Thursday, May 28, 2009

Obama say: You Ain't Seen Nothing Yet

At a Hollywood fundraiser yesterday, Obama responded to an audience member yelling, "Yes we can" by saying, "Yes we have. But we've got more work to do. We can't rest on our laurels."

The reason I started this blog is because of my horror at the policies Mr. Obama is enacting. I am not, in normal times, a blogger. But these policies are so concerning and so serious that I don't know what else to do to sound the alarm bells. In just 4 months Obama has basically set America on a course of record debt well and above anything that has previously been known. He is promising more future government mandates and entitlements, more spending, cap and trade, and will soon be enacting massive tax hikes because he has to do so to fund the massive government expansion.

If Obama does nothing else for the remainder of his presidency, he has already made decisions that have buried this country in debt for decades. If he does much more, this country may never recover. I shudder at what's left for him to do... How much more damage can a great country endure? Please wake up folks.

Wednesday, May 27, 2009

It's Tax Time!

Well, you gotta fund cartoon like spending somehow. Obama and Democrats in the Senate are going to be giving a tax hike for everyone, especially the poor and lower middle class.

This time it's coming in the form of a VAT tax. Everything you buy is going to go up. So get ready to stock up on the non-perishables now my friends. Upset? Don't be. We'll all get government managed health care in return. So get healthy. As if you needed a reason to get in shape...

Spending Wads to "Save a Job"

As the economy sheds more jobs, Obama's touting 150,000 new jobs that have been "saved or created". In other words, it's not as awful as it would have been. How do you measure a "Saved" job anyway? This only cost you $800 billion. Dividing 800B by 150K means the government spent over $5.3 million dollars for each job "saved" or created. This line of reasoning is much needed comedy relief.

Obama touts a decline in utility bills at Nellis AFB. Certainly, cost reduction through the application of new technology is a good thing. Over time, it can create new jobs by diverting workers into more efficient activities. However, I have done Return on Investment analysis for technology investments. The benefits are never realized quickly since the phase-in requires a substantial investment cost. Typically benefits from a technology investment accrue over time in later years as ongoing costs are decreased relative to what they would have been with manual labor or old technology. For Obama to argue that porkulus has created new jobs ignores the fact that he made a ridiculously large "investment", via porkulus, to do it - if we assume that claim is even true, which I seriously doubt. This claim is an assault on common sense.

Government Motors Wheels and Deals

GM and the UAW apparently made a deal yesterday. There were some choice quotes including:

--- "GM and the United Auto Workers have agreed to a new restructuring plan that would give the union a significantly smaller stake in the company than previously envisioned, and leave the U.S. government owning as much as 70% of the car maker.... An earlier revamping worked out by the Treasury Department and GM would have given the union 39% and the government 50%."

---"Concerned that GM's viability was based on an increasingly unlikely U.S. auto-sales rate of 10 million vehicles a year, the UAW instead sought the preferred stock that will pay out a $585 million annual dividend. The fear at the UAW was that ownership in GM could eventually be worth very little," said a person involved in the talks."

--- "In return, the Treasury could demand up to 70% of the company's equity, said people familiar with the matter. The funds would, in effect, be a big bet by the government that GM will be successfully reorganized."

--- "The Treasury is portraying itself as an unwitting majority-owner-in-waiting of GM -- the only lender able and willing to put forward the huge sums necessary to rescue the company, but a player that has no intentions of directly guiding the company once it emerges from bankruptcy. 'We are reluctant, involuntary shareholders in this case,' said one person involved in the discussions."

If ever there was a recipe for billions and billions of dollars to be wasted this is it. GM will get money from a new owner with a seemingly endless supply of cash. However, that owner will not actively manage or even guide the company. So who will? I pity the CEO who has to make hard decisions moving forward. Finally, GM's workers opted for cash via preferred stock because they don't seem to believe the company will have any long term value. It's not often that I wholeheartedly agree with the UAW. To quote Winston Churchill, "Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning." The Government Motors saga is a work in progress and will go on and on. And on. And on.

Ultimately, it's the workers and especially taxpayers who get left holding the bag on this one. Meanwhile, Obama will say lots of words, with lots of adjectives, and talk about responsibility and hope, followed by more words with more adjectives. I guess he's doing the best he can? It's still all Bush's fault, right?

Tuesday, May 26, 2009

Judge Sotomayor the Post-Modernist

The NY Times reports ( that the judge gave a speech at Berkeley where she “questioned the famous notion — often invoked by Justice Ruth Bader Ginsburg and Sandra Day O’Connor that a wise old man and a wise old woman would reach the same conclusion when deciding cases.” Instead she concluded “I would hope that a wise Latina woman with the richness of her experiences would more often than not reach a better conclusion than a white male who hasn’t lived that life,”

What this brings to the surface is really a conflict between how enlightened modernity and post-modernity believe one can establish truth or a truth. The Ginsburg-O’Connor view is more akin to a modernist view and the idea that reason and the slow process of facts, discovery, and sound arguments will lead you to uncover the truth. On the other hand, the implication of Ms. Sotomayor’s questioning is that she is not so sure such a process will achieve that. This is probably because she does not believe in truth as found by the modernist methods. She’s more post-modern in that sense. It may not be that she doesn’t believe in a truth. She just may not arrive at that truth through “reason-alone” modernist methods. Instead, she believes experience is as good a guide as reason.

On the one hand, I tend to have a streak in me that believes reason alone cannot, by itself, uncover truth. Experience and even intuition play a vital role in uncovering truth. Logic, analysis, and reason do not always lead to the truth or the best outcome. On the other hand, I find it hard to believe that truth can be unreasonable. A conclusion has to have sound reasoning and logic before you agree to it. So, while reason is not the whole truth, reason does have to be satisfied before moving on to intuition or experience as a way to determining truthfulness. A truth cannot be true just because it jibes with experience or your own intuitive sense of how the world works. Experience is far more subjective than reason. Human beings should provide justification for the things they do, what they believe, etc. rather than to primarily rely on their primordial urges or intuitive feelings.

Reason separates us from animals and does enable us to move beyond simple existence and our own caveman urges. To emphasize experience over reason is to downgrade our humanity. Postmodernism, with its lack of strong reasons does in fact seem to make us less human in many ways. Let’s hope a Supreme Court judge realizes that, as a judge, reason should have a primary role in how she arrives at opinions.

A New Justice - Get Rid of Affirmative Action Now

Obama is going to select Ms. Sonia Sotomayor to fill the vacancy left by the departure of the loud and proud David Souter. I have not followed this too much but from what I can tell she may be about the best a conservative can hope for. That's not saying much. It just is what it is.

NY law-guy extraordinaire Robert Morgenthau wrote an op-ed recently praising her as a law and order type of gal. On the other hand, she was also on a recent 3 judge panel that argued before the Supreme Court that a civil-service test for firefighters in New Haven, Conn could be deemed invalid because no minority applicants passed. The white guys sued because they studied, passed, and expected to be promoted. Those crazy honkies, with their expectations and all. Get with the times people.

There were some picks that could have been worse. There was one guy who would have been interesting, Cass Sunstein. Ole Cass apparently believes cost-benefit analysis should have a role in determining the efficacy of regulatory policies. Of course, economics was never President Obama's strong suit so you wouldn't think that could get too far.

Sonia is a latino from New Yawk. While her views are probably off, she seems qualified in terms of education and judificial experience. There really shouldn't be an emphasis on the whole identity politics, with she being a woman and latino. This is the ugly unintended consequence of affirmative action. Anytime a qualified minority is selected, people tend to feel that the candidate got there because of help and not because they are the most qualified or best person for the job. By now, as we watch the justification for picking her that will be made on the talking head news shows this week, we should realize that even having to make a case that a minority is deserving based on merit demonstrates how ugly affirmative action has become. Hopefully, we can get beyond the affirmative action rhetoric in my lifetime.

Friday, May 22, 2009

GM Needs More Bling

The government is going to give GM tens of billions of dollars more. That's on top of the other bling-bling they already gave back in November and recently to Chrysler. This from the Washington Post:

"The Obama administration is preparing to send General Motors into bankruptcy as early as the end of next week under a plan that would give the automaker tens of billions of dollars more in public financing as the company seeks to shrink and reemerge as a global competitor, sources familiar with the discussions said."

Why not just give GM an IV with a tube that goes right to the U.S. Treasury? Or, the Treasury can lay the money on a special table in the same room with Al Gore's old social security lockbox. GM staff can just come in every few days as they need.

Like the South, Inflation Will Rise Again

The Fed Prez for Philly is predicting a 2.5% inflation rate in 2011. This is supposedly higher than the Washington Fed's forecast. My prediction is about 8% because I think inflation is going to whip around and come like a buzzsaw if the porkulus cash and all the newly minted dollars the Fed is printing via buying T-Bonds results in an uptick in consumption. But we'll see. 8% may be off the charts but I have my reasons.

In a way, this might be a good time to stock up on stuff if you do have cash. Prices are going to begin ratcheting up once the slack in the economy dampens and people stop hording and saving. Since Americans love their stuff, it's just a matter of time because saving is so boring, so yesteryear. Why delay gratification when you can have it now, right?

Thursday, May 21, 2009

In Their Own Words: The Budget is on an Unsustainable Path

Part III, on pp.191-192 of theFederal Office of Management and Budget's "analytical perspectives" for 2010 indicates that the nation's finances are on an "unsustainable path" regarding its long term outlook. The following chart and excerpt is interesting:

"Increasing health costs and the aging of the population will place the budget on an unsustainable course without changes in policy to address these challenges. Medicare and Medicaid have grown faster than the economy for decades, and if they continue to do so will exert tremendous pressures on the budget. Additionally, the first members of the huge generation born after World War II, the socalled baby boomers, reached age 62 in 2008 and became eligible for early retirement under Social Security. In 2011, they turn 65 and become eligible for Medicare. In the years that follow, the elderly population will steadily increase, putting serious strains on the budget."

The percentage of GDP, which ranges from 10% to 20% of the total, is particularly alarming since the burden of supporting it falls to the young. In fairness to President Obama, this excerpt could come from any budget analysis during the last 30 years probably. However, what Obama is currently proposing will make this even worse with the pain realized even more quickly than anicipated. For social security, the only option was to privatize a portion of what people contributed through the 6.2% or 12.4% in their payroll taxes so people could invest it. The proposals during the Bush administration and others such as Kerrey-Moynihan in the late 1990's were to divert about 2% of the 12.4% payroll tax to private investment plans. These were reasonable reforms that, naturally, were scare-mongered to death.

The normal objection to privatizing a portion of social security is that this would have led to people losing the value of their money. What these critics fail to realize is that the alternative of "protecting social security" leads to an even larger loss of value through either the higher taxation that will be required to finance it. Or, they could inflate, stop the cost of living adjustments, and dilute the value of what's owed. They could let it go bankrupt. Or, they could just outright cut the benefits. At least investing a portion provided people some ownership and some opportunity for gains. The stock market, unlike, government entitlements, could actually yield positive long run returns.

As for the health and medicare cost entitlements, I have no answer for that. Ideally, there would be a private market for health services. Health insurance would work more like any other types of insurance but there might be room for government assistance to cover catastophic cases. But, instead, we went the HMO route and now we're going the government run route. Both are flawed. Health care requires a far more radical shift in paradigms. Eventually, from an economic perspective, the way we're going must lead to rationing if people are unwilling to move to a market based system and reform it entirely. I am genuinely not hopeful on healthcare.

Wednesday, May 20, 2009

Further Down, Further Down... Keep Going

The Fed has revised its previous economic outlook regarding unemployment.

It was supposed to be 9.2%. But that has been revised downward to 9.6%. The Fed is still too rosy. It will easily be under 10% by the end of the year courtesy of Obamanomics. An economy doesn't grow from the "bottoms up". Faithful readers, don't say I haven't already warned you.

Great Leadership is Responsible Leadership

I named my first son Theodore. This wasn’t entirely because of the president Theodore Roosevelt, but it certainly didn’t hurt that he bore that name. I greatly admired him from all the biographies I’ve read.

I’ve come to believe that Theodore Roosevelt's legacy is a curse. Before him, presidents didn’t seek to push America “forward” through vigorous advocacy of government initiatives. Ever since Roosevelt, presidents have been measured by how much they do, what they start, and how they communicate their aims. Take FDR for example. His legacy was to start unsustainable entitlement programs. It is to him that we owe social security, Medicare, and a whole host of other ideas related to building up public infrastructure as a means to improve the general welfare. Government stuff has only served to grow as each subsequent president tries to prove how good they’re doing by how much they’re doing. LBJ only expanded on FDR. Carter wanted more.

There have been presidents who have slowed or stalled the growth for a time such as Reagan and, ironically, Clinton. GW Bush didn’t go full throttle but he expanded government more than anybody since Nixon.

And now we have Obama. Obama is striving to be a great president in the mode of the two Roosevelt’s. If presidential greatness is measured by how much you expand the influence of the federal government and how active you are in advancing it, than indeed he is poised to be perhaps the greatest president since FDR.

I suggest a different approach. We should start to evaluate past, present, and future presidents by how responsible they govern. Do they burden us with long term obligations for the sake of short sighted aims? Do they balance the budget and spend only what they have? Do they work to foster peace and prosperity both now and in the long term? Are they realistic rather than romantic? Do they see America as it is and realize that while it’s not perfect, it’s not that bad either? Do they genuinely think the American people are good? Are they modest and realistic about what they can accomplish in their foreign policy? Do they respect that the business of America is business and appreciate all it provides in the way of jobs, stable communities, and opportunities for people to pursue what they enjoy? Do they recognize limits? Do they advance the cause of freedom and liberty?

Modesty, gravity, realistic, restrained, and responsible are the words that must describe our next president. That is the only way we will be able to dig ourselves out of the hole we are currently digging.

California Begins to Pay the Piper

Five ballot measures intended to close the massive state budget deficit failed yesterday.

My favorite line was spoken by Gubernator Arnold last week: “We have a budget deficit and unlike Washington, the state of California can’t just print money to get out of it”.

Where California goes from here is anybody’s guess. Cali is a golden example of why you can’t have a progressive income tax structure that soaks the rich while spending ludicrously. They also have property tax problems and a whole bunch of legislative rules that make it a hard place to govern. It also has a state legislature filled with liberal democrats in one of the most liberal places in America. It’s really not all that hard to understand why Cali, despite all it has going for it in terms of economic diversity, natural resources, and even its year round great climate, is now on the verge of bankruptcy. Liberal ideas sound great on NPR though don’t they? If only the world wasn’t actually as it is these ideas might have even worked.

Tuesday, May 19, 2009

Saving the World, One Car at a Time

Today the Obama administration proposed an industry standard of 35.5 MPG for cars and light trucks. This would go to 42 MPG for cars and 26 MPG for light trucks by 2016.

This is an interesting idea. In regulatory circles there is a long running debate about the value of regulation. One side feels regulation quickens the mind, so to speak, and forces those who are being regulated to get their act together to comply with the mandate. Without regulation, the regulated would just stall and continue business as usual with no real substantive change. The other side feels that incentives and a more gradual shift are the efficient way to move towards the ultimate goal at the lowest cost with the least collateral damage. This gives time for companies to proceed to the ultimate goal in an orderly way that best balances the often competing ideals and demands of regulators, consumers, owners, and employees.

Much of the impetus behind this specific regulation that Obama unveiled is the supposed urgency of global warming. If we don’t act fast in curbing man-made emissions we will have global catastrophe. Global warming is bad. It’s very bad. Everybody knows this! I would not be surprised to find in 20 years that we will look back on this period of global warming as an example of hysteria.

The more complicated questions in the global warming (and what to do about it) debate are (1) the extent of how much it is attributed to mankind and is man-made?, and (2) Even if it is granted that much of it is man-made, how far are we willing to go curb what mankind can do in terms of allowable actions? There are natural variations in climate over time with hotter and cooler periods. This has been the case for thousands and thousands years. To suggest that the current global warming is, or must be, all man-made is not honest.

More importantly, even if mankind were entirely the cause of global warming, how would you curb it without radically restructuring society? Essentially, supposing the hysteria is entirely valid, and you were really serious about reversing global warming, you would have to impose not only driving bans, but a host of other activities that characterize a modern, advanced economy. We would essentially have to return to an agricultural society to some degree. The sheer vastness, scope, and dependence on those things that are in one way or another harmful to the environment are well beyond the scope of simple emissions standards. That’s a start. But it doesn’t even begin to deal with reversing global warming if at the same time other nations such as China and India with their billions of people are now moving on up on the economic ladder and consuming more.

The reality is that mankind rules the earth. I wish this were something that Christians and secular “humanists” could agree on. What after all is a humanist in the first place if they can't place humans above their dwelling? And, in practice most self-respecting humanists agree with this. But you will always have left wing university professors carving out their own niche and preaching about mother earth. We are to respect, nurture, and cherish the environment. But leaders are also charged with being realistic and doing the best for all involved. My hunch is that this proposal will be stripped down over time as competing interests in Congress become known. I also don’t feel it’s a hugely radical proposal since the auto industry has been moving in the direction of increasing emissions standards and MPG efficiency for at least several years now. I personally drive a Civic Hybrid, which gets between 42 and 45 MPG, and can attest to the financial benefit of having a car that doesn’t guzzle gas.

Unfortunately, I think Obama tends to govern with policies that could be from an average university professor. They sound good in theory. In practice, theory is a little more complicated. Things are never as simple as “see a problem: regulate it. There, problem solved.” If only life were that straightforward and problems could be resolved in that way.

Friday, May 15, 2009

Majority of Americans Are Pro-Life

This is a huge story. This is the first time since Gallup started asking the "are you pro-life or pro-choice" question in 1995 that a majority of Americans said they are pro-life (51-42). Proof that things can change in a positive direction if you advocate faithfully for a just cause.

I See Dead People!

Dead folks are apparently getting stimulus checks. And why not? Thanks to ACORN, they voted for Obama. Don't they deserve special favors too?

In other news, Obama declares that we can't keep borrowing because the debt load is unsustainable.
It will lead to higher interest rates. Gee, you think so? This fascinating proclamation comes in the same week that it's announced we'll have a budget deficit of $1.84Trillion budget and a report that social security and medicare will go bankrupt sooner than previously thought. This also comes as Obama fleshes out his new crown jewel entitlement: National health care, which is poised to cost about $1.5Trill (of more borrowed money on top of the other borrowed money) over the next 10 years. Government healthcare is going to drive down costs though... Really... Oh, and he's essentially going to war on private business and seems to think that working for a business (see last post) is an existentially pointless soul crusher. Of course, I sincerely expect Obama will reverse course now due to his new awareness of all the problems his cartoonish budgets are going to cause.

Thursday, May 14, 2009

Obama's Religious Revival Speech at ASU

Barrack Obama, speaking at the Arizona State University Commencement:

"For many of you, these challenges are felt in more personal terms. Perhaps you're still looking for a job - or struggling to figure out what career path makes sense in this economy. Maybe you've got student loans, or credit card debts, and are wondering how you'll ever pay them off. Maybe you've got a family to raise, and are wondering how you'll ensure that your kids have the same opportunities you've had to get an education and pursue their dreams.In the face of these challenges, it may be tempting to fall back on the formulas for success that have dominated these recent years. Many of you have been taught to chase after the usual brass rings: being on this "who's who" list or that top 100 list; how much money you make and how big your corner office is; whether you have a fancy enough title or a nice enough car. You can take that road - and it may work for some of you.
But at this difficult time, let me suggest that such an approach won't get you where you want to go; that in fact, the elevation of appearance over substance, celebrity over character, short-term gain over lasting achievement is precisely what your generation needs to help end.
I want to highlight two main problems with that old approach. First, it distracts you from what is truly important, and may lead you to compromise your values, principles and commitments. Think about it. It's in chasing titles and status - in worrying about the next election rather than the national interest and the interests of those they represent - that politicians so often lose their way in Washington. It was in pursuit of gaudy short-term profits, and the bonuses that come with them, that so many folks lost their way on Wall Street.
The leaders we revere, the businesses that last - they are not the result of narrow pursuit of popularity or personal advancement, but of devotion to some bigger purpose - the preservation of the Union or the determination to lift a country out of depression; the creation of a quality product or a commitment to your customers, your workers, your shareholders and your community.
The trappings of success may be a by-product of this larger mission, but they can't be the central thing. Just ask Bernie Madoff.
The second problem with the old approach is that a relentless focus on the outward markers of success all too often leads to complacency. We too often let them serve as indications that we're doing well, even though something inside us tells us that we're not doing our best; that we are shrinking from, rather than rising to, the challenges of the age.
With a degree from this university, you have everything you need to get started. Did you study business? Why not help our struggling non-profits find better, more effective ways to serve folks in need."

Mr. Obama, I work for a business. It is not a charity. In the past, I had worked for a non-profit in public service as well. My current vocation enables me to provide for my family, to participate in my church and community as best I can, and enjoy leisure and vacations from time to time. At times I do feel unsatisfied with the work I do. And yet, as I get older, as I mature, I realize that work which doesn't completely satisfy my inner longings is still worth doing.

Am I working for the brass ring, great title, and corner office? Sure, I want to be recognized for my work. Good feedback and a job well done is satisfying. Is it so simplistic and do you seriously believe that I and others scheme in exactly that way? There are definitely some shallow souls in my company leadership who do. But generally speaking, that's not the case for the vast majority. At least it's not for me.

Does my job distract me from what is truly important? There are many times I question how my day-to-day job relates to what is important and makes use of the gifts and talents that I perceive God to have given me.

Does my job force me to compromise my values, principles, and commitments? My job affords me a living that enables me to participate in those causes and activities that reflect my values. I feel confident that I am earning an honest living. I feel content that I am doing what I am supposed to do before the eyes of God.

Does my job make me feel like I'm not doing my best? Sometimes. I think often about how I perhaps could be doing something more fulfilling with my vocation. My job can be monotonous and I don't always see the immediate fruits and impact of my labor. But I certainly don't shirk from my tasks or deliver subpar products to my customers. At least I never do that intentionally.

Am I rising to the challenges of my age? I am doing what needs to be done quietly and faithfully. Is it glamorous? No. Am I interested in seeing my paycheck deposit? Yes, because I do care about my pay. I am married and have 3 children all under the age of 7. I don't believe I am taking shortcuts. Can I directly align it to conquering a challenge of my age, whatever specifically that is? It's never that clear cut is it?

Mr. Obama, I suppose that what I do is not that different from what most people do. The people I work with on a daily basis seem to have a similar attitude. Though I can't speak for Bernie Madoff. As I get older, I realize that the ambitions, hopes, and dreams of my younger years have not all come to fruition in the exact way I thought they might. But that's ok.

Adults learn that life is not always a straight line, that there's good and bad and that part of maturity is navigating through it. I am content. But I don't believe in heaven on earth. I am a Christian and there's a reason for it. I have much to learn and need to grow in many areas. While I don't have the luxury of proceeding on the basis of wistful dreams and vague hopes because there really are bills to pay and responsibilities to meet, I am generally content with the course of my life. Those students will learn the same thing that all adults have to learn as the years go by. I don't know what you've seen in the course of your life that leads you to have such a romantic imagination of what's possible in a finite world. But maybe you'll learn the same lessons we all have to learn if we're to faithfully meet our responsibilities to our families, our colleagues, our friends, and ultimately to ourselves.

I agree with you on one thing. Hope is not to be found by chasing materialistic dreams, money, and prestige. I would just expand on what you said. Hope is also not to be found exclusively by working for a non-profit, working for a "green" company, or teaching. These things can be very satisfying, indeed. In the same way, for many, as a job well done doing profitable work that meets your customer's needs.

We should look for hope where it is to be found. We certainly won't find it in a materialistic outlook nor will find it toiling in a non-profit institution. All of these things have their own unique blessings and challenges. Hope should be looked for where it is to be found: In the person and work of Jesus Christ who died for our sin and reconciled us by His grace to God. As a self-proclaimed Christian, Mr. Obama, hopefully you can lift your gaze and see that.

GM Producing Cars Overseas While on The Dole

GM is charged by the UAW of moving production overseas. This may be a necessary business decision to cut costs. But given that taxpayers have been keeping the company on life support, this could prove quite tricky. Government intervention always has unintended consequences. Nothing new about that. As usual private company recipients of government largesse always lose in the long run. In this case it will be American workers who lose.

What if Nobody's Borrowing?

Interest rates are at an all time low. Banks have been given billions by the government. Retailers in almost all industries are offering incredible deals. Community and regional banks are in relatively good shape, as compared with the Bank of America's and GMAC's of the world. And yet, it appears consumer and business loan applications are down this year. Why?

One of the more under-reported stories of this economy is that it doesn't much matter what the federal government does. If people don't want loans, they don't want loans. This was discussed in an article today in the Wall Street Journal. It was noteworthy because I haven't seen more articles like this over the past few months.

If people don't perceive a self interest and potential future gain from borrowing to invest, there is little government policymakers can do about it. On the consumer loan side, this also indicates that people are more rational than academic theorists give them credit for. People don't have to be perfectly rational. All but the most destructive people act in a somewhat rational, predictable way. People are saving rather than borrowing. This makes a lot of sense at this time.

It also indicates, better than opinion polls could, what people are really thinking about the current and likely future state of affairs. The country is not optimistic about future prospects. We are mainly looking to shore up basic necessities and pay down debt. When people are optimistic they tend to invest or buy new cars or whatever. We're not doing that. I am certainly not doing that. This is a time to get out of debt and shore up basic necessities. So if you have credit card debt or a house. Pay it off as soon as you can because you may be laid off next...

Keynesian economic policies and trillions and trillions of dollars of debt that amount to many tens of thousands of dollars that you and I will have to pay back, do not come without consequences. A president making daily proclamations of radical changes in healthcare, energy, executive pay, international trade, and financial market regulations among other things -- in the midst of this environment -- do not inspire confidence for those who are sane.

Wednesday, May 13, 2009

Those Illusory Glimmers of Hope

I have the same graduate economics background as many of the current economic commentors who claim the U.S. economy is poised to come around. And yet, I can't help being confused about what they're seeing and what I may not be seeing.

I have to wonder if their own personal business interests are clouding their judgment. The numbers are not encouraging by any standard. It's akin to a doctor suggesting to their patient that the spread of cancer is growing but the rate of growth has diminished so the patient should be encouraged. We have almost 14M people unemployed out of a labor force of about 155M. At some point, the rate of decline has to slow. If, for example, the economy lost 500K new jobs a month for just 4 more months, we'd be seeing an unemployment rate of over 10%. Due to the structure of the economy, there is no way that rate is sustainable. At least I hope.

With porkulus, and a daily barrage of nonsensical Keynesian inspired economic policies, I don't see how anybody worth their salt could objectively hope for a recovery after seeing these numbers. Especially if they were trying to encourage new business investment, which is what ultimately creates new jobs. Not that I want to be a conspiracy theorist, but there has to be other motives behind why these economists are even cautiously optimistic.

Just Burn the Bankers Already

The Obama administration has decided to weigh in on what banks can pay their executives. This doesn't matter if the bank is a TARP recipient or not. I didn't know banks had been nationalized. It never occurred to me that a U.S. president, rather than the company board with some input from major shareholders, had any say whatsoever.

The term "socialism" has been thrown around a lot lately. The reason for the visceral reaction to it is that there is something inherently emasculating about it. I don't want the government to take care of my every need, to make promises that it can't possibly keep, to offer me shallow hope rather than substantive opportunity. This constant demonization of bankers doesn't stop with bankers. Eventually, the ugliness of being demonized because of your profession, may be directed towards you. We shouldn't have a president and government picking and choosing heroes and villains. Everyone has a role to play from the banker to the mechanic to the doctor to the plumber. While a capitalist system may not lead to a world of holding hands, where people love one another while chanting folk songs, it's worked pretty decently. At least as best as anything can in an imperfect world.

Having the government set pay for non-government, private companies is wrong whether it's for executives, plumbers, musicians, or anybody else. Mr. Obama: Where are you going with this?

Tuesday, May 12, 2009

War Casualites are Ok Now

I was just watching the esteemed Rachel Maddow of MSNBC interview one of her pundits about the ramp up of U.S. troop casualties that may occur in Afghanistan. The pundit said that deaths would likely rise but we shouldn't gauge mission success or failure by that metric.

Apparently, under Obama, deaths don't matter to liberals. Under Bush they were very concerning. Indeed, reporting of the death toll in Iraq was a daily headline from 2004 to 2007. The ultimate lesson is that whatever Obama does, for liberals and MSNBC blabbers who open their cake holes for a shrinking audience, it's all good.

More Economic Predictions

Here again are my previous predictions of how the U.S. economy will look on December 31, 2010:
  • Unemployment reaching 11% to 12% by the end of this year and staying put for 2010 (not really growing or contracting)
  • Inflation at 8%, which will start ramping up during early and mid 2010
  • Mortgage interest rates at 7% to 8% with Long Term T-Bonds up at the 8% level also starting to ramp up in early to mid 2010.

Thought I'd add a few more:

  • Gallon of gas will be at $3.50 in Missouri, where I live, already at about $2.05 and it will ebb and flow but the long term price will be higher
  • Dow Jones IA will be between 8000 and 8500. This is about where we are now.

I am really not sure if in the November 2010 election Republicans will make huge gains in Congress. Normally, with a president and congress pursuing ideas this destructive the party would be punished. But Obama's a rock star. I admit to not getting it. I truly don't know why over 60% of Americans approve of the job he's doing. I get that he's "not Bush". I get that you've got to give time. And I get that we all want to see America recover and prosper. But these policies are so destructive towards that last aim that I don't know what else to say. I do have a good idea of how economy's work so I'm more confident predicting that. If pressed to the wall, I'd say a GOP landslide with 30 to 40 seats gained in the mid-term election.

Monday, May 11, 2009

Don't Worry, Starting Next Month the Deficit is Under Control

Like Seinfeld's Jackie Childs, I am shocked, appalled, and dismayed by such disfigurement... It seems Obama's initial FY09 budget deficit estimate of only $1Trill was a lowball estimate. The new estimate is that we will see a deficit of $1.84 Trillion in FY09.

Since that still assumes that growth will be a blazing hot 3.5% (or 3.2% depending on the article) starting in just a little over 4 months and going on through 2010, that rosy deficit estimate may even lowball the $1.84Trill. It is also expected that inflation "will remain subdued" as the Fed essentially prints shiny new dollar bills, basically exploding the dollars in circulation.

Get the Coffee, Mike Lupica Just Woke Up

NY Daily News columnist and all around sports guy Mike Lupica complained there was a double standard for jokes given at a whine and dine DC Schmooze Fest Thingie on Saturday night.

Mike can’t seem to believe that “comedian” Wanda Sykes got away with a joke about Rush Limbaugh but a white comedian didn’t about a Nancy Pelosi joke. He’s being decried. But Wanda, who said that Rush’s kidneys should fail so he could die, is not being decried.

So there’s a double standard? You are kidding? In America? Has America become ludicrously PC? Really? I’m just glad Wanda didn’t joke about how white people can’t dance…or… start off every joke with “why do white people…”?

What’s 17%, Wasteful, Inefficient, and Bound to Reshape America?

Government-run healthcare, that’s what. Obama and his apparatchiks in Congress are about to bog down America with another long-term entitlement program. As if social security and Medicare weren’t enough.

The end result of this will be to transfer about 17% of the American private sector to the government sector as healthcare companies are phased out. Of course, in the beginning, you can keep your current health insurance. It’s just that you will have the option to pay less for taxpayer subsidized government insurance. It’s expected that people will prefer to pay less, in the short term. In the long term, we all pay more because government funded anything is not manna from heaven. GOVERNMENT GOODIES COME FROM YOU THE TAXPAYER! IT IS NOT “FREE”. There is no free lunch. And in the end you will ultimately get what you pay for.

There are at least two reasons why healthcare is not an efficient market: (1) People who use most of the services, particularly the elderly on fixed incomes or those in dire straits, do not ultimately pay the full cost of those services; and (2) medical technology and discovery is expensive but it saves lives and is hard to deny to people in life and death situations just because they may not be able to pay.

Thus, there is probably a need to have some form of government intervention unless people are willing to pay the full cost themselves or they are willing to let family members die and forego potential new technologies and drugs because of the expense. Neither is realistic. The government intervention should be more to create incentives for the private market to fix these situations. They should be stop-gap measures. These inefficiencies do not call for a radical complete overhaul of everything. So we’re throwing the baby out with the bathwater.

Sunday, May 10, 2009

You Know it's Bad When...

Even the Washington Post Editorial writers are saying Obama's budget ain't all that and a bag-a-chips...

Obama's budget not only defers hard choices to future presidents, it makes it almost impossible to get out of the hole he's digging. I should say "we are digging" because the American people are eating this all up as judged by Obama's approval ratings. At this pace, there won't be a whole lot of choices requiring anything less than radical reconstructive surgery available to future presidents.

I've always had sympathy for those who had to live in socialist, bankrupt regimes where individual initiative and personal freedom was limited or impossible. Obama is moving America in a direction where before long I will probaby know all about it myself. Hyperbole? I wish.

Friday, May 8, 2009

GM: Oh-Oh Obama's Gonna Furrow his Brow Again

Exit Chrysler, Enter GM. This will be something to watch....

GM may need to file for bankruptcy protection in a month or two. At that point, Obama will again furrow his brow, look tough, give some speeches, cast the private and institutional investors as villians, and probably give the UAW the majority ownership. It won't cause anybody to buy GM cars. But is that really Obama's point with these performances?

The Unemployment Numbers are Bad: So How Will Obama and His Media Friends Spin it?

The unemployment rate went up to 8.9% as "only" 539K jobs were lost during April. Here's the the high-level job loss summary:
  • Construction employment down 110K
  • Factories down 149K
  • Business and professional services companies shed 122K
  • Financial-sector lost 40K
  • Retail trade cut 47K
  • Leisure and hospitality down 44K
  • Temporary employment down 62K
  • Good news for health care, which added almost 17K new jobs.

The government added 72K jobs due to hiring of temporary workers in preparation for Census 2010. Of course, without that we would have been back at the 600K plus job loss range.

I expect to see headlines such as "Obama's stimulus policies begin to turn the tide" and "Numbers reveal new hope for recovery" and so forth. But the sad fact is that this is very bad news. As I've stated before -- -- just because the rate of growth has slowed, does not mean the economy's coming back. I hope things will eventually level out and jobs will start to be added. But with Obamanomics, it's really hard to be hopeful.

California Dreaming

The state of California is poised to go broke by about July according to the state politburo's comrade in charge of budgeting.,0,7342537.story. The shortfall is estimated to be $23B. What's so concerning? Maybe it's just me, but that sounds alright in this day age. Maybe it reflects ingenious stimulus policies?

At the same time, President Obama has threatened to withhold $6.8B of stimulus money to Cali if the state cuts wages to unionized healthcare workers,0,4592200.story. The state had cut wages to the Obama campaign contributing Service Employees International Union and the United Domestic Workers labor union.

They used to say that California is the future. Let's hope "they" are wrong.

Thursday, May 7, 2009

Taking 61.5%

Britain is planning to tax its high income earners more so that their total overall marginal tax rate is 61.5%. Wow. Do I even need to comment on just how stupid this is?

The Dude's Clever

I've got to give it to the guy. He comes out on the podium, furrows his brow, takes on his serious and subtly angry persona and declares he's going "line by line" to cut spending from his $3.4T budget.

This sort of thing is great theater. Obama proposes to cut $17B from programs that his secretary of Defense has already basically made public a few months ago. The cuts are also less than what G.W. Bush proposed in previous years. Bush proposed $34B in cuts and it is routine that presidents request cuts. Bush was unable to get the same cuts to many of the same programs because Congress didn't go along. It seems Congress is rumbling again about the cuts this year. But who really cares? Let's not bicker and argue over who cut what...

Whether the cuts happen, whether the cuts don't happen -- it will all be forgotten in a day or two and we'll move on to some other speech on some other topic. He'll look tough with brow furrowed. People will leave with the sentiment: "hey, this guy is doing something". Americans will be happy. Heck, even crusty ole me loves the circus.

Wednesday, May 6, 2009

Trackin Every Dime of Porkulus ... er "Stimulus"

Well not really. Surely the overwhelming amount of shovel ready projects made it impossible for to track the details.

Although I confess I am actually impressed that they've gotten as far as they did with the site. I was happy to see my state oiling the engine of economic growth through projects such as:
  • $920M to the State Fiscal Stabilization Fund
  • $147M to Title I Grants to Local Educational Agencies
  • $128M for Weatherization Assistance for Low-Income Persons
  • $47M for Public Housing Capital fund Stimulus
I am not sure what happens to weather assistance for low income folks when the "one-time" money runs out over the next year or two. These seem to be either funds for local government or just plain old welfare type of things. It's not necessarily bad as part of a routine local government budget type of thing. But this is not really stuff that would actually create long-term value-added jobs. But, hey, those type of concerns are so yesterday! It will all just work so long as you have faith in Obama.

Tuesday, May 5, 2009

Burger Time!

Obama and Joe go out for a burger.
This can only mean the recession's over. Personally, I miss eating at Faccia Luna's in Clarendon, VA. Better pizza can only be found at Dewey's in St Louis.

We're Back Baby!

Ben's smiling. Happy days are here again my friends!

From the Wall Street Journal -- "The U.S. recession appears to be losing steam, with growth likely to resume later this year on the back of firmer household spending, a bottoming housing market and an end to inventory liquidation, U.S. Federal Reserve Chairman Ben Bernanke said Tuesday."

VEE SHALL SEE... The stock market went up yesterday and the sage of Omaha, Warren Buffett, believes the Obama policies will work. I suppose that throwing borrowed money at the problem can't help to some degree. It would be like me taking a $40K credit card cash advance at a to-be-determined variable interest rate to buy an HDTV. This would benefit the economy to some extent on the day after yesterday. My local TV store salesman would be happy with the sale and I'd sure enjoy the sharp picture. But I'm not looking forward to getting the bill at the end of the month! I know, I just won't get the mail and think happy thoughts. Maybe I'll listen to my Ipod filled with Obama speeches. Carpe Diem.

Monday, May 4, 2009

Year of the Salsa

I have a love-hate relationship with my beloved Costco. It's sheer hugeness thrills me like no other. Tonight I made the bi-weekly trek to the South St. Louis warehouse. I picked up my usual 4 lbs. of grapes, 13 lbs. of oranges, 4 boxes of butter, and so much more. Everything a growing Dad of 3 needs for adequate sustenance.

Usually Costco quality is unparalleled. I trust implicitly all that Costco puts on its shelves. From the food that I eat to the TV I watch to the diapers that grace my baby's bottom to the socks I wear to the sheets I sleep in, the Kirkland signature brand is a welcome friend. Unfortunately, not all is roses. I was confronted with a monumental Salsa decision last time I was there:

To buy the fresh 2lb. jug of Salsa or the 65 oz. container of the regular stuff.

Instinct told me to go with the fresh stuff. Budget said otherwise. Budget won out. So now I am stuck with 65 oz. of Salsa that I'm not all that crazy about. Thus, it looks like the remainder of 2009 and into 2010 will henceforth be known as the "Year of the Salsa."

Would the White House Destroy a Reputation?

Interesting follow-on to what I wrote about Chrysler's hedge fund creditors last Friday. An attorney representing the evil hedge funds charged that the Obama administration threatened to destroy the firms reputation using the White House Press Corps. That could never happen. I don't believe my Obama could do that.

Can We Please Bury Keynes Already?

President Obama has decided to borrow trillions. This is motivated by an economic idea advocated by an English economist John Maynard Keynesian who wrote a classic book “The General Theory…” during the Great Depression. Keynes thought that when times are good we slow up on the brakes and use fiscal policy to depress the economy, lest it overheat and usher in inflation. When times are bad, use government spending and/or tax cuts to generate demand and prop up employment. This is what Obama advocates when he says he’s going to grow the economy from the “bottoms up”. He means he’s going to try and give people purchasing power by giving 95% tax cuts and he’s going to give them jobs via government infrastructure and public works projects.

Well, Mildred, we’ve learned a lot since the 1930’s. Keynesian ideas are useful tools in teaching macroeconomics to undergraduates. Otherwise, these ideas are a weak way to organize a sound economic policy. This has been realized but old ideas die hard as the neo-Keynesian school in economics attests.

What has proven to be vitally important in economics is the study of microeconomics and analysis of individual and firm behavior. This is truly where the rubber hits the road, especially with respect to investment. The Obama people do not seem to grasp how their policies are negatively impacting market psychology and the investor class. Ultimately, economic growth occurs when entrepreneurs take risks and companies develop products and services that individuals want to buy. Buyers buy when they perceive value and like the price. Companies that fail to do this… fail. And, it’s generally good because people move to the industries that produce products where buyers perceive value. New jobs in new industries are created. For anybody who likes to learn and likes new challenges from life, this is a good thing.

Keynesianism would work if people were mindless cogs, which is what liberals do tend to think of the folks so it’s not shocking they espouse it. Keynesians live in a world of models, math, past data, where the actors and variables all seem to somehow be passive data points. Keynesian economics would work if (1) people were unable to think long-term in terms of investment and business planning and (2) if the money to hire people to dig ditches came like manna from heaven without any need to be financed by taxes, printing money, or via bond markets. Indeed if people acted like robots with no capacity to think through portfolio decisions, Keynesian economics would be a splendid idea. Unfortunately, the government spending part of the money given to dig ditches or bankroll new infrastructure jobs does have to be financed by taking money out of somewhere else in the economy in the short and long-term.

I thought we buried Keynes by the time I was knee deep in graduate economics courses in the 1990’s. But I suppose ideas die hard. It is my sincere hope that by at least the end of this administration Keynes will die a final death. Perhaps another great depression will be the only way for the final nail to be put in the proverbial coffin. It’s not my hope. But looking to Keynes to satisfy your economic needs is like looking to porridge to fill your stomach. It was once an interesting idea. Once upon a time.

Saturday, May 2, 2009

Obama's Job Approval Polls

The Gallup poll has Obama at 67% approval and 28% disapproval ( and Rasmussen Reports ( has him at 54% and 45%.

Who really knows? But I can't imagine the Gallup poll could possible be accurate. He lost 46% of the vote to McCain in November. Essentially, you would have to have millions of Conservative GOP and independents saying Obama's doing a great job charting trillion dollar deficits and helping usher in a coming depression. I know personal anecdote is not scientific but my sense from the people I know is that their concern is growing rapidly.

If Obama's basing policies on the thought that he has a sweeping mandate based on the Gallup poll, he has a rude awakening in store. I hope...

Pigs: I Owe You an Apology

To the pigs of the world, I am sorry.

Recent news coverage of the H1N1 virus has made me realize just how horrible and insensitive a person I am. I referred to H1N1 flu as swine flu and I shall never forgive myself. To insult pigs in this way goes against everything I believe.

Pigs have made incredible contributions and great strides since the days of Porky Pig, Arnold of Green Acres, and the movie Porky's. We need to mobilize, organize, and actionize against this sort of crass discrimination against pigs. Our society is better than that.

Friday, May 1, 2009

The Next Economic Hammers

I’ve predicted that the auto industry was the next big shoe to drop in the economy.

There are thousands of dealerships and their employees, suppliers, and others who will struggle as a result of this. There is no doubt that it will be painful. Unfortunately, it needs to happen if the American economy is to recover.

This may be just a sign of more bad things to come. For example:
1. It’s very possible the price of gas will rise. Nobody can accurately predict that and this is not something Obama or the congress can screw up. If it does, which is not an unrealistic expectation, the economy would suffer.
2. The cost of current energy will rise, especially if Obama pursues a cap and trade policy. Current energy will be taxed to fund Obama’s new “investment” in a “green” future energy economy.
3. Employers are very likely to be hit with new mandates for health insurance coverage, especially small businesses.
4. Tax hikes will come for individuals and small businesses earning over $250K. This will reduce overall job creation as these folks who have the means to hire see a reduction in their marginal income.

There are other ramifications of current Obama policies. I suppose it’s possible that things won’t get as bad as they could be. But maybe they could. I hate to write these things. I'm deeply concerned and I call it as I see it.

Payback Time: A Labor Union Owns Chrysler

Yesterday President Obama declared: "I don't stand with those who held out when everyone else is making sacrifices." He's referring to those evil Americans who lent Chrysler $6.9 billion and, horrors, expected to actually be paid back! These are mostly individual investors, banks, and hedge fund investors. The hedge fund investors lent about $1B of the total. Hedge funds, in Obama's worldview, are evil so naturally he targeted them. Because hedge funds are not generally well understood they make a great villian in Obama's narrative.

Hedge funds tend to have a smaller number of investors who invest a higher amount. The minimum requirement is usually $1M, $500K, or $5M or whatever else depending on the hedge fund. Hedge fund investors include the super-wealthy but also many normal folks who are older and just saved a lot of money over the years. They could be your dentist, insurance agent, local small business owner, etc.

The normal course in a bankruptcy proceeding is that the creditors get paid back first. But in this case, President Obama has to ensure his Union supporters get first dibs. They've given a lot of time and contributed millions of dollars to the Democrat party. Not only, that but the main union essentially owns the thing. Obama's giving the UAW a 55% majority ownership stake in Chrysler. Investors will be lucky if they get back even $2B of what they're owed.

The UAW owns Chrysler now. The government gave it to them. Regardless of what political party you belong to if you are not concerned about this you ought to be.