Resurrect Capitalism!

February 21, 2009

Piling on the Pain

Filed under: Obama, socialism, taxes — Tags: , — admin @ 10:00 pm

Details of Obama’s proposed budget for the next fiscal year are leaking out.  Our president is trying to cut the budget deficit.  This is tough to do
when you spend trillions of dollars on various socialist programs.

To be fair, I do approve of Obama’s plans to wind down war efforts in Iraq and Afghanistan.  At this point in time I think it is pretty clear we’re not going to make any lasting changes in those regions.  We have cleaned up Iraq significantly; that combined with our fiscal situation makes the present an ideal time to withdraw.  At some point they have to pull their own weight.

You might think if you are trying to reduce debt you should cut government services, but in this new budget Obama wants to greatly expand the size and scope of government.

In addition to tackling a deficit swollen by the $787 billion stimulus
package and other efforts to ease the nation’s economic crisis, the
budget blueprint will press aggressively for progress on the domestic
agenda Obama outlined during the presidential campaign. This would
include key changes to environmental policies and a major expansion of
health coverage that Obama hopes to enact later this year.

Obviously there is a massive contradiction between “tackling the deficit” and enacting “a major expansion of health coverage”, especially in an era of collapsing tax revenue. The government already accounts for nearly half of all healthcare expenditures in America, but Obama thinks this is not nearly enough.

And as for “key changes to environmental policies”, now is an absolutely dreadful time to enact CO2 taxes.  For starters there has still been no evidence that our CO2 emissions are causing the earth to warm.  And even if you did believe that anthropogenic CO2 emissions were causing harmful warming of the earth, due to the economic downturn CO2 output is already falling without any government regulations. Does piling a new cost on to the shoulders of already stumbling consumers sound like a way to stimulate economic growth?

New taxes on individuals and businesses would likewise be disastrous.  American corporate tax rates are already among the highest in the developed world.  Obama’s budget would make this even worse.  If your profits are already declining you would get to keep even less of your money under Obama’s proposed budget.  Does this sound like a good way to create jobs and stimulate economic growth?

The key to reviving the economy is to let the market clear the deadwood and heal itself.  The best thing for the government to do is to get the hell out of the way.  Obama is trying to stunt this at every step of the process.

I don’t like the USSA (United Socialistic States of America) very much these days.  Obama needs to be careful about pushing things too far.  He does not realize it but he faces a growing risk of a backlash.  The anger among hardworking, responsible Americans is palpable and growing with every new socialist plan that Obama conjures up.  The boiling point is somewhere, not too far away…

February 19, 2009

The Cost of Regulations

Filed under: regulations — Tags: — admin @ 11:53 am

I believe the government cannot cause net economic growth through stimulus plans.  But, there are many ways the government can stimulate the economy.  One way is through tax cuts.  Another way (which costs nothing directly) is the relaxation of strangling regulations.

Unlike some free market advocates I do not think all regulations are inherently bad.  But regulations should be as minimalistic and straight-forward as possible. 

A sad story about a proud fisherman calling it quits thanks to burdensome regulations.  He can no longer make a living in his chosen profession, thanks to regulations that make the business of fishing maddeningly difficult.  People need to keep in mind that for every regulation there is a consequence, a trade-off that somebody has to bear.  In New England the people who seek new regulations are typically not the people who have to bear the consequences of those regulations.  As a result they are (in the short-term) insulated from the trade-offs. 

Some better news on regulations: Oklahoma is streamlining nuclear power regulations.  They currently don’t have nuclear power in the state but want to leave that option open by making the reactor construction process as streamlined as possible.

Unfortunately I am seeing a sharp split in this country between more socialistic and more capitalistic regions.  There are two distinct visions for the type of nation that America should be.  I fear that we may all need to make a firm decision as to what side we stand on.

February 16, 2009

Financing Socialism

Filed under: bailouts, socialism — admin @ 3:59 pm

Though our politicians and economists don’t act like it, these socialistic bailouts have a price.  In the past decade China has amassed many hundreds of billions of dollars of treasury bonds.  Japan and many other foreign nations have likewise purchases American federal government debt.

But all of this is going to change.  The rest of the world is feeling the effects of this depression and other nations do not have the funds to support American debt.

So we’re actually going to have to pay our own debt this time.  These bailouts are going to be an extremely heavy burden going forward.  Spending has skyrocketed while tax revenues are plummeting.  Spending needs to plummet as well but of course our politicians believe that deficit spending is something for nothing.

“The U.S. may have trouble funding” its deficit, certainly at yields anywhere close to today’s rock-bottom levels, Ryding says. Notably, he is concerned that foreigners - who’ve bought as much as two-thirds of our debt in recent years - will be doing “much less purchasing of U.S. Treasuries.”

The issue is not so much foreigners’ desire to punish America for its profligate ways or to exert geopolitical influence, but simply because they won’t have the funds to do it. This is specifically a problem for petro-states as oil has collapsed and major Asian economies that previously relied on the U.S. export market to build surpluses, which they previously “recycled” back into the U.S. via purchases of Treasuries and government agency debt.

“Is there a domestic buyer [ready] to step forward?”, the economist asks. “Only at higher yields.”

It its for these and related reasons Ryding is worried about inflation, as detailed here, and why Moody’s is warning about the risks to the U.S. government’s hallowed Aaa rating.

There is no viable way to finance these bailouts.

If only our politicians would let the market clear itself of the excesses of the financial system.

February 15, 2009

Global Warming Panic- Turning It Up a Notch

Filed under: global warming, psychology — Tags: , — admin @ 10:59 am

Politicians and socialist CEOs are busy pressing the economic panic button.  Anthropogenic global warming (AGW) alarmists are getting concerned that their cause is getting washed out by the deafening financial panic screams.  As a result AGW folks are cranking up the volume on their own noise machine.

It seems the dire warnings about the oncoming devastation wrought by global warming were not dire enough, a top climate scientist warned Saturday.

It has been just over a year since the Nobel-winning Intergovernmental Panel on Climate Change (IPCC) published a landmark report warning of rising sea levels, expanding deserts, more intense storms and the extinction of up to 30 percent of plant and animal species.

But recent climate studies suggest that report significantly underestimates the potential severity of global warming over the next 100 years, a senior member of the panel warned.

“We now have data showing that from 2000 to 2007, greenhouse gas emissions increased far more rapidly than we expected,” said Chris Field, who was a coordinating lead author of the report.

This is “primarily because developing countries like China and India saw a huge upsurge in electric power generation, almost all of it based on coal,” Field said in a statement ahead of a presentation to the American Association for the Advancement of Science.

Without decisive action to slow global warming, higher temperatures could ignite tropical forests and thaw the Arctic tundra, potentially releasing billions of tons of carbon dioxide that has been stored for thousands of years.

That could raise temperatures even more and create “a vicious cycle that could spiral out of control by the end of the century.”

“We don’t want to cross a critical threshold where this massive release of carbon starts to run on autopilot,” said Field, a professor of biology and of environmental Earth system science at Stanford University.

This warning of catastrophe sounds strange to me as everything else I have read suggests stable global temperatures since the el nino heated year of 1998.  A quick plot from UAH (University of Alabama Huntsville) satellite temperature data: the dark blue line is the global mean lower troposphere temperature and the light blue trace is the atmospheric CO2 concentration.

uahmsuglobetemp

So CO2 emissions have been increasingly steadily for the past few decades but warming has stalled / declined.  This does NOT prove that anthropogenic CO2 emissions are not making the earth hotter than it otherwise would be.  But it shows that with increasing CO2 emissions the temperature isn’t going haywire.  It’s not even getting hotter. There is no cause for panic.

This suggests an obvious problem with AGW climate models which have predicted unceasing warming with increased CO2 concentrations.  AGW alarmists know there is a problem and they are trying to preclude scientific debate with emotion.

AGW alarmists often label anyone skeptical of their theories as people who get funding from “Big Oil”, “Big Coal”, etc.  In other words, people who don’t agree with AGW models have a financial incentive in having the public believe that AGW isn’t real or isn’t a problem if it is real.

But one must keep in mind the financial incentives for AGW alarmists.  Many climate scientists and modellers will be out of work if you don’t think that AGW is a problem.  Many scientists have staked their reputations on AGW and will defend it no matter what.  People like Al Gore have become extremely wealthy ( > $100M!) by promoting AGW and have every incentive in the world to try to have you believe that we need their wisdom.

With our economy reeling the worst action our government could take would be to impose draconian global warming taxes on industry.

February 14, 2009

Panic

Filed under: economics, politics, psychology — Tags: — admin @ 12:02 pm

It’s interesting to be living through a financial panic.  Mind-blowing stuff is happening on a daily basis (trillion dollar bailouts are disgustingly routine these days).  Financial institutions that have lasted untold calamities have collapsed in the past 6 months.  And we’re going to see increasingly dramatic events.  It seems like everything is falling apart.  In times like these you need to keep your head screwed on more tightly than ever before.

panic_attack

I strongly disagree with the premise that our economy is going to collapse without government intervention.  Uncertainty is in the air and some people cannot handle it.  Think of all the turmoil our economy has survived in the past: numerous financial panics, the Revolutionary War, the Civil War, World Wars I & II, the Great Depression, stagflation in the 1970’s, and many other times of massive uncertainty.

And this downturn is going to sink us and send us back to the dark ages without government assistance?  I am skeptical to the extreme.

The main flaw with the “total collapse” theory is that not all financial institutions are unsound.  Many banks actually maintained rational lending standards in the past 5 years.  New banks untainted by the excesses of the near-past are seeing a wide array of opportunities open.

A good example is Discover, the credit card issuer.  Discover Financial Services has been derided as a low-tier credit card company but they maintained more prudent lending practices during the Great Credit Bubble.

while other issuers were still courting customers with multiple mortgages, Discover flagged borrowers with two home loans, keeping their credit limits low. As a result, say analysts, Discover has less exposure to the riskiest markets

Now they can reap the benefits as their rivals wobble:

Discover, the sixth-largest credit card issuer, is the one laughing now. Earnings jumped 57% in the past fiscal year, compared with a 34% decline at AmEx and a $46 million loss at Capital One Financial (COF). The company is trying to capitalize on others’ pain to gain market share and boost its international presence. “This is the classic tale of slow but steady winning the race,” says Dennis Moroney, a research director at TowerGroup.

The business landscape is changing dramatically.  But it’s not going to dissolve without socialistic “stimulus” plans like the panic mongers say it will.  Understand something crucial here: many panic mongers have a vested interest in having you believe the system is at risk of going under without bailouts.  Socialists in our government (and there are many, including our president) are using this panic as an opportunity to increase the size and scope of government.  Socialist CEOs want you to believe that allowing them to collapse due to their own bad decisions will ruin our entire economy.

In a nutshell A LOT of people have A LOT to gain by getting you to believe that your well-being is dependent on government stimulus efforts.

February 13, 2009

Mystery Meat

Filed under: politics, pork — Tags: , — admin @ 9:14 pm

A very disturbing aspect of the bailouts: it seems as though not a single senator will have the chance to read the actual $790B stimulus plan before voting on it.  The reason is because it takes a while to read 1071 pages of anything but the vote is going to be held in a rush.

The bill is expected to land on President Obama’s desk no later than Monday, and the president is expected to sign it into law–whether the nation’s lawmakers have read it or not.

Call me cuckoo, but I’d like to at least have the fantasy that our elected officials know what they are voting for.

Sen. Roland Burris (D-Ill.), President Barack Obama’s successor in the Senate, seemed baffled by the thought of actually reading the entire bill–as did his press secretary.

“I think it’s about 800 pages,” Burris’s press secretary said before laughing lightly. “We’ll do the best we can.”

Fuck you, Roland Burris!

Fuck you, Sen. Burris’ press secretary!

I don’t think saddling our children with extreme amounts of debt is something to flippantly blow off.  My teachers made me read 1000 page books in some classes.  But I guess the standards are looser when you’re voting on increasing debt levels by many hundreds of billions of dollars.

It’s obvious that the bill is being rushed through in an effort to strong-arm opposition.  It’s also obvious that the amount of pork and wasteful spending in the bill will be of biblical proportions.

February 11, 2009

And Then the Unthinkable Happened…

Filed under: entitlements, politics, unions — Tags: , , — admin @ 11:52 pm

The city of Vallejo, CA made the news last year for going bankrupt.  The city coffers swelled during the 2000’s real estate boom.  As that bubble popped real estate tax revenue dried up and the town went bankrupt due to its unsustainable obligations.  One of the major costs that broke the city was the cost of employing public sector union members.

Now, after much haggling and legal wrangling with the bankrupt municipality the unthinkable has happened: public employee union members actually accepted a cut in entitlements.  Public employee unions typically fight tooth and claw against getting small increases in benefits & pay (never mind outright decreases) so this is actually significant.  OK, so the town had to go bankrupt to renegotiate its union contracts but at least it happened.  This is why bankruptcy was created.  It allows an entity to renegotiate unsustainable agreements.

Some concessions CAMP members made in their supplemental contract include dismissal of all bankruptcy-related damage claims against the city, limited unpaid furlough in the next two fiscal years, a reduction in medical benefits coverage — starting in 2010 — and further reduced retiree medical benefits for new hires. Also, new employees will be unable to cash out accrued sick leave or gain longevity pay.

Notice what didn’t happen: the union members are not down and out.  Unions don’t want to accept even the smallest cuts and will wage fear-mongering propaganda campaigns about the horrors that await the budget ax.  But ultimately the union members accepted mild entitlement concessions so that their city could regain solvency.  Sounds like a win-win deal to me.

The Detroit automakers should do the same thing as the city of Vallejo.  Go bankrupt and renegotiate your labor agreements.  Wring some concessions out of them and regain the ability to profitably manufacture cars.  Instead the bailout of the Detroit three has prevented (at least temporarily) the marketplace feedback from influencing labor agreements.  We taxpayers are footing the bill for unsustainable UAW union labor practices.

On that note, here is a sad story: the main manufacturing plant in my Central New York hometown, Magna International / New process Gear, is closing down.  The factory has been financially wobbling for some time and the closing was precipitated by UAW members voting against accepting wage and benefit concessions.  Some of my friends from high school and family members work for that plant.  They didn’t want pay cuts but now they are going to get a 100% cut in pay. Through the years the UAW fought tooth and claw against every single effort to control labor costs and this “no” vote was simply the straw that broke the camel’s back.

I don’t want to think about what this closing will do to the area:

When the afternoon shift let out, there wasn’t a worker in sight at the normally crowded McShane’s. “All the factory jobs we’ve already lost - General Motors, Marcellus Casket Company, Carrier, Crouse Hinds, Syracuse China, and now Magna, what’s left?” asked [McShane's manager] Doran.

Nothing is left.  My home region used to be a manufacturing powerhouse.  Now it is a vegetable on life support, with various handouts from the state as the dominant industries.  Some of the job losses are due to outsourcing but many of those jobs have just moved to more business-friendly climates down south.  The tax and regulatory environment simply make New York state an uncompetitive place to do business.  Upstate New York needs capitalism badly.

Say hello to your future, New York:

detroit_ruins

The Rage Simmers

Filed under: bailouts, politics — Tags: — admin @ 10:20 pm

This might as well be me…

I don’t think politicians realize the anger that most Americans have about these bailouts.  We are alllowing a social worker with a law degree and a tax cheat to saddle our children and grandchildren with a ghastly amount of debt (assuming we actually pay it).  Disgusting and despicable.

February 10, 2009

This Isn’t Monopoly Money

Filed under: bailouts — admin @ 11:17 pm

Our central econnomic planners in the federal government today allocated the spending of $3T-  yes, 3 trillion dollars- in an attempt to counter economic decline.

On a single day filled with staggering sums, the Obama administration, Federal Reserve and Senate attacked the deepening economic crisis Tuesday with actions that could throw as much as $3 trillion more in government and private funds into the fight against frozen credit markets and rising joblessness.

I’m stunned at the magnitude of these bailout / stimulus efforts.  We’ve already spent trillions of dollars to no avail- so what’s a few trillion more?  Politicians are not looking ahead at all.  What are the concrete goals of spending $3T dollars and how will its effectiveness be judged? I doubt they even have an idea.

The bailouts are extremely irresponsible and I don’t see how they will ever be paid off. Well, there is one way- the Zimbabwe solution.

future denominations of American dollars?

future denominations of American dollars?

I don’t think our politicians realize how much anger they are creating over these bailouts.  When the bills for these bailouts are due how many Americans will be willing to pay the tab?  Think about that.

In news that is 100% uncorrelated with the above, gold bullion sales have skyrocketed  (bullion is the real physical metal and not just an account with “gold” in it).  In January gold bullion sales were about 4 times the total bullion sales for all of 2008.

Socialist Rot

Filed under: Obama, decline, entitlements, freedom, socialism — Tags: , — admin @ 10:39 pm

Socialism is bad in for multiple reasons.  Most significantly it fails miserably in achieving the goals stated by its advocates (improved economic performance through central planning).  It places severe burdens on productive people.  Higher taxes and increased regulations restrict your freedom (if you work or produce something of value, that is).

But perhaps the ugliest effects of socialism are on the recipients of handouts.  When your survival depends on persistent freebies from the state you lose something.  Your independence, your life force, your vis viva slowly withers.  The survival instinct fades.  You become helpless, a shell of your former self.  I don’t look down on people who accept help in times of need.  The problem of course is when “time of need” becomes indefinite.  It’s OK to accept help from others.  But as soon as you take the help for granted you are ruined on the inside.

I’m posting a few clips that disgust me. Clips like these are anecdotes and are not necessarily representative of America as a whole.  These clips show people begging President Obama for help in meeting their day to day needs.

Apparently the handouts in Ft. Myers, Florida are not good enough for Ms. Henrietta Hughes.  She feels the need to shake her beggar’s cup straight to the man at the top:

Could you imagine getting in front of this crowd, in front of those television cameras, in front of your president, and demanding help?  It boggles my mind.

Then you have Julio, who looks hopped up on some type of drug.  He has worked at McDonalds for 4.5 years, claims that he can’t get anything better, and thinks he is owed premium healthcare:

Regardless of their citizenship these folks are not true Americans.  They are not self-reliant and don’t appear to want to be so.  They wouldn’t fight for their freedom.  They will fight tooth and claw to take away your freedom, however.  And Obama will try to oblige them.

Look at how pleased Obama seems in these videos.  These are the kind of voters he likes.  He will very happily sell your hard-earned tax dollars down the river in exchange for their votes. Besides which, he gets to play savior.

The fate of a society is determined by the attitudes and actions of the common man.  Let’s hope the above folks aren’t the new median.

Older Posts »

Powered by WordPress