Saturday, February 28, 2009

Numbers Are What You Make Of Them

Since he's been in office, Mr. Obama has been wildly throwing numbers around like pancakes at a Church breakfast bazaar. Or, like the bets at a roulette table!

Just recently, in his joint address to Congress, Obama said that his people (and, he does have people!) have already identified nearly $2 trillion in cuts against Federal spending. In that case, he is talking about a 10-year number. The real cut number is probably well south of $200 billion a year. Then, that number is floated upwards by applying some very optimistic assumptions on the time value of money to get to that final $2 trillion number. Those assumptions include some optimal inflation and economic growth influences that would have been applied if that spending had remained in effect over a 10-year period. The problem with that is that politicians always love to use the best case scenario. In presenting their numbers to the public, they generally assume that inflation will be contained; that the Gross Domestic Product (GDP) will grow at better than historical averages; the recession will be over in short order; and, that Congress won't balk at any of the spending cuts that Obama is proposing.

Projecting 10 years of economic activity is like trying to predict the exact point of landfall for a hurricane when it is still 3 weeks out from shore. A perfect example of how imprecise this exercise can be, came on Friday. Just a month ago, the GDP growth for this country was pegged at a negative 3.8% for the Fourth Quarter. This take at the GDP of this country was called the "initial" number. The secondary "look-see" (the "preliminary" number) was release on Friday and the GDP growth number was revised substantially downwards to a negative 6.2% (See Full Story: "Meltdown 101: Why would a GDP revision be so huge?"). My guess is that the "final" number, to be released a month from now, will be even worse.

The reason that Obama used a 10 year, $2 trillion number was because, I think, he knew that he would be unloading a $1.75 trillion deficit number for this year. The $1.75 trillion number is somewhat psychologically tempered if people are inclined to remember the $2 trillion in cuts from his speech of two days prior.

Then, as part of that same budget presentation on Thursday, he says he will cut deficit spending (note: not the deficit) in half by 2013. 2013 is four years from now. I think he used that number for a variety of political and less-than-transparent reasons. The first deception has to do with what year of deficit spending he's talking about. His "deficit spending-in-half projection" uses the baseline of last year's deficit; which is already known to be about one trillion dollars. It completely ignores the new deficit projection of $1.75 trillion; a much higher number to halve. Second, 2013 is a budget year that is a full year past his first term in office. I think that Team Obama intentionally picked that particular date in the future because Obama will be able to sidestep from being pinned down on it as a campaign issue during his 2011-2012 run for reelection. Third, he uses that date in time because, by his own people's calculations, the deficit will start to rise, again, in the years beyond 2013 when the full effect of his spending plans start to kick in.

For a guy who constantly preaches transparency, this is just a lot political B.S. He uses apples and oranges comparisons; and, in doing so, tries to hide things. When it is convenient, he will use a one year number. Another time, he'll throw out an optimistic 10-year number. Then, again, he will hide a much greater 10 year deficit number, by saying he'll halve the deficit in 4 years; when, just 6 years later, the deficit will be even higher than it is today. To the people who can't see through this or don't understand the accounting that is being used, he is able to use these numbers on unquestioned basis. And, our national media is so into bed with him that they neglect to do their job in picking things apart.

This is the same kind of B.S. that his team was able to pull off with the Stimulus Package. All you have to do is go to to see the deception. On that site there is a bar chart which gives the false impression that tax cuts make up the bulk of the Stimulus Package. However, nothing could have been further from the truth. In reality, tax cuts are outweighed in that bill by a factor of two to one. Tax cuts are only a third of the entire bill.

The same deception took place throughout the Obama campaign when our prince of transparency claimed that 95 percent of Americans would get a tax cut under his tax plan. That too was a kind of it-depends-on-the-definition-of-what-is-is lie, because he, once again, bundled apples and oranges buy claiming that FICA tax (the payroll tax for Social Security) was the same as income tax. Further, he never took into consideration that 5 percent of America, at that time, was out of work and pays no FICA taxes at all.

Other than the last year in office when the deficit ballooned as a result of all those bailouts funds, the Bush Administration was always pessimistic about reducing the deficits of post 9/11. However, time and time, again, the numbers always came in better than projected. In the case of Obama, I think all the numbers are a sham and are being excessively overstated. He is playing fast and loose with his calculations in order to sell an extremely expanded role of government. Those who have looked at his recent deficit projections don't see any way he will cut the deficit by half by 2013. Even if you took all the income away from the top 5 percent of wage earners in this country and, then, applied the $200 billion that is his claimed spending cuts, you can't reduce the deficit in half. It is impossible even under the best of circumstances.

I think that Team Obama is front loading all these programs by using deceptive numbers, so that when the truth finally does come out, the framework for the complete socialization of this country will be so set in concrete that any retreat from that inevitability will be totally impossible. It is an ever narrowing road that started with FDR's using of the cover of Depression to lay the first bricks. Then, LBJ used the cover of racial turmoil and the division over the Vietnam war to lay down even more bricks in our trek towards socialism. And, finally, the very liberal agenda of the Obama Administration is now set to use the current economic turmoil to slam the final door on what was once a true capitalistic society. Just my opinion.

Image by John Wardell (Netinho)'s photostream on Flickr with Creative Commons Licensing. Some rights retained. (Click to View Other Works).

Friday, February 27, 2009

The End Of Private Banking In America?

If you don't think banks are making enough loans to consumers and small businesses right now, just wait until the Congress passes its "cram down" legislation (See Full Story).

As I have said before, the basic business model for banking is fairly simple. They take money in from depositors with the promise of paying interest on that money. Then, they use that money to give out loans to borrowers. The interest income derived from those loans is then used to pay interest to their depositors. In essence, the bank is a lending agent or consolidator between a diverse group of depositors and some group of select borrowers. For that, the banks take a commission; which is their profit.

Now, enter the Democrats in Congress. They believe that people struggling with their mortgages (mortgages that they couldn't really afford in the first place) should have mediation conducted by a Federal bankruptcy judge. That judge, armed with this new legislation, will be able to accomplish what the real estate industry calls a "cram down" of any principal loan amount to a new, much lower level, with lower and much more affordable interest rates.

A "cram down" is simply forgiving any loss in market value that a defaulting homeowner has realized against their original mortgage loan agreement. In essence, a person who bought a house for a high price and who has an equally high mortgage value associated with that home (a.k.a. their principal loan amount), will have a new contract written to match today's lower market value and today's low interest rates. The bank, then, has to eat the difference as a loss. For the delinquent homeowner, it is nothing but a win-win situation. They walk away with a new loan amount and a monthly mortgage that is, in many cases, more than halved. For the bank, they will have sustained losses in the 5 to 6 figure range for each home that is being crammed down on them.

The Democrats argue that this will keep people in their homes. And, it will have no cost to the tax payers. Also, the value of all homes will be maintained because there won't be any empty and foreclosed homes in our neighborhoods.

If only these people understood either business, or banking, or the real estate market!

Every time you financially benefit one group of people in some legislative or court action, you disadvantage others. In a "cram down," you are forcing banks into accepting severe losses. At the very least, those losses will result in reduced interest rates to all their depositors. In those formerly hot real estate markets, many banks won't be able to sustain all the losses that are being forced upon them and the FDIC will have to come in and takeover those banks. The savings of some people, those who exceed the current FDIC insurance levels, can and will sustain heavy losses. Federal funds, from the taxpayers, will be used to square the accounts of remaining depositors through FDIC insurance. So much for no cost to the taxpayers!

If a bank remains solvent while still sustaining tremendous losses, they are not going to be inclined to make any more moderate-to-high-risk loans for fear that some other Federal Judge, at some time in the future, will cram some more losses down on them. This will only exacerbate the current tight credit conditions that already exist in this country. It absolutely will insure that there won't be a recovery from this recession. Further, the value of homes in the real estate market will continue to decline because there won't be any loans available to drive the demand that is very much needed to clear all the existing inventory in what is already an oversupplied housing market.

Apparently, our Congress and Mr. Obama don't seem to understand that it is a lack of home buyers and not necessarily the number of foreclosed homes that is driving home prices down.

Additionally, if a bank sustains heavy losses but remains in business, it is likely to lose depositors because they won't be able to pay adequate or competitive interest rates on their checking/savings accounts. People will move their money elsewhere and, ultimately, those banks will fail as a result of runs on their deposits. Once again, Federal (FDIC) insurance money will have to be used in taking over another bank. And, once again, that's taxpayer money; just in case our Congress doesn't know.

This whole mess could result in a complete collapse of our private banking system. The net-net will ultimately be a Federally operated banking system with all the losses, the pitfalls, the inefficiencies, and all the lack of creativity of our current United States Post Office. God help us all!

Thursday, February 26, 2009

Doubling Down; and Down, again!

I guess I get little tired of hearing about the trillion dollar deficit that Obama says he inherited from the Bush Administration. I believe that a Democratically-controlled Congress also helped to double that deficit through legislation that approved the bailout monies for Fannie & Freddie, the banks, AIG insurance, and the auto companies. Granted it was at Bush's urging; but, I think the majority of Congress was on board with the various bailout proposals. I also seem to remember a junior Senator from Illinois who took time out from campaigning and who sat at the table with President Bush and others, and then agreed with him and voted for the bailouts.

Now, for Mr. Obama, as our President. He complains about the deficit he inherited. Yet, this morning, he has decided to nearly double it with a 2010 budget of his own (See Full Story). At the end of Obama's second year, by his own projections, the deficit will balloon to 1.75 trillion dollars. There's an ad running on TV that says you could spend a million dollars a day since Jesus was born and you still couldn't spend what was approved in the near $800 billion Stimulus Package. Obviously, that TV ad is out of date. It should be TWO MILLION a day with the current package plus all the new spending in Obama's budget.

But, I have another surprise. Mr. Obama's projection of a $1.75 trillion deficit is probably way off the mark.

Corporate profits are totally in the tank. They are literal disasters. Many are carrying big losses. Those who are still reporting profits are reporting drops in profits of 50 percent or greater. And, if this is happening to our publicly traded corporations, the same has got to be true for small businesses.

Companies that don't have any earnings don't pay taxes, and the list of companies with losses is growing by the day. If earnings are down by more than 50 percent, then the Federal taxes on those earnings will be proportionately down. Also, people losing their jobs won't pay taxes. And, every time a CEO is forced to take a pay cut (like the $500,000 ceiling placed on them by the Obama Administration or the voluntary $1 salaries), that is additional tax money that the Federal Government won't be seeing. Cuts in the Iraq war expenses will also cause profits to fall for all those U.S. companies that were making the "things" for the war effort like Humvees, guns and rifles, spare parts, Meals-Ready-to-Eat, etc. Some of those companies will probably have to let people go as the Iraq War effort dwindles and as those out-of-jobbers also hurt the tax base. Further, this morning's earnings data clearly show that AIG and GM will be back with their tin cups for Federal handouts. In the last quarter GM burned almost $10 billion dollars and says it will be out of money in two months (See Full Story). There is no doubt that GM will need another $30 billions in order to survive until the end of this year. AIG insurance is also under water with another estimated loss of $60 billion dollars. They have already received $150 billion from the taxpayers and it now looks like they'll be wanting another $60 billion more (See Full Story) .

My guess is that our Treasury Department and the rest of the Obama Administration have totally underestimated the amount of tax revenues that will be lost to this economy. Further, I'm am quite sure they haven't accounted for all the new bailout monies that will have to be doled out. Lastly, they've probably underestimated most of the costs that they associated with new programs such as nationalized health care.

I will personally bet that you can add 50 percent to Obama's projected deficit numbers. It would not surprise me to see a first-year Obama budget deficit by the end of 2010 that is well above $2.5 trillion. One thing politicians can't ever do is to get the numbers right.

If you don't think I'm right; then rewind to November, when Team Obama was talking about having a $500 billion Stimulus Bill ready for the President's signature in January (See Full Story). As we all know now, that stimulus bill finally turned out to be nearer to $800 billion; almost 60 percent higher than a projection of just two months earlier. It makes you wonder. If Team Obama can't forecast two months in advance, how can they submit an accurate budget for 2010; almost ten months from now!

Stop The Duplicity!

If the Republicans are going to complain about earmarks (a.k.a. pork) in spending bills, they should stop being duplicitous. In the 6-month Omnibus Spending Bill that was just passed by the House of Representatives, there were 8,570 earmarks (See Full Story). Of those, about 40 percent of the total lard was from Republicans.

Those who are not without sin, themselves, shouldn't be throwing stones at other sinners! They should lead by example by having yanked their own fat out of that bill. I personally don't follow the rationale that pork buys votes. If it did, the last near-decade of all-pork-all-the-time spending by Republicans surely wasn't able to save their bacon at the polls. Now, was it?

Wednesday, February 25, 2009

Jindal's Flop

Last night's Republican response to President Obama's address to a joint session of Congress was just pathetic. It was given by the current Governor of Louisiana, Bobby Jindal; a guy who has always been classed as one of the hot, up-and-comers in the Republican party. The sound was terrible. The setting was cold. Governor Jindal stood in front of camera with a slight slump and his head cocked sideways as if he was Mother Teresa looking for a charitable donation. His speech was less than forceful. He almost whispered as if he was announcing a golf tournament. The Jerry Seinfeld episode about the "low talker" came to mind. Finally, his use of jokes and personal experiences fell completely flat; seeming amateurish, at best.

Overall, that speech gave America no reason to believe that the Republicans are holding the answers to get us out of this recession. It would have been better if it had never occurred. Certainly, a dynamic speaker, like Barack Obama, would have been a hard act to follow anyway; but, there surely were better performers available in the Republican party to counter this first outing in front of all of Congress by Obama. Michael Steele, the new RNC Chairman, would have been a great choice. So would have most of those who had run for the Presidency; like Mitt Romney, or even John McCain.

History has shown us that the first, nationally-televised public appearance of any politician is a "maker" or a "breaker" in their chances for top leadership in this country. Certainly, we now have a President who elevated his chances for that when he gave the keynote address at the 2004 Democratic Convention. Sarah Palin hiked the price of her own stock when she spoke at this last Republican Convention for her first in a nationally televised appearance. George Bush once gave a Republican response to a Clinton Address; and, while not that remarkable, he didn't hurt himself, either.

I think Jindal hurt himself. Up until last night's speech, I thought highly of him. I had previously seen him being interviewed on a variety of topics and I liked his responses. However, last night proved that he doesn't have the guns to go out onto the national stage. Many in the Republican party thought that he should have been McCain's pick for V.P. Looking at last night's performance, I think McCain made the right choice in "not" picking Bobby Jindal.

Tuesday, February 24, 2009

Bernanke Pushes Stocks Up

Almost, as if any good news would be a reason to buy stocks, our stock markets are "all" up over 3 percent and the "Dow Jones Industrial Average" finished up 232 points. Fed Reserve Chairman Bernanke seems to be the primary driver for this rally. In a Congressional hearing, earlier this morning, Bernanke said that the recession "could" be over in '09.

Now, before you uncork the champagne and start buying up all the beat-down stocks you can find, you would be well advised to look at what this "Carnac the Magnificent", Mr. "Big Ben" Bernanke, said to Congress in April of just last year: "Recession is possible, but recession is a technical term ...I'm not ready to say whether or not the U.S. economy will face such a situation..." (See Full Story)

Now, for me, I don't think Bernanke can really be trusted with his defective little crystal ball. If what we are going through, right now, is just some kind of "technical" situation, I'd really hate to see what an actual, not "technical," recession looks like.

Tax And Burn

Apparently, the details of Obama's budget and tax plans are starting to hit the street. To pay for all of this massive spending, it is his intention to allow the tax cuts for the rich ($250,000 and upward) and for businesses and corporations to rise to pre-Bush tax levels. In those tax brackets, it assumed that the two highest tax brackets will be allowed to rise from the current 33 and 35 percent to 36 and 39.6 percent, respectively. Additionally, there will be a return to the 28% tax rates, from the current 15% and 20%, for dividends and capital gains.

While raising the tax rate on individuals and businesses by an extra 3% or 4.6% might not seem like a big thing, it all has to be put in the broader context of things.

First, these aren't the only taxes that are being raised. All across this country, the city, county, and local taxes are also being raised as taxing entities try to struggle to meet expenses in this failing economy. If I'm a small business owner in California and I am lucky enough to be still doing well, I just got hit will additional taxes for income, vehicle ownership, real estate, etc. It his highly possible that any profitable business in California will easily be paying 62% (or more) in total taxation when you add up the state, county, and federal taxes for income, for Federal AMT taxes, for federal gasoline taxes, state vehicle registration, sales taxes, real estate taxes, and so on. So, a company making, say, $500,000 in income will pay at least $310,000 when all the taxes are added up.

That $310,000 could have been used to pay 10 people a salary of $31,000. It could have been used for lower pricing. It certainly won't be available for any business expansion. California has already seen the loss of businesses in their state due to both regulation and taxes. Currently, they get 50% of their taxes from 1 percent of the taxable population; or, from about 144,000 taxpayers. My guess is that their tax base will continue to shrink as individuals and businesses accelerate their moving to other states. Eventually, California will just become a state of have-not's while all those who are "have's" will have completely moved elsewhere to avoid all the taxing and regulation.

At a time when we are in a serious economic downturn, increased taxing is just going to force individuals and businesses to look elsewhere to live and operate. Europe has had this problem for years. The wealthy keep moving out of places like France and England to worldwide locations that are less socialist and less tax crazy. For years, France has been losing its millionaires at a rate of one per day(See Full Story). All that does is shrink their tax base so that the tax burden on the remaining citizenry just gets heavier and heavier. That's one of the downsides of being such a socialist country.

In this country, taxes have resulted in the loss of much of our manufacturing base to places like China. You find the wealthy moving to other countries that have lower tax rates. That trend will just continue to increase as taxes rise to meet the financial demands of an increasingly socialist society. We will literally be taxed to death and will burn in doing so.

Obama isn't just another "tax 'n spend" Democrat. He's a spend and, then, tax Democrat.

Monday, February 23, 2009

The 31 Percent Solution?

In this country, there are about 55 million homeowner mortgages. According to the Obama administration, there are 9 million mortgage holders who are on the verge of foreclosure. If you didn't listen carefully, you would have thought that his new, $75 billion plan would help all those 9 million homeowners (See Full Story). But, in reality, those who would actually receive relief under this plan will be scant; at best. Here are my reasons.

At his press conference, Mr. Obama said that "thirty-one percent" was going to be the "means test" by which people will obtain a reorganized and reduced mortgage rate under his program. What that means is that any person receiving relief from their current mortgage obligations must have revised mortgage payments that are no greater than 31 percent of their income.

Right off the top, about 45 percent of those who are on the brink of losing their homes won't get any relief under the Obama program because they are unemployed and absolutely can't pass that 31 percent mortgage-expense-to-income means test (See Full Story).

Of the remaining 5 million homes in potential foreclosure, there are at least a million mortgages that are in the hands of former house-flippers and speculators. Generally, these are secondary or tertiary home mortgages that Obama has clearly said won't get any relief under his plan.

That leaves about 4 million remaining mortgages that "might" be eligible for relief out of the original 9 million. However, I will bet that, best case, only about half of those will actually qualify for the under 31 percent guideline. That's because at least half of those home's 4 million homeowners are so "upside-down" on their mortgages that no amount of interest rate relief will manage to get their mortgage payments below the 31 percent threshold. (By "upside-down," I mean that the mortgage amount that is owed is greater than the value of the house. In many cases, the homeowners actually have debt that is 6 figures higher than the current value of their home.).

So, now, we're down to about 2 million mortgages out of the original 9 million.

Now, here's the big kicker. It is already known that, historically, 55 percent of those receiving home mortgage restructuring will go back into mortgage default and foreclosure after 6 months (See Full Story). This happens for a variety of reasons. They lose their jobs. They have unexpected health issues. Or, simply, the other expenses in their lives continue to rise and they just can't meet all of their obligations. Also, many of those filing for restructuring actually lie about their incomes in order to get a lower rate. Therefore, it is possible that a year from now, the best we could hope for from the Obama plan is the saving of about one million mortgages. That's a far cry from the 9 million that Mr. Obama said his plan had originally targeted.

One other thing has to be considered. People are intentionally walking away from their mortgages and their homes by declaring bankruptcy because they are either being advised to do so, or they've figured it out on their own. More often than not, these are people who can easily afford their mortgage payments. But, they are so upside-down on their mortgages that it doesn't make any financial sense to continue to make those payments. For example, take someone who bought a house for $500,000 in 2007 and that house is now only worth $325,000. Maybe, originally, they mustered $25,000 in a down payment under some very liberal lending conditions of that time. That means that even if they could sell their house today, they would still owe the bank $150,000 (the difference in their mortgage commitment and their current house value). That $150,000 tab would also be applicable if they tried to refinance to lower their monthly rates. In essence, they're stuck with a problem unless or until they renege on that loan through formal bankruptcy. For most people in this situation, it is an amount of indebtedness that would take decades for them to pay off; even if the housing market did recover.

Certainly, there are some who will look at me as being both partisan and grossly pessimistic. However, I've been around a long time. Politicians never face truth. In selling anything, they always give the best case scenario; and, Obama is no different. Don't forget that this is a guy who, when running to get elected, said that his recovery plan would result in the creation of 4 to 5 million jobs. Then it was 3 to 4 million. Now...its "save" or create 2-1/2 million to 3 million jobs. My guess is that, in a month or two, the word "create" will be gone completely and we'll only be hearing about saving 2.5 million jobs.

Even if I am being overly pessimistic, my bet is still that we will only see the maximum of 1-1/2 million mortgages being saved by his plan. I will also think that he'll be back telling us that he needs to pour more money into the program in order to it to make it work. Further, my guess is that 31 percent will also have to float upward to 33 or 35 percent. I'll even venture that, sometime in the not-too-distant future, Mr. Obama will announce a program whereby the Federal government will pay to clear the upside-downedess of any loan in order to stop the still increasing rates of foreclosures.

Lastly, it's important to note that much of this "mortgage bailout" is just avoiding the inevitable. It would be better if the free markets were allowed to work and let banks renegotiate valid loans while continuing to allow the foreclosure process to go forward for those who were never qualified to be in the house they are now in. The temporary saving of mortgages is like dealing with the San Andreas fault. Having thousands of little earthquakes over time is much better than letting the pressure build up until you have one, massive one. If we keep trying to delay foreclosures, we could see a huge mortgage industry collapse in two or three years; even greater than it is right now.

Sunday, February 22, 2009

A Real Life "I Am Legend" Scenario

Anyone who saw the most recent Hollywood variant of the original 1954 Richard Matheson novel, "I Am Legend", knows that actor Will Smith played one of the last survivors of a medical catastrophe that literally wiped out the entire human race. That catastrophe was a supposed cure for cancer that became a virulent killer.

In a parallel to that movie, there was barely-noticed story, this week, that warned us of a similar fate if we press too hard on stem cell research. In this case, an Israeli boy, who was suffering from a fatal brain disease, was given fetal stem cells and those cells began mutating into tumors throughout his brain and spinal cord (See Full Story).

This is a warning to all those who seem to think we should press headlong into stem cell research. The premise of stem cell research is based on the fact that those cells can become any cell within the human body. This horror story shows that they can also become unwanted cells in our bodies.

I think this story was somewhat suppressed by the liberal news media because it could have the undesired political effect of stifling active research in this area. An area Obama wants to push hard on. But, we need to be cautious. This kind of activity can truly be like playing god. We, as a country, should not rush into the absolute broadening of stem cell research. Instead, we should establish some "rules of the road" so that we control the potential for abuse and control the potential for seriously unintended consequences.

George W. Bush put controls on stem cell research for moral and religious reasons. Many on the left argued that he was ignorantly slowing research that could save people's lives. But, in retrospect, he may have unknowingly added some much-needed pause and slow down in this type of research. I would hope that Mr. Obama takes heed from the lessons that were learned from that further-sickened Israeli child and not sign an executive order that will result in an unbridled opening up of the floodgates in stem cell research. If he wants to sign an executive order, he should sign one that gives the National Institutes of Health (NIH) the authority to restrict stem cell research to only legitimate and qualified labs and researchers. Further, the NIH should be allowed, under law, to review and approve each new stage in that research activity. There will be some "secrecy of research" issues that will have to be worked out; but, I think those issues are insignificant in the broader scope of protecting human life.

The image titled "Mutation" is by woodleywonderworks' photostream on Flickr with Creative Commons Licensing. Some rights retained. (Click to View Other Works).

The All Too Quiet Surge

Just like there's a psychological impact of "talking down" this economy, there's a psychological component to winning a war.

For a guy who can't seem to go to the bathroom without thinking he has to give a 20-minute speech beforehand, Obama quietly sent 17,000 additional troops into Afghanistan with a simple written order. There was no speech. There was no press conference. No fanfare. Just a quiet, and hardly transparent, executive order (See Full Story).

The national media was just as quiet too. No front page hysteria as was the case whenever George Bush sent more troops into war. Not for Mr. Obama.

This is surprising to me because Obama campaigned on the fact that our focus should have been Afghanistan and not Iraq. He made it clear that he was going to raise the stakes in that country as soon as he got into office.

But, I think he is seeing, as I think I am seeing, that many of this country are tiring of the Afghanistan war. Everyday, Afghanistan is looking more like another Vietnam. Not just to the people of this country but to the military observers that are closely following it (See Full Story).

You have the equivalent of North Vietnam in the border areas of Pakistan. Those who live along that border, both in Pakistan and in Afghanistan, are more loyal to the Taliban than they are to their central governments in Kabul or in Islamabad. It is like the "Wild West" in that part of world with the local warlords having all the power.

Even so, I think that Obama would have best served the troops that are fighting over there by making a "show" out of sending 17,000 more troops to fight that fight. That's because there's a lot of psychology involved in winning any war. First, you need the home front to be engaged and believe that the war is winnable. Sending in more troops shows that we, as a country, are committed to winning. Secondly, an announced troop increase puts our enemy on psychological notice. Hyping that fact could give us a mental edge in that war.

I just think that Obama (or, his advisers) don't understand the psychological importance of being a leader. They absolutely don't seem to know how to use the "bully pulpit" the way it should be used. He talks down the economy when he should be cheerleading. He says nothing when he should be scaring our enemy into submission. But, this is consistent with a lot of his campaign talk. He wants to talk, without precondition, with our enemies; and, at the same time, he publicly denounces our friends, like Pakistan or Israel. He has constantly criticized the elected leader of Afghanistan, Hamid Karzai; yet, he needs that person's support in winning the war. Personally, I think Obama has a lot to learn and I don't think he'll learn fast enough before we get ourselves into some serious trouble. And, that's just my opinion.

Saturday, February 21, 2009

Cowards by Conditioning

This week, our new Attorney General, Eric Holder, called Americans "cowards" when it came to any discussion of race in America (See Full Story).

I don't know what cave this guy has been living in for the last 4 decades but, the lack of discussion about race is a function of "conditioning" by the Black leadership of this country. Any time a white person wants to conduct a constructive discussion of race, especially when negatives are at issue, the person offering that discussion is generally labeled as being a racist. In this country, being a "racist" is even worse than being Satan, himself.

Another tactic used to blunt discussion is to accuse whites of stereotyping blacks. Additionally, any black person who attempts to side with a white opinion is shutdown by the using the social slam of being an "Uncle Tom." I think a perfect example of this kind of racial-tiptoeing that must be done in America is aptly contained within the context of this very timely story (Click To View It).

If Mr. Holder wants discussions over race, then call off the attack dogs so there isn't this constant social stigmatizing of whites and some blacks over even the slightest attempt at commentary, opinion, and/or discussion! If Americans are cowards about race, then, they've been turned into cowards by the political correctness of America itself. And, that's just my opinion.

The image of Eric Holder is in the public domain by virtue of the fact that it is an official U.S. government photograph.

Friday, February 20, 2009

Another Day, Another Show

At a time when 42 out of our 50 States are running severe deficits and at a time when most of America's cities are hard pressed to scrape enough cash together to provide toilet paper in public restrooms, Mr. Obama has decided to have an audience of 60 of the top Mayors of America fly into Washington D.C. for a photo-op over the recently passed Stimulus Package (See Full Story).

Given the current financial circumstances in this country and with city worker after city worker losing their jobs, I find this irresponsible. You would think that Mr. "High-Tech" Obama could find a better and less costly way to collectively talk to those mayors. He might try using teleconferencing as an example of doing something high-tech that has been proven, for years, to save airfare, hotel, and per diem expenses. But, when you're so used to flying around the country on someone else's hard-earned campaign donations and on the billions of dollars of so many hard working people's tax money, travel expenses appear to be immaterial to this President.

Of course, the reason that Mr. Obama wants all these mayors in attendance is because they are all too happy to pull tax payer money off of the Federal money tree instead of making any hard decisions about spending. I just wish Mr. Obama would stop all the campaign shows and start trying to govern this country back to life.

As usual, he opened this conference of mayors with another one of his patented speeches on how things like broadband technology to rural areas is going to pull this country out of a recession. This guy is so off-target, it is unbelievable!

Oh So Feinstein!

One of the major blunders by a mayor of any city in the U.S. came in 1985 when the then-Mayor, Diane Feinstein, decided to hold a press conference and release a lot of what had been intentionally kept secret about the serial killer named Richard Ramirez (aka: The Night Stalker). Her press conference literally destroyed any chance of catching this gruesome killer because she released information that should have never been given out. Further, she even jeopardized the criminal case against Ramirez by releasing the details of how he killed. Ramirez, too, listened to the press conference and, as result, quickly left San Francisco for Los Angeles to kill; and, keep killing again. This all took place at a time when the San Francisco police were so close to catching this guy.

Consistent with her stupidity of the past, the now U.S. Senator Feinstein pulled another loose-lipped stunt in the Senate yesterday by releasing information about the cooperation of the Pakistani government in using Predator drones, based in Pakistan, to attack Pakistani/Taliban strongholds along the border of Afghanistan (Click to See Diane In Action). She did it by releasing confidential/secret data in the setting of public hearings so that all of Pakistan could hear about it. All along, the Pakistani government has taken heat from its own citizenry over the attacks on the tribal areas of Pakistan by U.S. military forces. Now, thanks to our brilliant Ms. Feinstein, we may lose any cooperation of the Pakistanis in further attacks on those tribal areas. A cooperation that is so desparately needed in containing the Taliban and Al Qaeda; and, in finding Bin Laden.

This is a perfect example of why Senators and Congressional Representatives can not be trusted with classified information. All throughout the Bush Administration, classified and secret activities of our government came to light through press agencies like the New York Times. Speculation was that it came from within the CIA and other agencies. One can only wonder if it wasn't actually from the likes of Diane Feinstein. While she might not have anymore need to attack the Bush Adminstration, this latest blunder might actually be an intentional disclosure in support of her own, predominately anti-war constituency. Who knows.

Thursday, February 19, 2009

Every Man, Woman & Child Antes Up $300 To Help Out A Billionaire

I was reading the Drudge Report and one headline caught my eye. So, I linked to it.

It appears that the co-founder of Microsoft, an already-billionaire, is about to get another billion dollar benefit or about $333 from every living being who calls themselves an American as a result of this stimulus package (See Full Story).

This is just typical of everything that our government does. There's going to be so much waste, corruption and unintended benefits to the likes of Paul Allen that it is hard to believe our economy will benefit at all. This is what happens when you rush to just throw money out the door; and, mostly, unintended people will wind up with the benefit. If you think that the first TARP plan was wasteful, wait until the final accounting on this Stimulus Bill. And, by the way, it's your money.

A Leader Who Can't or Won't Lead

When Obama was in the Illinois Senate, he had a history of voting "present" (The equivalent of: "I don't know?" or "I'm not sure?") rather than definitively voting "yea" or "nay" on most of the bills in that legislative body.

While in the United States Senate (for only roughly two years before campaigning), he accomplished nothing. He tacked himself onto a couple of bills; but, for the most part, he was just a tag-along. A follower. Not a leader.

When most of the country knew that Reverend Wright was detrimental to his candidacy, Obama stuck with him until Wright, himself, put the final nail in his own coffin. Only then did Obama toss him overboard. This shows a lack of an ability to judge character. Bill Ayers was another example.

Prior to being sworn in, he constantly displayed a seal titled: "Office of the President Elect." It was as if he lacked the confidence to believe that he was actually elected. Do you think that anyone in this country (except for those in a coma) didn't know he was elected to be the President? That seal was childish. Leaders are leaders by their actions and not by some "made-up" label on a podium.

Obama decided to pick Governor Richardson of New Mexico despite the fact that he was already under investigation for "pay for play" as related to his Political Action Committee (PAC). In doing so, he seemed oblivious to the political consequences that would ultimately unfold. Bad judgment.

He has consistently criticized lobbyists. He has banned them from any contact with his Administration and banned people who leave his camp from becoming one. Yet, he's hired over 20 of them to be on his team. If you want to be taken seriously, lay down the rules and abide by them yourself.

When the Stimulus Plan was just an embryo, he met with Pelosi and Reid and, from all appearances, simply gave them a cursory overview. They filled in the blanks. Then, he literally backed off, hardly knowing what was in the ultimate bill. From then on, he just kept giving campaign-style speeches as to why it needed to be passed and passed immediately. There was never a sleeves-rolled-up session with the representatives of both political parties to get the bill passed on a bipartisan basis. I really doubt that he or anyone in his Administration had a chance to read it and agree to the contents. On the stimulus plan, it seemed to me that he acted as only the "ad agency" that was hired to change public opinion.

Lastly, in order to motivate the country's acceptance of the stimulus plan, he used fear and not the prospect of recovery to force feed it through the legislative process and to try and gain national acceptance. While that kind of motivation might work to get people to leave an area or run away from danger, it is hardly a motivator to get people to do something positive; and, use it too often and you're merely viewed as "crying wolf."

All of these things taken individually might not be too insightful. However, taken all together, they paint a picture of a figurehead and not a leader. Like all of those "present" votes in Illinois, this man appears not to be ready for prime time. That was to be expected. He was simply a junior Senator with hardly a single term under his belt. He ran nothing and had no experience with getting things done in Congress. He wasn't there long enough to do anything. The Stimulus Bill is a perfect example of what happens when you can't lead. It is neither targeted, short-termed, or, ultimately, will it be effective.

The only thing that this guy seems to be familiar with is campaigning and giving speeches. He's Mr. Speech! In the last week, he's used Air Force One like some type of whistle-stop campaign train. He went to Caterpillar in Indiana. He has since moved on to Colorado to hype and sign the Stimulus. Yesterday, he was in Phoenix to release and hype a home lending plan. Each time, he seems to be desperately trying to convince us, that what he is doing is the right thing to do. But, at times, he seems to be trying to convince himself as well.

I just don't see a leader. Not even a cheerleader. I see four more years of bad decisions and I would expect quite a few more statements from him like the one he made a couple of weeks ago when he said that he "screwed up!"

If he is just a figurehead, one has to wonder who's really running the show.

Wednesday, February 18, 2009

Will GM Management Be Speaking Chinese Soon?

One of the only remaining hot markets for General Motors products is, surprisingly, China (See Full Story). But, it is floundering elsewhere and absolutely living on the brink of bankruptcy. The stock price has fallen to just a couple bucks per share. I wouldn't put it past the Chinese Government to buy out GM if it goes belly up. I think that China would just love to have a well-known, worldwide auto concern that they could call their own; and the acquisition of GM would definitely do that.

My guess is that China will wait, like a scavenger, for GM to finally fall and die before coming in for the feast. That will happen when the voters and Congress can no longer feed GM anymore money to keep them in business. Then, they'll go into Chapter 11. Bankruptcy would allow GM to shed much of their debt and their labor commitments; both of which are making it very sick and killing it as an ongoing business concern. Bankruptcy would also put GM up on the chopping block for pennies on the dollar.

Right now, China is one of the few countries in this world with the money to buy anything. Increasingly they are buying up America by buying up all our debt. GM would only be another step in that process. With the ownership of General Motors, China would give the appearance of being a real industrialized country because almost all industrialized countries in this world, to some extent, have an auto company they can call their own. It is a measure of success that China might need and want.

Of course, this is all speculation on my part. But, if I didn't think it was plausible, I wouldn't have brought it up. If China doesn't buy GM, Chrysler could also be a target.

Image of Chinese Ad For A Buick Royaum by Hugo90's photostream on Flickr with Creative Commons Licensing. Some rights retained. (Click to View Other Works).

Tuesday, February 17, 2009

Mr. Transparency?

If you go to the Obama Internet site called, you would proudly see this graph showing the breakdown of the Stimulus Package. On top, you can clearly see that tax cuts make up the bulk of this $890 billion pig. But, this is truly being dishonest and hardly transparent. The $288 billion that is being shown as the top bar of this chart actually pales in comparison to $602 billion in spending that makes up the 7 bars under the category of tax relief. This is another example of the sleight of hand from the Obama Administration and not the truth. It is interesting that the Obama team has decided to breakdown the spending items and leave tax cuts alone. A more "truthful" bar chart would be:

It should be pointed out that many of the tax cuts that Obama is claiming under this plan can only be categorized as "maybe's" because they are highly dependent on the consumer running out and buying things like expensive electric cars in order to get that tax benefit. At a time when we are in a recession, buying big ticket items, like electric cars or solar powered systems, is probably more hopeful than likely.

If I hear, just one more time, that this is the most "transparent" government in the history of the United States, I'll throw up!

Down 22% and 2100 Points

Since the high's of the day when Obama got elected, the Dow Jones Industrial Average has dropped by 22% to this morning's lowest levels. We are now at a juncture where, if we finish the day at or near the low of this day, we could see the start of another severe fall in the stock market. We have already lost 45 percent in the value of the market since October 2007. Today's market activity puts us at risk of breaking through the previous floor that was seen on a single day: November 24 of 2008.

The risk of further erosion in the market could be lessened if the market finishes substantially higher by the end of this day. That would be what is known, technically, as a "single day reversal." Even if today finishes at a low, tomorrow could signal a bottom by recovering at least 66 percent of today's losses. That, too, is a form of market reversal. However, all bets would be off if we have a down day today, and it is followed by losses again, tomorrow. This is a critical day to anyone who follows the stock market using any form of technical analysis.

Obviously, the investment community had a weekend to mull over the Stimulus Package and today's market activity reflects it.

The Employed: The Forgotten People

When you listen to Mr. Obama and the rest of the Democrats, they're always focused on that extra 2-1/2 percent of our population that lost their jobs last year as the unemployment rate increased from 5 percent to 7.6 percent. Almost entirely, their recently passed stimulus package is aimed at the unemployed by attempting to use government funds to get construction workers back to work and by using that same funding to provide a social safety net for those who lost their jobs. But, 70 percent of this country's jobs are in small business and, predominately, in the service industries. Not in the construction and manufacturing jobs that will gain under their stimulus bill.

Circuity City didn't go under and lay off 36,000 people because 2-1/2 of the population lost their jobs in the last year. With a few adjustments, I am quite sure that they could have handled a proportional loss of 2-1/2 percent of their sales. If one of their stores has 50 people, a 2-1/2 percent reduction in sales could have been easily handled by letting 1 or 2 people go rather than just closing the whole store. But, they went out of business because the 93 percent of us, those who still have their jobs, weren't buying all those consumer electronics at the previous pace. Their sales were down more than 20 percent. The marketplace could no longer support them along with the more popular retailers such as Best Buy, Wal-Mart, Sears, the Internet, etc.

If those 93 percent of us were still buying stuff as they did before, companies like Circuit City could have survived. But their business was based on a certain level of buying activity in order to support all the stores and warehouses that they owned and leased; all those employees; and all the rich inventory they needed to maintain in order to be competitive. And, they couldn't adjust all those factors downward fast enough to support the dramatic reduction in buying activity.

In the grand scheme of things, the 2-1/2 percent of those who lost their jobs is less important to our recovery than the 93 percent who are still working. Even if our government could rehire the 2 million that lost their jobs in 2008, the impact to the economy, at best, would be about 2.5 percent. I say "at best" because people who have been out of work for a while will spend more of their paychecks on paying off the debt that they accumulated while being unemployed than becoming an active buyer of things in the general marketplace. Often, those who were unemployed will not go beyond buying the essentials for 2 or 3 years and until all their debt is paid off.

This, again, demonstrates the difference in philosophy between Democrats and Republicans. The Democrats are always concentrating on those who lost their jobs or those who are at the lowest ends of the pay scale. But, it is the lower middle class and above that drive our economy. Don't forget, Circuity City didn't go out of business because the poor and unemployed of this country weren't buying iPods, Flat Screens, and cell phones. It was the reduced spending by middle to upper classes that killed them.

This is why I and most Republicans keep hammering on the fact that it is "more important" to give tax cuts to the 93 percent of this country, those that are still working, than to worry about the 2-1/2 percent who lost their jobs. This is not to say we shouldn't care for those who lost their jobs and provide for them. But, they should not be our primary focus.

In reality, the stock clerk or the cashier who used to work at Circuity City will not be getting a job under this stimulus plan because they don't have the job skills to be in construction and manufacturing industries. Anyway, there's a lot of construction workers out there who are out of work and who would be better able to compete for those so-called shovel ready jobs.

There's a simple premise to get this country alive again. If we can get that 93 percent of the population to start buying again; then, those 2 million who lost their jobs will get them back. The auto industry isn't hurting because they lost 2-1/2 percent of their sales. They're hurting because they've lost 50 percent of their sales. But, what we're doing in this stimulus bill is just making sure that the well-connected in the construction industry will maintain their businesses and keep their employees while the clerks, cashiers, sales persons, auto dealers, etc. of this world continue to go unemployed as consumer spending continues to fall. That's why so many economists are still projecting 10+ percent unemployment by the end of this year.

Monday, February 16, 2009

I'm Excited!

I live in Las Vegas and I was born in Los Angeles. Most all of my relatives live in California. I just can't wait. In 19 months, right after Barack Obama signs the stimulus bill, there should be a brand new, $8 billion, Maglev monorail train service built between Disneyland, in Los Angeles, and the "Strip" in Las Vegas (See Full Story). Families visiting Disneyland can jump on that new rail service and the kids can be locked up in the hotel room while the parents take in some gambling and other forms of adult entertainment. It will be great. And, I can plan on visiting my relatives in "just" 19 months.

Man. I didn't even know that the Maglev project was shovel-ready. It has been talked about for almost 20 years but, I didn't ever think that we'd see it because it was really only marginally justified. There were so many other causes that needed the money more than this one. But, now, we don't have to worry about the justification. The Democrats and Obama put that aside and said, in effect: "Let's do it!" Yippee! It should really be something to watch. That's because to build the thing in the 19 month target of this stimulus package, they will have to build it at a rate of 14 miles per month. But, with $8 billion dollars in total spending and the ability to dole out 1/2 billion dollars per month; it should be a piece of cake!

This is really great! It is SO Las Vegas! It's rolling the dice with "your money" so "I" don't have to sit in a car for 3 or 4 hours on Interstate 15 to get to Southern California.

Thank you, America. Thank you for the election of Barack and all those Democrats. Thank you for your kind and charitable giving to the citizens of Las Vegas and those visitors to Disneyland. Thank you for spending this amount of money on us and not wasting it on the roads and bridges that are in much needed repair.

My sarcasm aside, this project is probably a good one for good times. However, it should have never been part of this stimulus package. It is literally a big piece of pork that Harry Reid could desperately use for his reelection. The taxpayers of Los Angeles and Las Vegas, the ones who would actually benefit from such a project, should be picking up the tab. Not the U.S. taxpayer. Why should every man, woman, and child in America cough up $26 each so that 1 percent of the population will benefit from this service. Now, many of us in Las Vegas need a higher level of expert health care that is only available to us in Southern California, and a high speed train would be advantageous. The city of Las Vegas would also benefit from the increased "gambling" traffic that could be realized from Southern California; once this thing is built. Currently, the Interstate 15 corridor is packed on a daily basis and rapid transit would be a great way of alleviating all that congestion. This project should be paid for by bonds or some other mechanism that is floated by the residents of both cities. I am concerned that, with the Federal Government getting involved, it could turn into another pig like Amtrak.

Shanghai Maglev Image by Dennis Kruyt's photostream on Flickr with Creative Commons Licensing remix/adapt/modify permission (Click to View Other Works). Specifically modified by Cranky George for this blog entry.

Our Presidents

It's amazing to me that this country has only had 44 of them. It seems like such a small number after having personally lived long enough to have spanned the individual terms of twelve of those 44.

More than anything, this country is often viewed by the world through it's Presidents. For sure, we've had some great ones. Then again, we've had some who weren't too good. Some have had to sacrifice their lives for this country. But, through it all, this great republic of ours has survived because of it's people; and, more importantly, because of our Constitution. A Constitution that brilliantly outlined the responsibility of our Presidents. A Constitution that was drafted with the intent to restrict the powers of the Presidency so that the people of this great country could still hold the ultimate control: Their Votes.

Because we are a representative form of democracy, we can take responsibility for hiring those great Presidents. At the same time, we can all share the blame for the bad ones. That's the way it works in a democracy. We're all in this together. It is, as it should be, all about the people. A government of the people, by the people, for the people. And, our Presidents, too, are of and from the people and were chosen by us to represent us all and to implement our "majority" will. History has proven that our Presidents get into trouble when they forget this and they insert their own personal will or ambition into the process of governing this country.

Disney World's Hall of Presidents Image by caniswolfie's photostream on Flickr with Creative Commons Licensing. Some rights retained. (Click to View Other Works).

Sunday, February 15, 2009

Liberals: Please Listen!

The liberal viewpoint is that Republicans are acting as if this $890 billion Stimulus Bill won't create jobs; and, that's why they're blocking it. But, the liberals aren't listening. I think everyone will agree that this spending bill will create some new jobs. However, the general Republican viewpoint is that it is more likely to give work to construction workers who already have jobs or to those in that same industry who have been recently furloughed. It actually does nothing outside of the construction industry to get people back to work.

The real issue is whether or not this massive amount of spending will cause the "general population" of this country, those who already have jobs, to start spending money so that new and additional jobs can be created in the process. The government doesn't create economic growth. Economic growth is accomplished through the collective spending activity of a "whole population" which spurs on the entire economy.

To put this into perspective, 50 workers in a city with a population of 250,000, or a million, or 2 million people, who are working on rehabbing a school building under this new stimulus program, aren't going to have enough impact on the local economy to do twiddly. Do we really think that 50 extra cups of morning coffee, being purchased by these workers, in what is probably a 10 or 20-mile radius from their job site, will cause the local Starbucks or Dunkin' Donuts to hire a few more people? Hell no! But, if 10 or 20 percent of the population in that same 10 or 20-mile radius all decide to start buying a cup of morning coffee, jobs will be created.

The trick of any stimulus package is to get the "general" population to buy stuff. It should make them want to buy that extra cup of morning coffee, or newspaper, or a breakfast, lunch, or dinner, or a TV set, or whatever. Stimulus doesn't simply mean handing out a few jobs under some very specific government contracts. That's why this whole Stimulus Package is so misplaced.

For our economy to start growing again, the majority of our population has to feel good enough to spend their hard earned money and stop protecting it in fear for their jobs. The cheapest and simplest way to get the general population to start freeing up a few dollars is to stop telling them that we are on the brink of disaster. Something that our new President can't stop from saying on a daily basis. This scares the hell out of people. As a result, the general population is frightened and is only going to spend money on essentials. They're not going to risk their savings to buy a new house or car if they feel their jobs will be gone in the not too distant future.

Under this stimulus package, you and I will get a $650 tax break. That's basically a couple of bucks a day. That amount of money could barely buy you a cup of coffee in the morning; and hardly the newspaper to go along with it. Certainly, after buying that single cup of coffee, there will be little money left over for anything else.

So, liberals, please listen. Objecting to this stimulus package isn't being an obstructionist. It is simply being concerned about getting this country back on its feet. It is a different viewpoint. If Republicans are being obstructionists, then too, are hundreds of eminent economists who are also raising red flags about this package. This thing was slam-dunked by one political side of our Congress without any Congressional debate or national discussion. To my knowledge, there were no economists in attendance while it was being crafted. What we got was a litany of social programs from a bunch of lawyers turned politicians. Most of which, in public life, never created a single job. So, if protecting our country is being an obstructionist, then I guess the Republicans should proudly wear that label!

Saturday, February 14, 2009

A Real Life Story Of How Shovel-Ready Projects Are Probably Doomed to Fail

I live in Las Vegas. U.S. Highway 95 runs from the south end of this city to the north. It is literally the main artery in this town. U.S. 95 was originally constructed in 1971 to handle about 25,000 cars a day. Today, almost 10 times that number of autos use this roadway on a daily basis.

In 2000, the Federal Government approved and began a project to expand "95" from 6 lanes to 10 in order to handle the current and the anticipated daily traffic increase of up to 300,000 cars. It is a Federal road and the expansion was paid for by you and I, the taxpayers. The project was within months of completion; but then, in walks the Sierra Club with a Federal Lawsuit (See Full Story). With a newly hatched environmental and health study in their hands, they were able to tie up the completed expansion of this road project for two years. The primary finding of that study was that any persons who lived or worked near highways could suffer increased health problems. Additionally, they used the close proximity of 3 elementary schools and a day-care center to season the scare and heighten any public concerns.

The Sierra Club won their suit in a friendly Federal Court. In fact, it was the always-liberal and wacko court of the 9th Circuit Court of Appeals in the heart of ECO-nutland - San Francisco -- that gave them their win. Besides delaying the project, the cost of the delay to the Federal government was in the hundreds of thousands of dollars. Also, the suit's settlement specified that additional "health protective" measures must be added to the project; which resulted in substantial cost overruns. These measures include massive high noise and exhaust abatement walls along the highway. There were also several "pollution measuring" stations mandated in the finalization of the suit.

Like much of the ECO-nut activities in this country, all this legal wrangling by the Sierra Club looked to have merit in the micro view but makes little sense at the macro level. First, there was this nonsensical attitude that if you build or expand a road, the cars will come; as if the cars didn't exist until the road was built. Duh! All those cars were already here! And, by not having the efficiency of an expanded highway to handle more and more cars; the health risks to the entire city of Las Vegas were raised. It seems that the people filing the lawsuit, and that judge in the 9th circuit court don't understand that a car idling at a dead-stop, in traffic, is getting ZERO miles per gallon and just needlessly pumping out exhaust pollution. Further, many cars in this city were being forced to take alternate routes through the city streets to avoid the traffic on 95. This, too, resulted in lower gas mileage and higher and higher rates of exhaust pollution. Pollution that affected the whole city and not just those who worked or lived in close proximity to "95".

The silliness of the abatement walls is the belief that somehow they would shield all those near U.S. 95 from any pollution. Pollution isn't like some immobile hunk of rock that will stay where you put it. Over time it will just go over those walls. Further, those walls are insuring that pollution is being trapped and concentrated at peak driving times before it can dissipate into the atmosphere or "climb" over those walls. As a result, every car's driver and all of its passengers (and, some might be kids) on that highway are being exposed to abnormally high levels of trapped exhaust emissions. That's at least 200,000 people in their cars per daily commute who are at higher health risks; not just the residents in those 380 homes and 27 apartment buildings, three schools, two community centers, and a care center that the Sierra Club identified in their lawsuit as being at risk. Where's the Sierra Club's study on that!

The purpose of bringing this all up is the fact that this was a landmark case of sorts. With this particular win, any activist organization in American can literally stop a road or bridge expansion project, either Federal, state, or otherwise, for the same reasons. That means that much of the infrastructure stuff in this stimulus package could be hit with a proverbial health related roadblock. That also means that much of the stuff that Obama and the Democrats seem to think will happen on a "timely" basis, probably won't happen at all "or" for at for least two or more years as many of these things wind their way through litigation. Those people who were supposed to be gainfully employed by these projects will either be just sitting around awaiting court decisions or, more likely, collecting more government money in the form of unemployment comp.

As with much of the legislation that our Congress finally approves, the only gainful employment will be for our nation's lawyers.

As usual with this last thing. Don't expect the billions in the stimulus plans to be used any time soon in expanding our electrical grid (electrical transmission facilities) so that all those Obama-proposed solar and wind power generation sites will have a place to send the electricity that they are supposed to produce. If ever there was a target for lawsuits, the expansion of the high voltage lines across this country will be it. There are already many well known studies that have identified the health risks, including cancer, that are associated with electromagnetic radiation emanating from high tension power lines (Please Click To Read This Related Entry In Wikipedia). Again, it will be the lawyers, and not the American workers, who will be stimulated (actually over-stimulated) by this part of the Obama/Pelosi/Reid stimulus package.

Detour image by lenseyed's photostream on Flickr with Creative Commons Licensing. Some rights retained. (Click to View Other Works).

Friday, February 13, 2009

The Stimulus Package: $3 Million Per Word

Well, the House of Representatives passed the Stimulus Bill. It totaled $789 billion dollars and was 1071 pages in length. If you use the generally accepted word count of 250 words for a type written page, that's about $3 million dollars per word.

Now, I might be wrong, but how thoughtful and how specific could anyone be in pounding out a spending program, seasoned with a few tax cuts, at a rate of "3 MILLION DOLLARS PER WORD"! And, they passed it without anyone ever really reading it! Just unbelievable!

Also. Don't ever forget. They passed this bill on Friday the 13th.

A Symphony Of Sour Notes

Well, this was another one of those bad weeks for Barack Obama; and, he's only been in office for a little less than four of them.

The big flops of the week were his stimulus plan and Tim Geithner's failure to deliver a credit recovery plan.

Certainly, our Congress is set to give Barack Obama his much-desired stimulus package by Monday, President's Day. But, it won't be handed to him on a "silver" platter. Instead, "lead" comes to mind. There's was no real bipartisanship in the development of this lard-laden law. And, only about 34 to 38 percent of Americans agree with this plan; depending on which poll you look at. Every day there are more and more revelations about how wasteful and partisan this spending bill actually is; with stuff either being buried or with liberal agendas being hidden by intentionally ambiguous wording in its over 600 pages.

At his first prime time news conference on Monday, our smooth-talking President proudly declared that there's no pork in his bill. But, I think, most Americans clearly see this thing as a prize-winning, pregnant sow.

On Tuesday, there was that now-famous, fictional short story released by "Tiny Tim Geithner;" our supposed-to-be credit saving hero and head of the U.S. Treasury Department. Ya know, the only guy in the whole wide world that could fill that job. That little story that Geithner painted on Tuesday should have been titled: Coma. His coma. This obviously fictional short story (not the novel the the world was waiting for) was delayed an extra day so Geithner could solidify his numbers. At Barack's news conference on Monday, Mr. Obama refrained from talking about any of the details. He didn't want to steal any of Geithner's thunder. But, now, we really know why Barack was unable to discuss the details. There wasn't any! And, boy, was the President right about stealing his thunder! The stock market was so impressed with the clarity of Geithner's plan to spend somewhere between 200 billion and 2 trillion dollars that it tanked by 400 points. Only after a new rumor, late yesterday, that a better plan was in the works from Geither's Treasury Department, did the stock market snap back enough to be rolled into recovery after spending 3 days in what only could be called a cardiac arrest; with it losing more than 600 points. Only after that rumor was the market able to erase yesterday's 300 point early-morning downdraft.

Then, too, yesterday, our new Prez was actually thrown under the bus. Not just once; but, twice! This was an unusual position for Mr. Obama to be in. Since we've gotten to known him, Barack has always been the thrower and not the recipient of any ground-level bus experiences.

First, he traveled to East Peoria, Illinois to have another one of his campaign-style, "I'm still running for President" town hall meetings with some Caterpiller Corp. employees. This place was chosen because, earlier in the week, Barack had received word from the CEO of Caterpillar that he would rehire some of the 20,000 people that he had just let go; if the stimulus package was passed. In fact, Mr. Obama repeated that pledge at that meeting with the CEO in attendance. But, later, in a separate news session, the CEO managed to throw Obama under the bus by stating he will probably let more people go before he ever hires any people back (Click to see the story and the side-by-side, fiction-versus-fact video). I think it was the left-side of the bus that ran over Mr. Obama this time.

Then, the right front wheel of that bus ran over Obama when Republican Senator Judd Gregg withdrew his nomination as Commerce Secretary. Commenting that "Obama's policies were too much to stomach," Gregg clearly left with a feeling of hollowness about Obama's theme of bipartisanship; noting how partisan the process of putting together the stimulus plan was (See Full Story).

I think this show-piece Republican finally figured out that he was being used in what has been a constant "Show of Shows" from this no-go showboat of a President. I say "no-go" because he constantly contradicts his own policies and campaign promises at almost every turn. He was going to change Washington by having ethics; but, one key nominee after another has been surrounded by ethical issues; like tax evasion. He signed an Executive Order in his first week of office to ban lobbyists from meeting with his Administration; and, to bar any leaving-members of his Administration from becoming lobbyists. Yet, he has managed to nominate former lobbyists (at least 20) to key positions within his new Administration.

Then, there's the most used word in the Obama vocabulary: transparency. But, there hasn't really been a lot of it since he's been in office. The backdoor and behind door meetings, relative to the stimulus plan, are a perfect example. Further, Obama promised to have the contents of every piece of legislation, that was passed by Congress and to be signed by him, up on a website for at least 5 days before he signed it. That didn't happen with the Lilly Ledbetter Act that he signed in his second week; and, for sure, there won't be enough time for the stimulus bill to be on display for 5 days when he signs before this President's Day. The real con-game, and not transparency, was the posting of the 647-page Stimulus Bill that was passed by the House of Representatives. Barack clearly wanted the Senate to pass it quickly before the Republicans, or you and I, or the national press was able to wade through its contents. That's not transparency; that's just another form of sleight of hand.

I can't keep up with all the crap that this new President and his Congress seem to be pushing out the door. I am sure that next week will be another trip through the political equivalent of Disney's Wonder and Fantasy Lands; backed up by an orchestra (the new Administration and Congress) that appears to be outfitted with a bunch of out-of-tune instruments. It will be interesting to see how much more of this Americans will tolerate. He's already come down to earth in the polls by sliding from his pre-Office 78 percent approval rating to one poll that now has him at 55 percent. Most of the others have him at low 60 percent approvals.

When he signs that stimulus bill, he then owns this economy. It will be his to live or die by. It should be an interesting year. It's already been an interesting near-month!

Thursday, February 12, 2009

Retail Sales Up?

For the first time in seven months, retail sales, from December to January, increased by 1% (See Full Story). This was also the biggest jump in monthly sales numbers in the last 14 months.

Before too many people get all excited and think that this means that we are on the brink of coming out of our economic doldrums, it is important to understand what that number is really saying and to also put it into a broader context of another number: Consumer Credit.

First, the retail sales number is a comparison of gross dollar volumes from a month prior. It is not some kind of units sold number. Nor, is it a measure of how much money you or I are spending each month.

We already knew from last week's consumer credit number (as released by the Federal Reserve), that people aren't swiping their credit cards and buying all kinds of new stuff (See Full Story). So, to have a retail sales number that has increased may only mean that the retailers have finally found pricing and inventories levels that match their current level of sales activity; and, they are no longer deeply slashing prices to get the product off their shelves. Simply speaking, prices are stabilizing to meet the reduced purchasing activity of this depressed economy.

We have already seen this in gasoline prices. Despite the slipping demand, gasoline prices are rising again. That's because the retailers and the refiners have found some equilibrium in the supply and the delivery of their product. At the local gas station, inventory levels have bottomed out to a point where they can properly estimate and meter the amount of gasoline deliveries they need to match the reduced sales activity. Similarly, the refineries are now in a position to accurately measure demand and they are shutting down portions of their refining operations so that they don't overproduce and lose money. The fact that prices are rising just means that refiners and the local gasoline outlets have somewhat overshot this adjustment. Without any further increases in demand, prices should fall again as this process of fine tuning deliveries and inventory levels continues to properly match the level of sales. However, you shouldn't expect any big drop in gasoline prices. The adjustment of pricing will probably only be in the magnitude of 2 or 3 percent; or, a few pennies. Further, we are approaching the summer driving season and demand (and prices) are sure to go up.

All this is "not" to say that Retail Sales isn't a good measure of our economy. But it is just one number out of many measurements that should be taken into consideration. Everything has to be put into context. I would say that, if we see consumer credit starting to expand, a rise in retail sales could be a significant indicator that our economy is improving. But, to me, one without the other is just a hollow and false indication.

Wednesday, February 11, 2009

I Was Wrong

In an earlier post of this morning, I was betting that the combined House and Senate stimulus plan would exceed a trillion dollars. I was wrong. It appears that restraint prevailed, and the final bill will actually be lower than either the original Senate or House versions.

Americans will only be in hock for $789 billion and not the over $800 billion of either the Senate or House plans; or, worse yet, the trillion that was being bandied around by the news (and by me). While I am happy about the restraint, I don't think I can give a "Here! Here!" about all that money being spent for a stimulus package that is neither timely nor truly ubiquitous in its nature.

We can only wait and see if the concept of Keynesian Economics and the belief that big and bigger government can drive our economy into prosperity; even though that bigger government has to take as much or more from our economy to drive the economy. We'll just have to see if sapping this country's wealth, through a form of redistribution, will actually work. My guess is not. That's because it didn't work during the Great Depression by both Hoover and FDR and it didn't work in the "lost decade" in Japan. My bet is that we will wind up with even higher unemployment; a bigger debt for future generations to bear; wildly unpopular inflation in just a few years; and finally, more, rather than less, dependence on foreign oil. I will be surprised if even half the monies for infrastructure are spent within the next two years due to environmental and legal delays; initial cost under-estimation, and in-progress cost overruns; and, just bad planning and implementation. But, I was wrong this morning and I might just be wrong again. We'll have to see.


My guess is that Republican Senators Collins, Specter, and Snow will realize, at some point, that they were simply being used to get the stimulus package through the Senate. I'll bet money that, after the machinations of the House/Senate conference are completed and reconciled, much of what was removed to satisfy these turncoat Republicans will be back in; and, then some. That's because, what was passed in the House and the Senate are substantially different in scope while they might appear to be the same size in actual spending levels. I have read estimates that the two bills, overlapped together, will equal, on the low side, $1.2 trillion and, on the high side, $1.5 trillion. Neither the House nor the Senate Democrats are going to give up easily and just toss their portions of the bill into the abyss of compromise. Both groups are going to fight hard for their programs. I would not be surprised if the final product isn't over a trillion dollars. Maybe we'll find out later today.

Tax Cuts Versus Tax Rebates/Credits

When the income tax rate is cut, the impact is almost immediate. Payroll tax deductions will be quickly lowered. So will self-employment and corporate quarterly tax filings. In both cases, that money becomes immediately available to flow back into our economy and grow it.

Tax rebates and tax credits, on the other hand, don't have any benefit to the taxpayer or to our economy until that person or company files their annual tax return and actually receives a check in the mail; which could be months after filing an income tax return. That means that more than a year will pass before any impact to our economy is actually seen.

That's why tax cuts are so powerful. If you need to stimulate the economy quickly, that's the only way to go. Further, tax credits and tax rebates carry additional administrative costs as that money moves from your pockets to the Federal government; and, then, back again to you. Actually, the non-partisan Cato Institute calculated this "dead weight" to be about 25 cents on every tax dollar that is being collected and redistributed by our Federal government. Therefore, it takes $1.25 in collected taxes "from you" so that our Federal Government can digest it and "give you" back a check for one dollar. Just think about that when the Republicans talk about tax cuts and the Democrats talk about tax rebates and tax credits in order to stimulate this economy.

One last thing. Democrats like sending you a check; even though its more costly, less effective, and hardly timely. They like the psychological power and the pure political message it sends to you when you receive that rebate check in the mail. Mostly, it's because they can attach political ownership to it. A check is absolutely more powerful, politically, than you simply seeing a small decrease in your payroll tax deductions. With Democrats, it's always about the appearance of every action and not ever really about trying to save our economy.

Tuesday, February 10, 2009

Geithner Makes Jello

For all the hype by Barack Obama at his news conference of last night and by numerous Democrats and Administration personnel over the last few days, the Geithner plan fell way short of being specific about anything (See Full Story). It is the plan that isn't. Maybe $200 billion? Maybe 1/2 trillion? Maybe, a trillion or more? He doesn't seem to know. Like jello, there's nothing to get your hands around and the stock market followed the release of his plan with a 300 point downdraft. He was supposed to release this plan yesterday. He needed a whole extra day to say what little he said today?

Obviously, a guy that can't do his taxes right shouldn't be in charge of saving this country from its credit problems. (I know that was a cheap shot....but, he well deserves it after this performance!) This is another one of Barack Obama's bad choices. It started with Biden. Then, Richardson. For sure, Daschle. And, the bad choices to run this government just keep showing up. Pre-election, you only have to look at his choices of Reverend Wright and William Ayers to know the this President of ours has demonstrated failure in judging character.