Saturday, October 31, 2009

Obama On The Afghanistan Troop Decision: Playing Politics?

There are some political pundits who believe that Obama is holding his decision on additional troops for Afghanistan until after Tuesday's elections are held. They believe that Obama doesn't want to announce a "surge" and tick off his liberal base and jeopardize the Democrats already floundering gubernatorial races in Virginia and New Jersey.

If that is true, we can expect Obama to announce increased troop decisions within a couple of days following Tuesday's closure of the polls. Also, if true, it would be a sad state of affairs for this President to have jeopardized the lives of our soldiers while playing strategic politics.

Taxes Take A Big Bite Out Of The Big Apple

France and England have been losing their millionaires for years over their high tax rates. California has suffered the same fate. I live in Nevada and over half the people who live here came from California to avoid high income taxes, real estate taxes, sales taxes, and, too, the insanity of California's regulation of their personal lives.

Now, New York is finding out that the last few rounds of tax increases are causing a mass exodus of their rich (Click to See Full Story: "Tax refugees staging escape from New York").

Like a lot of states -- and our own Federal government -- New York will find out, the hard way, that high taxes will not only result in the loss of taxpaying millionaires, but it will also result in the l0ss of businesses; because they too will decide to leave the state.

Right now, Michigan has the highest unemployment in the country. The auto industry was their mainstay but the American auto industry has literally fallen into ruin. Because of taxes and high union wages, those foreign automakers who have decided to set up shop in the U.S. -- like Toyota and BMW -- are moving to the friendlier quarters of the South, like Tennessee; rather than move to Michigan where the supposed experienced auto-making labor already exists.

The bottom line is that taxes, in the long run, hurt all of us. Losing millionaires is a disaster and high taxation makes that happen. In our country the top 1% of taxpayers foot the bill for 40% of our government's activities. If we lose those people, it will ultimately be you and I who will have to fill the gap. These people should not be treated like dirt but, instead, treated with some respect and not pushed to literal extinction with increasing and abusive taxation rates.

Friday, October 30, 2009

The Big Lie: Saved Or Created Jobs

In the face of increasing unemployment, the Obama Administration is still standing by their fantasy that they have saved and created jobs with the Stimulus Package. Increasingly, people aren't buying it; especially with the "true" unemployment rate at 17% (Click to See Full Story: "Chart of the day, underemployment edition"). I think the Obama Administration should start to worry because the what-had-always-been-friendly-to-Obama news media is starting to put out reports that say Team Obama is all wet. Here's an example from CBS News:

Watch CBS News Videos Online

And another report from Associated Press: Stimulus jobs overstated by thousands.

All too often, our politicians seem to think that if they tell you the same lie, over and over again, it will actually become the truth. However, this "saved and created jobs" lie is just too much of an exaggeration for anyone to take seriously.

What A Difference A Day Makes

Yesterday, there was mass euphoria over the first positive Gross Domestic Product in more than a year. The headlines said this showed that the recession was over. However, today's numbers on personal spending have somewhat put a dent in that excitement.

This morning the Personal Income and Spending Numbers were released and Personal Spending was down 1/2 of one percent. On a one month basis, that is huge (Click to See Full Story: "Income Flat, Spending Falls as Consumers Stay Wary").

The spending number is important because our economy is 70% driven by the consumer and his or her spending. Again, the drop in spending is being blamed on the fact that the Cash For Clunkers program ceased. But, don't forget, the Cash for Clunker program only benefited less than three tenths of one percent of the people of this country -- about 700,000 people out of a population of 300 million. So, to say that overall spending was impacted by the cessation of this program, clearly shows how that program had skewed the economic numbers and had little or no overall benefit to the general population.

Yesterday, I said that if you dug down into the details of the GDP report, you would have seen that business investment was negative. That means that businesses aren't buying things. This morning shows that personal spending, too, is missing. Put those two facts together and you can see that the "spending" that is needed to turn the economy around is not there. That's why I am not sure that yesterday's growth in terms of GDP is sustainable.

Update: This blog was written just before the stock market opened. When it was actually posted, the market was only down about 3 dozen points. As of now (12:30 Pm Eastern), the market is down nearly 200 points and has wiped out all of yesterday's euphoric gains. I think this shows that my concerns over spending are being validated by today's trading behavior in the stock market.

Thursday, October 29, 2009

GDP Up 3.5%! Good News?

This morning, the Gross Domestic Product (GDP) measure was up 3.5% (Click to See Full Story: "U.S. GDP rises 3.5% as stimulus kicks in"). For a country in recession, this is good news because it shows that the economy is growing again. But, before the champagne is uncorked, you have to put some things into perspective.

First, you have to understand that an economy isn't really considered to be out of recession unless there are two consecutive quarters of growth. Two quarters is important because, quite often, an economy might sputter again after having had one good quarter. Some of that has to do with the seasonality of business, the extent of business inventories, and some has to do with what the government is doing.

That brings me to the second issue: Government spending. In this last quarter, the government artificially pushed the economy with two major programs (1) Cash for Clunkers and (2) The First-Time Home Buyers Tax Rebate. As a consequence, there might be as much as 2.5% in that 3.5% number that has been artificially spawned by these two programs. But, what's worse, those two programs may actually hurt the upcoming 4th Quarter GDP because they may have stolen sales that would have naturally occurred in that 4th Quarter. For example, in the Cash for Clunkers program, there was a $3 billion spurt that has since created a substantial slack period for auto sales. Consequently, auto sales in the 4th quarter may actually be lower than they were in the 2nd Quarter; before the "clunkers" program. On the Tax Rebate for first-time home buyers, there was, again, a substantial spurt of sales before mid-September in order to effectively take advantage of that rebate and be able to close on a house before the program was set to expire at the end of October. Even though Congress has just passed legislation to extend the program through April of 2010, the impact on the home sales might have peaked as people scrambled to take advantage of the original program. Again, hurting sales going forward.

Lastly, GDP is a relative number. It is a measurement of business activity from the prior quarter. But, you need to really put that into perspective. Business activity in America is down 50 to 60 percent or more from where it was in 2008. So, to have 3.5% growth still leaves us a very long way from getting back to where we were in 2008. Think of it in terms of being in an elevator that had once made it to the 100th floor. Last quarter it finally stopped going down and made it to the ground floor. This quarter we went back up 3-1/2 floors. But, we still have 96-1/2 floors to go before we get back to where we were in 2008 at the 100th floor.

I personally think that this 3.5% rise in GDP is extremely overstated and my guess is that we might only see a meager 1% growth for the next quarter. Anyone who really takes the time to take a hard look at details of this GDP Report would have seen that business investment was still negative. And, that fact, to me, shows that the economy is still faltering.

On the political side of things, you can expect the Obama Administration to hype this "recovery (?)" to the max; especially with two critical gubernatorial elections pending in Virginia and New Jersey. In fact, this good number on the economy might actually help Corzine to retain his Governor's job in New Jersey; seeing that he was already so close in the polls.

I still think we could possibly see a double-dip recession in 2010 if foreclosures and unemployment continue to rise and if inflation kicks in. Right now, foreclosures are still on the rise and we just had 7 more banks this last week that went belly-up and had to be taken over by the FDIC. Jobs are still being lost and that leads to further reductions in consumer activity. The true home building activity is for apartments -- to house all those people who have been foreclosed on -- and for condos and starter-homes being built for those people who want to take advantage of the first-time home buyer tax credit. But, down the road, we are going to have a glut of condos, apartments, and cheap starter-homes as people start to move back into the homes that were once foreclosed on.

Remember: Everything in economics has a short-term upside and an ultimate and even bigger downside when the government tries to jury rig the economy.

Wednesday, October 28, 2009

Another Study That Supports Tort Reform

Two weeks ago, the Congressional Budget Office released a report that said the Federal government could save $54 billion per year in Medicare and Medicaid expenses if caps were placed on medical malpractice suits (Click to See Full Story: "Tort reform could save $54 billion, Congressional Budget Office says"). Keep in mind, this saving would only apply to that portion of the nation's health care bill that is being picked up by the Federal government.

Now comes another study that supports tort reform.

The Thomas Reuters company has just completed a study and their conclusion is that there is between $500 billion and $800 billion in wasted dollars in our health care system each year (Click to See Full Story: "Healthcare system wastes up to $800 billion a year").

22 percent of this waste is directly due to fraud. Medical mistakes can cost up to $100 billion a year. Other waste exists in the redundant flow of paperwork that could be eliminated if electronic record keeping was adopted and fully implemented.

But, by far, the greatest waste -- 37 percent of the total -- is due to the unnecessary use of procedures and drugs to avoid medical malpractice lawsuits. This number -- somewhere between $200 billion and $300 billion per year --- has a 10-year cost of between $2 trillion and $3 trillion dollars. That, unto itself, would easily pay the cost for any of the health care legislation that is floating around Congress these days. Yet, these Democrats would prefer to protect their personal special interest group, the American Trial Lawyers, and not implement any form of tort reform for medical malpractice suits. Instead, they would have you and I foot the bill for health care reform while those "greedy" trial lawyers keep all their luxury cars, homes, and boats. So much for the Democrats looking out for the "little guy"!

1,2,3,What Are We Fighting For?

I was scanning the Drudge Report headlines and I ran into this story: "Morale dips for American marines in Afghanistan". When I read it, I couldn't help thinking about the de facto theme song of Woodstock, sung by Country Joe and the Fish, that went like this:
And its one, two, three, what are we fighting for?
Don't ask me I don't give a damn, next stop is Vietnam.
And its five, six, seven, open up the pearly gates
Ain't no time to wonder why, whoopee we're all gonna die.
The only difference between then and now is that you can swap the word Vietnam with Afghanistan.

It seems like the whole objective of the Afghanistan war has changed since Obama took office. Even the national polls are reflecting a dissatisfaction with this war. Almost overnight, it is as if we went from wanting to be a victor to just wanting to get the hell out. And, I'm not sure why.

I realize that the Taliban have been winning some victories and our troops have sustained casualties. But, wars are like that. Sometimes it can look the darkest before things turnaround. Just look at Iraq.

We lost Vietnam because of a lack of commitment. Now, the same seems to be happening in Afghanistan. But, what is really strange is that Iraq and Afghanistan have literally swapped roles. Just two years ago, Iraq was looking like a quagmire and it was Afghanistan that seemed more under control. Now, I am believing, more and more, that we will leave Afghanistan in much the same way we left Vietnam. And, that's very sad.

Tuesday, October 27, 2009

The Absurdity of Harry Reid's "Opt Out" Option

Harry Reid's latest shell game with the "public option" for health care reform is his "opt-out" option (Click to See Full Story: "Reid to advance opt-out 'public option'")

Under Harry's plan, any individual state, not wanting to participate in the Federal "public option", can just "opt out". If they want, they can create their own public option. But the kicker is that if a state elects to "opt-out", its citizens will still have to pay all the Federal taxes and fees and accept all the cuts in Medicare and Medicaid in order to pay for the Federal "public option".

It's sort of like Harry making you buy a ticket for a movie and, then, saying: "You don't have to see the movie but everybody "does have to buy" a ticket!"

Because of this, Harry knows that no State Governor or State Legislature will ever "opt-out" of the "public option" under that condition. That would be political suicide. But, when you listen to Harry and his "opt-out" option, he makes it "seem" like the Feds are being flexible and not forcing all of America to accept the "public option".

And, so, the game of deception by the Democrats over ObamaCare continues on.

Caterpiller Announces Another 2,500 Job Cuts

Does anyone remember this statement from Obama in February:

At the very end, Obama said that Caterpillar could rehire some of those laid off employees if his stimulus package was passed. Well, Obama was right. Caterpillar will recall about 550 employees that it had previously laid off. The only problem with this is that they won't be rehired until the "end" of 2010. In the same breath, however, the company also announced another permanent cut of 2,500 more jobs (Click to See Full Story: "Caterpillar Cuts 2,500 Workers, Recalls Others"). So, I guess you could say there was another net loss of almost 2,000 jobs. Overall, Caterpillar has let go 34,000 workers during this recession.

(Please Note: Later, the CEO of Caterpillar said that he never told Obama that he would rehire anyone if the Stimulus Package was passed. Even so, no one should ever say "You Lie, Mr. President!" After all, Obama doesn't lie, he just "misstates". Unfortunately, he seems to"misstate" a lot, now, doesn't he? )

Isn't it amazing that one of the supposed heirs of the spending in the Stimulus Package has to keep laying employees off. This is despite all the purported infrastructure building that would need the very kind of heavy equipment that is made by Caterpillar.

However, if Obama knew anything about the heavy equipment industry or, even, business in general, he would have known that, in a recession, there is a lot of idle heavy equipment that is just laying around. Even with the Stimulus Package, it will only be idle equipment that will be put into use. Further, in the midst of this extreme economic downturn, no construction company is going to commit to any new equipment that costs thousands of dollars to buy. Additionally, there's no credit available to cover such massive purchases.

Every day we find out another piece of information that shows that Obama's Stimulus Package isn't working. This is just another example.

Monday, October 26, 2009

The Afghan War: Another One of Obama's 'Present' Votes

While in the Illinois Senate, Obama voted "Present" 129 times. A "Present" vote is like voting "Maybe". It neither says that you are "For" or "Against" a piece of legislation. Supporters of Obama will point out that Obama voted 4000 times in his Illinois career and that voting "Present" 129 times is an insignificant number. However, all votes are not the same. Some are just procedural. The true fact is that Obama voted "Present" on some of the most difficult issues that were before the Illinois Senate; like his voting twice on partial birth abortion legislation.

Today, we have a request from the field commander for additional troops in Afghanistan. It has been more than a month since that request was actually made. However, Obama has still not made a decision. The literal pickle that Obama finds himself in is that the polls are showing a declining support for the war. His left-wing base is totally against any escalation of this or any other war. However, Obama is on record saying the Afghanistan War, unlike Iraq, is the "good war" and it was the war that he would fight to win.

So, as a result, we have the equivalent of another Obama "Present" vote for the war in Afghanistan. In this case, doing nothing is the same as voting "Present". It appears that the only time Obama is tough is when he's up against Fox News and the Chamber of Commerce. Otherwise, indecision will prevail. And, that's a sign of weak leader.

Another Emergency?

I just don't know how many times chicken little has ventured out; looked at the sky; and declared it falling again. For someone who "ducked and covered" every month or so in preparation for the "bomb" being dropped on us, I can't tell you how many impending, but never happened, emergencies I have seen in my lifetime. It seems as if we, and the rest of the world, are always on the edge of our seats, with sure death just around the corner.

Does anyone remember the vanishing ozone layer and how, by the turn of this century, we would all be in our protective suits to avoid solar radiation. That threat resulted in the elimination of freon as a refrigerant and aerosol spray bottles. Then, there was the Millennium Bug associated with the advent of the year 2000. In that emergency, planes were sure to fall out of the sky; electrical power plants and water pumping stations would just shut down as the calendar moved from December 31, 1999 to January 1, 2000. Just, 5 years ago, the bird flu was going to kill us all. G.W. Bush stockpiled millions of doses of Tamiflu in that non-existent pandemic. And, of course, there is the ever-presence of Global Warming.

Now, Obama has declared a National Emergency associated with the H1N1 virus (or, also known in "underground circles" as the forbidden-term: "Swine flu".).

Certainly, it is wise to prepare the nation in the event that things get out of control. However, the numbers don't really stack up to the requirement for an actual "emergency" declaration. In the United States, about 1000 deaths have occurred due to H1N1. It is estimated the 1 in 5 have already either contracted the disease or have been exposed to it and the symptoms, in many cases, were either minimal or insignificant. Worldwide, the death toll is about 5,000. However, in a normal flu season, there are about 36,000 who die each year in the U.S. and, worldwide, there are approximately 1/2 million deaths each year. In the countries "Down-Under" (Australia and New Zealand), they have concluded this year's flu season with very few ill effects. By all accounts, this is not a "killer" virus; although, children seem to be at the highest risk for death.

The only problem that I have with the declaration of H1N1 as a National Emergency is that it could, unto itself, create panic in the minds of many. Then, that panic could result in an unnecessary swamping of our heath care system. I really think that Obama should have gotten in front of the cameras and explained what he was doing. Instead, he simply signed the declaration and the news media had to fend for itself to try and figure out what this "emergency" declaration really meant. When you think about it, this whole thing was so un-Obama. In any other situation, Obama would have gladly stuck his nose in front of the cameras. But, in this case, there was no teleprompter; there was no news conference; no doctors in lab coats; no nurses holding syringes; there was nothing! He didn't even use his Saturday radio address to explain it. This, to me, makes no sense at all. Couple that with the benign effects of this flu and it makes me think that this emergency is being used for some other reason. Then, I keep going back to the words of Rahm Emanuel who said: "Never let a good crisis go to waste." I guess it's the conditioned skeptic in me that seems to think there is something else afoot here. I hope I'm wrong and that this emergency declaration is just what it is; and, nothing more.

Sunday, October 25, 2009

AP Contradicts Obama and Dems On Those Bad Health Insurance Companies

Back in August, I wrote a blog entry that was titled: "Those Bad Health Insurance Companies". In that entry, I showed that the top health care insurers in America had profits ranging from 2-1/2 percent to just under 5%. Then, I compared those profits to companies like Apple, Microsoft and Johnson & Johnson; showing that their profits were at least double that of the health insurers. In fact, Johnson & Johnson's profits were almost 12 times higher than Humana's.

Now, the Associated Press has done their own study -- taking all the health insurers into account -- and their finding is that the industry, as a whole, barely makes a 6 percent profit in the good times and only 2.2% in the current recession (Click to See Full Story: "FACT CHECK: Health insurer profits not so fat").

I am glad to see that the Associated Press has taken a stand here and contradicted the lie that Obama and the Democrats keep pushing. We need more to come out and put a stop to all the distortions we are getting from the Democrats about ObamaCare.

Don't Pay Them Now and We Won't Get Paid Later

The Obama Administration seems to think it can reduce executive pay at these bailed-out banks without any consequences.

First, there is this absurd assumption that people will just stay in their existing jobs after having had their salaries slashed by 90%. This isn't like they are part of some family business and have loyalties that are above pay. They also have a lifestyle that is predicated on those high salary levels. These people are paid those big salaries because they are the educated cream of the business world. That's how they got to where they are; and, that is why they got paid what they did. They are valuable business commodities and I don't think they can't just move on to another corporation; and, not necessarily in the banking community. And, don't think they would be just restricted to the U.S. job market.

Secondly, saving a few million on salaries in comparison to the billions that were given out in bailout money is just dumb math. It will literally take decades to return the billions owed to the taxpayers if Obama thinks that slashing salaries is the mechanism to do that.

Thirdly, if enough of the brains behind the banking industry leave these companies, these banks will flounder. Logic says that if you want the bailout money repaid and repaid quickly, you want the best and brightest to help to achieve that goal. By forcing key employees to go elsewhere, the banks will be left with people who have limited experience and little knowledge of the business. That is a formula for failure. I guess Obama seems to think that a multi-billion dollar bank with complex domestic and international transactions can be run with the equivalent of mail room staff. Today's banking is not simply managing loans, and checking and savings accounts!

Personally, I don't think we'll ever get our money back from these banks. They will probably remain in debt to the taxpayers until they go out of business. But, then, maybe that is the real intention of these pay cuts.

Saturday, October 24, 2009

Obama's War With FOX News Has A Sinister Objective, But Could Backfire

Since taking office, Barack Obama and his Administration have been at war with Fox News. In his latest volley, he likened Fox to "talk radio" because of its opinion oriented shows; with particular anger towards shows like Sean Hannity's America and the Glenn Beck Show. Last weekend, Rahm Emanuel and David Axelrod both said, in what can only be an orchestrated effort, that Fox isn't really a news organization but, instead, they have a "perspective". And, then, Rahm specifically issued a veiled threat by saying that other news organizations shouldn't follow their lead. Axelrod added to that by saying the other news agencies shouldn't treat them like news organizations. In not so many words, they effectively gave notice to the news media to not follow Fox's lead in uncovering dirt about this Administration or there could be consequences.

However, this kind of commentary from people like Axelrod, Emanuel, and their boss, Obama, are just off the mark. Every one of the major television news organizations is involved in some kind of "opinion" show. CBS has "60 Minutes" and NBC has "Dateline". The Beck and Hannity shows on Fox are more than offset by MSNBC with their left-wing shows with people like Ed Shultz, Chris Mathews, Keith Olbermann, and Rachel Maddow. MSNBC also has it's token conservative with Joe Scarborough. And, what about semi-conservative Lou Dobbs on CNN? Certainly, NBC's business network, CNBC, has been quite over the top against Obama's economic programs with certain hosts, guest hosts, and guest commentators. What's to stop Obama and his thugs from going after these news groups, also, if they decide that these news organizations, too, are being too FOX-like in their reporting?

The commentaries that I have heard with regard to this silly war with Fox have ranged from Obama being "Nixonian" to Obama being just plain "immature". However, I believe this battle with Fox is just the start of a larger and more sinister war to contain all of this nation's news organizations. I believe the Obama Administration wants to punish Fox and, then, use them as an example to all the other news organizations to stay in line. This is the Chicago way. For example, a Chicago mob loan shark will cut off a finger or break a leg of a deadbeat as an example to all the others who might think about not paying back the money they owe.

But, I think this tactic is starting to backfire. Thursday, the White House tried to exclude Fox from a pool interview with Kenneth Feinberg and his plan for executive pay compensation. But in an "all for one and one for all moment", all the other news agencies stood with Fox by saying that if Fox was to be excluded from the Feinberg interview then, there will be no interview by any of them. The White House then had to back off.

When you think about it, the White House, by implying that Fox isn't on board with them, is really saying just the opposite about all the other news organizations. In essence, they are implying that CBS, ABC, NBC and CNN are all in the bag for Obama. Further implying that these news agencies have become "state-run and state-controlled"; and, I believe that all of this nation's news groups are becoming offended by that implication. Just watch this exchange by Chip Reid and Helen Thomas with Robert Gibbs over a pending Town Hall Meeting in July:

Obama and his Chicago gang should watch out. Over the years, it has been the gumshoes of the fourth estate that have brought down many a President and key members of their Administrations. It was the Wall Street Journal and their article in July of 1922 that opened the door to the Teapot Dome Scandal. It was the Washington Post with Woodward and Bernstein who took out Nixon over Watergate. And, don't forget that that it was Newsweek that broke the Clinton/Lewinsky scandal.

Obama just might find out that this war with Fox could be his Waterloo; especially if the other news groups decide to turn on him, too. The truth about Obama is out there; and, it has been largely ignored. With all his major programs failing and his poll numbers falling, Obama is increasingly becoming a target for the press. I think that Obama would be well advised not to keep pushing because those who were once friendly might actually start exposing his real faults.

Friday, October 23, 2009

Obama to Cut Executive Pay by 90%

If you listened to Barack Obama on the subject of executive pay, he is of the belief that it is high executive pay that leads to risky behavior by Wall Street companies. With this mindset, Obama, vis a vis his pay Czar, Kenneth Feinberg, has decided to slash executive pay for bailout companies (Click to See Full Story: "Washington to enforce executive pay cuts").

What Obama doesn't seem to understand is how executive pay got to where it is. The risky behavior and the desire of companies to pay higher and higher salaries for their CEOs actually comes from the external forces that are being applied to these companies.

The short-term behavior of companies is actually being driven by the Federal government. Under the rules of the Security and Exchange Commission (SEC), each publicly-traded corporation must issue a fully-certified (audited) earnings report on a quarterly basis. In other countries, this is not the case. That means that our CEOs must manage to the bottom line and do that each and every 3 months. A failure to do so could result in a dramatic drop in stock price and, additionally, result in lawsuits by angry investors who want some of their lost money back. To make things worse, companies are expected to meet the analyst's projections for earnings or suffer the consequences of missing them. This is unbelievable pressure. In sports, it would be like expecting a highly paid player to hit a home run at every at-bat.

Like it or not, American corporations are being forced to manage their companies on a short term basis. The risky behavior is being driven by this need. And, high salaries are being given out to attract the talent needed to meet that goal.

While it is true that executives continue to get high salaries, even when the company is doing poorly, those salaries aren't necessarily based on the current activity but what will be delivered in the future. In a similar comparison, should an actor, who gets $20 million or more a movie, give his salary back if the movie is a box office flop?

I am willing to bet that this move by Obama is just the tip of the iceberg. My guess is that he will find other ways to cap executive compensation by using the "they took government money" excuse for other, non-bailout money companies. He might even formulate that excuse for companies that get government contracts. That's because he, like the rest of the capitalism hating left, want corporations to be punished. In their minds, a company like Wal-Mart doesn't create jobs but, instead, gyps people out of good pay while their executives lavish themselves. The only way to stop that kind of thing is to impose socialist practices that level the "paying" field for everyone. Just mark my words.

Thursday, October 22, 2009

Enemies Of The State

While the list of successful accomplishments by Barack Obama might be small, there is one list that is growing by the day. That is his list of enemies.

From day one, Obama has used the politics of division and derision to attempt to get public approval for his policies. He has used this technique extensively to divert attention from his own failings.

For the economy and the Afghanistan war, George Bush has been blamed from the get-go; and, still now, is being blamed for Obama's inability to get the economy on track or to improve the deteriorating situation in Afghanistan.

He has also called out individuals like Joe the Plumber during the campaign. Since being in office, people like Rush Limbaugh and Bill Kristol have be singled out as enemies of Obama.

Then, there was AIG and all those greedy Wall Streeters. When he was trying to restructure GM and Chrysler, the enemies were the bond holders; even though Obama was literally screwing them to the wall. Lately, it's all those profit-motivated-only doctors and those bad health care insurance companies. Humana was especially targeted because they sent out a notice to all their Medicare recipients; telling them how ObamaCare could take away their benefits. Now, Obama's laser beam of hate has been focused on the U. S. Chamber of Commerce for not backing his Cap and Trade and health care reforms.

Lastly, of course, there's Fox News because it won't become the ever-loving Obama news outlet like it's competitors.

Obama can't seem to sell his programs on their face value. Instead he's always trying to create a bogey man to make the American people think that he's some kind of White Knight who's trying to save us all and protect us from the ever-present evils in our society. But those groups and people that Obama is complaining about are our real White Knights; actually protecting us from his radicalism.

Obama is practicing thuggery politics. He calls out individuals and groups to demonize them and make himself and his policies look better. But, the polls are increasingly showing that people aren't buying it. They are beginning to see who the real problem is. And, that problem is the real enemy of our state.

Wednesday, October 21, 2009

As Predicted!

Back in March, in this very blog, I said: "I don't think it is unreasonable to believe that we may see highs in oil of $80 a barrel this year." (Click to See Full Blog Entry.) And, now, oil is sitting above $80. When I made that prediction, it was contrary to almost everything that was being said or written about in our left-leaning press.

My purpose of writing that blog was to say that this recession, Obama's plans for green jobs, and the Cap and Trade punishment of dirty energy isn't going to cause oil prices to swoon. There is nothing that this President can do to change the fact that oil is becoming an increasingly scarce commodity; especially, by choice, in this country. Our dependence on oil isn't going to go away with wind and solar power or by shaving a few miles per gallon off of a few new cars. When all the other countries in the world are scurrying around to find new oil and establish strategic partnerships with oil rich countries, America is insanely laughing it all off by not drilling for its own oil. High oil prices are both job and business killers. Oil is going to go back above $100 a barrel next year; and, that, along with the punishing effects of Cap and Trade, will just push this country into a second recession when the rest of the world had the foresight to plan for new and additional oil resources. Just mark my words.

Afghanistan: The Biden Solution?

Increasingly, there are rumblings that Obama is considering implementing a Joe Biden plan for the war in Afghanistan; rather than take the advice of his appointed general overseeing that war. In essence, the Biden plan says we should conduct a protracted war in Afghanistan with limited troop support and concentrate on attacking Al Qaeda with remote-controlled drones by targeting their strongholds all along the Pakistan-Afghanistan border. At the heart of this plan is the belief that we don't need to worry about the Taliban; as if, somehow, these just-radical-as-Al-Qaeda radicals pose no threat to America.

Apparently, people like Biden seem to forget that we wouldn't have even attacked Afghanistan if the ruling Taliban had simply turned over Bin Laden in the first place. But, they protected Bin Laden and the rest of Al Qaeda and Al Qaeda training camps and refused to give them up. This, then, resulted in the war that we have today. A war that has chased both the Taliban and Al Qaeda into the mountainous areas of Tora Bora. To back off now would just hand Afghanistan back over to the Taliban and, then, most likely, reestablish home sweet home for Al Qaeda.

If Biden had been such a spot-on military strategist in the past, I would say that we should consider his plan. However, he has been consistently out of step with both logic and reality. He was against the original Gulf War because he didn't think we could take Saddam's army. But, to the contrary, we defeated Saddam in just days.

Then, he was all "for" the second war with Iraq because he firmly believed that Saddam had those weapons of mass destruction. The left seems to forget that Biden was wrong, too, while they keep blaming Bush for the "lie" that Saddam had WMD's. Since then, Biden went on record saying that the surge wouldn't work. But, unfortunately for Biden's continuing reputation of being wrong, the surge did work and worked better than expected. Then there was his brilliant plan that the war in Iraq could be ended by just partitioning Iraq into three religious areas that were controlled by the Sunnis, Shiites, and the Kurds. Of course, instrumental to this insane idea was the fact that Sunnis, Kurds and Shia who were living in someone else's territory would have to be uprooted from their homes and moved to be with those of their own kind. Thank God Biden didn't have any input on desegregation plans of the 1960's in this country. Otherwise, all the Blacks of America would have wound up being cloistered in some isolated city/states in America.

The left has a history of not trusting the military and in believing that the military is only interested in war and more war. Because of this, the left has always believed that it is the military's own self interest to always want more troops. But, in reality, Generals, like anyone else, don't really want to go to war unless they can win without sustaining massive losses of either men or material. Also, most Generals believe that a strong military is a deterrent to war and not a reason to go to war; at least if the military is part of a peaceful society like ours.

Personally, I wouldn't bet on anything that Biden says. He is literally a gaffe-a-minute machine. This fact, alone, should give one pause to consider anything he says. To listen to him on Afghanistan is to ignore that fact and to ignore how terribly wrong he has been in the past. Yet, this President and the left of his party seem to think that Biden is the be-all and end-all when it comes to military planning. God help us all!

Tuesday, October 20, 2009

Do Clothes Make The Woman?

Does anyone remember how vicious the press was when it was learned the Republican National Committee had outfitted Sarah Palin during last year's campaign?

Well, I guess the mainstream press has had a change of heart since then. Apparently, there is no outrage in the fact that this White House busily outfitted Sonia Sotomayer in order to make a good impression during her nomination process (Click to See Full Story: "Sotomayor Says White House Even Picked Out Her Clothes").

Funny how that works. Isn't it?

Monday, October 19, 2009

How Stupid!

This morning, CNBC actually fell for a bogus email and announced that the U.S. Chamber of Congress was behind the climate change bill that is working its way through Congress. The stupidity of CNBC is that U.S. Chamber of Commerce would never get behind Cap and Trade because they know, more than anyone else, that it would kill American businesses and jobs. Rather than fact-check before they did their "BREAKING NEWS" alert, CNBC didn't even question the validity of that email and went ahead and reported the lie. The reality is that this fake email was sent to them by a pro-Obama, pro-Climate change group (Click to See Full Story) who has sent out other bogus emails in the past.

This just shows how eager the media is to promote any left-wing agenda being backed by Barack Obama.

Ya know. It's all about love. And, when you're in is blind.

To be fair, Fox Business also fell for this bogus email; but Fox News didn't. The same can't be said for the always Obama-loving subsidiary of Obama Inc., General Electric, and its cable operations like CNBC and MSNBC. After all, it was one of CNBC's star anchors who once called George W. Bush a "monkey" (Click to See Full Story). No political bias there!

ObamaCare and The Family Feud

If you listen to Obama and his people, it's the Republicans that are blocking health care reform for America. Or, sometimes, it's those bad and greedy insurance companies that don't want their massive profits being tampered with. Other times, Obama will call out Fox news and Talk Radio for depriving America of a chance for affordable and quality health care.

But, the reality is that ObamaCare isn't passing muster among his own party members. The Democrats are the real reason why Obama is still waiting to pass health care reform. After all, he theoretically has all the Democratic votes that any left-wing President could need to get any legislation passed. Yet, the process just keeps dragging on and on.

Pelosi and Reid can't get the job done because their own party members are bickering among themselves. The fiscally conservative Blue Dog Democrats aren't buying the big price tag. Other very liberal Democrats want abortion in the bill; while others say their constituents won't have it. Then, the rural Democrats are fighting tooth and nail over any abandonment of Medicare Advantage because it could kill their reelection chances. The big city Dems want illegal aliens covered; while many others are saying no. The biggest problem for the many Democrats who feed at the union money trough is the fact that Cadillac Health Care Insurance plans, the ones most union members have, will be taxed; and, taxed big time.

So, when you put it all together, it is the Dems in Congress who are really going "mano e mano" on health care. That's why anything that comes out of this "melding" process that's now going on behind closed doors, is bound to result in a final bill that is easily over a thousand pages long and is guaranteed to have an equal number of pages worth of addenda attached, in order to appease each individual concern of every Democratic member of Congress. Because of this Family Feud between the Democrats, this will be the most hodgepodged bill in U.S. history. When all the dust settles, we are going to have a health care reform proposal that is "sausaged up" with every possible Democratic special interest being taken care of and, the American people will be left out in the cold.. Just mark my words!

Update: As of this late afternoon, it was determined that the health care reform bill has now made it to a total of 1502 pages (Click to See Full Story). Of course, the addenda have yet to be played out!

Sunday, October 18, 2009

The Second Stimulus - Another Waste of Money

The facts about the first Obama Stimulus Package are in. In one report, it now appears that our Government spent close to 1/2 million dollars for each new job that was created (Click to See Full Story: Stimulus Math: $533,000 Per Job Saved or Created?). However, according to the President's group of Economic Advisers, the cost to create a single job was much, much lower at only $92,136. Of course, it took almost $150,000 in taxes being collected to spend that $92,136 in order to create a single job.

What's worse, each of these new jobs that were created were for time-limited projects and, therefore, can only be considered, at best, to be temporary work. Once the park is built, the job is over and the employee goes back on unemployment. Once the bridge is fixed, the same is true. Once the pothole is filled, that job, too, is over. And so on. Also, every one of these jobs, because of Federal work rules, is a union job.

The problem with all this is that the average worker in America is not a union worker and not a single non-union job was directly created by the Obama Stimulus Package. Union workers only represent about 8% of the overall workforce in this country. So, now, the Democrats, in order to help the non-union workers, have conjured up a better idea.

If there is going to be a second stimulus, the Democrats want to create a $2000 annual tax credit over the next two years for any employer that hires a new employee. This is just stupid. Employers are not going to spend $16,000 a year or more, plus the cost of benefits, to hire a brand new, but totally unneeded, employee because they will get a couple of thousand dollars back from the U.S. government by doing so. Apparently, the Democrats think they can create a new version of Cash for Clunkers; but, this time, for hiring people.

The simple fact is that, in business, employees are "overhead" and each unnecessary employee seriously impacts the bottom line of that business. No business is ever going to hire an employee if they don't need one. So, in essence, the only employers that will take advantage of this "tax rebate" are those employers who were going to hire an additional employee anyway.

The absurdity in this kind of tax rebate scheme is the assumption that the economy is simply driven by employers hiring employees. If ever there was putting the cart before the proverbial horse, this is it. Business activity drives hiring; not the other way around. So, the $2000 a year per person that the Democrats want to spend on hiring would be better targeted at stimulating business activity to create jobs. That's why tax credits to the consumer would be much more powerful than this planned boondoggle of a tax rebate. Once again, the debt will just pile up and, then --- months later -- we will find out that this plan, too, was another big waste of money. We should rename this Congress: "The Gang That Couldn't Shoot Straight!" They all appear to be as stupid as the characters in that dumb 1971 movie of the same name.

Friday, October 16, 2009

Harry Reid's Apples and Oranges Analysis

The above video is making the rounds on the Internet today.

The primary reason for this is that Harry Reid appears to have spilled a very big can of beans by saying that health care reform will "really" cost $2 trillion dollars and not the under $900 billion "lie" that he and the other Democrats have been throwing around as gospel.

But, more than that, Harry can't seem to do simple math.

In the video, he compares an estimated $54 billion in "annual" savings for tort reform with a 10-year spending total of $2 trillion. And, then, he he has the gall to say that $54 billion -- when compared to $2 trillion --- is just a drop in the bucket. Lastly, this dummy concludes this flawed analysis by saying: "You can do the math...we can all do the math..."

Oh, really? Do the math, Harry?

This is so typical of the B.S. that we continually get from so many politicians on the left when they're trying to make things add up for one of their extremely wasteful projects. In doing so, it appears that they either have left their knowledge of simple mathematics behind when they graduated from grade school or, more than likely, they are all habitual liars.

That $54 billion per "year" savings will have a 10-year total savings that is in excess of 1/2 trillion dollars and, to Harry, I would say: That ain't the chicken feed that you seem to think it is!

My math says that this number, alone, is one-fourth of the $2 trillion that Harry plans to spend and that's a big chunk of change to anyone; except, of course, for a typical tax-and-spend Democrat like Harry.

Maybe this is why the consummately-clueless Harry Reid is doing so poorly in the polls; especially in his own home state of Nevada! It just reminds me of another episode of stupidity by Harry when he and Nancy Pelosi sent a letter to George W. Bush -- in early 2007 and before any additional troops had even arrived in Iraq -- to tell him that the surge wasn't working and we should redeploy our troops out of that country (Click to Press Release and the Letter). If we had listened to Harry and Nancy, then, we wouldn't be leaving Iraq in the next year or so with our heads high and an apparent victory under our belts. Instead, Harry and Nancy would have had us leave in complete defeat. Now we're supposed to believe him on health care?

Thursday, October 15, 2009

The Rate Of Foreclosures Continues to Increase

Last July, I wrote a blog entry titled: The Worst Is Yet To Come for Foreclosures.

I wrote this on the basis that there was going to be an increasing number of mortgages that are due to reset and adjust with higher and higher monthly payment rates in the months going forward. Additionally, with the unemployment rate increasing, the number of defaulted mortgages can only increase in concert with that fact. Lastly, the foreclosure assistance program that Obama put in place in February is failing miserably in its attempts to stem the actual tide of foreclosures.

Just as predicted, the numbers are in for the third quarter and the rate of foreclosures was the worst in the history of the country (Click to See Full Story: "Foreclosures: 'Worst three months of all time'"). I would expect this trend to continue to increase for the remainder of this year and all through next year unless something is done by this Administration to actually improve the economy. People are losing jobs and they are losing their homes because the focus of the Stimulus Package is narrowly aimed at preserving jobs for teachers, cops, and union workers. At best, that's about 10 percent of the total workforce.

This concept of Obama's economic team, that a helicopter full of money can just fly over America and dump dollars on the country isn't working. It's not focused on the problem of an absent consumer in the marketplace. Work programs didn't work under FDR during the great depression and they aren't going to work now. We are stupidly ignoring the lessons that history has taught us (Click to See My Blog Entry of October of Last Year and Before The Stimulus Package Was Passed: "The Lessons of the WPA and the Great Depression"). Now, the only thing we've got to show for that ignorance is a literal mountain of debt!

Wednesday, October 14, 2009

Where's The Electric Passenger Jets?

The newer, more fuel efficient, Boeing 767 will use about 1700 gallons of jet fuel per hour of flight. In comparison, an Airbus A330 will run at approximately 2100 gallons fuel per hour.

Efficiency aside, our fleet of aircraft, flying over our heads, are burning fuel at a rate that is the equivalent of between 80 and 120 automobile gas tanks worth of fuel per hour. In a 4 hour flight, the fairly efficient A330 will empty about 400 automobile gas tanks' worth of fuel. Every hour during the peak daytime hours, there are approximately 5000 aircraft in the air at any one time. All those aircraft, combined, are emptying the equivalent of 1/2 million automobile gas tanks every hour. To put that into better perspective, a tank of gasoline will typically power a car for 4 to 6 hours of highway travel. As a consequence, you could conclude that an hour of peak air activity is using the same amount of fuel that 2 to 3 million cars would use in that same hour.

The purpose of all these statistics is to show how mammoth the use of oil-based fuels is. While the automobile seems to be the target of our Washington law makers, the real and substantial fuel usage is flying over our heads and wind and solar won't solve that problem. To my knowledge, there are no practical electric passenger jets on the drawing boards.

Then, to that airplane fuel usage, you can add a substantial oil-based fuel usage for things like boats, trains, trucks and buses that operate every hour of the day in America. For sure, these, too, will have no "electric" or hybrid alternatives and, from that, you can see how insanely futile it is to save a few miles per gallon on passenger cars; like in the Cash For Clunkers program.

Despite all the push for wind and solar power, crude oil based fuels for non-auto transportation vehicles will be with us a very long time. Even for cars, the average automobile will last 9 or more years; with many operating well past 9 years in order to achieve that average age.

Our oil reserves are declining and the real prospects of lowering fuel usage are not going to happen fast enough for us to avoid increasing our importation of crude oil. The stupidity of our politicians is that they don't seem to understand that we need to find new domestic oil reserves if we really want to wean ourselves off of our dependence on imported crude. Our avoidance in drilling off shore in California and Florida and in not drilling in the Alaskan National Wildlife Refuge and in the Bakken reserves of the Midwest is just putting us at an increased dependence on foreign oil. Our national security is at risk because many of our oil supplying countries are either our enemies or they are in unstable parts of the world. People don't seem to understand that we now import almost 63% of our needed crude oil (Click to See a Report: "USA Oil Imports by Country 2007"). My guess is, that will be 70% or higher in the next 10 years and we will have more oil-hungry vehicles than we have today; by virtue of population growth.

As our dollar continues to weaken, the price of crude oil just keeps rising. This morning, crude oil was near $75 per barrel; and, this is despite the reduced demand during this recession. This is a serious warning because, once this recession is over, oil prices will go through the roof as demand starts to increase. Those days of $4 a gallon gas are clearly going to be here again. Additionally, we could wind up paying more than $6 per gallon if the dollar continues to fall and if domestic supplies continue to fall. No amount of lowering the average automobile fuel usage or hybrid cars is going to really easy that pain. All the money being poured into wind and solar isn't going to help us power airplanes, boats, trucks, and trains. We're in serious trouble and we just keep ignoring the problem.

You better have a bicycle in your garage because things are going to get pretty hairy for us in the not-too-distant future!

Tuesday, October 13, 2009

Again, Attack The Messenger!

Yesterday, a bomb was literally dropped on the Baucus Health Care Reform bill by the health insurance industry.

Price Waterhouse Coopers, an accounting/auditing firm, was commissioned by that industry to look at the Baucus bill and determine what the impact would be on future private insurance costs. Price Waterhouse determined that the Baucus Bill could result in an increased annual insurance cost of $4,000 for an average family of four by the year 2020 (Click to See Full Story: "Health-reform lemon").

Of course, the Democrats went crazy.

Rather than dispute the numbers themselves, the Democrats went after Price Waterhouse and the insurance industry.

First, they claimed the timing of the Waterhouse report was suspect; being released just prior to the Senate Finance Committee's vote on the Buacus proposal. Of course, the timing of the Waterhouse report doesn't actually make the findings of the report invalid; but, the Democrats would have you believe that.

Also, they tried to discount the findings by claiming that the insurance companies are intent on discrediting the Baucus bill because they want more profits than that bill would afford them. Again, those greedy insurance companies! However, the devil is in the details of the Price Waterhouse report, and this claim by the Democrats is just another political attempt to sidestep its real findings.

Finally, they claimed that Price Waterhouse doesn't have the credentials to calculate the effects of the Baucus bill because they aren't part of the health care industry. ( As if our Senate is all-knowing about the health care industry!) I am quite sure that Price Waterhouse has conducted audits for numerous health care and health care service companies and is quite qualified to analyze the results of the Baucus bill.

Aside from all this smoke and mirrors by the Democrats, the real fact is that no single Democrat was able to discredit the math that went into the findings of that report. All the Dems did is attack the messengers!

Price Waterhouse is an extremely reputable accounting firm. For them to put their name on a flawed study would be ridiculous because it could jeopardize their reputation as an auditing firm and that fact, alone, could easily undermine their business. Unlike politicians, an auditing firm's business is totally dependent on the truthfulness, the depth, and the accuracy of their reports. In the case of Price Waterhouse, that reputation has allowed them to be a firm who provides accounting services for hundreds of Fortune 500 companies and other well-known, worldwide businesses; both large and small.

So, who would you trust? A Congress that has historically low approval numbers and who is unable to garner any real trust from the American people; or, a trusted accounting firm that operates successfully in 150 countries and has been in business since 1849.

The Price Waterhouse report only confirms what most people in America already know and have said in many, many polls: The health care reforms that are being put forth by the Democrats will be expensive, provide less care, and result in higher taxes for everyone. This latest attack on Price Waterhouse is another effort by the Democrats to hide that imminent reality.

The Dishonesty of Costing Out the Senate Health Care Reform Bill

Last week, a lot was made out of the fact that the Senate health care reform bill, aka the Baucus Bill, would not only be deficit neutral over ten years but, it would actually save the government $89 billion over that same period. However, the dishonesty of this fact is unbelievable.

The calculated savings all comes down to the fact that spending doesn't start until four years past the point when any new taxes and spending cuts have already been implemented. Therefore, a full 4 years of new taxes and spending cuts will be accumulated before any spending begins. Simply speaking, the savings for this $829 billion program have been calculated on the basis of 10 years of deficit benefits (new taxes and spending cuts) and only 6 years of spending. So, nowhere, is there a calculation of a full ten years of spending versus a full ten years of taxes and cuts. The Congressional Budget Office, who did this 6-out-of-10 year cost analysis, says that it can't calculate any costs beyond 10 years because the results might be too unreliable. But, they don't have to. The numbers that we need in order to make an apples-to-apples deficit spending calculation are already there.

First, we know that the program has a total projected spending of $829 billion for the years 2014 through 2020 -- a total of 6 years. That means that the program will actually spend $139.2 billion a year for each of those 6 years of operation. Additionally, we know that the program will reduce the government's deficit by a total of $89 billion at the end of ten years; from 2010 to 2020. That says to me, that the total savings from new taxes and spending cuts can be calculated by adding the $89 billion in net deficit savings to the program cost of $829 billion. Therefore, the per year deficit benefit of this program ($829+$89 divided by 10 years) would be calculated to be only $91.8 billion dollars. As a result, we are looking at a "true" spending of $139.2 billion per year as compared to the net deficit benefit of only $91.8 billion per year; or, a differential of negative $47.4 billion per year.

Now, it doesn't take a genius to see that this program will be spending "more" than it is taking in or saving. As a consequence, we can derive that there would be a 10-year increase in deficit spending that will be closer to a half trillion dollars than the positive $89 billion in savings that the Congressional Budget Office is reporting. There's where the dishonesty lies. No politics; just the facts!

Monday, October 12, 2009

A Word About Taxes

Before the word tax became associated with government economics, it was a word that had the following synonyms:
charge, cumber, drain, encumber, enervate, exhaust, lade, load, make demands on, oppress, overburden, overtax, overuse, overwork, press hard on, pressure, prey on, push, put pressure on, saddle, sap, strain, stress, stretch, task, tire, try, weaken, wear out, weary, weigh, weigh down, weigh heavily on, weight

When I hear politicians say that taxes won't cripple business, I can only think that they don't understand the origins of that word. Taxes are what the word implies. They are a burden and they do cripple the economy.

In the upcoming year, the Bush tax cuts are due to expire. With the current stimulus plan working so poorly, an immediate extension of those tax cuts by this Congress would go a long way in sending a signal to business that they can expand and hire people without worrying about the added burden of increased taxes for next year.

At the same time, while Congress is toying with the possibility of a second stimulus, this economy could get a big kick start if they would consider tax cuts for the average citizen; rather than another boondoggle expense package that solely gives union workers some extra part time work in filling pot holes and building running tracks.

Sunday, October 11, 2009

What Earnings Are Truly Saying About The Stock Market

One valued and fundamental measurement of stocks (and, ultimately, the entire stock market) is the Price Earnings Ratio or PE Ratio. Simply speaking, the PE Ratio is a measure of how expensive any given stock or basket of stocks are relative to their earnings or earnings power.

To establish the PE Ratio is fairly simple. It is calculated by dividing the current stock price by the last known or even the projected per-share earnings of any given stock or basket of stocks. The result is sometimes referred to as the trading "multiple" and it reflects how high the price of the stock is in comparison to its earnings's power. Typically, high PE stocks are called growth stocks. This is because high PE ratios reflect some speculation on the long-term growth prospects for that stock.

Other than baseball and football, no other activity has so many accumulated statistics than the stock market. It is charted and measured; both six ways and sideways. But a simple way to look at the stock market as a whole is to look at the average PE Ratio for any given market basket of stocks. A market basket might be all financial stocks. Another could be all auto stocks. But, generally speaking, the most common market basket of stocks -- the ones that most people are aware of -- are indexes like the Dow Jones Industrial Average and the S&P 500.

Most seasoned investors look to the Standard and Poors 500 basket of stocks because it is more broadly accurate than the other and more widely popular measurement of the stock market: the Dow Jones Industrial Average.

At the end of 2007 -- just before the recession -- the average PE Ratio for all the S&P 500 stocks was 22.19. At 22.19, that multiple was even higher than normal; indicating that the stock market was severely overbought and was due for a correction. Since then, the stock market had taken a 50+ percent tumble to a low in March of this year. By March of 2009, the average PE Ratio for the S&P 500 went to a whopping 116.31; or, about 5 times higher than it was in December 2007. Remember, if 22.19 was a high number in 2007, then, 116.31 in March of this year was even more ridiculous; indicating an absolutely overpriced stock market.

Yet, despite that fact, the stock market has rallied back from the March lows of 667 on the S&P 500 to today's level of near 1071. That's a percentage gain of over 50%. Simply looking at this fact, one might conclude that the earnings of all those stocks that make up the SP-500 would have to have increased by 50% or more. However, the reality is that the corporate earnings continued to fall. That's why the current PE ratio is close to 141; or, over 6 times of what it was in December of 2007.

So, what is the conclusion here?

The conclusion, to me, is that we are in another bubble. This time it's the stock market; and, not housing. There is absolutely no reason for this stock market to have climbed as high as it has; in such a short period of time; and, without any earnings to support it. There is absolutely no prospect for earnings to increase substantially in the short term. And, no reason that would support the kind of market movement that we have seen since March. If anything, the stock market should have fallen even farther after hitting the March low. Therefore, this should give pause to anyone who is now invested in the stock market. I am concerned that we are due for another fall in the not too distant future.

(Click to View a 5-year Chart of PE Ratios for the S&P 500)

Saturday, October 10, 2009

Absent At The Top

By virtue of a '60 Minutes' interview on CBS two weeks ago, we now know that our top General in Afghanistan had previously only talked to the President "once" in the last 70 days. At the same time, the Treasury Department has hired only 1/3 of its politically-appointed staff. That means that just 11 out of 33 critical staff positions have been filled.

In poll after poll, the economy is the top concern for most Americans these days. Yet, we have a sorely understaffed Treasury Department. At the same time, we have two major wars at our feet and Obama can't find the time to get even monthly briefings from his top generals in the field.

Meanwhile, Obama was off to Copenhagen to push the Olympics bid for Chicago in 2016. Before, that he prepared and delivered more speeches than he has had days in office. On top of that, he's given numerous interviews and held dozens of campaign style meetings and presentations.

I personally think that Obama has a serious prioritization problem and lacks the true ability to manage. If you listen to him in any one of his near-300 speeches that he has given since being in office, one might conclude that he is intimately involved with all the stuff that this government is working on. That's because you will always here the words "I, me and my" when he talks about anything. Yet, in reality, there's more "they" than "he" in any effort to get things done. Instead of a leader, we seem to have an "ad man" that is willing to give a speech, at the mere drop of a hat, to promote some legislation that he neither fully understands or even had any input into. We know this because he is constantly getting trapped in so many "you lie" situations; especially when it comes to health care reform.

As the "CEO" of America, he is looking like a failure. Almost every promise of his campaign is floundering. The economy is floundering and health care is getting closer and closer to a "DNR" (Do Not Resuscitate) order. The wars in Iraq and Afghanistan are looking more like horses being ridden by a headless horsemen. And, on the world stage, Obama's apologetic, prostrate attitude has shown our enemies that he is weak; not powerful.

Bill Clinton might claim that there is some "vast right wing conspiracy" that is responsible for Obama's problems. But, the reality is that no one but Obama is responsible for his problems.

When it comes to Obama's failings, three old sayings come to mind: (1) "A jack of all trades and a master of none!" (2) "Talk is Cheap!" and (3) "Actions speak louder than words!"

Only the best of the world's managers have the ability to juggle as much as this President is trying to juggle and actually be able get any one of those things done properly. Obama would have been much better off in just focusing on the economy as priority one and setting all the other distractions, such as the closure of Gitmo and health care reform, aside. When he came to office he had no management credentials and that lack of skills is glaringly obvious.

If Obama was in business he would have never gotten the job as the top guy in anything but the mailroom. And, maybe not even that. In my years of working for and with a multitude of managers, Obama reflects the worst of those managers. He's the guy that over commits his staff and never gets anything done right. And, usually, those people are gone in short order. Sadly, we will have to wait until the 2012 election to fire this guy from his job.

Friday, October 9, 2009

On Sale Cheap: The Nobel Peace Prize

I know that the world is in a recession and that there are a bunch of unbelievably cheap deals out there, but apparently, one of the biggest bargains going is the Nobel Peace Prize. Based on today's events, it is obvious that the Nobel Prize was being offered at nearly 99% of it's regular value. That explains how the President, who has done absolutely nothing to warrant it, has just been awarded it (Click to See Full Story: "Obama wins Nobel Peace Prize to mixed reviews").

This just proves how absolutely politically liberal the Nobel judges really are.

Obama's nomination was actually submitted to the Peace Prize Committee only 12 days into his Presidency. At that juncture, this man had hardly done anything on the world stage except to give all-too-many B.S. speeches. Even since then, there are highly questionable actions that he has taken towards peace in the Middle East, the Korean peninsula, and in Eastern Europe. Note this Associated Press opinion piece just recently written about Obama's success on the world stage: "Analysis: Obama's woes keep piling up around globe". (It should be noted that the Associated Press is a fairly liberal group who is normally very friendly to Obama.)

One thing is for sure, he hasn't created peace in this country. In fact, the political atmosphere here is as divisive as I have ever seen it; at least since the Vietnam war. So much for Obama's promise to reach across the political aisle.

There have been critics of the Nobel Peace Prize for years and this only adds fuel to the fire.

The suggestion by the Nobel Committee that this President deserves the award because of what he says he will do is just moronic. He says a lot of things and hardly anything ever becomes a reality. In fact, he may go down in history as the "Broken Promises President".

In the citation for the award the Nobel Committee said: "Very rarely has a person, to the same extent as Obama, captured the world's attention and given its people hope for a better future". Once again, there is this "hope" thing. Hope is just a feeling which does not necessarily ever become a reality. Don't these people understand that Obama talks a lot but rarely delivers on the goods! One of the synonyms for hope is "castles in the air" and that probably says more about Obama than anything else. Others include "a fool's paradise" and a "daydream".

To me there are hundreds of better choices. I, for one, would have awarded it to the founders (collectively) of Doctors Without Borders. Even Cindy Sheehan has more cred for winning it than Barack Obama.

What is done is done. However, it just cheapens this once-prestigious award.

Thursday, October 8, 2009

Pelosi Says Value Added Tax Is On The Table

Earlier this week, Nancy Pelosi, in an interview on the Charlie Rose Show, said that a Value Added Tax (VAT) is on the table to help pay for health care:

In that interview, Nancy made it sound like it would be applied to make up for the health care cost differential of domestic versus foreign products. But that's not true. It will be primarily applied to our own manufacturers and not those who import finished goods. It would basically hit our domestically manufactured products the hardest. Otherwise, it would be called an Import Tariff and not what she is calling a VAT. But, she is clearly talking about a Value Added Tax that will be applied to all manufacturing and, I suppose, somehow, finished imported goods.

The problem with a VAT is that it is one of the most job and company killing taxes that ever existed. It ignores whether or not a company is profitable and even able to pay the tax. Instead, it is a tax that becomes attached to the cost of doing business, and it is passed along throughout the manufacturing process of the finished goods from one company to another; with each company paying the tax along the way. In effect, it is a roll-up tax that gets compounded each time value is added to something.

Take for example, a steel company. Assume that it buys iron ore from a mining company and then turns that ore into various types of end-product steel such as rolled steel. The end-product, the rolled steel, is a product that has added value from the original iron ore, and it will be subsequently taxed for the increase in its value. That tax is applied before any profit or loss is realized by the steel company. If the steel company is profitable, it will pay that tax in addition to any income tax on its profits. If the company is losing money, the VAT will still have to be paid and that tax will only deepen the company's losses.

From there, the rolled steel might be sold to another company to make something else. That something else could be an automobile trunk lid or a washing machine frame. Whatever that rolled steel is made into will be considered, again, to be value added. Once again, the government will tax the increase in value. And, so it goes until you or I eventually buy the product.

Ultimately, we will pay for that tax in higher prices for all the things we buy. Further, the VAT will punish our own manufacturers because it will make our products more expensive and less competitive against foreign made finished products. That's because the tax will be applied all along the manufacturing process on a compounded basis. At best, this tax will only be applied to the straight value of the finished imported goods.

We are a country that is losing manufacturing operations by the day. Now, Nancy Pelosi wants to punish American manufacturers even more.

Lastly, it will hurt the poor the most because of their inability to pay the resulting higher prices. So, in effect, we are going to give the poor free health care; but, at the same time, punish them by making all the things they need in order to live, from clothing, to cars, to furniture, more expensive for them to buy. This is totally insane!

Wednesday, October 7, 2009

The New Gold Rush: Gold Lovin' Trouble

Earlier this week, a U.K. online news service wrote a story (a rumor?) that Gulf Arab states are pushing to dump the U.S. dollar as the primary currency for trading oil (Click to See Full Story: "The demise of the dollar") . Based on that article, the gold traders poured into the market and the price shot up $50 a troy ounce in just 2 days. Yesterday, gold metal hit a new high.

At the same time, the U.S. dollar declined even further with the exchange rate between it and the Euro Dollar at above 1.47 Euros/dollar. To make things worse for the dollar, the United Nations has called for the replacement of the U.S. dollar as the world's reserve currency (Click to See Full Story: "UN calls for new reserve currency"). If this should happen, it could seriously devalue the dollar even further and we could be hit with double digit inflation on everything we import; including oil.

Before the oil/dollar news, gold had simply strengthened in price on the basis that the U.S. economy looks to be faltering once again. Last Friday's unemployment, as an example, came with a higher number of job losses than had been anticipated. In fact, 60% more than was expected.

Gold is a hedge against troubled times. Its used as protection against things like a weakening dollar or the consequential effect of inflation.

Looking at the charts, it appears gold has got its legs again. I wouldn't be surprised if it reaches the $1200/ounce mark or higher by the end of the year. This, again, is further proof that the stimulus spending is not righting our economy. It ain't working, Mr. President!

Please Note: I do not own gold or gold derivatives and, therefore, I have no interest as to whether or not gold goes up or down.

Tuesday, October 6, 2009

Letterman's Glass House

For years, Letterman has used his show to hurtfully denigrate many a person through his comedy. Over the last decade, his attacks have been increasingly focused on those who are on the political right. His attacks against Sarah Palin and her daughter were of particular note.

Now, we find out that the rock throwing Letterman was living in his own glass house.

With his apparent sexual escapade with at least one staffer, we know Letterman to be the hypocrite who violated one of the primary unwritten rules of good business practice: Never dip your pen in the company ink well.

What is even more disturbing are Letterman's own words used to describe his wrongdoing. He said that he did "terrible, terrible things" and things that were "creepy". This, to me, says that his actions were well beyond a simple -- and maybe, normal -- romp in the hay with a subordinate.

I think Letterman may find himself in a world of hurt if what he says he did is actually true. If, in an open court, it actually does turnout that he did "terrible" and "creepy" things, his career could be toast. And, I, for one, won't miss him.

Water, Not Global Warming, Is the Biggest Challenge Facing Humanity

Throughout the world, it is the lack of available fresh water that is threatening the existence of mankind; not Global Warming. Much of the world's water sources are either contaminated or on the verge of completely running dry.

In the United States, the water tables are dropping and the underground water sources are being contaminated by toxins from our landfills. We have many serious droughts throughout regions of our country and the world. We are dirtying our water supplies at a faster rate than nature can clean and replenishment them.

So logically simple, water is the key to our existence. We need it directly to survive and indirectly so that we grow and produce our food.

I just find it unconscionable that for decades our government has literally ignored this problem.

Monday, October 5, 2009

Iran: Palming The Real Nuke Facility

It appears that Iran will open its doors of its supposed super-secret Qom nuclear processing facility to the U.N. atomic energy inspectors in just three weeks (Click to See Full Story: "Iran OKs inspection, moves toward cooperation with U.N.").

Since I am always the consummate pessimist, this agreement from Iran just screams of deception. My guess is that when, in 2007, an Iranian opposition group announced that Iran was building the super secret Qom facility, Iran decided to use this disclosure to it's own benefit. At that point, I am sure that Iran decided to leave Qom open, using it for some innocuous nuclear work, and, then, continue the really secret work somewhere else. Like the street hustler who palms the target card in a game of 3-card Monte, Iran is also palming its real nuke facility and making you think that Qom is the target. The fact that they are so quickly willing to open the doors on this supposedly secret facility strongly hints at this kind of intentional deceit and not a willingness to work with the West.

I think this was Iran's plan from the beginning. All, they needed was someone like Obama to call them out on that Qom facility. All along they were probably willing to open the doors and allow the inspectors to walk around; knowing full well that those inspectors will only find benign activities. Once again, this deception will make Iran look totally guiltless. Meanwhile, the real dirty work is still going strong without any scrutiny. Then, Iran can again proclaim to the world that they are just an innocent country who is trying to provide needed nuclear energy to its people; even though Iran is actually awash in oil as an energy source.

Sunday, October 4, 2009

How Now Chairman Mao?

When Chairman Mao instituted his form of communism in China, it became a country of pure socialism. It was literally: One for all and all for the state.

Now with China just having celebrated 60 years of Communist rule, China can hardly be seen as what Mao originally envisioned. It has turned into an economic powerhouse that is quickly becoming the manufacturer to, of, and for the world.

Yes, sir, good old capitalism has infiltrated this once-pure communist/socialist country. Western clothes have replaced the old uniform attire. Sure, the government still has a lot to say about what is done there. However, there are an increasing number of anti-Maoist, renegade capitalists who are being reborn as wealthy Chinese businessmen. I don't think that Mao envisioned that his vision of "everybody being the same" society would have gone so far in creating so many billionaires and millionaires in what was supposed to be his Utopian society. But, it has (Click to See this Story from Two Years Ago: "300,000 Chinese millionaires in China, Rolls Royce trying to get some of them").

China is what the U.S.S.R. was unable to become because, unlike the Soviets, it began embracing capitalism. The China of today would never be found in the words and philosophies expressed in Mao's blueprint for his country in what is now popularly known as his 'Little Red Book'.

It just seems like, with every new page of history, the precepts of socialism are found to be faulty and the benefits of capitalism are being extolled by the improvement of people's everyday lives. Yet, now, we look to be moving towards the futile direction of socialism. How dumb is that?

An Aging America Could Kill America

Recently, there was an Associated Press news article reporting the fact that Social Security is getting hit hard by the current economic situation: "Job losses, early retirements hurt Social Security".

Certainly, we are becoming a more 'maturing' society and that fact does present a problem for both Social Security and our healthcare expenses in the future.

Based on Table 5 of the current United States Census Data (Click to See Data), we had 72 million people who were under the age of 18 in 2000. At the same time, the amount of the population that was above the age of 65 was a shade under 35 million. Through extrapolation, that means that the theoretical working population (age 18 through 64) was 174 million.

In that same report, it is estimated that, by 2030, the under-18 population will be almost 86 million. The average working population will be 206 million. At the same time, the above-65 population will have zoomed to 71 million; and that is almost double that of the year 2000. And, therein lies a big problem.

Social Security works when there are more young people coming into the workforce than there are those who are retiring. It actually works best when seniors have less time remaining in their years after retirement than that of 18 years; the year that many Americans begin there working career. However, the combination of both the post-World War II baby boom and the fact that people are living longer has put pressure on Social Security that was never anticipated when it was adopted in 1935.

The reality is that Social Security is unsustainable in it's current form and that is why it will go bankrupt within the next two decades.

Medicare, too, is facing the same fate and for the very same reason.

Now to complicate things even further for both those programs, it is estimated that half or more of children being born today will live to be 100 (Click to See Full Story: "Half of U.S. Babies Living Today May Reach 100").

In the year 2000, the ratio of the working population (age 18 to 64) to those who were over 65 was approximately 5 to 1; meaning that, theoretically, there were 5 workers to support the post retirement needs of each person who was over the age of 65 and receiving Medicare and Social Security benefits. By 2030, this ratio will drop to an astounding 3 to 1; putting substantial wage pressure on every 3 workers to support a single retiree.

With the current average lifespan of each American male being 75 years of age, this means the the normal average retirement years for a man will span a total of 10 years. For a woman, it will be 13 years; with their current average lifespan being 78.

But, what if lifespans do rise to 100. That means that the aged of our population will need to be supported in their retirement for 35 years; and, not just the 10 or 13 years of today. Furthermore, this means that the retirement years will be double that for those waiting to enter the workforce. It also means that we could literally get to a 1 to 1 ratio of a each worker supporting each retiree. That's because 37 years is the average working lifetime for most Americans; assuming that they start to work at age 18 and retire at age 65.

If you put this all together, it paints a very bleak scenario in that most people in America will wind up working to support the lives of those who have retired; and that, over time, could or will just destroy this country unless some changes are made.

Right now, the only logical solution to this problem is to raise the age of retirement to above 65. Additionally, Social Security and Medicare start-ages will have to be delayed past the age of 65 or, otherwise, these two programs will die a not-so-slow death. If not done, half or more of everyone's pay in the future will have to go to support retired persons.

Most all sociologists and economists see this handwriting on the wall; and, they all know that an aging America could and probably will kill America from a pure economics standpoint.

If living to 100 years of age also means that one's productive years continue to rise with health that is better than that of today, then the extension of the retirement age will work. However, if living to 100 just means that you or I will live longer with the same amount of declining productive years that we have today and with the same possibilities of age-related disease, this country and the world will be in a literal world of hurt. It could mean that a high percentage of our working population is dedicated to tending to the care of the infirmed-aged of our society.

Because of this future for both America and the world, there are those who also see "death squads" and euthanasia as being a reality; in fact, a necessity. There are already those who have written and gone on record to say that our population must be halved in order for world's populations to survive (Click to See My Blog Entry: "Is A Real-Life Soylent Green Society Just Around The Corner?").

Now, with all this in mind, think about why there is such a push to immediately implement health care reform. It isn't to lower cost. Instead, I believe it to be the ultimate means by which our future governments will address the "problem" of an aging population.

I am of the belief that science will solve this problem and not government. I believe there is a future in robotics to care for the elderly. I believe that science will make us stronger, past age 65, and even more productive in our later years. I believe that dying will be of old age and not of disease. Just my opinion.