Obamanomics: Trillions for Nothing

Saturday, September 15, AD 2012

 

 

Another fine, and timely, econ 101 video from the Center for Freedom and Prosperity.  When future historians write the history of the Obama administration, and what a sad farce that tale will consist of, I think they will stand aghast at all the borrowed money poured out by the Federal government with virtually zero positive impact on the economy.  In regard to Keynsian economics, the Obama administration is proof that one of Karl Marx’s maxims has proven to be a largely accurate observation on human affairs:  Hegel remarks somewhere that all facts and personages of great importance in world history occur, as it were, twice. He forgot to add: the first time as tragedy, the second as farce.

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6 Responses to Obamanomics: Trillions for Nothing

  • Keynes v Hayek – What a brilliant piece of parody.
    Couldn’t help smiling about the Security guard at the door doubling as a proctocologist 🙂

    Listening to what Friedman said, its a pity Keynes didn’t live a little longer. In any event, people take what they want from those who propound theories and become famous, and use those pieces of the theory to suit their own ends, whether or not they fully understand them.
    Greetings, Mr. Obama.

  • Don the Kiwi:

    Greetings from occupied America.

    Re: proctology. I did my post-doctoral field work reading “vox nova” blog. Thank Heaven I don’t need to do it any longer.

    I read that late in his career, Keynes attended a conference of economics egg-heads. He said that he was the only one present that wasn’t a “Keynesian.”

    Keynes would have had Obama and progressives pegged: “How anybody, or any system, so dull and illogical could have exercised such influence over so many . . . ” will be a subject for future historians, or space aliens exploring the ruins of mankind.

  • There is one way federal spending can have stimulative effect on the economy and that is increasing defense spending. Before I go any further. I must issue the big fat disclaimer that I work for the DoD (Navy exactly) as a civlian employee.

    But the defense department is the only federal agency that creates meaningful private sector jobs. I mean the military doesn’t build its own tanks, planes or ships. Or even guns bullets, vests, or even uniforms. And we need a much bigger military, especially a bigger blue water Navy. Our enemies are on the move militarily, China is growing its blue water Navy while we are cutting ours to the bone. Russia is on the move and of course Iran is nuking up. Serving this need would provide a much needed boost to our economy, especially in areas where there is a concentration of military bases and where there are manufactuers of military equipment. There is actually some historical precedent for this: it was the WWII ramp up of military production that brought us out of the Depression, not FDR’s New Deal, which actually prolonged the Depression.

    Now, there would be some side effects to this. One, would be waste. After 28 years in the DoD employ, if you include my eight years of active duty in the Navy, I know a thing or two about waste in the defense department. After all, it is part of the Federal Government. The other is an increase of federal employees in the DoD. But the net benefit will be well worth it.

    Unfortunately. this is something even Paul Ryan doesn’t seem to understand. For him to talk about the need to cut defense spending in the same breath as entitlement reform during last year’s debt ceiling debate demonstrates this. The prospective 500 billion cut viz sequestration (thank you John Boehner and Barack Obama) in addition to the already draconian Obama cuts will not only have a chilling effect on security as well as our economy.

  • My father, who was a veteran of WWII and wisely frugal, often tried to explain ‘that is increasing defense spending’ because the ‘defense department is the only federal agency that creates meaningful private sector jobs.’ Honest work for honest pay. He was adamant that the business of government was to both improve the country’s travel ways for private economic pursuits and protect the country from waste and danger – and not its business to interfere in private lives. Everyone would have a chance to work and live because ‘money can’t grow on trees’.

    It is insane to give and lend bundles of nothing or borrow what can’t be repaid. Someone someday will not get what is coming to him and grow angry. The financial industry has jobs that are based on nothing real because there is no accounting for a government of broken or no budgets, insider personal gain/stealing, dishonesty, and so on. No concrete evidence or no policing. Look at some of the career politicians and their lifestyles – do they also need that paycheck ? If so much of our leaders’ time is spent campaigning for donations, then it proves they know the value of a dollar when it’s for personal gain.

    I agree that defense and interior are a place for job growth with substance.
    A minor example learned while working as auditor (bean counter) for an aerospace contractor:
    a widow wanted to stay home to raise her children so she fed and educated them by sewing plain bags for machined parts as an independent contractor. That enterprise amazed me.

    Old sound buildings are being closed just because the location and cost of rewiring and updating the facilities costs money. Instead, places with no character are built that cannot withstand time. Mall open and then close, while shops disappear.
    Trees planted along highways are being strangled and killed by vines that could easily be managed by workers. Schools – unspeakable waste. On it goes everywhere that has a skyrocketing cost.

    I can almost hear him as to the 2012 wreckage. His generation had kids who rebelled, took a left turn, are making laws and demanding to be tolerated – but can’t manage to do the same.

  • “Eat when you’re hungry.
    Drink when you’re dry.
    If the sky don’t fall in,
    You’ll live ’til you die.”

    From Zerohedge (warning: pervasive bearish sentiment) blog:

    “Marc Faber, . . . , remains very bullish on gold. In another excellent Bloomberg interview, Faber said that ‘the trend for gold prices will be steady but the trend for the dollar and other currencies will be down. So in other words gold in dollar terms will trend higher.’ ‘How high it will go, you will have to call Mr Bernanke and at the Fed there are other people who actually make Mr Bernanke look like a hawk and so they are going to print money.’ Faber is on record as to the importance of owning physical gold and he again warned about the importance of owning gold but not storing it in the U.S. ‘You ought to own some gold but don’t store it in the U.S., the Fed will take it away from you one day,’ Faber astutely noted. He said that Bernanke is a money printer and this could lead to massive inflation and the Dow Jones at 20,000, 50,000 or 10 million. Faber cheerily predicted that the ‘the Federal Reserve’s monetary policy will destroy the world’ and ‘eventually we will have a systemic crisis and everything will collapse.’”

    N.B. the prophesied confiscations. It would not be limited to gold. Your IRA and 401k are in their sights.

    Pray for the best. Prepare for the worst.

    Cheers!

2 Responses to Klavan on Obamanomics

Keynesian Twilight Zone

Monday, September 19, AD 2011

There are few things sadder than a one trick pony whose trick fails to work.  Obama, with a faith whose fervency cannot be doubted, believes with all his soul that vast government spending is the mechanism to lift the country out of this never ending bad slump.  That his policies have failed to do anything other than to increase our massive public debt, sways him not at all.  For a true ideologue, and that is what Obama clearly is, a collision between reality and  beliefs merely means that reality is wrong since the beliefs are beyond question.  Thus in economic policy this administration is one endless Groundhog Day where the nation is stuck in a loop of high unemployment, minimal economic growth and ever expanding public debt.

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15 Responses to Keynesian Twilight Zone

  • He makes Carter look good.

    Thomas B. Reed, “Every time he opens his mouth he subtracts from the sum of human knowledge.”

    “The Emperor Has No Clothes.”

    I know! I’m a racist.

  • That his policies have failed to do anything other than to increase our massive public debt,

    The last assessment I saw calculated the multiplier of the stimulus spending at 0.6, not at 0.0. (IIRC, there were economists who offered just that estimate going in). Arguably it was not worth the candle but not nothing.

  • At least one study Art asserts that the stimulus cost a net 595,000 jobs:

    http://canadafreepress.com/index.php/article/36584

    Much of the stimulus of course merely allowed the states to use federal money to pay for highway projects instead of state funds. Estimates of the cost of jobs “created or saved” by the stimulus range from 287,000 per job from detractors to a “mere” 100,000 per job by supporters. Blue smoke and mirrors is too kind a phrase for 787 billion dollars sent down a rat hole. Obama would have had more of an economic impact if he had just gone from town to town throwing $20,000 checks made payable to cash at random from the presidential limousine.

  • In fairness to the President, he seems to be channeling the Democratic Party’s cognoscenti in matters economic. The new line (propagated by Joseph Stiglitz) is that the stimulus was not large enough, we have a plentiful supply of useful public works, and that we are fools not to borrow at minimal interest rates (as if those rates were set in stone). Thomas Sowell posed the question some time back as to whether Dr. Stiglitz et al could state their propositions regarding stimulus in a manner that was potentially falsifiable. Morning’s Minion, take it away.

  • Arg, Matey!

    It likely isn’t Master Keynes’ fault.

    Nick Gillespie, “Whalen isn’t simply dumping on Keynesianism, he’s bent on pointing out that even its latter-day adherents are straying far from their master’s theory. And in this, he’s surely correct. As Allen Meltzer has argued, Keynes was against the very sort of large structural deficits that characterize contemporary federal budgets and policy, believing instead that deficits should be ‘temporary and self-liquidating.’ And Keynes believed that any sort of counter-cyclical spending by government should be directed toward increasing private investment, not simply spending current and future tax dollars on public works projects. Or, to put it another way: If the federal government had a strong track record of responsible spending, it would mean one thing if it went into hock for a short period of time to goose the economy (again, whether this would work is open to question). It means something totally different when a government that spent all of the 21st century piling on debt and new, long-term entitlement programs responds to an economic downturn first by creating yet another gargantuan entitlement (Obamacare) and taking on even more debt in the here-and-now.”

    Shiver me timbers! I doubt Master Keynes would call class war/demagoguery fiscal policy.

  • “There are few things sadder than a one trick pony whose trick fails to work. Obama, with a faith whose fervency cannot be doubted, believes with all his soul that vast government spending is the mechanism to lift the country out of this never ending bad slump.”

    Why do you hate Catholic Social Teaching?
    Love,
    Morning’s Minion

  • Catholic social teaching doesn’t say we should abdicate to Caesar what is our own God-given duty as Christians to do. It is NOT Caesar’s responsibility to feed the hungry, give drink to the thirsty, clothe the naked, care for the sick, etc. That’s our duty as the adopted children of the Great King, and every time we abdicate our responsibility and evade our accountability to keep the command that God gave us to love our neighbor as ourselves, then we sacrifice on the altar of political expediency our citizenship in the Kingdom of Heaven and the very power of God in our own lives for the temporal “graces” of a secular national socialist democracy and its Obamanation of Desolation. The lesson of Judas Iscariot is clear when he suggested that the proceeds from the oil with which Mary annointed Jesus’ feet could have been given to the poor. Judas said that not because he cared about the poor but because he was a thief. That’s exactly what Scripture says in John 12. Government is no different. And by the way, we shouldn’t be seeking the bread that perishes as that crowd did in John 6, but the eternal Bread of Life. Jesus didn’t feed that crowd a second time. He noted exactly what they wanted: another free handout. TANSTAAFL – There Aint No Such Thing As A Free Lunch – not then and not now.

  • The following is a Walter Williams column from 1998. Diverting money from the free productive private economy into the wasteful and destructive government command economy is disastrous.

    New study shows economic growth is inversely proportional to government spending

    20 MAY 98 – James Gwartney and Randall Holcombe, economics professors at Florida State University, and Robert Lawson, an economics professor at Capital University in Columbus, Ohio, have just completed a report for Congress’ Joint Economic Committee. The title is The Size and Function of Government and Economic Growth.

    The report points out, as just about every American knows, the expansion of the U.S. economy has now moved into its eighth year. It’s been 15 years since a major recession. That’s the good news.

    Despite this performance, the real rate of economic growth during the 1990s is less than half that achieved in the 1960s. In fact, our average rate of growth has fallen during each of the last three decades.

    Greater economic stability, but less rapid growth, has also been the pattern of other developed nations. Gwartney, Holcombe and Lawson, using data from 60 nations, produce convincing evidence that there’s a strong negative relationship between the size of government, increases in government expenditures and economic growth.

    In the case of our country, the authors conclude: If government expenditures, as a percentage of Gross Domestic Product (GDP), had remained at their 1960 level, the 1996 GDP would have been 9.16 trillion instead of 7.64 trillion. That translates into $23,440 for the average family of four.

    The authors also compared developed countries with the smallest increases in the size of government between 1960 and 1996 to those with the largest increases and looked at their growth rates. In 1960, government spending as a percentage of GDP in the United States, Iceland, Ireland, United Kingdom and New Zealand averaged 28.9 percent. The growth rate for those countries in 1960 averaged 4.3 percent. In 1996, government spending in those countries rose, averaging 39.1 percent, and their growth rates fell, averaging 2.7 percent.

    Developed nations with the largest increases in government size between 1960 and 1996 were Portugal, Spain, Greece, Finland, Sweden and Denmark. In 1960, those governments spent an average of 28.1 percent of their GDP, and their growth rates averaged 6.4 percent. In 1996, government spending averaged 54.5 percent of GDP, and their growth rates fell to an average of 1.2 percent. From these statistical estimates, Gwartney, Holcombe and Lawson show that for each 10 percent increase in government spending, there’s a 1 percent decrease in the rate of growth.

    The authors are not anarchists; they acknowledge an important critical role for government, namely that of providing the legal and physical infrastructure for the operation of the market and a limited set of public goods to provide a framework conducive to economic growth.

    As governments move beyond these core functions, however, they adversely affect economic growth through the disincentive effects of taxation, diminishing returns as government takes on activities for which it is ill-suited and government interference with the wealth-creation process. Governments aren’t as effective as markets in adjusting to changing circumstances and discovering innovative production methods.

    The Gwartney, Holcombe and Lawson study understates government size because it doesn’t take into account its regulatory burden. But even with this minor shortcoming, will the study’s persuasive argument and evidence lead Congress to reduce government size? I doubt it.

    The reason is that it is impossible for any of us to know or appreciate how much wealthier we would have been had government expenditures remained where they were when John Kennedy was president. In other words, how can a family of four know that it is $23,440 poorer because of Washington and its state and local governments?

  • “Why do you hate Catholic Social Teaching?”

    Do you equate CST with the progressive, Demorat class war? If so, I love more prosperity but love less economic destitution and financial repression.

    It’s not yer mother’s CST, minion matey.

  • It is time we all just understood the stark fact that Obama doesn’t know any better. No, he’s not very bright, doesn’t spend time thinking things over and wouldn’t know an idea if one fell on him. We elected the “Un-named Democrat” who always does so well in polling. We put upon Obama whatever wonderful things we wished to find and we then voted for our dream…but the dream was carried by a man who’s only claim to being worthy is to have two wonderful daughters…which is no small thing, but hardly something that fits a man for the Presidency.

  • Keynes was against the very sort of large structural deficits that characterize contemporary federal budgets and policy, believing instead that deficits should be ‘temporary and self-liquidating.’ And Keynes believed that any sort of counter-cyclical spending by government should be directed toward increasing private investment, not simply spending current and future tax dollars on public works projects.

    The Roosevelt Administration’s largest deficit prior to the War amounted to about 4% of gross domestic product. The president and Congress turned in two balanced budgets during the period running from 1933 to 1941.

  • Friends, Americans and undocumented immigrants, I come to bury Obama not to libel him. The failures men fall into . . .

  • So ten years ago we passed tax cuts lowering the federal tax take to the lowest it has been since before WWII, the result was the worst 10 years of employment growth in the same time frame. The response to the fact that the current President’s policies have not quickly enough repaired the damage of the last President’s policies is to ask for deeper tax cuts. And the Democrats are the one trick ponies.

    To hold true to Keynes’ teachings, President Clinton raised taxes and produced a surplus while during the good times. The president who followed him cut taxes and turned that into a deficit. Tracking from the end of WWII our total debt as a percentage of GDP continually dropped until1981 when we cut taxes on the promise that it would increase revenue. Revenue did not increase until the massive tax increases of the mid 1980’s took effect. Nowhere in historical economic data is there evidence to support tax cutting to produce long term jobs. There is plenty evidence that the government can spend money (even deficit spending) and create infastructure that leads to long term job creation. Two prime examples are the interstate highway system and the internet. This isthe type of spending originally proposed, unfortunately, it was changed to allow it to get through congress.

  • “So ten years ago we passed tax cuts lowering the federal tax take to the lowest it has been since before WWII, the result was the worst 10 years of employment growth in the same time frame. ”

    Get behind me, Satan.

  • Ziggy zoggy!
    Ziggy zoggy!
    Oy! Oy! Oy!

    Look it up. Terrorist attacks 9/11/2001. Recession. Global war on terror. Average unemployment rate during Bush presidency 5.2% (Eurozone average 8.2%). Also, tax reductions were passed to Buffett”s secretary: 50% pay no federal income tax. Stop me!

    Bush’s tax cuts were passed based on the same conservative, private sector growth concepts as another great American President: JFK.

    Employers are not hiring because taxes aren’t high enough . . . Actually, it’s Obamacare.

    You cannot reason with a person that will not agree that 2 + 2 = 4.

We Are Shackled to a Corpse

Wednesday, September 14, AD 2011

Last night Republican Robert Turner won the special Congressional election in New York 9, the congressional seat vacated by Anthony Weiner of Weinergate infamy.  Weiner was a pro-abort.  Turner is pro-life and against gay marriage.  How does a candidate, a 70 year old retired executive with no prior political experience, like this win in an icy blue congressional district held by Democrats since 1923?

Turner won by turning the race into a referendum on Obamanomics, and with this strategy he won resoundingly, 54-46.

This race is going to send shock waves through the Democrat establishment.  Already some Democrat leaders were saying privately what most sentient Americans realize:  due to his lousy stewardship of the economy Obama may well lose next year.  With this election, many Democrat leaders may well change from “may well lose” to “probably will lose”.

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12 Responses to We Are Shackled to a Corpse

  • Drudge has this as its top story headlined: “Revenge of the Jews…” which give Obama a 13% approval rating in that district. Notice ‘The Jews’ terminology, which one poster has accused me of using. As a voting bloc, Jews, for all their reputation as liberals, have a solid conservative streak as evidenced by this election and their positions on social issues such as abortion and homo marriage.

  • Orthodox Jews do Joe, and those are the type of Jews which predominate in that district, which has not prevented them from voting for politically liberal secular Jews, up to now. Obama may not have brought the hope, but he certainly brought the change, just not the change his most ardent backers expected.

  • Something will “come up” and Obama will have to make the hard choice between his “whatever” and running for a second term … I think he will not be running.

  • I pray every day Obama loses the White House, the sooner (e.g., by impeachment) the better, but ejection after the November 2012 election would be satisfactory result.

  • Don’t forget the other special election GOP victory in Nevada-2 by Mark Amodei. Evidently President Obama had to rally the troops last night, and here’s some video:

  • Interesting thing about the district is that, though it’s solidly Democrat, it’s one of the more Republican friendly districts in the city outside of Staten Island. It’s a ridiculously gerrymandered district that snakes across the Orthodox Jewish section in Brooklyn to the middle class neighborhoods like Forest Hills in Queens. These are the areas that supported Rudy Giuliani and which will occasionally cross party lines for Republicans in local elections. Still a big shock, though I fear the seat could be swallowed up due to re-districting as NY is due to lose a Congressional seat in the city.

  • I looked up the district map to see if I ever lived in it. The district border looks like it’s crossing the street whenever it sees a black person. I’m generally a fan of gerrymandering (yes, a fan), but I just found the blatant racial districting amusing.

    How Republican-friendly blue state districts are seems to be highly correlated to the immigrant-to-WASP/black ratio. That kind of turns the popular narrative on its head. Blue state WASPs are the most reliably Democrat. First generation immigrants are socially conservative small business owners who don’t care for handouts. They’re natural constituents for the GOP. The only reason they’re still swing voters leaning Democrat is because of the GOP’s immigration problem.

  • The district was intentionally gerrymandered so that the surrounding districts would be more heavily minority, which means it’s a pretty white bread district itself. In fact it snakes through my old neighborhood (Ridgewood), though the district that my mother is in is actually represented by Nydia Velazquez – and said district is itself ridiculously drawn up.

  • I looked up the district map to see if I ever lived in it. The district border looks like it’s crossing the street whenever it sees a black person. I’m generally a fan of gerrymandering (yes, a fan), but I just found the blatant racial districting amusing.

    You’re on to something, but it’s the exact opposite motivation at work. The Voting Rights Act of 1965 has a mandate to maximize African American representation. That’s why you sometimes see truly odd districts, and have seen some intensive litigation over them. The Shaw v. Reno line of cases (involving the infamous I-95 district in North Carolina) at the Supreme Court has really made district drawing a balance beam act.

    You also get to see some very funny arguments by lawyers as a result, in an attempt to evoke the bizarreness of the district shape. The Shaw case had a lawyer arguing that “if you drove down I-95 with both doors open, you’d kill half the voters in the district.” Bush v. Vera was even better: “these districts were not drawn, they were vomited on a screen door.”

    Ironically enough, the Supreme Court initially punted on challenges to majority-minority cases in a case originating out of a New York district that was heavily Orthodox Jewish in population: the United Jewish Organizations v. Carey case back in 1977. While the Supreme Court ultimately rejected the challenge, the justices were so befuddled by the problem that there was only a plurality in favor of the judgment and a lot of half-concurrences which make the Oracle at Delphi look positively forthright by comparison.

  • My day began with a good laugh, as I saw Debbie Wasserman-Schultz say that this district has always been “difficult” for Democrats. Oh yes, what an uphill battle the donks have had in a district that hasn’t had a GOP rep since the 1920’s.

    I’m becoming a big fan of Debbie, really I am. I hope she is on TV flapping her jaw as much as possible between now and Nov. 2012. She’s almost as entertaining as Biden.

  • Debbie does have a true talent for comedy relief. I suspect that her party will need all the comedy relief they can muster after the election results next year.

  • Last night Republican Robert Turner won the special Congressional election in New York 9, the congressional seat vacated by Anthony Weiner of Weinergate infamy.

    That election victory is more evidence that the public holds Republicans to a higher moral standard than Democrats.

Debt Sun

Wednesday, April 22, AD 2009

 debt-sun

Hattip to Instapundit.  The Heritage Foundation supplied the above graphic which compares Obama budget “cuts” of $100,000,000.00 to the appropriations bill for fiscal 2009 of $410,000,000,000.00, the Bankrupt the Nation Act of 2009, sometimes erronously called the “stimulus” bill, which has a price tag of $787,000,000,000.00 and the estimated bill for fiscal year 2010 of $3,600,000,000,000.00.  How ludicrous is all this?  Ludicrous enough that the Obama supportive Associated Press makes fun of it.  Ludicrous enough that even Paul Krugman is chuckling.

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11 Responses to Debt Sun

  • Is this the equivalent of global warming?

  • Considering that Al Gore helped to create both Phillip, I’d say you are on to something!

  • Perhaps he could cut $100 million by merely not printing that amount!

  • The problem is that a lot of people will fall for this 0bama stunt. This man preys on the stupid better than anyone.

    It’s been a long time since I heard the word matterhorn.

  • Fron the “White Giant” to the “Red Dwarf”

    The end of life as we know it.

    OR

    The Big Bang, and the ever expanding universe. 🙂

  • You’re just upset that you’re looking at winter coming. 😉

  • “Either we turn away from this madness or our ecnomy will eventually hit a wall of governmental debt and the whole house of credit cards will come crashing down.

    I think we’re already getting there. This wretchedly regrettable crisis we’re currently in is merely but one of its manifestations:

    “The root cause of today’s crisis lies not in the housing market but in America’s foreign debt. Over the past four years the U.S. private sector has borrowed an astonishing $3 trillion from the rest of the world. The money, directly and indirectly, came from countries such as China, Germany, Japan, and Saudi Arabia, which ran huge trade surpluses with America. Foreign investors trusted their funds to U.S. financial institutions, which used much of the money for mortgage loans.

    But American families took on a lot more debt than they could comfortably afford. Now no one is sure how much of that towering sum the U.S. is going to pay back — and all the uncertainty is roiling the financial markets.

    SINCE MID-2004, AMERICAN HOUSEHOLDS HAVE TAKEN ON A BIT MORE THAN $3 TRILLION IN MORTGAGE DEBT.”

    SOURCE: Chief Economist Michael Mandel

    — and —

    “Experts say that even when the current credit crunch eases, the nation may finally have maxed out its reliance on borrowed cash. Today’s crisis is a warning sign, they say, that consumers could be facing long-term adjustments in the way they finance their everyday lives.

    ‘I think we’re undergoing a fundamental shift from living on borrowed money to one where living within your means, saving and investing for the future, comes back into vogue,’ said Greg McBride, senior analyst at Bankrate.com. ‘THIS ENTIRE CREDIT CRUNCH IS A WAKEUP CALL TO ANYBODY WHO WAS ATTEMPTING TO BORROW THEIR WAY TO PROSPERITY.’

    AMERICANS ARE MORE RELIANT ON DEBT THEN EVER BEFORE.

    The portion of disposable income that U.S. families devote to debt hit an all-time high in the second half of last year, topping 14 percent, figures from the Federal Reserve show. When other fixed obligations — like car lease payments and homeowner’s insurance — are added in, about one of every five household dollars is now claimed by bills.

    The credit card industry lobbied heavily in 2005 to tighten bankruptcy laws to make it more difficult for consumers to seek court protection and shed responsibility for paying off debt. But in a sign of just how much households have become dependent on borrowing, the average amount of credit card debt discharged in Chapter 7 bankruptcy filings has tripled — to $61,000 per person — from what it was before the law was passed.

    ‘We are going to have to cut back,’ said Dean Baker of the Center for Economic and Policy Research, a Washington, D.C. thinktank. ‘We’ve really been living beyond our means.'”

    SOURCE: http://www.msnbc.msn.com/id/27149408

  • “From the “White Giant” to the “Red Dwarf”

    The end of life as we know it.

    OR

    The Big Bang, and the ever expanding universe.”

    I’d vote for the Big Whimper Don!

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Red Ink

Wednesday, March 25, AD 2009

bush-obamabudget1

A look at the federal budget since 2000, with projections, for what little they are worth, by the White House and the Congressional Budget Office to 2019.  By CBO estimates last week, the budget deficits between now and 2019 would total $9, 300, 000, 000, 000.00.  The entire cost of WW2 for the US in 2008 dollars was 3.6 trillion.  This year the budget deficit will total 13% of our gross domestic product.  This isn’t economic policy, it is lunacy.  These type of deficits are completely unsustainable, and we are running towards national bankruptcy.  It is impossible to borrow these type of funds from abroad.  We will simply create the funds out of thin air.  The long term impact on our children and their children can be easily imagined.  As the Heritage Foundation points out, this is a completely bi-partisan disaster.  Politicians have acted like teen-agers with stolen credit cards for far too long.  However, this will stop.  It will stop either by voters throwing out of office the fiscally irresponsible, or, much more likely in my estimation, the economy will simply hit a brick wall.  This will not, cannot, go on.  How it is stopped is up to us.

Update I:  The President of the EU slams current US economic policy as a road to hell.  I never thought I would live to see the day when a President of the EU would have more economic sense than a President of the US.

UpdateII:  Hattip to Instapundit.  A sign of things to come.  Stocks slide after a lack-lustre sale of T bills and notes: 

“Bond prices fell after the auction of $34 billion in 5-year Treasury notes. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 2.77 percent from 2.71 percent late Tuesday. The yield on the three-month T-bill rose to 0.19 percent from 0.17 percent Tuesday.

Investors gave an unexpectedly cool response to the note sale just a day after a $40 billion auction of 2-year notes suggested strong demand. The government is running up huge deficits in order to fund an array of plans to provide stimulus to the economy and support to the ailing financial system. Any suggestion that demand for U.S. government debt is weakening is a negative for stocks, simply because Wall Street has been relying so heavily on the government’s rescue plans.

The surge of worry over the debt auction wiped out the market’s early optimism in response to durable goods and home sales data.”

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9 Responses to Red Ink

Of Tea and Taxes

Wednesday, March 18, AD 2009

dont-tread-on-me

In politics, as in physics, an action causes a reaction.  With the election of President Obama and strong Democrat majorities in both houses of Congress, the stage is set for a radical increase in the size, power and scope of government to transform the United States into a socialist state, along the lines of the European social welfare states.  The Bankrupt the Nation Act of 2009, erroneously called a stimulus bill, is merely the first step in the process.  The President has already warned of trillion dollar budget deficits as far as the eye can see, and he has the votes for now to carry out his vision.  Can he be stopped?

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7 Responses to Of Tea and Taxes

  • I hope there’s a debate, Donald.

    Vice President Biden during one of the Democratic primary debate said that he was astounded as to how much money is thrown into the election process and how much money people will throw to get a candidate elected, but we cannot raise the funds — either through government or private means — for issues like alternative energy, health care, education, and the like.

    I’d gladly pay more in taxes if the cause is worthy. I can’t speak for the rest of the country.

    Again, I’m glad you clearly outlined the need for a debate. I’ve never in my life agreed with Republicans so much, but just as I begin to reflect on it: am I really a Democrat? The answer is a resounding ‘yes.’ I agree with the GOP in the ‘no,’ but that’s what the Republican Party seems to be wrestling with right now. They cannot, in my view, be successful in the long-term if they run only as opposing Obama’s “out there” policies and then sweep Congress and maybe the presidency in 2012 with no plan of what to do. So, on the “no,” I’m with you and on the specifics of what to do, maybe we can begin the debate there.

    Good post.

  • Thank you Eric. The debate is really long overdue and I can understand why. It will be very painful to come to grips with fundamental questions of what government should do and how we will pay for it. However throughout most of our history we did just that and we must do so again.

  • Well, Donald, I think Gov. Quinn has just handed us Illinois residents an excellent warm-up exercise (in the form of his tax increase/budget proposal) for that national debate.

    In fact he explicitly asked the question you raise: if you insist on no budget cuts, tell us how you plan to pay for what you want; if you insist there be no new taxes, tell us what you plan to cut and why. I personally don’t agree with everything suggested in this budget, but the debate is, after all, just getting started.

    I presume similar debates will take place in other states, which also face severe budget shortfalls, but can’t print money or borrow from foreign nations to cover them up.

    I also believe that our current economic and fiscal woes, both at the state and national level, could perhaps be seen as our payback, penance, karma or whatever for our past electoral sins — voting for candidates who told us only what we wanted to hear, ignoring obvious corruption and incompetence, and adhering to party loyalty over principle.

  • Well said Elaine. In Illinois we are at a later stage in the debate than the nation is. We had the Build Illinois drunken sailor binge under convicted felon George Ryan (R.), or as many of us fondly deemed it, Bilk Illinois. Bloggo (D.), in addition to being a crook, was a lousy manager of the fiscal house of the State. Now the State is facing bankruptcy and so the best idea our government can come up with is a massive increase in taxes, sans the needed debate, thus far, on cutting spending. Crunch time is coming however, and this debate is going to take place in Illinois, in spite of the fact that most politicians would prefer to eat ground glass than to squarely address this fiscal nightmare.

  • It has come to this. The Porkapalooza Bill has forced a long overdue national debate on Gummint And Its Size. Reaches in all kinds of places- as in Philly Mayor Michael Nutter proposing temporary nudge nudge wink wink increase in property taxes to keep the swimming pools and neighborhood libraries open. Ignoring that the city’s population but a fraction of that two generations ago. Oh well no police or fire protection affected. But may come down to these points. What is necessary and what constitutes the category of Don’t Take Away My Teddy Bear. Happy to see our Washington Elite looking absolutely buffoonish in their efforts to demonize AIG. Spring is such a lovely time for protests. Had been the province of the sensitive and concerned over War In Iraq, Women’s Right to Choose, other stuff. This time, a different crowd with different beefs. Let the games begin.

  • Eric,

    They cannot, in my view, be successful in the long-term if they run only as opposing Obama’s “out there” policies and then sweep Congress and maybe the presidency in 2012 with no plan of what to do.

    While you won’t hear it on MSNBC or broadcast news, or the NY Times, the GOP has a health care plan, an energy plan, and an alternate stimulus plan, and an alternate budget. It’s unfortunate that the mainstream media doesn’t give the current opposition the play that the Democrats had under Bush.

    The Republicans certainly must find a way to get their message out that there is a BETTER way than selling our future, which is precisely what the Democrat tax and spend policies will do… slower economic growth and rising inflation for many years to come, with the tax the rich limitations slowly or suddenly dropping from 200k to 25k… We’ll be in the doldrums unless this is halted and reversed VERY soon.

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Obamanomics, or How Low Will the Dow Go!

Wednesday, March 4, AD 2009

bear-market

As Glenn Reynolds at Instapundit notes here, since the passage of the Bankrupt the Nation Act of 2009, erroneously referred to as the Stimulus Bill,  the Dow has lost over 1400 points.  Since the election of President Obama, the Dow has lost over 2700 points as detailed here.  However, in the midst of the greatest Bear market in a generation, our President has financial advice for us:  Buy stocks!

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19 Responses to Obamanomics, or How Low Will the Dow Go!

  • Very well authored and understood!

    I favor President Obama’s Stimulus plan, as you can see by my recent posting:

    http://ourcountryspresident.wordpress.com/2009/03/04/the-voice-of-wall-street-speaks/

    And sure hope it works for all Americans, everywhere!

  • Out of curiosity, I wonder how many of our readers do plan on buying stocks in the near future?

    I’ve been thinking about it. (Of course, I’ve also been thinking about stockpiling gold, so my investment strategies are a bit diversified).

  • Much pain is being felt by people in their late 50’s who could have done well had they opted out of the 401 stocks into the safety of principal feature of such plans….about two years ago. Now they have lost half of their life’s retirement savings. Had leveraged shorting etf’s been available to 401 people, they would still be hurting but would be better off than they are. IRA people (retirement accounts in IRA plans…not left over Irish radicals) can use leveraged short ETF’s. The 401 options need a lot of tweaking after this in the bylaws. They fix inexperienced people into the long direction which is chaos when a down market comes. Do a hundred year chart at big charts using .spx for the broader market and you will see that people whose stocks went down during the depression, took 25 years to come up to their peak again. Hopefully this time being different will be much quicker than that. But the carelessly bandied about canard of the past decades: “the market always comes back”…. executed some older folk who stayed long…..trusting in that….. as the market went down.

  • Hmm, not that I’m fan of the Prez and his stimulus plan which is obscenely laden with pork and counterproductive spending, but I think his promoted investment in the stock market is a good thing – or could/should be. The market is sensitive to confidence and fear. You want to tank the market for sure, have the nations executive and financial leaders say that the market is in horrible shape and recommend everyone bail out of it. On the flip side, try to instill some confidence and (genuine) hope, that we will work our way out of this, but part of that is to behave in a manner that looks to the future.

    I’m not saying that I think we’ve hit the bottom – I have no idea. And I’m not saying that if everyone started investing more heavily in the market it still won’t tank and bust the nation further. I just know that if the only way to help the market to recover is to build some confidence. I’ll give the Prez credit on that front because the M.O. of his party is usually to peddle fear which always makes things worse.

  • Tom,

    what exactly do you like about the stimulus bill that is mostly void of the key stimulating measures that are universally agreed to? tax cuts, and infrastructure projects?

    Community organizing is not infrastructure, steelworkers will not retool to become social workers and pre-school teachers.

  • I did go ahead and crank up my 401k contributions a few percent back in January, on the theory that the stock market is low enough that it’s a “bargain” to buy more now. I also started buying my company’s stock again for the first time in a couple years — it’s bottomed out at roughly the cost of lunch per share and I think the company’s essentially sound so I figure it’ll go up eventually.

    However, being 30, I have a lot of years for the buying-at-the-low behavior to pay off. I don’t know if I’d be doing it if I expected to need that money within the next five years.

  • I’m with Rick as far as not knowing how far the market will drop, but I also am of the same mind as Black Adder is on Gold. I haven’t made any decisions at all, but I’m eyeballing high risk mutuals the closer the stock market approaches 4-5000.

  • Sold almost all I had in August so avoided big losses (took some losses.) Have all my contributions on hold as of this month. Will watch how the market will go in next couple and decide on restarting contributions. Think 5000 is not unreasonable. Will wait until sure bottom is hit before considering reinvesting. No need to buy now if stocks are still overpriced.

    My big concern is long-term. The stimulus plan may actually improve the economy somewhat in the short-term (next year.) My concern is for the long-term which the plan may impair. Thus my doubt in investing for the long-term.

  • I had been doing some volatility trading with indexes, but (fortunately) got out last week. Not sure if I’ll go back in anytime soon. I think stepping up the 401k contributions is probably a good idea long term, though.

  • “I think stepping up the 401k contributions is probably a good idea long term, though.”

    The problem is probably. It is probably good if you’re thirty. If your in your fifties I’m not so sure.

  • John Henry,

    It is in my humble opinion that what you’re doing is exactly what I do to during times like these. I increase my contributions when the market slides because when the market does rebound you’ll have many more shares in your 401k that will drastically increase your bottom line.

  • There is a lesson here for all the 30 year olds and 40 year olds vis a vis their 401’s…when they age into retirement. As one gets into their 50’s, one must be way cautious and seeking more safety.
    The other more adventurous lesson is to put something in IRA’s alongside a 401 which would have helped you even now….because IRA’s permit short ETF’s meaning ETF’s (bought exactly like stocks) that do the opposite of the market. The market goes down;they go up.

    When a dark period comes with systemic warnings on the whole economic system being given weekly on the nightly business news, the IRA pensioner can load up on vehicles like QID which does 2 times the inverse of the Nasdaq. As the market tanks, QID goes up and depending on the principal, it can prevent one’s whole total from doing anything negative or positive if one watches it as one can with IRA’s on the internet at places like Fidelity. Since it does 2 times the inverse, it takes less money in the IRA to counterbalance the 401 regular stocks but it needs watching because the short vehicles lose their advertised leverage when things are very bad so that a 2X’s can become something less than that in efficacy.

    It is not perfectly easy…otherwise no hedge funds would be down since they employ this technique…but many of them are down half what the market is down and hedge funds have the added burden in dealing with so much stock, that they are not as nimble as an IRA person in this area. There are short only hedge funds that are up 90% in this time period.

    Laws for 401’s should make something like the Prudent Bear Fund available: it is a Mutual Fund that is always short….goes up when the market goes down.

  • I guess this all presupposes what the Obama plan will do to the economy long-term. By this I mean for the next ten to twenty years. Will the plan make the American economy (and the stock market) grow much more slowly? If so, will we not see the historical 8% returns on stock investments (as I understand them to have been.) Or will they be significantly less? If significantly less, what would be a better investment especially if one is still not a youngster and a 4% return on an investment may not yield much in ten or fifteen years.

  • As one gets into their 50’s, one must be way cautious and seeking more safety.

    It’s a very good point. I turn 30 later this year, and so I can accept a higher level of risk. It may be a very bad idea to step up 401k contributions into the market if you plan to retire in the next five years. Even for younger people, the Japanese stock market is a pretty stark reminder that markets don’t always continue upward.

    http://www.tradingeconomics.com/Economics/Stock-Market.aspx?Symbol=JPY

  • Bill,

    I completely agree. I probably should have put a caveat to my earlier posting concerning investing in high risk mutuals, but while you’re still in your 30s and 40s.

  • In the 80’s Japan was the economic miracle. John Henry’s link above shows how things can change. The general rule for the American Stock Market has been to hang in there. In the long-term things will turn out just fine.

    However, is Obama’s economics making the future of the American Stock Market look more like the current Japanese one?

  • Obama’s anti-capitalist rhetoric has driven the market further down. The economic slowdown may have started with President Bush, but Obama is pushing this economic slowdown into a disasterous depression.

  • The question for long-term investment then is will this (possible) depression transition into sluggish, European style growth? If so, will the conventional wisdom about long-term investing hold? Or if one is already in their 40’s it might not be advantageous to invest but if one is in their 20’s and young 30’s perhaps so?

  • Another thought on “how low can it go.” They’re talking 4000! Do I hear 3?

    http://www.marketwatch.com/video/asset/dow-could-hit-4000/1973951D-B6AB-41F1-B91D-06032C304AFB

Obama Finds His 9/11

Friday, February 27, AD 2009

Critics of the Bush Administration often complained (especially during his first term) that Bush used 9/11 as a justification for nearly everything he did. Given that the country was widely supportive of the administration in the years right after the attack, this was (the complaint went) a way for Bush to do things he’d wanted to do anyway under the guise of responding to an emergency. While I think this complaint was overstated, there is an element of truth to it. For instance, I don’t think there’s a whole lot of question that many within the administration (rightly or wrongly) wanted to get rid of the Baathist regime in Iraq even prior to taking office.

In this respect, Obama seems to have found his 9/11, his excuse for doing all the things he and his party want to do while assuring everyone it would be a Very Bad Idea it not Downright Unpatriotic for them to disagree. Obama’s 9/11 is the recession, or as the media seems to have named it “The Worst Economic Downturn Since the Great Depression”. (This is, to my mind, a rather unwieldy name. Perhaps we could just call it the “Big Recession” or the “Little Depression”?)

Thus, in his presentation of a new budget which is heavy on partisan measures (big tax increases on “the rich” and preparation for major changes in social service structure and spending) and racks up the largest deficit (as percentage of GDP) since 1942, Obama assured people that this was necessary in order to restore the economy:

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20 Responses to Obama Finds His 9/11

  • Interesting. Bush used 9/11 to spread imperialism; lead a series of unjust military actions that resulted in 100s of 1000s of unnecessary deaths; torture, suspend habeas corpus etc,

    So far, Obama has used the recession to extend healthcare for children, invest in our infrastructure and attempt to put a modicum of order to the shambles of an economy that Bush and his Republican majority bestowed on us.

  • Bush used 9/11 to spread imperialism;

    Really? It’s certainly one of the more interesting imperialistic regimes of all times, one in which the supposed imperial power has not exactly displayed a penchant for flexing its will on the supposed colonial powers.

    lead a series of unjust military actions that resulted in 100s of 1000s of unnecessary deaths;

    A series? There have been exactly two military actions taken, the first of which was largely supported. So we have exactly one supposedly unjust military action that resulted in the creation of the only Arabic democracy in the world.

    suspend habeas corpus

    This allegation would be true were it the United States circa 1861, but last I check habeas corpus remained well in tact unless you were a non-citizen who was considered a terrorist.

    Obama has used the recession to extend healthcare for children, invest in our infrastructure and attempt to put a modicum of order to the shambles of an economy that Bush and his Republican majority bestowed on us.

    Yeah, keep drinking that kool-aid Mark. So far Obama has used the “crisis” to drastically increase the size and reach of the federal government. The “infrastructure” developments largely extend to helping union construction workers here in DC in order to make the federal government buildings look prettier. But hey, billions of dollars for ACORN and trains between Disney and Las Vegas will surely restore the economy.

    BTW, you do realize that the Democrats have been in the majority for well over two years?

  • Paul

    It is well documented, even by Paul Wolfowitz himself, that our primary reason for going into Iraq was oil.
    —-

    I am sorry I do not minimize the deaths of Middle Easterners in the manner that you apparently do.

    When localized governments,human service organizations, and the private sector fail to deliver what the common good demands, CST allows– even calls for– actions by government on the higher-level.

    Stop reading your Rand, Acton, or Limbaugh propaganda.

  • It is well documented, even by Paul Wolfowitz himself, that our primary reason for going into Iraq was oil.

    That claim doesn’t pass the sniff test. If we were going there to take their oil, isn’t it odd that we haven’t taken it?

    I am sorry I do not minimize the deaths of Middle Easterners in the manner that you apparently do.

    And yet you wish so very much that the Iraqi people were still being crushed under the Baathist’s boots, rather than running their own country democratically? I’m afraid I don’t despise them so much.

    However, I do think that the attempt to use 9/11 as a shortcut to gain support for the Iraq War (a worthy cause in its own right) has resulted in a great deal of trouble in the long run. The Iraq War should have been sold on its own merits.

    And I strongly suspect that as people wake up to realize that Obama is mortgaging (if not destroying) the US economy in order to achieve his dream of a euro-style technocratic state, they will similarly turn on him for having sold them a bill of goods under false pretenses.

    When localized governments,human service organizations, and the private sector fail to deliver what the common good demands, CST allows– even calls for– actions by government on the higher-level.

    Which is exactly why Obama should not be frittering away money on silly pet projects and political games in the middle of a recession.

  • Darwin,

    Nice post. There’s nothing like a crisis to justify a power grab by politicians.

    And to Obama’s claim that this is not a normal turn of the business cycle, I’d suggest checking out some of the nice charts that the Minnesota Fed has put out comparing this recession to previous postwar recessions. It’s not obvious that this is the worst (or even the 3rd or 4th worst) in the past half century or so.

  • It is well documented, even by Paul Wolfowitz himself, that our primary reason for going into Iraq was oil.

    If it is well documented, then you can easily provide the documentation. I await with baited breath.

    I am sorry I do not minimize the deaths of Middle Easterners in the manner that you apparently do.

    What Darwin said in response is basically what I would have said.

    Stop reading your Rand, Acton, or Limbaugh propaganda.

    Never read Rand or Acton, but some people named Madison, Adams, and Hamilton who all predicted that this would come to pass if we destroyed the breaks on plebiscatary democracy.

  • that this would come to pass if we destroyed the breaks on plebiscatary democracy”

    O O O O…
    It’s so elegant,
    So intellligent.

    And try Plato, Aristotle, Aquinas and Maratain.

  • O O O O…
    It’s so elegant,
    So intellligent.

    And try Plato, Aristotle, Aquinas and Maratain.

    Mark, seriously, if you have something intelligent to contribute, do so.

    For instance, you speak of Plato. Clearly you know nothing of Plato if you believe that he was a proponent of mass democracy. In The Politics he described the degeneration of regimes from timocracy, to oligarchy, to democracy, to tyranny. The democratic form of government is actually castigated by Plato. Aristotle also lists democracy among the bad forms of government – “polity” was the good form of rule by the masses, one in which the people governed indirectly.

    The Framers established a Republic, one which was designed to limit the harm done by mass democracy. The Framers feared that demagogues could use crises to devise hasty legislation that would be designed to do good, but instead would do more harm. As Madison said in Federalist 63:

    “As the cool and deliberate sense of the community ought, in all governments, and actually will, in all free governments, ultimately prevail over the views of its rulers; so there are particular moments in public affairs when the people, stimulated by some irregular passion, or some illicit advantage, or misled by the artful misrepresentations of interested men, may call for measures which they themselves will afterwards be the most ready to lament and condemn. In these critical moments, how salutary will be the interference of some temperate and respectable body of citizens, in order to check the misguided career, and to suspend the blow meditated by the people against themselves, until reason, justice, and truth can regain their authority over the public mind? What bitter anguish would not the people of Athens have often escaped if their government had contained so provident a safeguard against the tyranny of their own passions? Popular liberty might then have escaped the indelible reproach of decreeing to the same citizens the hemlock on one day and statues on the next.”

    Seems like he was on to something.

  • It is well documented, even by Paul Wolfowitz himself, that our primary reason for going into Iraq was oil.

    It depends on what you mean. Here are some options:

    1) The Middle East wouldn’t play such an important role in international politics if it did not have oil, and that this was a sine qua non of U.S. military involvement in the region in both of the Gulf Wars. In other words, the strategic importance of the region’s resources creates the necessary background conditions for military involvement.

    2) The U.S. went into Iraq because they wanted to take Iraqi oil.

    If you mean the former I agree; if you mean the latter, I expect next you’ll confess you have some suspicions about the ‘official story’ for 9/11. I’m kidding…mostly, but I think both are fevered conspiracy theories.

  • Paul,

    Plato wrote the Republic. Aristotle wrote the Politics. Plato said what you summarize in the Republic.

  • Paul

    And read, say, Maratain’s beautiful Universal Declaration on Human Rights, written for the U.N.

    BTW, in the words of some rock persona whose name I cannot seem to remember, “I am a lover, not a fighter.” So I advise that you save your spiritedness for your Rush fix on Monday. But I pray for your co-workers and relatives who think differently than you and may happen to be in your proximity. 😉

  • Sorry for the typo. But do you care to actually argue about what was said? And while you’re at it, you still have not shown any documentation that the Iraq war was about oil – something easy to do since it is so well documented.

  • And I much prefer another French philosopher, linked to today by Zach at Civics Geek. Again, it fits the occasion:
    http://civicsgeeks.blogspot.com/2009/02/tocqueville-saw-this-coming.html

  • John Henry,

    not to mention it’s unlikely that Hussein could have remained in power without oil revenues, nor could he have been as great a threat to US interests without it.

  • Very nice link, Paul. I particularly liked this passage:

    “[The despotism that arises from a democracy] does not destroy, it prevents things from being born; it does not tyrannize, it hinders, compromises, enervates, extinguishes, dazes, and finally reduces each nation to being nothing more than a herd of timid and industrious animals of which government is the shepherd. .??.??.”

    O-baaaaaaaaa-ma.

  • Hit the nail right on it’s head.

    A fine post.

    Obama and the liberal Democrats will seize as much power as possible to push their Marxist agenda.

    Can’t wait for the congressional elections in two years.

  • It is amazing that these Obama nuts still do not seem to realize that they voted for a total idiot that has no idea what he is doing. He is without a doubt a socialist, but this one cannot add, does not know history, and certainly hates the USA.

  • Gramps,

    Just a friendly reminder to address the issues and not to demean people.

    Thanks.

  • I certainly agree with many (though not all) of the President’s goals, but his statist impulses vary in no way from the standard Democrat line for the last sixties, and as numerous scholars have argued, such an approach only furthers the atomization of our culture and the withering away of intermediary associations, tending toward a future in which the State is involved in every aspect of our life and the exclusion of other entities… in other words, totalitarianism.

  • “in other words, totalitarianism.”

    Chris.

    You surprised me here. I take you as much more intellectually temperate.

Now We Know Who Gets The Change

Thursday, February 12, AD 2009

obama-reid-pelosi

President Obama ran on a platform of Hope and Change.  From the details of the National Bankrupt the Nation Act of 2009, sometimes called a “stimulus” bill, we can now see who gets the change:

“Q: What are some of the tax breaks in the bill?

A: It includes Obama’s signature “Making Work Pay” tax credit for 95 percent of workers, though negotiators agreed to trim the credit to $400 a year instead of $500 — or $800 for married couples, cut from Obama’s original proposal of $1,000. It would begin showing up in most workers’ paychecks in June as an extra $13 a week in take-home pay, falling to about $8 a week next January.”

Thanks a heap!

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9 Responses to Now We Know Who Gets The Change

  • From two Happy Meals this year to one next January. At least worldwide sales at Mc D’s were up 7.1 percent last month. Now that Disney has acquired Dreamworks. more chances for movie cartoony characters served with your fries. This is truly Hope and Change.

  • Fear not; your Republican buddies kept out of the package the controverted spending on school construction.

    After years of Reagan, Bush I and II, oi polloi will remain content with a little bit more of bread and circus.

  • How did “the Republicans” keep anything out of the bill? They weren’t in conference on it, and Snowe, Specter and Collins aren’t exactly doctrinaire conservatives.

    I’d have been perfectly content with the bill had there been more actual job creation, regardless of whether it involved spending or tax cuts. The infrastructure stuff is great, not to mention overdue. But there’s too little of it, and too late to do much. Frankly, there’s precious little stimulus in all the spending, however meritorious much of that spending may be to help those who are down and out. And there’s precisely squat being done to address the mortgage crisis at the heart of our current troubles.

  • Mark,

    While I have no problem, in general, with school construction, I am dubious that it should be included in a stimulus bill. Is there any other economic stimulus other than a few construction workers getting a job for a year or so building or renovating, and then being out of a job when the funds run out? Much of what I’ve seen in the package should create a bunch of short term jobs, but it doesn’t seem to me that those jobs will last in the long term without future governmental spending on the same proportions we’re seeing now. Am I missing something?

  • Mark DeFrancisis,
    It’s that simple, right? Republicans don’t want schools built. Of course – so simple, and dovetailing nicely with the MSM narrative.
    Allow me to translate: School construction = make-work jobs for union tradesmen at an exorbitant cost. Union tradesmen that would do half the work at half the quality as a struggling crew of Polish immigrants. But hey, Dems are for the little guy, right?
    Thanks for regurgitating what the MSM told you. I needed this line of crap warmed up.

  • daledog,

    I worry about you. Have you talked to your doctor about high blood pressure or hypertension?

  • Daledog and Mr. DeFrancisis, keep it civil please.

  • Mark,
    Witty comeback.

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Obama and the Stimulus Package

Tuesday, February 10, AD 2009

Has anyone ever wondered if it is possible that one can land in a financial crisis when one has a steady income, no debts, and a large reserve of money in case of emergencies?  Certainly, I suppose, if something devastating comes around, like an accident that requires weeks in the ICU, surgeries, and a long rehabilitation, that could bankrupt a person.  Yet such accidents, on a whole, are rare, and most people who live a financially responsible life never have to plead for a bailout.

When we look at our current financial crisis nationwide, I can’t help but wonder what people are thinking.  President Obama has promised us trillion dollar deficits for years to come in an effort to restore our economy.  Like most right-leaning folk, I’m under the impression that our current crisis has come from overspending, living beyond our means, and not being prepared for when we hit bumpy times in the economy (like $4/gallon gas, which drives prices up all around).  Perhaps, if this view is incorrect, someone will be willing to explain to me why it is so.  But my impression has been that first, people individually are consumed with buying, buying, buying, even when they don’t have the money to buy.   I have friends who, though they grossed over $60,000 a year, were still living paycheck to paycheck because of their deficit spending.  I’ve seen people who, upon receiving their government money, have gone and blown it on new cell phones (that are shut down after two delinquent months), on fancy steack dinners, and so on, instead of buying necessities or saving up what they can.  I’ve seen people struggling with hundreds of thousands of dollars of accumulated debt that came from student loans, house loans, car loans, credit cards, and so on.  This is just what I’ve seen.  What I’ve heard–word of mouth, or in the news, or on blogs–is even worse.

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18 Responses to Obama and the Stimulus Package

  • My personal feeling is that the dollar will die within the next 10-15 years. I just don’t see how it can survive all these pressures of printing and borrowing in order to pay for entitlement programs and foreign interventions.

    If Obama were really interested in rescuing the economy and preserving the nations ‘greatness’ while there is still time he would:

    1.) End our overseas commitments, whose cost is perpetually skyrocketing to the detriment of our blood and treasure; not to mention the liberty of those we are trying to “help”

    2.) Audit the Federal Reserve if you aren’t willing to abolish them. The Fed is a quasi-public/private cartel of banks that has control of our currency via manipulating interest rates. Who the hell are they to arbitrarily decide the price of money? Our fiat currency had been far too politicized, thanks to the removal of any kind of commodity standard. We need to know what the Fed has been up to in total. Its way past time Congress reassert its powers and responsibilities.

    3.) Create a long-term transition away from entitlement programs. It turns out the Great Society ain’t so great. While many people are now dependent on the state to survive, the costs we could save from ending foreign commitments could be moved towards these programs as we slowly close them down over time. Congress should be barred from raiding Social Security/Medicare and Medicaid funds for their pet projects.

    4.) Elimination of the Income Tax. The government could easily put money back in the hands of consumers instantly by simply not taxing the fruit of their labor. There are plenty of other tariffs and taxes that would maintain the size of government at about the level it was in the Clinton years. If you have to institute a consumption tax, fine… but it should eventually be phased out too.

    5.) Secure the border. If the Defense Department really needs something do, why can’t they defend our federal border from rampant illegal immigration? Immigration, particularly of educated individuals is crucial to our society’s resources, but that is a far-cry from the seemingly endless free-for-all occurring on the border with Mexico. If the Mexican government were ever to collapse, the U.S. has to be able to preserve its physical integrity. Entitlement programs in medical care and education that have an effect of subsidizing illegal immigration should be ended.

    6.) Allow the liquidation of assets to occur. If the banking industry, real estate industry, auto industry etc. don’t fail how can we ever rebuild on a better footing? We have to discover the price of their assets by rewarding the people who have saved their money. They are the ones capable of bringing on a genuine recovery and moral redistribution of wealth. What is occurring now is an attempt by the elite and politically-well connected to keep the status-quo afloat at the expense of taxpayers and responsible consumers. This process will undoubtedly be extremely painful. But quick and painful is preferable to slow and painful.

    The fact is for the last few decades we’ve been living in a fantasy world of cheap money, easy credit and an entitlement mentality. Thats NOT what this country was ever supposed to be about. We’re supposed to work towards lifting ourselves up so that the next generation could go even higher. Instead we chose the pleasures of today at the expense of tomorrow.

    We aren’t the first generation to ever act this way. Its something that can be forgiven and reversed if we are willing to endure the consequences of our bad decisions. There’s no easy or popular way out. Its time to freaking man-up and deal with it.

    At least thats the way I see it.

  • I’m usually just a lurker here and love The American Catholic writers and the in depth dialogue here – Thank you. … I can’t help myself in making this point to enough people… I believe the goal of Obama and whoever is behind him is to destroy this country and maybe that just means Democracy but I can’t help think it also includes Christianity.

  • Lee,

    I really hope you’re wrong.

  • I think it is inappropriate to accuse the President of wanting to destroy the country. After listening to similar accusations from Bush-haters for the last eight years, I think those on the right should be especially sensitive to this.

  • I don’t believe that the President intends to destroy this country. I think he sincerely believes that unprecedented deficits that our descendants will never be able to repay, an ever-expanding public sector, and enhanced government regulation are the path to prosperity. Truth to tell I would have more intellectual respect for the President if I believed that he did wish to destroy the country, instead of accepting the fact that he actually believes this snakeoil.

  • Lee,

    I would also caution against spreading that speculation. I’m more in the camp that Obama and his ilk are plunderers (cf Ayn Rand’s Atlas Shrugged), and they simply think they can keep plundering the wealth accrued by our hard-working, industrious citizens indefinitely.

    Part of the problem is that there’s a disconnect between viewpoints on the right and the left. The ideas of how economics work, how to stimulate job growth, how to make sure everyone has his needs met, are so divergent there is simply no middle ground to work with. To this extent, both sides see the other as being completely disassociated with reality. Frankly, I believe most of these people who are willing to plunder our nation–and they are on both sides of the aisle–are the ones who are truly disconnected with reality. The plundering occurs to score political points, and those points continue to put a person in power.

    Now, I don’t really see what Obama gains personally by being president, except that he gets to be the one directing the course of the nation. Now, most people are drawn to one party or another because they believe that party has a particular vision that agrees with their own view (even if that party hasn’t held that vision since 1960). I think Obama truly believes there are huge injustices working in our nation. Ask any Democrat, and you’ll get that kind of response. In some cases, those injustices are completely valid, and Republicans are remiss in failing to address them. In other cases, those injustices are trumped up, or are infantile railing against the natural order of the world. But just because they’re trumped up doesn’t mean that the person advocating fixing those injustices knows it.

    Consider the plight of having extremely wealthy and extremely poor in our nation (though, arguably, our poor are wealthier than most “wealthy” in many third-world nations). Democrats view this disparity as coming from free market economics, a system that plunders the poor for the advantage of the rich. (I’ve argue long and hard with my sister on this point, and she won’t budge an inch on the denunciation of capitalism as personified by the industrial giants of the late nineteenth century.) Republicans view the disparity as being derived from government interference, whose subsidies and favoritism to lobbyists create situations and loopholes that permit the plundering to occur. I believe the disparity comes in part because the free market permits people to get rich by working hard (and often being in the right place at the right time), and permits people to be destitute by not working hard, or having the wrong ideas, or being in the wrong place a the wrong time. But I also believe that governmental interference with the markets by and large has permitted the grossest of injustices to occur. So when I see someone calling for more governmental oversight, more governmental interference, more governmental control, I cringe and feel that the person calling for this is either off his rocker, malevolent, or making power plays.

    But you have to understand, that someone working with that opposite viewpoint things the same about me when I call for deregulation, for tax cuts, for more faith in the market, and so on. When Obama speaks about the “failed policies of the past eight years”, I really think he believes what he says. That doesn’t mean he isn’t flat out wrong, but I think he’s honest about it.

    But I also think he is plunderer, in the sense that he feels the hardest working and most successful have an obligation to subsidize those who aren’t as successful. Now, Catholics believe that a man’s excess wealth should by right be accessible to the poor, but that can be accomplished in more ways than just handing money out. But there’s a big difference between believing there’s an obligation on the part of the rich to help the poor, and believing that a person can only be rich at the expense of the poor, and therefore should have his possessions forcibly confiscated and returned to the “rightful” owners, which I think Obama believes.

    Have no doubt–I believe Obama’s economic policies will do much to ruin our nation. But I also believe he feels he’s doing right. But then, I believe no one willingly does evil. They simply convince themselves that what they want to do is good, and then feel justified in what they do.

    Of course, you could argue that Obama sees the destruction of this nation as a good he is fighting for, but I don’t think there’s much justification for that.

  • “Catholics believe that a man’s excess wealth should by right be accessible to the poor…” – Ryan Harkins

    I disagree. I do not have such a low opinion of Catholics as to believe that Catholics approve of envy, theft, and ingratitude.

  • Micha Elyi,

    Of course Catholics do not approve of envy, theft, and ingratitude. The principle I’m referring to is when a man has more wealth than he needs, and the poor person does not even have the essentials for survival. The right to private property does not outweigh the obligation to work towards the common good, especially when one can deliver needed sustenance to those who would perish without. The Catholic church does not approve of theft, and many of the arguments we tend to have concerning social justice is whether, say, governmental taxation and entitlement programs are thinly disguised theft, or if they are true genuine charity, the option that is least bad for helping the poor.

    The problem that we face is how much wealth one can possess before any more is truly excess, and how little one can possess before it constitutes to a desperate situation that permits the usage of another’s goods in order to survive.

    Context, Micha Elyi, should help resolve what I’ve said with what the Church teaches.

  • This stimulus plan is the old “wrong execution of the right idea”. The
    righy idea being something is needed to “kick start” the economy after a
    brutal loss of confidence. But piling on more debt after execessive debt will
    not work anymore than giving a heroine addict more heroine.

    We must do what Kennedy and Reagan did. Cut Taxes!

  • Ryan,

    The right to private property does not outweigh the obligation to work towards the common good, especially when one can deliver needed sustenance to those who would perish without.

    I think you’re comparing apples to oranges here. It is precisely because we have a right to private property, that we have a moral obligation to work towards the common good.

    The Catholic church does not approve of theft, and many of the arguments we tend to have concerning social justice is whether, say, governmental taxation and entitlement programs are thinly disguised theft, or if they are true genuine charity, the option that is least bad for helping the poor.

    While the state has an obligation to insure the barest needs of the poor are met, even when the state does step in, it is not out of charity in any Catholic sense. The state is incapable of theological virtues as far as I understand it.

    The problem that we face is how much wealth one can possess before any more is truly excess

    In our economy, the excess wealth is that which one keeps in one’s mattress, or uses to buy yachts. Funds invested in the markets, bonds, treasuries etc. is not excess, it is actually “working”, it is providing the needed capital for job creation, manufacturing needed goods, and in fact funding social programs. There is such a thing as excess consumption. The beauty of the fair tax is that it taxes consumption, not wealth.

    and how little one can possess before it constitutes to a desperate situation that permits the usage of another’s goods in order to survive.

    If they have cable TV, DVD, a car, cell phone, MP3 player, etc… then… I submit that their situation is not so desperate.

  • Good post, Matt. I would add that a free society means that one is free to behave selfishly. The miser who shovels wads of money under his mattress and the big spender who buys more houses and yachts than necessary are both guilty of being uncharitable, but that does not give the state the right to take their property away. Characters like Paris Hilton can momentarily make a Marxist out of even me, but then I remember that there have always been rich people who choose to lead selfish and self-serving lives. They will be judged, just as the rest of us will be.

    If charity is forced, it is not a virtue. And you are perfectly right that the state is not in the charity business, but in the business of expanding itself.

  • Donna V.,
    I would add that a free society means that one is free to behave selfishly.

    Quite right, I meant to be suggest that, to the extent that the state is obligated to provide for the common good, that it should be funded from excess consumption rather than by reducing the capital which is the engine of the economy.

  • Matt,

    I think you’re comparing apples to oranges here.

    Hardly at all. The crux of the question is how much wealth is enough, and how much is too much (or excess)? At what point does a person have so little that he has a right to appropriate my property in order to survive? Private property and working towards the common good go hand in hand. The common good upholds the notion of private property (for a variety of reasons, like making our work fruitful, like providing for our individual needs so as not to be a burden on others), but that does not mean that private property is inviolable, either.

    But keep in mind that you’re making way too much out of my statements. I’m not in the slightest an endorser of the massive lot of entitlements the government keeps handing out. What I do endorse is understanding two things. One, we Americans have by far more stuff than we need. Just think of all the things that you could do without (and maybe should, since wealth has this nasty tendency to get between one and God (cf Luke 16)). Two, while investments are good long-term strategies for both making sure one is provided for in old age and providing jobs for people, there are plenty of people who need some short-term solutions just to make it to the long-term solutions. I would hope that these are apparent. The question then is: how do we best help those who truly need an act of charity to make it through the day?

    The Catholic church does not approve of theft, and many of the arguments we tend to have concerning social justice is whether, say, governmental taxation and entitlement programs are thinly disguised theft, or if they are true genuine charity, the option that is least bad for helping the poor.

    While the state has an obligation to insure the barest needs of the poor are met, even when the state does step in, it is not out of charity in any Catholic sense. The state is incapable of theological virtues as far as I understand it.

    Keep in mind I just stated what the dilemma was here, and not a solution. You have proffered an understanding of the government that bars any true charity in governmental acts. I would counter, reluctantly, that the government is made up of people who are capable of charity, and who often enough believe that passing laws to force others to subsidize the needy is the only way to provide aid. But I say reluctantly, because Donna states it correctly when she says: If charity is forced, it is not a virtue. But you have to understand where the supposed charity theoretically lies in the case of the government–it is supposedly (and I say supposedly because too often I feel the government entitlement programs have nothing to do with charity, and everything to do with political power) on the side of the government officials who are wresting the money from one person to another. The absence of charity is, often enough, on the part of the tax-payer, because their tax dollars are an obligatory contribution, not a gift.

    Of course, if we look at charity–the love and willingness to give of oneself for another (even a stranger) because of one’s love for God–then we see that the government official fails in part because the wealth is taken from someone else, not the official. But then, you have to understand that a case could be made that the government official’s giving of herself is the giving of her time and talent to craft those laws that wrest the money from the rich man and redistribute it to the poor.

    Now, if it seems that I’m wishy-washy here, or waffling, or whatever, it is because I’m just writing arguments. I’m not arguing one side or the other; I’m merely presenting other factors to consider. I don’t think my case for the charity of the government worker is at all compelling, but it is an argument that can be made, and to someone in power, is a good justification for enacting massive entitlement programs. (That whole fallen nature thing I’m sure comes into play somewhere around here.)

    If you want my honest opinion, it is that most government entitlement programs enable sloth, breed envy, and in general make the situation worse. The principle of: if you subsidize something, you get more of it is at play. Sometimes love for our neighbors has to be tough love, but the only way to know if that is the case is to be intimately involved with our neighbors.

    Just some things to chew on.

  • Ryan,

    Ryan:The right to private property does not outweigh the obligation to work towards the common good, especially when one can deliver needed sustenance to those who would perish without.

    Matt:I think you’re comparing apples to oranges here.

    Perhaps I’m misreading, but in my understanding you are comparing the right to private property with the moral obligation of that owner to give of his excess to support the poor. The first is a right, the second is an obligation which flows (at least in part from the right), it is not a question of one outweighing the other.

    But keep in mind that you’re making way too much out of my statements. I’m not in the slightest an endorser of the massive lot of entitlements the government keeps handing out.

    I recognize this, just seeking to clarity.

    What I do endorse is understanding two things. One, we Americans have by far more stuff than we need. Just think of all the things that you could do without (and maybe should, since wealth has this nasty tendency to get between one and God (cf Luke 16)).

    Absolutely, and with regard to “stuff” this is exactly the argument in favor of the fair tax, which targets stuff.

    Two, while investments are good long-term strategies for both making sure one is provided for in old age and providing jobs for people, there are plenty of people who need some short-term solutions just to make it to the long-term solutions. I would hope that these are apparent. The question then is: how do we best help those who truly need an act of charity to make it through the day?

    Principally by letting those who have a right to those investments determine what portion ought to go to charity, it would be for God to judge them on their culpability for letting greed interfere, secondarily, by the state acting as an emergency backstop to take by compulsion what it is absolutely necessary (all the better based on consumption rather than income)

    Matt: While the state has an obligation to insure the barest needs of the poor are met, even when the state does step in, it is not out of charity in any Catholic sense. The state is incapable of theological virtues as far as I understand it.

    Ryan: You have proffered an understanding of the government that bars any true charity in governmental acts. I would counter, reluctantly, that the government is made up of people who are capable of charity, and who often enough believe that passing laws to force others to subsidize the needy is the only way to provide aid….The absence of charity is, often enough, on the part of the tax-payer, because their tax dollars arean obligatory contribution, not a gift…a case could be made that the government official’s giving of herself is the giving of her time and talent to craft those laws that wrest the money from the rich man and redistribute it to the poor.

    Excellent! This is the sort of precision I like (I recognize that you aren’t agreeing with these arguments).

    1. government people are capable of charity – absolutely
    2. government people believe that taking from the wealthy to give money to the poor is charitable – absolutely, but they are in complete error on this (the crux of my opposition)
    3. government people are charitable when they give their efforts to taking from the wealthy – they are in error, particularly when they are paid, it increases their power or furthers their ideology. They may be charitable to an extent when they give of themselves as part of their work to aid the poor, and/or they sacrifice potential for private sector wealth by working for government (great distinctions have to be made here, as this may be exceedingly rare).

    My definition of “government people” extends from legislators, to employees of government and non-governmental organizations (as well as those who support such) who’s practice it is to expand the role of government.

    If you want my honest opinion, it is that most government entitlement programs enable sloth, breed envy, and in general make the situation worse. The principle of: if you subsidize something, you get more of it is at play. Sometimes love for our neighbors has to be tough love, but the only way to know if that is the case is to be intimately involved with our neighbors.

    Amen! The amazing thing is that true Charity has a much better impact on the reciever and the sender because it is not seen as an entitlement or taking but a gift of love.

  • Matt,

    Just to clarify:

    Perhaps I’m misreading, but in my understanding you are comparing the right to private property with the moral obligation of that owner to give of his excess to support the poor. The first is a right, the second is an obligation which flows (at least in part from the right), it is not a question of one outweighing the other.

    I’m viewing this more as a weighted scale than a comparison. Our first obligation is to take care our of ourselves, and we are not called to give charitably when doing so harms our ability to survive. But as we accrue more wealth, the possibility of a contribution harming said survivability decreases, and eventually vanishes (save for being stupid about it…). At some point, we have so much (think scales dropping well below the equilibrium point) that we have a graver obligation to use that wealth for the benefit of others than for our own concerns.

    So it really isn’t comparing two unrelated objects (in my mind, anyway), but trying to determine where the tipping point comes, and what should be done when the scales tip.

  • Ryan,

    Our first obligation is to take care our of ourselves [, our families and those we have a special obligation to], and we are not called to give charitably when doing so harms our ability to survive. But as we accrue more wealth, the possibility of a contribution harming said survivability decreases, and eventually vanishes (save for being stupid about it…). At some point, we have so much (think scales dropping well below the equilibrium point) that we have a graver obligation to use that wealth for the benefit of others than for our own concerns.

    Now we’re on the same page, the apples-apples is obligations, to our own vs to others. I agree completely. Of course, using our wealth for the benefit of others is not necessarily direct help for the poor, it can include hiring workers or investing in businesses that do so.

  • using our wealth for the benefit of others is not necessarily direct help for the poor, it can include hiring workers or investing in businesses that do so.

    I might add, that growing our business is not charity, even if it helps others. No matter how many people we help through employment, we have a serious obligation to direct charity.

Trust Your 401(k) to Uncle Sam?

Friday, October 24, AD 2008

The government of Argentina plans to nationalize, read steal, the private pensions of Argentinian citizens.  Good thing we’re Americans right?  That could never happen here, right?   Depending on how the election next month goes, maybe it could happen here?   Hmmm, that investment strategy of gold in coffee cans buried in the back yard is sounding better and better.

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