Saturday, January 31, 2009

Time To Swallow The Bitter Pill - Say No To Democrats' Lunacy

From James Quinn

We have borrowed ourselves to the brink of disaster. The only logical way to resolve this quandary is to reduce spending, pay down debt, and increase savings.

It took 28 years to get to this point, and it will take at least a decade to repair the damage. Some indisputable facts will put our current predicament in perspective:

  • The US National Debt was $930 billion in 1980, or 33% of GDP. Today it is $10.7 trillion, or 76% of GDP. The national debt has grown by 1,150% in 28 years.

  • GDP was $2.8 trillion in 1980. Today, it is $14 trillion - and declining. GDP has grown by 500% since 1980 - which means the national debt has grown more than twice as fast as GDP.

  • Total US consumer debt in 1980 was $352 billion. Today, US consumer debt totals $2.6 trillion - 738% in 28 years. Revolving credit increased from $56 billion in 1980 to $982 billion today, a 1,750% increase in 28 years.

  • The real median household income was $41,258 in 1980. The real median household income in 2007 was $50,233. Over the course of 28 years, households are bringing home 22% more. The trickledown theory turns out to be a drip.

  • The personal savings rate was 12% in the early 1980s and reached negative 1% during the Bush administration. It has inched above 2% in the last few months.

Friday, January 30, 2009

Real Leaders Take Their Medicine - Team Obama Is On Drugs

Few thoughts from James Quinn:

I know that many Americans are looking for President Obama to solve this crisis painlessly. But there is no easy way out. The debt must be paid off and/or written off.

The politically unpopular steps that need to occur are as follows:

  • Housing prices need to drop another 15% to 20% to reach fair value. This will result in more foreclosures. When prices fall far enough, the houses will sell and inventories will fall. If you cannot afford the payment on your home, you should become a renter. Not everyone should own a home.
  • The government and Federal Reserve need to shine a bright light on the bad debt within the financial system. The collateral or lack thereof backing up government loans needs to be revealed by Treasury and the Federal Reserve. Covering up the worthlessness of these assets is contributing to the frozen system.
  • The remaining mega-banks that have caused this crisis -- including Citigroup (C), Bank of America (BAC), Goldman Sachs (GS), Morgan Stanley (MS), and any other insolvent banks -- need to be allowed to fail, if failure is indeed their destiny.
  • Failed companies with failed strategies must go bankrupt. Allowing companies (such as General Motors (GM) and Chrysler, for example) to fail brings about restructuring; the remaining healthy companies can buy the good assets.
  • Only infrastructure projects that benefit the citizens of the country should be undertaken. These would include water pipe replacement, electrical grid upgrades and repairing structurally deficient bridges.
  • Keeping interest rates at zero in an effort to force savers to borrow and spend is penalizing the frugal to benefit the profligate. Borrowing our way out of a debt crisis will never work.
  • Consumers should be encouraged to pay down their debt loads and increase their savings rate. The sooner this can be accomplished, the sooner the country can resume growth.
  • The median 401k balance was $18,942 at the end of 2007, with 39% of workers having a balance below $10,000. Approximately 8,000 Americans turn 65 every day. 20% of the U.S. population will be over 65 by 2030. An aging population with virtually no retirement savings must increase their savings and cut consumption dramatically.

Thursday, January 29, 2009

Luigi Zingales Thinks Geithner, Incumbent Bankers & Lobbyist Are Bed Fellows

Luigi Zingales, Prof at the UofC writes:

Mr Geithner, incumbent bankers and their lobbyists will always make you believe there is no alternative to the plan that benefits them the most. You cannot fall for this old trick.

We can save the banks as institutions and restart lending without a massive transfer of money from taxpayers to investors and bankers, and here is how.

One solution is the one I advanced last fall. It requires passing a new piece of legislation introducing a new form of bankruptcy for banks, where derivative contracts are kept in place and the long term debt is swapped into equity.

An alternative would be to allow banks to divide themselves into two entities, a bad bank with all the toxic assets and a good bank, with lending etc.

If the solution is so simple why has it not be done before? First, because it is much simpler to get money from the government than to obtain it through hard work. So no bank would consider doing this spinoff if it hopes to receive extra TARP money. Second, because most bank debt has covenants prohibiting exactly these splits. Even if the liabilities are shared equally between the two entities, the equityholders tend to gain from this split and the debt holders tend to lose. If the shortfall in the value of toxic assets is large enough equity in the whole entity would be entirely wiped out, while with the two split entities equity holders will retain some value in the good bank, at the cost of a lower overall repayment for the debt holders.8

This problem, however, can be dealt with by giving debt holders of the bad bank a warrant on the equity of the good bank, increasing their payoff at the expense of the equityholders. Furthermore, the creditors have benefited so greatly from all the government infusions of money so far that it would only be fair that they will share some of the pain for their bad investment. To allow banks to spin themselves off in two units, however, we need to pass a new law. As in October the “nay sayers” will say it is impossible. It was possible to write a $700 billion check to Paulson, it is possible to approve a $825 billion stimulus package, why it is not possible to pass a very short law allowing banks to spin off?

Wednesday, January 28, 2009

Gary Becker Takes Issue With the $800 BILLION Pork

Gary Becker of the UofC states:

Recessions would be a good time to increase infrastructure spending only if these projects can mainly utilize unemployed resources. This does not seem to be the case in most of the so-called infrastructure spending proposed under various stimulus plans.

The likelihood that such a rapid and large public spending program will be of low efficiency is compounded by political realities. Groups that have lots of political clout with Congress will get a disproportionate amount of the spending with only limited regard for the merits of the spending they advocate compared to alternative ways to spend the stimulus.

The rebuilding of "crumbling roads, bridges, and schools" highlighted by in various speeches by President Obama is likely to make greater use of unemployed workers in the construction sector. However, such spending will be a small fraction of the total stimulus package, and it is not easy for workers who helped bStimulating the economy when employment is falling requires rapid spending of this huge stimulus package, but it is impossible for either the private or public sectors to spend effectively a large amount in a short time period since good spending takes a lot of planning time.uild residential housing to shift to building highways.

Tuesday, January 27, 2009

The Economic Team at White House Are Wearing Rosy Colored Glasses

The proposed stimulus spending plans by team Obama is based on the historical actions of the FDR admin. But economists are pointing out that the WWII related spending was massive as a % of GDP. It won't work today.

From Mathew Yglesias:

One is “whether a large multiplier ever exists” and one is whether such multipliers suffer from diminishing returns. World War II spending was enormous relative to GDP. Wartime spending on that kind of scale goes way beyond the conversations we’re having right now about fiscal stimulus—the equivalent today would be something like a $5.2 trillion package rather than the $800 billion or so we’re talking about. And to get spending up to that level the government had to resort to quasi-forced savings (”war bonds”), rationing, etc.—deliberate efforts to direct production away from where demand was highest and toward the national objective of military production. The 0.8 multiplier is probably the result of diminishing returns. The question is whether you got a decent multiplier out of the first 5-10 percent of GDP you spend on stimulus. It shouldn’t surprise us if it turns out that defense spending eventually got somewhat higher than would be economically optimal in the middle of the largest war in history.

Monday, January 26, 2009

Obama's Economic Team Playing Russian Roulette

Interesting analysis Van R. Hoisington and Lacy H. Hunt, Ph.D. The Obama economic team wants to perform a grand experiment by utilizing massive fiscal spending to get us our of this depression. The US tax payer will be on the short end of this.

Fiscal stimulus will not work well, and may even be counterproductive, and this applies to both spending programs and to certain tax programs as well. One of the major problems on the expenditure side is that the government sector is smaller than the private sector.

The only really viable option for federal stimulus is a permanent reduction in the marginal tax rates, as highlighted in the research of Christina Romer, incoming Chair of the Council of Economic Advisors. This would have the benefit of raising after tax rates of return, but the drawback in the short run of still having to be financed by an increased budget deficit. Over time, a massive reduction in marginal tax rates would be beneficial, but the operative word is time.

With consumers confronting such hostile wealth and income prospects, the saving rate is likely to rise sharply as it did after the Great Depression and, excluding the distortions created by World War II, continued to do for a half century. If the deflation now apparent in specific sectors of the economy spreads, the rise in the saving rate is likely to continue for a very long time. In the past, debt deflations have caused consumers to avoid at all cost the pattern of living beyond their means. Thus, the rising saving rate will constitute a major headwind for the U.S. economy.

As the experience from U.S. and Japanese history indicates, many "false dawns" will occur, with investors assuming that the long-delayed cyclical recovery in economic activity is at hand.

Sunday, January 25, 2009

Jeremy Grantham Has No Love for Obama's Economic Team

Great observation from Jeremy Grantham of GMO.

One can only admire Bob Rubin’s ability to retain influence and have his protégés in powerful positions. Rubin is the guy who was last seen exhorting Citibank to take more leverage and keep swinging.

His man Summers has proven he has some bite. He runs no risk of being on any of the many lists of people who gave clear warnings of potential financial disaster. And dozens did. Summers was
emphatically not a whistleblower. He did not rail against falling financial standards. What he did, with his allies Greenspan and Rubin, was beat back a heroic attempt in late 1998 by Brooksley Born, then boss of the CFTC in Chicago, to supervise OTC derivatives.

Obama appointed Gary Gensler to lead the CFTC. Gensler has a good reputation, but was hired into Treasury by …you’ve guessed it … Robert Rubin.

And as for Tim Geithner! He was, if anything, a cheerleader, and wrote in support of the new era of “Great Moderation.” He, however, was not picked by Rubin. No, he was picked by ummers, who was picked by Rubin. These guys are very, very loyal!

What a missed opportunity this all is. Obama was given a mandate that could have included some serious bottom kicking. We could have quickly taken quite a few steps down the long road leading to a credible financial system deserving of respect. The time to do that was now.

Tim Geithner Should Be Judged Like Zoe Baird & Kimba Wood

Both Zoe Baird and Kimba Wood were considered for the Attorney General's position during Bill Clinton's Admin. Both withdrew their names when it was revealed that they had hired undocumented workers as nannies.

Tim Geithner's seems to have run into similar problems with his housekeeper and then some. He owed personal income taxes that went unpaid until he was nominated to be Treasury Secretary.

The most damming case against Geithner is his role as the governor of the New York Fed. Here is a question from Anna Schwartz, a prominent economist at the National Buereau of Economic Research:

Ordinary taxpayers would like an answer to this question: Why have they been billed more than $45 billion to rescue Citigroup from failure when, as president of the Federal Reserve Bank of New York, you were its primary supervisor? Three major problems led to Citigroup’s downfall: bad investment policy; overexpansion, which overwhelmed Citigroup’s management; and an inadequate capital base. Why was Citigroup’s supervision inadequate to deal with these problems?

Senators should not confirm Geithner and the Obama admin should be chided for their audacity to give Geithner a break. Any self respecting liberal feminist should be appalled and disgusted by this.

Saturday, January 24, 2009

What Is In Store for The Global Economy - from Jeremy Grantham

Jeremy Grantham, chairman of GMO, has some wise advise and comments in his quarterly newsletter. Here are some highlights:

It is obvious to all of us that these are momentous days in which government actions
may well have make-or-break impact, but my confidence in government and leadership is at a low ebb.

Economic advice for President Obama covers the waterfront, and even the near consensus case for great stimulus is lacking in historical certainties or intellectual rigor.

Even the Japanese often express dismay at the costs they have paid due to their heroic level of public spending. Bridges to nowhere have not been as stimulating or productive long term as a focus on energy conservation and oil and coal replacement technologies would have been.

Japanese individuals went into the 1989 event with a very high savings rate and very high accumulated savings. In contrast, our households go into our crunch borrowed to the hilt (or beyond) and painfully undersaved.

It is worth remembering that real wealth lies not in debt but in educated people, laws, and work ethic, as well as in the quality and quantity of fixed assets and the effectiveness of corporate organization.

Monday, January 19, 2009

What is the half life of Obama's after glow?

The election after glow will sparkle and fade in a world that is experiencing one of the worst economic down turns, a society that is hung over from 30 years of consumerism, low rate of saving, and a belief in government to save their economic souls.

Obama's masterful milking of the post election praise will only turn to bitter medicine that will be consumed by all of us. It will be our fault for leading astray from what has made this country so great: individual contribution, individual accountability, thriftiness and that government is not the answer to our problems.

Obama's ponzi scheme of massive deficit spending, like Madoff's $50 billion scheme, will be exposed in time. Hope is not an option!

Is Obama A Symbol of Jean Baudrillard's simulacrum?

Jean Baudrillard wrote:

'The simulacrum is never that which conceals the truth--it is the truth which conceals that there is none. The simulacrum is true.'

'Baudrillard claims that modern society has replaced all reality and meaning with symbols and signs, and that the human experience is of a simulation of reality rather than reality itself. The simulacra that Baudrillard refers to are signs of culture and media that create the perceived reality; Baudrillard believed that society has become so reliant on simulacra that it has lost contact with the real world on which the simulacra are based.'

Obama's painting of reality with childlike chants (Yes We Can, Change,) and the multitude of extraordinary promises to artificially lift the nation's somber mood will fall flat once reality hits the fan, unencumbered by liberal media bias and the half life of the after glow!

Liberal Democrats Should Read Up on MLK instead of getting their info from the Liberal media. Part II

It was the Republicans who fought to free blacks from slavery and amended the Constitution to grant blacks freedom (13th Amendment), citizenship (14th Amendment) and the right to vote (15th Amendment). Republicans passed the civil rights laws of the 1860's, including the Civil Rights Act of 1866 and the Reconstruction Act of 1867 that was designed to establish a new government system in the Democrat-controlled South, one that was fair to blacks. Republicans also started the NAACP and affirmative action with Republican President Richard Nixon‘s 1969 Philadelphia Plan (crafted by black Republican Art Fletcher) that set the nation‘s first goals and timetables.

Few black Americans know that it was Republicans who founded the Historically Black Colleges and Universities. Unknown also is the fact that Republican Senator Everett Dirksen from Illinois was key to the passage of civil rights legislation in 1957, 1960, 1964 and 1965. Not mentioned in recent media stories about extension of the 1965 Voting Rights Act is the fact that Dirksen wrote the language for the bill.

Over $7 trillion dollars have been spent on poverty programs since President Lyndon Johnson's War on Poverty with little, if any, impact on poverty. Diabolically, every election cycle, Democrats blame Republicans for the deplorable conditions in the inner-cities, then incite blacks to cast a protest vote against Republicans.

Liberal Democrats Should Read Up on MLK instead of getting their info from the Liberal media

From the National Black Republican Association:

From its founding in 1854 as the anti-slavery party until today, the Republican Party has championed freedom and civil rights for blacks. And as one pundit so succinctly stated, the Democrat Party is as it always has been, the party of the four S's: Slavery, Secession, Segregation and now Socialism.

It was the Democrats who fought to keep blacks in slavery and passed the discriminatory Black Codes and Jim Crow laws. The Democrats started the Ku Klux Klan to lynch and terrorize blacks. The Democrats fought to prevent the passage of every civil rights law beginning with the civil rights laws of the 1860's, and continuing with the civil rights laws of the 1950's and 1960's

During the civil rights era of the 1960's, Dr. King was fighting the Democrats who stood in the school house doors, turned skin-burning fire hoses on blacks and let loose vicious dogs. It was Republican President Dwight Eisenhower who pushed to pass the Civil Rights Act of 1957 and sent troops to Arkansas to desegregate schools. President Eisenhower also appointed Chief Justice Earl Warren to the U.S. Supreme Court which resulted in the 1954 Brown vs. Board of Education decision ending school segregation. Much is made of Democrat President Harry Truman's issuing an Executive Order in 1948 to desegregate the military. Not mentioned is the fact that it was President Eisenhower who actually took action to effectively end segregation in the military.

Democrat President John F. Kennedy is lauded as a proponent of civil rights. However, Kennedy voted against the 1957 Civil rights Act while he was a senator, as did Democrat Senator Al Gore, Sr. And after he became president, John F. Kennedy was opposed to the 1963 March on Washington by Dr. King that was organized by A. Phillip Randolph who was a black Republican. President Kennedy, through his brother Attorney General Robert Kennedy, had Dr. King wiretapped and investigated by the FBI on suspicion of being a Communist in order to undermine Dr. King.

Wednesday, January 14, 2009

Secratary of the Treasury Designate Tim Geithner Fails To Pay Taxes!

Looks like Timmy is going to be on the hot seat.

Timothy F. Geithner, President-elect Barack Obama’s choice for Treasury secretary, failed to pay more than $34,000 in federal taxes over several years early this decade, and also faces questions about the employment papers of a former household employee, suddenly complicating what had seemed to be an easy confirmation process in the Senate.

Tuesday, January 13, 2009

Obama Outs Closet Keynesian

From the Becker-Posner Blog:

As Posner and others have indicated, there appears to have been a huge conversion of economists toward Keynesian deficit spenders, but the evidence that produced such a "conversion" is not apparent (although maybe most economists were closet Keynesians all along). This is a serious recession, but Romer and Bernstein project a peak unemployment rate without the stimulus of about 9%. The 1981-82 recession had a peak unemployment rate of about 10.5%, but there was no apparent major "conversion" of economists at that time. What is so different about the present recession compared to that one, and to other recessions since then, that would greatly raise the estimated stimulating effects of government spending on various types of goods and services?

But it is not obvious why this should lead to greater confidence in the power of government spending stimulus packages. Of course, perhaps the prior emphasis on crowding out, and skepticism toward the stimulating effects of government spending, were wrong, or that recessions were too short and mild after the 1981-82 recession to call for Keynesian-type stimulus packages.

Sunday, January 11, 2009

Obama's first 100 days will be no cake walk

It seems that Obama's team is signaling that they are ready to take on anybody in Congress that will oppose his economic agenda.

From the NYT:

Brad Woodhouse, who was a senior Democratic Party strategist in the campaign, has assembled a group of 25 organizations — including unions like the American Federation of State, County and Municipal Employees and grass-roots groups like and Acorn — to build public and Congressional support for Mr. Obama’s economic package.

Mr. Woodhouse said the group was in the process of raising money for television advertisements that would pressure local lawmakers to support the plan. He said he had consulted with several of Mr. Obama’s senior strategists.

“We’re doing this with the notion,” Mr. Woodhouse said, “that if we can help in any way, even at the margins, to make this any easier on Obama, it will preserve some of his political capital.”

It gives the Republicans a chance to take a stand and marshal the unity and pave the way for a cohesive theme for 2010. They have nothing to loose and everything to gain. It also gives the RNC a chance to get back to basics and focus on their brand: less centralized government and more economic freedom.

Bring In The Austrians, Kick Out The Clowns!

From Kevin Depew of Minyanville:

While it may be true that "all economists" at the annual meeting of the American Economic Association favor drastic public spending measures to end a "bad recession," it is hardly true that "all economists" everywhere favor this kind of spending.

Not ALL Economists Agree

The Times article completely ignores an entire school of economic thought:

All attempts to emerge from the crisis by new interventionist measures are completely misguided. There is only one way out of the crisis: Forgo every attempt to prevent the impact of market prices on production.
- Ludwig von Mises, The Causes of the Economic Crisis

Of course, ignoring the Austrian school makes sense in this day and age. Ludwig von Mises certainly discovered there is no popularity gained from being right about economic doom. Being "right" about doom is the quickest way to create more enemies than you can shake a stick at.

That really is the only way to explain why, today, the very people in charge of driving the global economy over the cliff - global central banks and Keynesian economists - are now charged with "rescuing" it from its death dive.

Popping Obama's Stimulus Hype

Greg Mankiw does a good job questioning Obama's stimulus hype in a piece in the NYT:

When the Obama administration finally unveils its proposal to get the economy on the road to recovery, the centerpiece is likely to be a huge increase in government spending. But there are ample reasons to doubt whether this is what the economy needs.

.., by doing the math, we find that when the G.D.P. expands, less than a third of the increase takes the form of private consumption and investment. Most is for what the government has ordered..

If the stimulus package takes the form of bridges to nowhere, a result could be economic expansion as measured by standard statistics but little increase in economic well-being.

One possibility is that he wants to use a temporary crisis as a pretense for engineering a permanent increase in the size and scope of the government. Believers in limited government have reason to be wary.

But don’t expect such qualms to stop the juggernaut. The prevailing orthodoxy among the nation’s elite holds that increased government spending is the right medicine for what ails the economy.

Mr. Samuelson once said, “I don’t care who writes a nation’s laws or crafts its advanced treaties, if I can write its economics textbooks.”

The coming stimulus bill, warts and all, will demonstrate brilliantly what he had in mind.

Saturday, January 10, 2009

Obama The Spending Liberal

From WSJ

President-elect Barack Obama says he is planning the largest public-works program since the 1950s construction of interstate highways. He also plans to use stimulus funds to repair schools, expand broadband Internet access and put energy-efficient technologies in public buildings.

For any infrastructure investment to succeed as stimulus, nations must ensure people are hired quickly to work to reverse the downturn -- and don't become part of a permanent program. U.S. governors say their states have $136 billion in "shovel ready" projects that are fully planned and simply lack funding.

But critics doubt those claims. Historically, infrastructure projects have proven to fall behind schedule and over budget. Boston's Big Dig highway project started out in the 1980s as a $3 billion effort but topped $15 billion two decades later.

Lawmakers and a variety of interest groups are already grasping for the government cash. Last month, the Association of Zoos and Aquariums, noting New Deal programs that funded zoos decades ago, made a plea for its "shovel-ready" zoo and aquarium projects to be eligible for federal stimulus funding.

Inflation has quickly disappeared as a concern around the world. It's likely to reappear once growth perks up.

Friday, January 09, 2009

Obama Lack of Leadership Shines Through

Obama defended his trillion dollar plan as the nirvana to get us out of this terrible economic funk. The easy road is to spend and create massive deficits, the likes of which we have never witnessed int the history of the nation or any other industrialized nation.

The road less traveled is to do the right thing and cut government spending. entitlements, cut income and capital gains taxes on productive assets such as labor and capital, and use the bully pulpit to encourage Americans to save more, be more frugal, cut waste, be more efficient etc.

His economic team, that does not have a credible track record, seems to look to the past to come up with same old solutions: spend, spend, spend. The WSJ states:

'Still, with the U.S. economy facing 1930s-style threats, the Obama administration is looking back to that period for guidance. President Franklin Roosevelt's Works Progress Administration provided jobs to millions of Americans during the Great Depression, though it had critics who said the program wasted money on unnecessary projects.

..limits of Keynes-inspired growth were reached in the following decades. Many countries mistimed their spending, pouring money into their economies just as they were riding out a downturn and leading to economic overheating. Latin America regularly succumbed to hyperinflation, while in the U.S. the "misery index" -- the combination of inflation and joblessness -- climbed to 20.8% in 1980, from 10.8% a decade earlier.

Many nations also wasted their money on unnecessary projects: Japan became notorious for investing in little-used airports and bridges leading into sparsely populated islands. Indonesia started a national car project that lost money and was riddled with corruption.

With the rise of Ronald Reagan and Britain's Margaret Thatcher, critics of stimulus policy came to the fore. The goal became to shrink government.

Thursday, January 08, 2009

How The Chinese Can Take Out Obama's Vision

Nice piece in the NYT on the importance of the Chinese in the US debt market. When the Chinese decrease their appetite for US government debt, the Obama admin will have a difficult time funding the $ 1 trillion spending spree.

'China has bought more than $1 trillion of American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home, a move that could have painful effects for American borrowers.

“All the key drivers of China’s Treasury purchases are disappearing — there’s a waning appetite for dollars and a waning appetite for Treasuries, and that complicates the outlook for interest rates,” said Ben Simpfendorfer, an economist in the Hong Kong office of the Royal Bank of Scotland.

At the same time, three new trends mean that fewer dollars are pouring into China — so the government has fewer dollars to buy American bonds. The first, little-noticed trend is that the monthly pace of foreign direct investment in China has fallen by more than a third since the summer. The second trend is that the combination of a housing bust and a two-thirds fall in the Chinese stock market over the last year has led many overseas investors — and even some Chinese — to begin quietly to move money out of the country, despite stringent currency controls. A third trend that may further slow the flow of dollars into China is the reduction of its huge trade surpluses.

Wednesday, January 07, 2009

More Bla Bla from Oblama!

Obama wants to spend close to a $1 trillion dollars to revive our morbid economy. Any idiot can spend the money we don't have. That is politics as usual. Deficit spending has been the modus operandi for the last 30 years when the normal business cycle heads down.

Where is Obama's so called 'different' kind of politics? Borrowing massive amounts and sacrificing the future generation's earnings is not a sign of intellect! None of his economic advisors saw the economy tanking! Why should we belive them when they insist that massive deficit spending will get us out of this mess. They are relying on a small data set of past policy actions to defend their recommendations.

It takes a different type of politicitian, one who truly understands the trade offs, to cut government spending (including entitlement programs such as Social Security, Medicare), encourage savings, cut income taxes and capital gains taxes. It takes a different of politician to let the housing bubble correct and send the right message for those that took a risk and lost. Those that saved and avoided risk should be rewarded. Clearly Obama does not understand this.

Republicans need to take a stand, right here, right now.

'Senator Judd Gregg of New Hampshire, the senior Republican on the Budget Committee, and his House counterpart, Representative Paul D. Ryan of Wisconsin, said the extensive borrowing by the government could be a disaster if Congressional Democrats and the new Obama administration did not also work on long-term solutions including changes to Social Security and Medicare. ' - NYT

Monday, January 05, 2009

Obama Has Confidence in Public Schools - NOT!!

Michelle Rhee the chancellor of the DC public school system sends her two daughters to DCs public schools. She is doing an amazing job cleaning up DC schools while fighting the entrenched bureaucracy and the teachers union.

Obama could have boosted her efforts by sending his daughters to DCs schools. He could have walked the talk on improving education by leading from the top. Ah well, being an elitist has its privileges. What happened to change you can belive it? I guess it went by the wayside.

From the BBC
Malia and Sasha are attending Sidwell Friends, a private Quaker school in Washington's north-western suburbs.

Sasha, 7, will be going to Sidwell's elementary school campus, while Malia, 10, will attend its middle school.

Sunday, January 04, 2009

Throwing Stones At Obama's Transparent White House

Richardson's withdrawal is a sign that Obama's over confidence has it's limits. The Republicans in the Senate should use this to their advantage and dig deep into every cabinet level appointee's ties. With Blago's ties, Rahm Emmanuel's dealings, Fannie Mae and Freddie Mac ties, the Senate Republicans can diffuse Obama's momentum effectively.

From the NYT

The Richardson withdrawal, first reported Sunday afternoon by NBC News, raises questions about the thoroughness of the Obama team’s vetting process, which had been touted as one of the most stringent ever. Stories about the investigation of the CDR contract and of the donations by David Rubin — the president of CDR and a major Democratic contributor — to the Richardson-linked political action committees have appeared in news reports at least since August.

In 2003 and 2004, Mr. Rubin gave about $100,000 to two political action committees that Mr. Richardson controlled, according to published reports.

An individual knowledgeable about the grand jury proceedings, who requested anonymity because of the secrecy of the proceedings, said last month that a grand jury was investigating “how CDR gets business in New Mexico and whether the governor’s office was involved in getting them business here.”

Saturday, January 03, 2009

Will Obama's Policies Lead To a Depression

A common misconception is that the stock market crash of 1929 cased the Great Depression. The major cause of the Depression was the protectionist policies of Herbert Hoover's administration and the bungling of FDR's first two terms.

Looks like Obama might be going down Hoover's path.

From Bloomberg:

President-elect Barack Obama’s advisers are looking at including a “buy American” provision in the economic-stimulus legislation that the incoming administration has made its first priority.

“We are reviewing the buy American proposal and we are committed to a plan that will save or create 3 million jobs, including jobs in manufacturing,” said Jen Psaki, a spokeswoman for Obama’s transition team.

Nucor Corp. Chief Executive Officer Dan DiMicco said he will use his position as a member of the U.S. Department of Commerce’s manufacturing council to push for the use of domestically produced steel in such projects. Current requirements that American-made material be used in government projects are unevenly enforced, he said.

This is how trade wars start. It will destablized the interconnected world econonmy, leading to the failure of the very policies that the administration hopes to help the economy!

With a fragile enconomy in a deep recession, it won't take much to push us into a depression.

Obama Waltzes To The White Hosue On a Carpet of Green (Millions!)

From Bloomberg:

Fundraisers who helped Barack Obama amass a record $746 million for his presidential campaign are among those who have funneled more than $21.4 million to his inauguration committee, roughly half of the donation goal.

Those who brought in $300,000 to pay for inauguration- related costs include Chicago businesswoman Penny Pritzker, who headed Obama’s campaign finance committee. Two others were John Rogers, chairman of Ariel Investments LLC in Chicago, and Julius Genachowski, the managing director of Rock Creek Ventures, an investment firm in Washington. Genachowski is in contention to head the Federal Communications Commission in the new administration.

The inaugural committee’s Web site shows that 23 of the 47 people who raised more than $500,000 for Obama’s White House race are among 157 supporters who have collected large amounts of money to be spent on festivities connected to the swearing-in Jan. 20.

Yes they still can! I find it funny that they have placed limits as to who the bribes, uh, donations come from! As if making these arbitrary restrictions makes it palatable! Gobama! Go!