Archive

Posts Tagged ‘Economic Stimulus’

The Quantitative Easing

January 20, 2011 2 comments

From our friends at xtranormal. Definitely one of the best videos I have seen in a long long time.

Watch It

Please post your thoughts or other links on the topic. After you quit laughing of course.

Advertisements

Obama’s Economy Not Working

July 16, 2010 7 comments

It’s the ECONOMY, Stupid!

Barack Obama’s White House has decided to back a Keynesian economic policy of “let’s get big government dollars to spend our way out of this economic crisis.”

Is it working? Absolutely Not.

Has Obama effectively lined his supporter’s pocket’s in the process? Absolutely.

When US Automaker General Motors was in financial trouble, the US Government effectively took GM over. As the US Gov’t reworked the company, it ditched the banks and creditors of GM, and transferred huge amounts of the “New GM Ownership” to Unions and other Obama supporters. It’s almost like when a new King started in England, and he decided to take enormous tracts of land from people he didn’t like, and bequeath enormous wealth to his new supporters. Basically it’s robbery, but legalized!

In the Federal Reserve minutes from their meeting last month, there were some very important words hidden near the back, in the small print: The Fed doesn’t think that the US Economy will recover for 5 to 6 years.

In other words, far from winding down the Great Recession and talking about the new Economic Gains that Obama has been touting this week, this shows that in the global economic crisis, the US is now becoming the problem.

The new Fed Reserve minutes show a complete change in policy, demonstrating how fast the recovery has lost steam. International Monetary Research says that the US authorities have “botched the policy response.” Oh really?

  • New home sales at 300,000 in May, lowest since records began in 1963
  • Outbound exports from Long Beach (major SoCal shipping port) dropped from 139,000 in May to 116,000 in June.
  • Philadelphia’s new manufacturing orders index plunged to -4.3 in early July

So what will Barack Obama and his team of Economic Advisers do? According to Gabriel Stein of Lombard Street Research, they are “throwing in the towel.” Washington wants to start another round of government spending again — raising the debt level from $2.4 trillion, to a whopping $5 trillion.

Sound HOPEful and CHANGEful to you? Me either.

We need to get government deficit spending to stop before the dollar becomes totally worthless. Out of all the dollars ever created in the 234 years of USA’s history, over half has been created in the last 3 years.

We need to get the US Government out of the business of spending money on stimulus programs and bailouts. We have spent billions of dollars, and it hasn’t brought the economy out of the recession. Now we want to do it again?

The US Government needs to stop the bleeding. Reduce entitlement payments immediately. Reduce the size of the behemoth that has become our Federal Government, creating Czars of This and Czars of That, each with mandatory staff and spending budgets. We need to get out of the business of saving failing banks and businesses. Let the AIG’s of the world fail. Stop the bailout spending spree. And reduce the US Federal Income Tax.

The more money is in the hands of the individual consumers, the better. What, we won’t be able to afford all of the government programs? It’s okay. The individual cities and communities will pick up the slack, feeding the poor, helping them back onto their feet.

It’s what Americans do.

Scenario for the President

March 29, 2010 2 comments
“QUICK!  Mr. President, bad policies for the past 20 years have dug us into a hole….and the brightest minds we have tell us we’re within 48 hours of the financial system freezing.  Make a decision:
1) Inject liquidity AS A LOAN to the system (Like we did for S&L crisis which turned a profit for the US Gov’t.  This was how the TARP plan was sold to the Administration – but it has clearly been hijacked since by Congress, Geithner, others.).
…or….
2)  Stand there and we’ll take a guess about just how far the market can crash.  But we’re being told it is as bad/worse than 1929.
QUICK…”

If you are standing on principles, the speed of the decision doesn’t matter as much.

I think the scenario sort-of makes one point: Government gets involved with “A” in mind (in this case the S&L loans or Financial Bailout.) First blush is positive. But as with most if not all government involvement, it gets hijacked, and turned into something not intended. Go back (choose the years) and we will see the examples. Income tax; FDR’s programs; Welfare; The Great Society programs; etc. etc. I don’t know them all.

My opinion? Given the above scenario, the President should choose 2, and let Lehman Brothers collapse. And he should have pressured the Fed to not get involved in helping bail them out. (Or maybe he didn’t know cuz it was secretive, but he could have found out, and fired the guy for doing it.) Also, allowing the Fed to facilitate JP Morgan Chase’s purchase of Bear Stearns for pennies on the dollar. Yes these banks should have failed. There’s no way that a banking system performing the kinds of stunts that they have been performing should have been bailed out with taxpayers money. You think laissez faire is adversely affected by uncertainty (absence of full information)? Absolutely it is. What about Keynesianism and other interventionist policies? Are they immune to the ails of uncertainty? Absolutely not. And the market forces will correct for any uncertainty a LOT quicker than a poor government policy that has become LAW and may take generations to overcome. We’re still paying for the ones from 60-70 years ago. In fact, the government injects it’s own uncertainty into the system, but more on that below.

We appear to have changed topics from Bush vs. the Constitution, and maybe for good reason after listening to Paul, Jeff and Deon’s points. One of the best conservative minds — possibly ever — was Edmund Burke. I bring him into the Constitution discussion because he advocated gradual change, but at the same time not destroying the pillars of freedom with our experimental Acts. I’m equating his mentioning of Experimental Acts of his time to the Patriot Acts of our time. Yes we have to change with the times as Burke says (e.g. we have to deal with terrorists), but according to him, it’s not worth destroying the pillars of liberty that we have built our society on in order to accomplish that change. If we do so, we are destroying the foundation upon which our nation is built.

In terms of the banking issues, absolutely let Lehman Brothers and Bear Stearns fail. Don’t let the Fed get involved at all. The banks made bad business decisions. There is tons of evidence of corruption. Why inject loans into that? What is the economic principle that that decision is based on? In my opinion the decision was based on fear. Once again, we have a government trying — through their macro economic policies — to right the ship. “We can fix it. We can control the market forces.” And once again, the evidence is that they can’t. It might have stabilized some things for the time being, but anyone watching KNOWS with their gut that this glut of spending is going to have to be paid for at some point, and it’s going to be worse when it’s time to pay the piper. The Fear Move didn’t do anything but delay a market correction. Check out Karl Denninger if you’d like to read more.

AND, there are even some studies, like this one by the Stanford economist John Taylor, which purports to show (pdf) that the credit markets actually did not react all that badly to Lehman going under and that the crisis was really the product of market uncertainty about the effects of government action. So, the “market” reacted not all that badly to a market force of letting a bank go under, but the real market crisis started after the government decided to get involved to try to “control” the natural market forces? Add to this the fact that the bond market says it’s safer to lend to Warren Buffet than to Barak Obama, and I think we see what Keynesian fiscal policies bring to the table in terms of uncertainty.

See, now this makes sense to me.

We’re sick of the secrecy, Barry

February 26, 2010 6 comments

Check out this exchange between Senator John McCain and President Barak Obama, aka Barry Soetoro. (If you don’t know about Obama’s former name, please google it and learn a few things.)

ABC News (http://abcnews.go.com/GMA/HealthCare/john-mccain-health-care-summit-obama-democrats-start/story?id=9952202&page=2) says there was a tense exchange between McCain and Obama when the longtime senator criticized Obama’s healthcare bill and his promise to televise healthcare discussions on C-SPAN, one which he did not keep.

“Let me just make this point, John, because we’re not campaigning anymore. The election’s over,” the president countered.

McCain today said he brought up the subject because of the closed-door meetings.
“The reason why I brought it up yesterday was not because of the campaign, but because the American people don’t like these unsavory deals,” he said.

What does Obama mean, “we’re not campaigning anymore”? As in, he can make any promises he wants to on the campaign trail, but once the “election is over”, he doesn’t have to follow through? I know we think this is “normal” for politicians, but would Obama really do this? I just want to point out yet another swig of kool-aid that many Americans were all too happy to drink in the name of Hope & Change, that has turned out to be a lie.

I’m not in love with McCain and his voting record, but he is spot on this time: “the American people don’t like these unsavory deals.” We are sick of the secret deals benefitting Nancy Pelosi, Harry Reid, ACORN, Treasury Secretary Timothy Geithner, and everyone else playing politics on Obama’s team secretly hidden in the healthcare and bail-out bills. The American people have said they don’t want the current Senate healthcare bill, yet Obama is moving ahead with it and all the hidden benefits and political favors because he doesn’t have the votes to get it through the Senate again. If this passes, it will be a multi-Trillion dollar mistake we will be paying for many years to come. One small. enormous example: It has 6 years of benefits, but will take 10 years of increased taxes to pay off. Sound like good business sense to you? That’s Bernie Madoff accounting! What happens 6 years from now…and it’s time to pay for the next round of benefits? We won’t have any money because we’ll still be paying off the first set — for 4 more years!

Obama has filed over 90 lawsuits keeping personal information about his past hidden from the public. Why? When you and I go for a job, we expect people to check on our references and educational claims. There are more background checks going on for College Football coaches who have their resumes scrutinized than the President of the USA. When coaches’ claims are false, the institutions have no problem dismissing the coach straightaway. Yet we cannot even see Obama’s records from Columbia University. They are sealed by yet another lawsuit.

Investigative reporters have been trying to uncover anything about Obama’s time at Columbia. Many claim that he never attended the University. I don’t know either way – but my point is this: Why the secrecy? Obama has told people that he will be the most open President in US history, and yet he spent over $1million to hide his hospital birth records. Was this done to give his team more time to concoct their story and produce a forgery? Or was he really born a US citizen? I have no clue, but – if there is nothing to hide – why the millions to hide the record? If he attended Columbia, why hide the university records behind another court order?

We know less about this man than any President in US history. Most of what we know has been written by Obama himself, which should be a clue about something. The problems happen when his stories about himself are refuted. Like the one that Michelle Obama refuted. About his birth story.

Mrs. Obama has said that Obama’s mother was “very young and very single” when she had Barak, who she named “Barry.” http://www.wnd.com/index.php?fa=PAGE.view&pageId=114259 which doesn’t jive with what Barry claims.

(Does this mean that I can call him a bastard if I want to? If Michelle is right, technically, it would be accurate.)

But back to the point: We the People are sick of the secrecy. Open the healthcare discussions to real debate. Give the legislators time to read and understand the ramifications of $1.5 Trillion worth of legislation. And then open your records Barry. Let us know who we have as President of the United States of America.

Bailout Money and Spanakopita

February 24, 2010 10 comments

There’s a new term in America’s lexicon: “bailout money”. A friend said to me last weekend, “Let’s not go to that restaurant, that place takes ‘bailout money’.” As in expensive. Very. One of my favorite dishes, spanakopita, usually isn’t very expensive. It usually doesn’t take “bailout money” to buy spanakopita. Usually.

Speaking of the $787bln bailout, what happened to (y)our bailout money? There is evidence now that some of the companies that received our bailout money – Goldman Sachs, French company Societe Generale, etc. – were associated with the mortgage bankers that offered the high risk loans in the first place. Mortgage companies associated with these investment banks were offering loans to people without even verifying employment and income claims. In other words, they knew these loans were very high risk. And when they tanked, they received our money to get bailed out of the very problem they created.

Here’s how it worked. In a bit of financial hocus-pocus, Goldman Sachs, SocGen, etc. rolled up these high risk loans into something that people could invest in called CDOs. They were basically bonds, which have a guaranteed return. The return to the investors was supposed to be provided by the interest payments that people make on their mortgages. And it would have worked if people kept paying their mortgages on time. Before it blew up, however, there was a bit more hocus pocus: Goldman Sachs, et al. knew these CDO investments were super high risk. So they bought insurance policies. AIG decided to insure the debt of these high risk home loans with something called credit default swaps. Bad move. Once the people – the same people that never should have been offered these home mortgages in the first place – started defaulting on their payments, Goldman’s and SocGen’s CDOs were not making their expected returns. So, they called their insurance company AIG for a payout. There were so many bad CDO bonds (based on high risk loans) made by these and other banks, and insured by AIG, that when it came time to pay the claims, AIG went bankrupt…..well almost. Instead, the US of A decided to step in and bail them out. Just to make sure this is clear: Goldman Sachs and friends – unethically, or at the very least with conflicting interests – made the bad loans to begin with, which created the problem. Next, they purchased insurance without disclosing the true nature of the assets they were insuring. Then they were bailed out of their poor business decisions with our money.

What did AIG do with the money? First, they were forced to pay out their insurance claims *at full value* to Goldman Sachs, Societe Generale, etc. although everyone already knew by this point that the mortgages they had insured were worthless. The Federal Reserve Bank of New York ordered http://www.bloomberg.com/apps/news?pid=20601087&sid=ax3yON_uNe7I AIG to pay them back at full value even though AIG was in the process of negotiating the payout at a large discount. The Federal Reserve of NY then hid this fact for more than a year from Congress and other oversight committees even though AIG wanted to publish the information. Conflicting interests, anyone? A year later, Goldman Sachs is paying out $23 billion in bonuses to it’s employees. Yes, that’s with a “b” for billion. That’s enough money to send 460,000 people to Harvard or buy health insurance for 1.7 million families. I wonder what the NY Fed Chair is getting. Oh, and in case you aren’t following, that’s your money they are paying out as bonuses to their employees.
http://rawstory.com/2009/2009/10/goldman-sachs-2009-bonuses-to-double-2008s-23-billion-could-buy-115-million-iphones-or-send-460000-to-harvard/

AIG received more than $182bln of our money. And this is only one example. The list goes on. A lot has been – and will be – said about the lying, cheating and cover-up in this bail-out scandal. I don’t have the space or inclination to delve further right now. Maybe later. I hope people like Darrell Issa www.darrellissa.com get to the bottom of this.

But my question is: why the slimy and secret cover-up from the Administration? Why cover up what happened to our $787bln if there’s nothing to hide Mr. Treasury Secretary Geithner? What happened to the transparency that was promised on the campaign trail? Where are the healthcare debates on C-Span that were promised on the stump? Where are all my friends that drank the kook-aid and insisted Obama would be different? Instead, we have his particular brand of Chicago politics at the national level. As US News & World Report claims, the stimulus program and healthcare are loaded with hidden political pork: Pelosi and Co. receiving $54M in earmarks to relocate a wine train in California; Reid and Co. arranging an earmark for a Los Angeles-to-Vegas high-speed train. The healthcare bill, specifically, was another fiasco of political corruption, with millions of dollars allocated to buy votes, such as those of Louisiana Sen. Mary Landrieu and Nebraska Sen. Ben Nelson. Anger with that process and the bill it produced helped fuel the stunning election of Republican Scott Brown in Massachusetts. http://www.usnews.com/articles/opinion/mzuckerman/2010/01/21/mort-zuckerman-the-incredible-deflation-of-barack-obama.html?PageNr=1

Is this the Hope and Change we were promised?

But back to AIG and the spanakopita. Due to the bailout, the USA (that’s you and me) owns 80% of AIG. Now it’s coming out that – according to a German newspaper – AIG sold the same kind of credit default swap insurance policies on Greece’s national debt. http://www.nakedcapitalism.com/2010/02/german-paper-says-aig-may-have-sold-cds-on-greece.html Greece is currently floundering in debt and is in danger of going bankrupt. The EU has already imposed austerity measures on Greece to ensure that they are able to pay back their mounting debts and keep their status in the European Union. Suddenly it appears that it is in the USA’s – I mean AIG’s – I mean the USA’s interest to keep Greece from defaulting. How? Well, remember that European vacation/home in Greece you have fantasized about? Well, it may very well be that the USA will be purchasing a whole bunch of mortgages & homes in Greece — with your money — but there’s a catch: the Greeks get to keep living in them, not you.

Speaking of Greece, Aristotle made a point in 350BC that still rings true today. Legislators and politicians that get paid a lot of money and can stay in office for a long time are a danger to the Society. Not only do they receive the honor of the State, they will soon start taking the people’s money. And this makes the people doubly angry. Not only do the politicians have the honor, but they make themselves rich off the work of the people. Aristotle also saw how it gets resolved: The people will not stand for this for very long before they revolt and change the government. It was true back in 350BC and it’s true today. We the People will not stand for this type of slimy highway robbery bailout, secretive behind-closed-doors healthcare legislation process, and cover-up much longer. This should not be taken lightly, but it might just be the hope and change we are looking for in America.