I must have heard this said a hundred times: The Stimulus Package has saved or created 2.5 million jobs. In fact, the President and Vice President have staked this claim in numerous speeches. But, there's a couple of big problems with that claim.
First, the number of unemployed Americans in this country has gone from 11.1 million, when Obama took office in January of 2009, to today's 14 million. That, to me, is a loss of 2.9 million unemployed when the Stimulus Package was supposedly creating 2.5 million jobs.
Secondly, according to the data provided by the Bureau of Labor and Statistics (BLS), the workforce has remained relatively flat at 154 million workers over the last 32 months. This despite additions through normal population growth. In reality, the workforce should have grown to just under 160 million by now. But, instead, it lost all that growth because, statistically, 6 million workers are being categorized as "discouraged." In a nutshell, a discouraged worker is a special unemployed individual who is no longer being counted as part of the workforce because they, for a variety of reasons, have temporarily stopped looking for a job. Usually, when the employment picture improves, these people will start looking for work again and, then, will be counted back in as a valid unemployed worker. Of course, when this happens, the number of unemployed and the unemployment rate will both rise in response.
While the Stimulus Package might have a legitimate claim to having created some jobs, it's hard to tell when looking at the situation from the top down. That's because, as so noted above, our economy has shed nearly 9 million jobs since Obama took office and since the enactment of the Stimulus bill. That's the reality and that's the truth that is being intentionally hidden when the President claims that the Stimulus Package has created jobs. People understand this and that is why 3 or 4 to 1, Americans give Obama a failing grade on both jobs and on the economy.
Showing posts with label Stimulous package. Show all posts
Showing posts with label Stimulous package. Show all posts
Friday, September 16, 2011
Sunday, July 31, 2011
Obama's Indirect Tax Through Keynesian Economics
Even this tax-and-spend President has agreed that raising taxes during a weak economic period is a bad idea because it would further exacerbate an already languishing economy. But, indirectly, that's exactly what he and his previous completely Democrat-controlled Congress did through a massive "stimulus" spending program.
John Maynard Keynes, certainly the pure consciousness of Keynesian economic theory, correctly assumed and stated that the total aggregate demand (spending) in any economy is a direct result of the spending activity by (1) the public sector (state, local, and federal governments) and (2) the private sector (consumers and business). Further, he theorized that "if" private sector demand fell during an economic downturn, the economy could be righted, again, by simply increasing the amount of spending by the public sector; and, thus, offsetting any loss of demand in the private sector. In theory, it seems so elegantly simple and logical. Thus, we have the basis of "stimulative" spending that almost every Democrat believes to be the key to good recession-beating economics.
But, what Keynes (and the Democrats) totally missed the boat on, is the fact that all that stimulative spending would severely devalue our currency. In fact, in the last 2-1/2 years, the the U.S. dollar has lost more of its value against a market-basket of other key currencies than it had in the 15 years prior to Obama taking office. And, in an economy, like ours, which is so dependent on consumer spending and with a consumer who is so dependent on imported goods, this is pure economic poison.
In our economy, the consumer reigns king; normally representing about 70% of our total economic activity. The remaining 30% is comprised of a combination of public sector and private business spending. So, if, in any way, you hamper the consumer's ability to spend money by diverting a bigger chunk of their paycheck to either higher or new taxes or through higher prices, the economy would be doomed to falter; a fact that we are now seeing after having spent trillions to supposedly "stimulate" the economy.
The reality is that the consumer's paycheck has been under assault by the continuing devaluation of the dollar; which, in turn, has driven import prices higher and higher. In fact, in the last Import Price Report, the "average" of all import prices rose 13.6% -- year over year -- while the American paycheck has remained fairly stagnant. As a result of this inflation, the American consumer has seen their gasoline expenses double under Obama's watch; with the "average" 2-car family now paying about $2000 more per year. (Please note: The doubling of gasoline prices is only partly driven by the dollar's loss in value. The rest of the price inflation is due to the speculation that future demand could outstrip supply; eventually making world oil prices skyrocket. The demand side of this speculation is also being driven by the increasing need for oil by some rapidly emerging economies such as China and India. In addition, the instability in the Middle East could result in supply shortages. Also, there are foreseen supply limitations in this country due to Obama's anti-drilling policies; especially since America, with only 5% of the world's population, uses 25% of world's entire oil supplies.)
On top of higher oil prices, the consumer has seen their average food bill rise by almost 30% since 2009. That's because much our nation's food bill is for imported products. For example, 70% of our seafood comes in from other countries. Most all of the nation's fresh, off-season fruits and vegetables are imported. Even that morning caffe latte is dependent on coffee being brought in from places like Columbia. In addition, food prices are also very sensitive to rising energy prices. That's because gasoline and diesel fuels and electricity are heavily involved in every aspect of food production and in the delivery to market. While I have not been able to determine an exact number, my guess is that an average family of four has seen their food bill rise by at lease $2200 a year since the value started dropping in 2009.
Also, in a surprising way, domestically grown foods and food products are seeing prices rise as a result of the devalued dollar. That's because, as the dollar weakens, our farm goods and our manufactured goods actually become cheaper; overseas. That may seem like a good thing; and, for the most part, it is. But, it also has an adverse effect by increasing the demand for all those now-cheaper American farm goods that are supply-limited due to the fixed available acreage that can be dedicated to that products production. In effect, as our products get cheaper overseas, we find ourselves competing with the rest of the world for our own farm products. As a result, the extra demand -- given effects of the Law of Supply and Demand --- causes prices to rise domestically. Sometimes, farmers, seeing a more lucrative opportunity for an exporting farm good, will switch crops to a more attractive and profitable exportable product. When this happens, a supply-void occurs for the farm product being abandoned. As a result, that product, too, will see its prices rise as supplies decline.
The bottom line is that the stimulus package, by virtue of a weakened dollar, is actually having the opposite of its intended effect because it, for the most part, hurts the primary driver of the economy: the American consumer. Added to this, consumer spending is being further eroded by all the new taxes and increases on existing taxes that are being applied by individual state, county, and local governments across this country, as those governments try to push back against their rising deficits. But, as in the case of the weakened dollar, raising taxes just causes the economy to decline even further; thus, conversely, causing deficits to increase from an economy that gets even weaker.
I believe that the adverse effects of the stimulus spending (and taxes) can be clearly seen in the chart (below) which shows that our economic activity declined as more and more stimulus money (and taxes) is applied:
Prior to the application of any stimulus funds, the economy was actually on the mend as noted by this chart of Gross Domestic Spending:
Visually, there is an obvious change in our economy's direction as the stimulus money rolls out. The chart above clearly shows how the economy was recovering and, if left alone without stimulus funds, it would probably be doing fine right now. Instead, we are on the verge of going negative; once again.
I just think the economy would have been better served by reducing the amount of Federal spending; not increasing it. In that way, import prices would have actually fallen because the dollar would have strengthened. This, then, would have promoted increased consumer activity and that would have resulted in renewed hiring instead of the increased unemployment we have now. While it is a fact that exporting corporations might have been hurt by strengthening the dollar -- making their products more expensive in the world marketplace -- that fact could have been easily mitigated by reducing the corporate tax rate. Furthermore, Congress could have helped stimulate corporate business activity by passing legislation that would have allowed multinational companies to return profits back to the U.S. without any penalty of Federal taxation. Right now, those profits would not only be taxed in the foreign country in which they were earned, but also by the U.S government; should any of those profits be returned to this country. As a result, much of those funds are used to help the economies of the countries of origin and not the United States.
John Maynard Keynes, certainly the pure consciousness of Keynesian economic theory, correctly assumed and stated that the total aggregate demand (spending) in any economy is a direct result of the spending activity by (1) the public sector (state, local, and federal governments) and (2) the private sector (consumers and business). Further, he theorized that "if" private sector demand fell during an economic downturn, the economy could be righted, again, by simply increasing the amount of spending by the public sector; and, thus, offsetting any loss of demand in the private sector. In theory, it seems so elegantly simple and logical. Thus, we have the basis of "stimulative" spending that almost every Democrat believes to be the key to good recession-beating economics.
But, what Keynes (and the Democrats) totally missed the boat on, is the fact that all that stimulative spending would severely devalue our currency. In fact, in the last 2-1/2 years, the the U.S. dollar has lost more of its value against a market-basket of other key currencies than it had in the 15 years prior to Obama taking office. And, in an economy, like ours, which is so dependent on consumer spending and with a consumer who is so dependent on imported goods, this is pure economic poison.
In our economy, the consumer reigns king; normally representing about 70% of our total economic activity. The remaining 30% is comprised of a combination of public sector and private business spending. So, if, in any way, you hamper the consumer's ability to spend money by diverting a bigger chunk of their paycheck to either higher or new taxes or through higher prices, the economy would be doomed to falter; a fact that we are now seeing after having spent trillions to supposedly "stimulate" the economy.
The reality is that the consumer's paycheck has been under assault by the continuing devaluation of the dollar; which, in turn, has driven import prices higher and higher. In fact, in the last Import Price Report, the "average" of all import prices rose 13.6% -- year over year -- while the American paycheck has remained fairly stagnant. As a result of this inflation, the American consumer has seen their gasoline expenses double under Obama's watch; with the "average" 2-car family now paying about $2000 more per year. (Please note: The doubling of gasoline prices is only partly driven by the dollar's loss in value. The rest of the price inflation is due to the speculation that future demand could outstrip supply; eventually making world oil prices skyrocket. The demand side of this speculation is also being driven by the increasing need for oil by some rapidly emerging economies such as China and India. In addition, the instability in the Middle East could result in supply shortages. Also, there are foreseen supply limitations in this country due to Obama's anti-drilling policies; especially since America, with only 5% of the world's population, uses 25% of world's entire oil supplies.)
On top of higher oil prices, the consumer has seen their average food bill rise by almost 30% since 2009. That's because much our nation's food bill is for imported products. For example, 70% of our seafood comes in from other countries. Most all of the nation's fresh, off-season fruits and vegetables are imported. Even that morning caffe latte is dependent on coffee being brought in from places like Columbia. In addition, food prices are also very sensitive to rising energy prices. That's because gasoline and diesel fuels and electricity are heavily involved in every aspect of food production and in the delivery to market. While I have not been able to determine an exact number, my guess is that an average family of four has seen their food bill rise by at lease $2200 a year since the value started dropping in 2009.
Also, in a surprising way, domestically grown foods and food products are seeing prices rise as a result of the devalued dollar. That's because, as the dollar weakens, our farm goods and our manufactured goods actually become cheaper; overseas. That may seem like a good thing; and, for the most part, it is. But, it also has an adverse effect by increasing the demand for all those now-cheaper American farm goods that are supply-limited due to the fixed available acreage that can be dedicated to that products production. In effect, as our products get cheaper overseas, we find ourselves competing with the rest of the world for our own farm products. As a result, the extra demand -- given effects of the Law of Supply and Demand --- causes prices to rise domestically. Sometimes, farmers, seeing a more lucrative opportunity for an exporting farm good, will switch crops to a more attractive and profitable exportable product. When this happens, a supply-void occurs for the farm product being abandoned. As a result, that product, too, will see its prices rise as supplies decline.
The bottom line is that the stimulus package, by virtue of a weakened dollar, is actually having the opposite of its intended effect because it, for the most part, hurts the primary driver of the economy: the American consumer. Added to this, consumer spending is being further eroded by all the new taxes and increases on existing taxes that are being applied by individual state, county, and local governments across this country, as those governments try to push back against their rising deficits. But, as in the case of the weakened dollar, raising taxes just causes the economy to decline even further; thus, conversely, causing deficits to increase from an economy that gets even weaker.
I believe that the adverse effects of the stimulus spending (and taxes) can be clearly seen in the chart (below) which shows that our economic activity declined as more and more stimulus money (and taxes) is applied:
Prior to the application of any stimulus funds, the economy was actually on the mend as noted by this chart of Gross Domestic Spending:
Visually, there is an obvious change in our economy's direction as the stimulus money rolls out. The chart above clearly shows how the economy was recovering and, if left alone without stimulus funds, it would probably be doing fine right now. Instead, we are on the verge of going negative; once again.I just think the economy would have been better served by reducing the amount of Federal spending; not increasing it. In that way, import prices would have actually fallen because the dollar would have strengthened. This, then, would have promoted increased consumer activity and that would have resulted in renewed hiring instead of the increased unemployment we have now. While it is a fact that exporting corporations might have been hurt by strengthening the dollar -- making their products more expensive in the world marketplace -- that fact could have been easily mitigated by reducing the corporate tax rate. Furthermore, Congress could have helped stimulate corporate business activity by passing legislation that would have allowed multinational companies to return profits back to the U.S. without any penalty of Federal taxation. Right now, those profits would not only be taxed in the foreign country in which they were earned, but also by the U.S government; should any of those profits be returned to this country. As a result, much of those funds are used to help the economies of the countries of origin and not the United States.
Monday, June 20, 2011
To Obama: The Bump In Our Economic Road Is Not A Bump And It Was Clearly Predictable
If you listen to Obama and his soon-to-be-leaving chief economics adviser, Austan Goolsbee, the rise in last month's unemployment rate is just a bump in the road in an economy that they believe to be recovering. But, from my perspective -- and based on the facts that I will present -- that "bump" is more than just a bump. Instead, the rise in the unemployment rate was representative of a 2010 slowdown in the entire economy; and, a slowdown that was easily seen coming. All one had to do is simply look at the track of the nation's Gross Domestic Product (GDP) since the 4th quarter of 2009 to know that our economy wasn't firing on all cylinders. What's worse, the rapid recovery that had been previously seen in Obama's first year in office was actually being destroyed throughout 2010 and now, again, in 2011 as more and more stimulus funds were being dished out; creating massive amounts of national debt and a heavily devalued U.S. dollar. As a result of the dollar's fall, there has been rising inflation in both food and energy costs. As a consequence, this inflation was draining the consumer of their discretionary spending money that would otherwise be put to use in non-food/energy purchases and which would effectively fuel our economy back to a healthy recovery. This is a common problem with any Keynesian-style stimulus in an economy that imports far more than it exports and in one that gets 70% of its economic activity from consumer spending. In fact, the spending policies of Obama and the Federal Reserve have resulted in a 21% loss in our dollar's value in less than 2-1/2 years. In all of the 10 years prior to the Obama presidency, the dollar only lost 17% despite the billions being spent on two wars and the billions spent in the post-9/11 beef-up in our nation's security in federal buildings and in the formation of Homeland Security and the TSA.
To support my conclusions, I need only to present two charts:
Chart 1. Real GDP Reporting by Quarter from a negative 6.8% GDP in the 4th Quarter of 2008 to a positive 5% growth in the 4th Quarter of 2009. A Linear Regression Trend Line is overlaid to reflect the "steepness" of that recovery.
As you can clearly see from the trend line on the above chart, the economy was very much on the mend with GDP improving in each quarter of 2009. Also, you should note that there was nothing done by the Obama Administration in the first half of 2009 that would account for this easily seen economic reversal in that same year. After all, the initial stimulus funds didn't start going out the door until August of 2009. Furthermore, much of that stimulus funding wasn't actually applied to the economy until well past that date due to project delays associated with having to rebid many projects as Federal projects (requiring federal work rules and union labor) and due to the lack of either permits from local or state governments or, when applicable, project approval from the EPA. Recently, President Obama, himself, referenced those delays when he uttered these now-infamous words while some members of his Job Council just laughed: “Shovel-ready was not as ... uh ... (as) shovel-ready as we expected.”
Chart 2. Real GDP Reporting by Quarter from the 4th Quarter of 2009 at a 5% growth rate to the 1st Quarter of 2011 were the economy had slowed down to only 1.8% growth. Again, a Linear Regression Trend Line is applied; this time, to reflect the slowdown.
Obviously, the Stimulus didn't work. We actually had better performance in 2009 before any stimulus spending was ever applied. Once again, Keynesian economics has failed to produce the expected results. It failed during the Great Depression under FDR where Europe recovered much faster without Keynesian spending. It failed in the so-called "Lost Decade" (now 2 decades) in Japan where Keynesian-style stimulus was also tried a number of times to kick-start their economy. In fact, I'm not aware of any instance where the demand-side application of Keynesian economics has ever really worked. That's because Keynesians falsely assume that the economy is like some simple windup toy that can be given a few turns on the winding key (through massive government spending) and the economy will, like magic, take off again. But, this fact has never been proven to work. Yet, liberals/progressives just keep trying to make it work; over and over, again, and to no avail. They just can't help themselves. That's because they all believe that John Maynard Keynes had handed them the greatest gift that a liberal or progressive could have ever received: A macro-economic theory that gives them a license to spend, spend, and spend, again, without a care about the debt and the subsequent inflation they are creating!
And, when they are through creating massive deficits, they just want to raise taxes again to fix the mess they created. History saw this ugly fact in 1937 under FDR when taxes were raised and, as a result, the economy took another nose dive after looking like it just might be recovering. Obama has already stated that he wants to tax the millionaires and billionaires who make more than $200,000 for unmarried filers and $250,000 for those married and filing jointly to reduce the massive deficits he has created. If so, I think we'll easily see 1937 all over again.
To support my conclusions, I need only to present two charts:
Chart 1. Real GDP Reporting by Quarter from a negative 6.8% GDP in the 4th Quarter of 2008 to a positive 5% growth in the 4th Quarter of 2009. A Linear Regression Trend Line is overlaid to reflect the "steepness" of that recovery.
As you can clearly see from the trend line on the above chart, the economy was very much on the mend with GDP improving in each quarter of 2009. Also, you should note that there was nothing done by the Obama Administration in the first half of 2009 that would account for this easily seen economic reversal in that same year. After all, the initial stimulus funds didn't start going out the door until August of 2009. Furthermore, much of that stimulus funding wasn't actually applied to the economy until well past that date due to project delays associated with having to rebid many projects as Federal projects (requiring federal work rules and union labor) and due to the lack of either permits from local or state governments or, when applicable, project approval from the EPA. Recently, President Obama, himself, referenced those delays when he uttered these now-infamous words while some members of his Job Council just laughed: “Shovel-ready was not as ... uh ... (as) shovel-ready as we expected.”Chart 2. Real GDP Reporting by Quarter from the 4th Quarter of 2009 at a 5% growth rate to the 1st Quarter of 2011 were the economy had slowed down to only 1.8% growth. Again, a Linear Regression Trend Line is applied; this time, to reflect the slowdown.
Obviously, the Stimulus didn't work. We actually had better performance in 2009 before any stimulus spending was ever applied. Once again, Keynesian economics has failed to produce the expected results. It failed during the Great Depression under FDR where Europe recovered much faster without Keynesian spending. It failed in the so-called "Lost Decade" (now 2 decades) in Japan where Keynesian-style stimulus was also tried a number of times to kick-start their economy. In fact, I'm not aware of any instance where the demand-side application of Keynesian economics has ever really worked. That's because Keynesians falsely assume that the economy is like some simple windup toy that can be given a few turns on the winding key (through massive government spending) and the economy will, like magic, take off again. But, this fact has never been proven to work. Yet, liberals/progressives just keep trying to make it work; over and over, again, and to no avail. They just can't help themselves. That's because they all believe that John Maynard Keynes had handed them the greatest gift that a liberal or progressive could have ever received: A macro-economic theory that gives them a license to spend, spend, and spend, again, without a care about the debt and the subsequent inflation they are creating!
And, when they are through creating massive deficits, they just want to raise taxes again to fix the mess they created. History saw this ugly fact in 1937 under FDR when taxes were raised and, as a result, the economy took another nose dive after looking like it just might be recovering. Obama has already stated that he wants to tax the millionaires and billionaires who make more than $200,000 for unmarried filers and $250,000 for those married and filing jointly to reduce the massive deficits he has created. If so, I think we'll easily see 1937 all over again.
Monday, July 5, 2010
The Big Stimulus Package Lie!
Over and over, you will hear from Democrats that the Stimulus has worked because, before it, we were losing over 700,000 jobs per month. Superficially, this is true.
Simply looking at the Bureau Of Labor and Statistics own tracking chart of the monthly job gains and losses over the last two years, one could easily, and falsely, come to that same conclusion:
First off, the chart clearly shows that job losses peaked in January of 2009 at a level of just under 800,000 additional unemployed. Then, following Obama taking Office and the passage of the Stimulus Package, the losses began to decline; just as the left keeps touting. In fact, by August, the job losses had been slashed by nearly 80% to a level that was a little over 200,000 newly unemployed for that month.
But was the abatement of job losses really due to the Stimulus? Not, hardly!
The left seems to conveniently forget that the first Stimulus moneys didn't even start to going out the door until August of 2009; and, for many government agencies, even later than that (Click here to See a Typical Story: August a Busy Month for DHS Stimulus Spending). Much of the delay in awarding contracts for job creation was due to the slow Washington D.C. bureaucracy wasting months trying to figure out what to do and what the rules would be. The joke at the time was that all those presumably shovel-ready jobs weren't quite ready for prime time. In addition, It took weeks to setup up procedures for the approval and distribution of funding for any projects under the Package. But, by the time the initial projects were finally approved, this nation's job losses had "naturally" slowed on their own as our economy was busily trying to heal itself without any stimulus moneys.
Then, too, in early 2010, the job's picture moved from negative to positive. But, this, too, wasn't due to the Stimulus. Instead, it was primarily due to the hiring of temporary census workers. Now, in this latest report for June -- the first report since the hiring of the census takers was over -- we are again seeing losses, and those losses will only grow larger as the exacerbating effect of the census layoffs takes hold. With that in mind, most economists think that the unemployment rate will again go above 10%.
The lies associated with the Stimulus Package's ability to create jobs "and" the gullibility of the American public to believe those lies is amazing to me. What's worse, we have a group of noted economists in this country who are touting the benefits of the Stimulus but, in doing so, completely ignore the real facts surrounding the actual payouts of stimulus money. This is a simple denial by a group of supposed experts who don't want to admit that their Keynesian/demand-side economic theory is all wet in any practical application. Then, too, their personal politics might be clouding their opinions.
Surely, if the Stimulus Package was truly successful, we'd be basking in job growth and we wouldn't be hearing the excuse that the Stimulus is working "but" it needs to be even bigger. Let's not forget that, originally, long before Obama got into office, his team of economic gurus thought that $120 billion would be adequate to kick start the economy (Click here to See Story: Obama unveils $120 billion stimulus plan). Later, once elected and in office, that number soared to $787 billion. Now, some of those same people who originally thought the $120 billion would be fine, seem to think another trillion dollars is needed to get the economy going again. What, then, after that second trillion dollars doesn't work? $3 trillion? $4 trillion? Just how much of our money are these people willing to piss away to keep justifying a flawed economic theory?
The trouble with lying is that you have to keep lying in order to cover up the truth that you were attempting to hide with the first lie. Generally speaking, numbers don't lie when they're kept in their proper context. However, all too often, people are willing to pluck numbers out of that context and lie about them in order to advance their own personal agendas and/or to cover up or hide their original lie. And, that, my friends, is where Obama and the Democrats are today regarding the impact of the Stimulus Program!
Simply looking at the Bureau Of Labor and Statistics own tracking chart of the monthly job gains and losses over the last two years, one could easily, and falsely, come to that same conclusion:
First off, the chart clearly shows that job losses peaked in January of 2009 at a level of just under 800,000 additional unemployed. Then, following Obama taking Office and the passage of the Stimulus Package, the losses began to decline; just as the left keeps touting. In fact, by August, the job losses had been slashed by nearly 80% to a level that was a little over 200,000 newly unemployed for that month.
But was the abatement of job losses really due to the Stimulus? Not, hardly!
The left seems to conveniently forget that the first Stimulus moneys didn't even start to going out the door until August of 2009; and, for many government agencies, even later than that (Click here to See a Typical Story: August a Busy Month for DHS Stimulus Spending). Much of the delay in awarding contracts for job creation was due to the slow Washington D.C. bureaucracy wasting months trying to figure out what to do and what the rules would be. The joke at the time was that all those presumably shovel-ready jobs weren't quite ready for prime time. In addition, It took weeks to setup up procedures for the approval and distribution of funding for any projects under the Package. But, by the time the initial projects were finally approved, this nation's job losses had "naturally" slowed on their own as our economy was busily trying to heal itself without any stimulus moneys.
Then, too, in early 2010, the job's picture moved from negative to positive. But, this, too, wasn't due to the Stimulus. Instead, it was primarily due to the hiring of temporary census workers. Now, in this latest report for June -- the first report since the hiring of the census takers was over -- we are again seeing losses, and those losses will only grow larger as the exacerbating effect of the census layoffs takes hold. With that in mind, most economists think that the unemployment rate will again go above 10%.
The lies associated with the Stimulus Package's ability to create jobs "and" the gullibility of the American public to believe those lies is amazing to me. What's worse, we have a group of noted economists in this country who are touting the benefits of the Stimulus but, in doing so, completely ignore the real facts surrounding the actual payouts of stimulus money. This is a simple denial by a group of supposed experts who don't want to admit that their Keynesian/demand-side economic theory is all wet in any practical application. Then, too, their personal politics might be clouding their opinions.
Surely, if the Stimulus Package was truly successful, we'd be basking in job growth and we wouldn't be hearing the excuse that the Stimulus is working "but" it needs to be even bigger. Let's not forget that, originally, long before Obama got into office, his team of economic gurus thought that $120 billion would be adequate to kick start the economy (Click here to See Story: Obama unveils $120 billion stimulus plan). Later, once elected and in office, that number soared to $787 billion. Now, some of those same people who originally thought the $120 billion would be fine, seem to think another trillion dollars is needed to get the economy going again. What, then, after that second trillion dollars doesn't work? $3 trillion? $4 trillion? Just how much of our money are these people willing to piss away to keep justifying a flawed economic theory?
The trouble with lying is that you have to keep lying in order to cover up the truth that you were attempting to hide with the first lie. Generally speaking, numbers don't lie when they're kept in their proper context. However, all too often, people are willing to pluck numbers out of that context and lie about them in order to advance their own personal agendas and/or to cover up or hide their original lie. And, that, my friends, is where Obama and the Democrats are today regarding the impact of the Stimulus Program!
Saturday, June 12, 2010
The Worst Possible Presidential Cabinet For Our Times
In recent weeks, a lot has been said and written about Obama's ineptness and complete lack of management skills. But, the lack of experience and expertise in addressing the problems that currently face this country go well beyond the President. It goes deep into the cabinet members that he has selected.
Obama has completely surrounded himself with a bunch of cabinet officers who have no management experience. Instead, he has created a cabinet that is completely theoretical and professorial. Worse yet, almost all of these people are anti-capitalists and pro-environmentalists. This, at a time, when we're trying to recover from a recession and when we are now faced with one of the worst environmental disasters that the world has every seen. Most of his appointees have spent their entire lives fighting Wall Street, the banks, big business, and the oil, coal, and gas industries. Yet, these are the industries that they are being asked to work with in their various cabinet positions.
This complete lack of experience and understanding has manifested itself in a variety of ways since Obama took office.
First, we have the failed stimulus package because it was too pro-government, too socialist, too anti-business, and completely ignored the vital elements that would actually help drive this economy and create jobs.
Then, take, for example, John Morton, the Assistant Secretary who is in charge of ICE (Immigration and Customs Enforcement). Recently, he told a newspaper interviewer that he had no intention of working with Arizona if illegal immigrants are handed over to any of his agents. So, in effect, he was saying the he would no longer fulfill the responsibilities of his own job because of his ideological attitude towards the newly passed Arizona law on illegal immigration. Obviously this man doesn't take seriously the "Enforcement" responsibilities that are clearly spelled out and included in the very title of the agency that he manages. After all, it isn't the Immigration and Customs "Non-Enforcement" agency!
The same, too, is true of the massive BP oil spill. There is no coordination among cabinet members and no centralized control from Obama. For example, one agency has directed BP to use dispersants to break up the oil. Days later, another agency, the EPA, says no to dispersants. Then, for whatever reason, the EPA suddenly changes saying its ok to use them. Then, because dispersants have been used, OSHA says workers involved in cleanup procedures have to take breaks every 15 minutes to avoid getting ill. All along, Bobby Jindal had requested permission to build sand berms to provide protection from the ravages of the oil, however the EPA and the Army Corp of Engineers ate up valuable time because they were "programmed" (as in non-emergency times) to conduct an environmental impact study before giving approval.
Thursday, there was another perfect example of why these people that Obama has surrounded himself with should have never been allowed to be in charge of anything. Some days after it was finally recognized that the spill could be a serious environmental disaster, Obama convened a panel of experts to review the situation and come up with recommendations for addressing it. This panel actually reported up to Obama through Ken Salazar; his Secretary of the Interior. Following a review, the panel wrote up their recommendations in a report. But, unbeknownst to the panel, Ken Salazaar, at the direction of the White House (?), wrote into the report, a non-scientific and politically motivated opinion that all new and unfinished offshore drilling should be stopped; and, Obama acted on it. Now, we find out that the panel would have never made such a recommendation because to stop the drilling and idle these platforms could literally be dangerous (Click here to See Story: Experts Say White House 'Misrepresented' Views to Justify Drilling Moratorium). At the very least, thousands of rig workers and support personnel are now without jobs because of Salazar's personal recommendation. Additionally, those rigs, if idled too long, will be towed elsewhere in the world. They contain some highly sensitive technologies that were developed by the United States and, as a result, could result in the loss of any competitive edge that these afford in deep water drilling.
The Salazar (maybe Carole Browner) stunt shows what can happen when you have an agency headed up by an individual who has had an axe to grind with an industry that he/she is responsible for overseeing. This kind of mindset shows why Obama had never met with or even talked to BP's CEO prior to next week's hurriedly scheduled meeting that only resulted out of public outrage.
Watching this mess unfold, one can't help but get the feeling that we have given the keys to this country, to an immature President and a group of children. As a result, I think that history will record this administration's cabinet as being the worst possible to meet the challenges of our time.
Obama has completely surrounded himself with a bunch of cabinet officers who have no management experience. Instead, he has created a cabinet that is completely theoretical and professorial. Worse yet, almost all of these people are anti-capitalists and pro-environmentalists. This, at a time, when we're trying to recover from a recession and when we are now faced with one of the worst environmental disasters that the world has every seen. Most of his appointees have spent their entire lives fighting Wall Street, the banks, big business, and the oil, coal, and gas industries. Yet, these are the industries that they are being asked to work with in their various cabinet positions.
This complete lack of experience and understanding has manifested itself in a variety of ways since Obama took office.
First, we have the failed stimulus package because it was too pro-government, too socialist, too anti-business, and completely ignored the vital elements that would actually help drive this economy and create jobs.
Then, take, for example, John Morton, the Assistant Secretary who is in charge of ICE (Immigration and Customs Enforcement). Recently, he told a newspaper interviewer that he had no intention of working with Arizona if illegal immigrants are handed over to any of his agents. So, in effect, he was saying the he would no longer fulfill the responsibilities of his own job because of his ideological attitude towards the newly passed Arizona law on illegal immigration. Obviously this man doesn't take seriously the "Enforcement" responsibilities that are clearly spelled out and included in the very title of the agency that he manages. After all, it isn't the Immigration and Customs "Non-Enforcement" agency!
The same, too, is true of the massive BP oil spill. There is no coordination among cabinet members and no centralized control from Obama. For example, one agency has directed BP to use dispersants to break up the oil. Days later, another agency, the EPA, says no to dispersants. Then, for whatever reason, the EPA suddenly changes saying its ok to use them. Then, because dispersants have been used, OSHA says workers involved in cleanup procedures have to take breaks every 15 minutes to avoid getting ill. All along, Bobby Jindal had requested permission to build sand berms to provide protection from the ravages of the oil, however the EPA and the Army Corp of Engineers ate up valuable time because they were "programmed" (as in non-emergency times) to conduct an environmental impact study before giving approval.
Thursday, there was another perfect example of why these people that Obama has surrounded himself with should have never been allowed to be in charge of anything. Some days after it was finally recognized that the spill could be a serious environmental disaster, Obama convened a panel of experts to review the situation and come up with recommendations for addressing it. This panel actually reported up to Obama through Ken Salazar; his Secretary of the Interior. Following a review, the panel wrote up their recommendations in a report. But, unbeknownst to the panel, Ken Salazaar, at the direction of the White House (?), wrote into the report, a non-scientific and politically motivated opinion that all new and unfinished offshore drilling should be stopped; and, Obama acted on it. Now, we find out that the panel would have never made such a recommendation because to stop the drilling and idle these platforms could literally be dangerous (Click here to See Story: Experts Say White House 'Misrepresented' Views to Justify Drilling Moratorium). At the very least, thousands of rig workers and support personnel are now without jobs because of Salazar's personal recommendation. Additionally, those rigs, if idled too long, will be towed elsewhere in the world. They contain some highly sensitive technologies that were developed by the United States and, as a result, could result in the loss of any competitive edge that these afford in deep water drilling.
The Salazar (maybe Carole Browner) stunt shows what can happen when you have an agency headed up by an individual who has had an axe to grind with an industry that he/she is responsible for overseeing. This kind of mindset shows why Obama had never met with or even talked to BP's CEO prior to next week's hurriedly scheduled meeting that only resulted out of public outrage.
Watching this mess unfold, one can't help but get the feeling that we have given the keys to this country, to an immature President and a group of children. As a result, I think that history will record this administration's cabinet as being the worst possible to meet the challenges of our time.
Friday, June 4, 2010
Only 20,000 Real Jobs Added To The Economy In May
The May Unemployment Report is out and the numbers are astoundingly dismal. Like I predicted in yesterday's blog, the bulk of the jobs created in May were for temporary Census worker positions. In fact, of the 431,000 jobs created, 411,000 were Census workers; leaving the net increase to be about 20,000. Further, previously reported numbers for March and April, were lowered with a loss of an extra 22,000 jobs. Therefore, in reality, the 20,000 jobs created in May were more than offset by the 22,000 additionally lost in the prior two months (Click here to See Story: Jobs Growth Is Disappointing Due to Weak Private Sector).
Once again, the economists were shocked. They had predicted a growth of 500,000 to 575,000 jobs for the month. Economist and Presidential cheerleader at Moody's, Mark Zandi, had actually predicted 575,000 jobs in May (Click here to See Story: Census hiring to spike job figures in May). For reference, Zandi is one of the economic idiots who wholeheartedly backed the failed Obama/Democrat stimulus package. But, if Zandi and the rest of the economists would simply Google the word "layoff", they'd understand that the employment situation in real life is job losses and not job creation. That's why I've been so negative about the economy for months now.
From a political standpoint, this poor jobs' number will cause the Democrats -- literally in panic for their very own jobs in the Fall elections -- to push for another stimulus package. However, I think they've already proven they haven't a got a clue how to create or even save a single job in America.
Additionally, the Census jobs' number might be phony. The worker tally in the May report might just be a faked number through an intentional process of hiring and rehiring people a number of times to inflate the Census headcount. This charge was made yesterday by a whistle blower who has been rehired and trained by the Census Bureau a total of 5 times:
I read this morning that Obama touted the hiring of all those new Census workers (Click here to See Story: Obama: Economy 'getting stronger by the day'). What most liberals, like Obama, don't seem to understand is that you need to create at least 18 private sector jobs in order to have enough income tax revenue to cover the cost of hiring "one" new, Federal government worker. That's because 1/2 of those newly-created private sector jobs won't pay any taxes; leaving the total burden of paying for any new government position to the other half. The reason being that most government workers get paid more and get more health and retirement benefits than equivalent jobs in the private sector. And for our state governments, the government to private sector job ratio is even higher. This is why countries like Greece and states like California are in such deep trouble. Throughout this recession, Obama and Democrats have been creating more and more government jobs while protecting state government jobs like teachers, police, and fireman. At the same time the number of jobs in the private sector has kept shrinking. That, my friends, is a complete recipe for disaster and easily raises the potential for a double-dip recession in the coming year.
Once again, the economists were shocked. They had predicted a growth of 500,000 to 575,000 jobs for the month. Economist and Presidential cheerleader at Moody's, Mark Zandi, had actually predicted 575,000 jobs in May (Click here to See Story: Census hiring to spike job figures in May). For reference, Zandi is one of the economic idiots who wholeheartedly backed the failed Obama/Democrat stimulus package. But, if Zandi and the rest of the economists would simply Google the word "layoff", they'd understand that the employment situation in real life is job losses and not job creation. That's why I've been so negative about the economy for months now.
From a political standpoint, this poor jobs' number will cause the Democrats -- literally in panic for their very own jobs in the Fall elections -- to push for another stimulus package. However, I think they've already proven they haven't a got a clue how to create or even save a single job in America.
Additionally, the Census jobs' number might be phony. The worker tally in the May report might just be a faked number through an intentional process of hiring and rehiring people a number of times to inflate the Census headcount. This charge was made yesterday by a whistle blower who has been rehired and trained by the Census Bureau a total of 5 times:
I read this morning that Obama touted the hiring of all those new Census workers (Click here to See Story: Obama: Economy 'getting stronger by the day'). What most liberals, like Obama, don't seem to understand is that you need to create at least 18 private sector jobs in order to have enough income tax revenue to cover the cost of hiring "one" new, Federal government worker. That's because 1/2 of those newly-created private sector jobs won't pay any taxes; leaving the total burden of paying for any new government position to the other half. The reason being that most government workers get paid more and get more health and retirement benefits than equivalent jobs in the private sector. And for our state governments, the government to private sector job ratio is even higher. This is why countries like Greece and states like California are in such deep trouble. Throughout this recession, Obama and Democrats have been creating more and more government jobs while protecting state government jobs like teachers, police, and fireman. At the same time the number of jobs in the private sector has kept shrinking. That, my friends, is a complete recipe for disaster and easily raises the potential for a double-dip recession in the coming year.
Thursday, May 6, 2010
Is There A Greek Tragedy In Our Future?
Greece is a highly socialist and quasi-capitalist country that is trying to operate within a capitalist environment. One-third of their workforce works for the government. The balance works to literally support all those government workers. That's because government workers are non-contributors to the economics of the country. In reality, they are leeches. And, like too many leeches attached to any body, the body will finally die for the lack of blood.
The blood letting really stems from the fact the unions are so strong in Greece. A union worker, working for the government, can retire at age 53 with full benefits and at their highest pay for life. This is unsustainable. Because of this and other factors, the Greek debt is now more than 90% of their total Gross Domestic Product (GDP). Please understand that this is not a percentage of "gross domestic profit" that would be capable of generating tax revenues for the country. Instead it is total value of the products that Greece produces and, from which, the actual taxable income is less than 10%. This, then, makes it almost impossible to pay back any debt without years and years of reduced spending and increased taxes. Making things worse, the Greek debt is so high, that the rating agency, Standard and Poors, has had to downgrade Greece to junk status for their bonds. This in effect has caused the amount of interest that Greeks pay on their debt to skyrocket; making it even harder for them to avoid defaulting on all their loans.
The European Central Bank (ECB) and the International Monetary Fund (IMF) have come up with the equivalent of $146 billion to bailout Greece. But, the money has strings attached. Those strings are primarily aimed at labor with mandated reductions in government worker pay and benefits; including retirement pay. Thus, the riots in the streets.
The ultimate survival of Greece lies in the hands all the unions. But, as you can see, the riots tell a story of a labor element within Greece that is not willing to budge on pay and benefits. So, it is my opinion, as well as others, that Greece will fail to recover. Ultimately, the European Union will have to shed Greece out of its need for self-preservation. Greece is a gangrenous appendage that could take down the rest of the European economic union, and as such, it must be amputated.
As a result of this excision, Greece will default on all of its debt obligations. No one will want to trade with that country without extreme guarantees or by forced higher prices for everything that the Greeks need to survive. That means that Greece will plunge itself into a deep economic (and, probably mental) depression with double-digit inflation. In effect, it will become a mini version of what this country looked like in the 1930's.
Is this outcome in our future? It might just be. In states like California, New Jersey, and Michigan and in so many others, the amount of unionized government workers with similar pay and benefits guarantees is very high. And, as we have already seen in California and New Jersey, the unions refuse to budge on any more cuts in jobs, pay, or benefits; while, in the non-government sector, people are sustaining heavy unemployment levels. To make things worse, this President and this Democratic Congress have poured billions into state governments vis a vis the Stimulus Package to keep them from making the needed, hard decision to cut back on any unionized government workers; including teachers, police, and firemen. But, the spending continues and their deficits keep increasing and a Greece-like situation is already sitting at their doorsteps; with our Federal government being the only recourse to keep these states alive. But, that too, could accelerate the country's path to higher and higher debt in less time than was previously thought.
I am concerned that we have the same problem ahead of us that the European Union is having with Greece and other countries like Portugal, Spain, and Ireland. Except, in our case, it is the very socialist nanny-states like California who will become our equivalent of the current Greek Tragedy. And, let's not forget, our national debt is expected to exceed Greece's 90+ percent of GDP by the year 2020 and become as high as 125% of GDP by 2030. So, if we don't heed Greece as the Skull & Crossbones warning in our path to increasing social programs, it won't just be California but this whole country that collapses.
The blood letting really stems from the fact the unions are so strong in Greece. A union worker, working for the government, can retire at age 53 with full benefits and at their highest pay for life. This is unsustainable. Because of this and other factors, the Greek debt is now more than 90% of their total Gross Domestic Product (GDP). Please understand that this is not a percentage of "gross domestic profit" that would be capable of generating tax revenues for the country. Instead it is total value of the products that Greece produces and, from which, the actual taxable income is less than 10%. This, then, makes it almost impossible to pay back any debt without years and years of reduced spending and increased taxes. Making things worse, the Greek debt is so high, that the rating agency, Standard and Poors, has had to downgrade Greece to junk status for their bonds. This in effect has caused the amount of interest that Greeks pay on their debt to skyrocket; making it even harder for them to avoid defaulting on all their loans.
The European Central Bank (ECB) and the International Monetary Fund (IMF) have come up with the equivalent of $146 billion to bailout Greece. But, the money has strings attached. Those strings are primarily aimed at labor with mandated reductions in government worker pay and benefits; including retirement pay. Thus, the riots in the streets.
The ultimate survival of Greece lies in the hands all the unions. But, as you can see, the riots tell a story of a labor element within Greece that is not willing to budge on pay and benefits. So, it is my opinion, as well as others, that Greece will fail to recover. Ultimately, the European Union will have to shed Greece out of its need for self-preservation. Greece is a gangrenous appendage that could take down the rest of the European economic union, and as such, it must be amputated.
As a result of this excision, Greece will default on all of its debt obligations. No one will want to trade with that country without extreme guarantees or by forced higher prices for everything that the Greeks need to survive. That means that Greece will plunge itself into a deep economic (and, probably mental) depression with double-digit inflation. In effect, it will become a mini version of what this country looked like in the 1930's.
Is this outcome in our future? It might just be. In states like California, New Jersey, and Michigan and in so many others, the amount of unionized government workers with similar pay and benefits guarantees is very high. And, as we have already seen in California and New Jersey, the unions refuse to budge on any more cuts in jobs, pay, or benefits; while, in the non-government sector, people are sustaining heavy unemployment levels. To make things worse, this President and this Democratic Congress have poured billions into state governments vis a vis the Stimulus Package to keep them from making the needed, hard decision to cut back on any unionized government workers; including teachers, police, and firemen. But, the spending continues and their deficits keep increasing and a Greece-like situation is already sitting at their doorsteps; with our Federal government being the only recourse to keep these states alive. But, that too, could accelerate the country's path to higher and higher debt in less time than was previously thought.
I am concerned that we have the same problem ahead of us that the European Union is having with Greece and other countries like Portugal, Spain, and Ireland. Except, in our case, it is the very socialist nanny-states like California who will become our equivalent of the current Greek Tragedy. And, let's not forget, our national debt is expected to exceed Greece's 90+ percent of GDP by the year 2020 and become as high as 125% of GDP by 2030. So, if we don't heed Greece as the Skull & Crossbones warning in our path to increasing social programs, it won't just be California but this whole country that collapses.
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