the government from spending more money than it takes in during a fiscal year. Only 19 percent oppose a government spending cap.

The most popular policy prescription for reducing the national debt is spending cuts: 45 percent of people say Congress should bring down the debt by reducing spending without raising taxes. Another 16 percent favor reducing the debt primarily through spending cuts, but are open to some tax increases; 14 percent prefer an equal emphasis on spending cuts and tax increases; 8 percent want to reduce the debt primarily through higher taxes with some spending cuts; 4 percent say current spending levels should be maintained and taxes should be raised as needed; and 1 percent of Americans say we shouldn’t do anything about the debt.

I created a graph to illustrate the dichotomy between the realists and, for lack of a better term, the kooks.

The progressives on the right-side of the graph are the outliers. The extremists. The cultists.

We, the Tea Party conservatives, are the mainstream. The majority.

Get it, Mr. Boehner? Not too hard to understand? Now get to steppin'.



Hat tip: Dennis.