Wednesday, March 31, 2010

Another Failing Grade for Obamanomics

ADP reports this morning that private payrolls fell by 23,000 jobs in March of this year. This shows that the recovery is stillborn. Frightened by the Obama Adminstration, the private sector is stagnant. The only job growth in the economy is in the federal (not state) government sector. Obama is busy hiring his friends and paying them well, while he takes a sledgehammer to the private business sector and to the average American's economic prospects. As in the bailout programs that Obama has initiated, he picks the winners and the losers. The American people are the losers.

Obamanomics receives a well deserved F.

Making College Affordable

How do you make college affordable? Put the government in the business of providing loans and grants? What does that do?

Increasing the demand for college education by providing sweetheart loans and grants by the government simply raises the demand for a college education without in any way increasing the supply. What does that do? It raises prices.

The predictable response to Obama's recent closing of the private market for student loans in favor of more big government largesse will be a dramatic increase in tuition and fees in the college community. Why not? There is a significant increase in demand and funding. Take advantage of it. Raise your tuition and fees. Colleges administrators are smiling.

The problem that the modern college has is: how can I waste all of this money? An increasing share of college expenditures goes to non-educational pursuits -- mostly political pursuits. Centers for special groups proliferate. These centers have almost no educational purpose. Most merely seek to divide one student from another for the purpose of justifying its own existence. Pay administrators more. The modern college president has a total income that would make a bank CEO blush, not to mention free housing, free everything, as well as not much of a workload. The modern college president is mostly a party host for rich donors and has little or nothing to do with administrating the modern college. What is there to do? Professors have tenure and can't be required to do anything that they don't want to do, so what's there to do for the modern college president?

So, each college will now have to dig down deep and find new ways to waste the additional money that Obama is throwing their way. As for the middle class, they will sink deeper and deeper into a quagmire of debt to finance the booming tuitions and fees that colleges will impose. Thank you, Mr. President. Another idea from the coffee houses of Harvard that will impose a huge new cost increase on the American middle class.

Tuesday, March 30, 2010

Waxman in Action

There is probably no bigger fool in public office today than Congressman Henry Waxman. He represents a ridiculously left wing district in California and, as such, can say pretty much any moronic thing he wishes without fear of losing his seat. He has now subpoenaed the CEOs of companies (AT&T, Verizon, Caterpillar, Deere, Valero Energy, AK Steel, and 3M) who have taken immediate charges to their balance sheets for the economic implications of the recently passed health care legislation.

These companies are required by law to immediately disclose to the public the economic implications of the health care legislation on their businesses. They complied with the law.

Because these companies complied with the law, Congressman Waxman is outraged. After all, they didn't comply with the great Obama-lie that health care costs are going down. The truth is that these costs are going up thanks to Obama and Waxman and all the other ideologues who took sociology instead of economics while undergraduates. Too late for them to learn now.

So, now the CEOS are being hauled before Congress. Their crime, of course, is that they obeyed the law. Henry wants to know how they could dare suggest that Obamacare is going to cost them billions of dollars. After all Obama says that all of our health care costs are going down. Perhaps, Henry should read the securities laws, which require full and disclosure of the true facts. Henry, being a Congressman, is not used to such a standard and I am sure cannot really relate to the concept of full disclosure of the truth.

So more nonsense is on the way. Stay tuned.

NY Times Has a Good Article

Yes! It's true. I read the NY Times religiously every day hoping against hope that I will find an intelligently written, balanced treatment of some economic and/or financial subject. So far, this year has been disappointing.

Until today. Today's article by Mary Williams Walsh on state finances is a jewel. Ms. Walsh deftly analyzes the problems of state budgets and quotes the most knowledgeable researchers on the issue. It is a must read.

Three cheers for the NY Times. One balanced article in three months is something of a record for them.

But, unfortunately, I read on and got to today's article by Bill Carter entitled "CNN Fails to Stop Fall in Ratings." Carter seems puzzled as to why CNN, MSNBC, and all the major networks are collapsing in the ratings. Guess who isn't .... Fox! Listen to this howler in Carter's absurd article:

"CNN executives have steadfastly said that they will not change their approach to prime-time programs, which are led by hosts not aligned with any partisan point of view."

Is he kidding? Unless you assume that slavish devotion to Obama is a non-partisan view of things, there is no sense in which CNN hosts are non-partisan. They are all advocates of the extreme left (think Chavez) point of view.

Contrary to Bill Carter's view of things, Fox is the only network on television that provides both sides to every story. The major networks, including CNN, insult the viewers intelligence by providing only the most slanted pro-liberal view of every topic. Recall the sledgehammering treatment of Sarah Palin? There is no sense in which the major networks are news reporters in the modern era. They are merely mouthpieces for the far, far left.

If you want to see both sides of every major political issue, go to Fox News. You will hear Harold Dean on virtually every day. Last I checked he was one of the most left wing folks on the planet and former Chairman of the Democratic National Committee....not exactly a right-wing idealogue. What right winger do you ever see (except lampooned) on CNN?

There is no difference between CNN reporting and White House spin -- they are identical. Since you get to hear White House spin by listening to Fox, who needs to see the "spin" repeated ad nauseum by CNN?

Thank goodness for Fox News...Fox is truly fair and balanced. The major networks are completely irresponsible and biased.

The public is right to choose Fox over the major networks as their main source of the news. No doubt, Congress and Obama will try to find a way to silence Fox as they have attempted to silence their corporate critics. Fox is a winner!

Monday, March 29, 2010

Different Strokes for Different Folks

Among the many lies that President Obama told about the health care legislation was the lie that the legislation would provide ordinary Americans with the same health care options that Congress has for itself. That lie was repeated hundreds of times by the President. If Obama were Pinocchio, he would have trouble getting through the White House door.

The truth is:

There was an amendment presented to the bill that would require Congress and their staffs to have the same plans as those mandated in the legislation. The Democrats voted overwhelmingly to reject the amendment. They (like the vast majority of ordinary Americans) prefer what they currently have and do not want it replaced by Obamacare. Pelosi and Reid voted to keep their current insurance program and not see it replaced by Obamacare.

In fact:

The current Congressional program permits hundreds of different choices for Congressman, their staffs, and their families. Those choices are similar to what we once had available for ordinary Americans before big government got in the way.

Shame on Obama for lying about this very important topic.

Sunday, March 28, 2010

Meet the Press -- Now I Get It

Meet the Press on Sunday with David Gregory had three left wingers and one Republican political adviser on the topic of how November voters will react to the health care bill. The three left wingers ignored the voters, the heath care bill, the subject at hand. Instead they spent their entire time suggesting that all those who are opposed to the health care bill are racists and homophobes. One of the left wingers was the editor of Newsweek. He was the most absurd of the four panelists.

Since the polls shows that a majority of Americans still oppose Obamacare, Meet the Press's main message is that a majority of Americans are racists and homophobes. I guess that's why Obama got elected with 53 percent of the vote in 2008. He must have a special appeal for racists and homophobes.

No wonder the public has no confidence in the main stream media. They are so far to the left that Hugo Chavez looks mainstream to them.

Incidentally, in case you missed it, senior White House staffer Valerie Jarrett said in an interview Sunday: "Iran Will Back Down," speaking for the Administration no doubt. I feel comforted.

Health Care and Freedom

Like Chavez, Obama thinks that freedom stops at the ballot box. It doesn't. Freedom is the ability to do what you want to do without government interference. That kind of freedom should only be restricted by government if one person's freedom has a negative impact on someone else. Inevitably, there are hard choices, but generally, as long as no one else is adversely effected, then individuals should be free to do as they choose. Why not?

This brings me to health care. If I want to handle my health care by paying all of my expenses up to, say $ 5,000 per year, and have an insurance policy that would cover everything above that, then that should be my right. Obama says no. Such a policy is outlawed by recently enacted Obamacare. I don't have the right any longer to handle my health care the way that I want to and at an affordable cost. Instead, Obamacare defines what is a legal health insurance plan and what is illegal. My proposed plan is illegal under Obamacare. Why?

Shouldn't it be up to me how I choose to handle my own health care? Why is it any of Obama's business? Obama is wrong. Simple freedom doesn't end at the ballot box. Read Walden by Henry David Thoreau for a taste of freedom and its true meaning.

The entitlement world that now owns the United States' future is an assault on simple freedom. Citizens should have the right to provide for their old age and their health care without interference from government and without interference from Obama. The entitlements need to be scrapped and individuals should be left free to handle their own affairs without the interference of government.

Saturday, March 27, 2010

Restore the Medicare Cuts

Contained in the Obamacare legislation is more than $ 650 billion in cuts to the existing medicare programs. This means that old folks, who have no options, will be denied health care that has been promised for years. This denial of promised benefits will be decided purely by the whims of government bureaucrats. This is a foretaste of our future.

This should be opposed.

Promises should be kept for our senior citizens before opening a brand new entitlement to younger folks who still have alternatives, which seniors, now, don't have. Medicare is a completely stupid system. No doubt about that. But, if you put it in place and old folks are dependent upon it, you cannot, as Obama has done, cruelly and callously, pull the rug out from under them, once they are in a position of dependency. Obama has no moral core. He is willing to abandon the promise to senior citizens to further his political career.

This should be stopped.

Congress should completely restore the $ 650 billion in medicare cuts that are in the Obamacare legislation. This is not "fiscal responsibility." This is callous disregard for human life and the dependency that medicare has foisted upon our elder citizens. Promises should be honored, especially to those who no longer have real alternatives. There should be no new entitlements unless money is provided. Stealing from our helpless seniors, as Obama has chosen to do, is not acceptable.

Shame on Obama. Shame on the Democrats.

Wednesday, March 24, 2010

Is The Government Takeover of the Student Loan Market Helpful?

Buried in the House-passed health care legislation last Sunday was a government take-over of the student loan market -- billed as a new entitlement for students. (In reality, this bill represents a new entitlement for colleges and universities). The rationale behind eliminating free market lending for students and replacing it with a new government bureaucracy for student loans was that it will make colleges more affordable.

How will it possibly do that? In effect, having the government now a willing lender without the constraints that a free market lender would impose, means colleges and universities are now free to jack up their tuition and fees to even more astronomical levels. What the Congress has done is increase the demand without increasing the supply. The impact -- higher prices. So, colleges will become even less affordable than they are now. Eventually, students will be unable to pay the government back these ill considered loans (think Fannie and Freddie) and we will go in to workout mode. It is little wonder that colleges and universities were thrilled with this new entitlement for themselves.

The same logic is, of course, in place for the future of health insurance. Having mandated all manner of new costs on insurance policies, there are no market forces in place to keep insurance premiums from going through the roof. They will go through the roof. Then what? Then comes rationing. Hello to government bureaucrats deciding who (and when) American citizens can receive health care.

Tuesday, March 23, 2010

The Dodd Disaster is Next

Chris Dodd, one of the two main architects of the financial crisis (Barney Frank is the other) is now determined to make sure "it doesn't happen here." And what he means is his bill will virtually guarantee that the US will lose permanently its supremacy as a financial center of the world.

The Dodd bill puts so many new regulatory restrictions on financial institutions that Washington would be better to simply nationalize all banks and financial institutions, as China did pre-1990 and Russia did under the Soviet Union. It would waste less money and be more honest. No international bank domiciled in the US can possibly hope to be competitive in world markets, given the Dodd bill.

Having planted the seeds, that if they grow, will destroy American's health care system, the next step, with the Dodd bill, is to destroy the American financial system.

Perhaps the Republican can stop this disaster. But, who knows? The "reconciliation" strategy may be the route to turning the US into a banana republic that Democrats choose ... at least until November rolls around.

Monday, March 22, 2010

Now, Italy -- The Beat Goes On

Italian Prime Minister Silvio Berlusconi said yesterday that the European Union had "no reason to exist" if its members were not ready to help a crisis-hit Euro zone country. And how did Italy get in that shape -- free retirements and free health care. The same tune that played in Greece, plays in Italy. Greece debt-to-GDP ratio is projected at 120 percent this year. What about Italy? 117 percent. Spain is next.

Greece, Italy and Spain are clammering for Germany to fund the extravagant lifestyle of Greeks, Italians and Spaniards. German citizens say no.

A similar scenario is soon to play out in the US. California and New York have surrendered their government to the public employee unions whose retirement and health care packages are completely absurd and unaffordable for taxpayers. So, what is the solution? Ask the federal government for a bailout? Typical. Make the taxpayers of other states, who have lived within their means, fund the absurd nonsense and profligacy of California and New York.

All of this is in keeping with the idea that people that make bad decisions should be rewarded and that people that make good decisions should foot the bill for their wayward brethren. This changes everyday incentives, so that no one will have any interest in taking responsibility for themselves. This is the message from Greece, Italy, Spain, California and New York.

The beat goes on.

Health Care Loses 219-212

The House of Representatives passed the Senate Bill last night 219-212. Thus health care in America accelerates its descent toward a dysfunctional and unresponsive health care system. Following the path blazed by the public education system, we are now turning over an important segment of American life to Washington bureaucrats. The results will be similar. Within a decade, most Americans will be scared to even enter most public hospitals, as they currently are scared to enter most public schools in America.

Doctors will quit in droves, hospitals will close. What Americans will have is insurance (mis-named, since Obamacare is really just a government takeover of the health care system). What Americans won't have is health care. Virtually every American who now has health insurance will lose their insurance. Instead they will be forced to take on an Obama-blessed insurance policy that is a one-size-fits-all policy. It will be illegal to sell (and therefore to buy) a health insurance policy tailored to your own specific needs. The health insurance market place will disappear. You will only be able to purchase an Obama-plan and if you don't purchase what Obama wants you to purchase, you may find yourself in prison for failure to make that purchase.

When something becomes an economic "right" as opposed to a political right (like free speech), then the government must produce it (according to Obama-ites). Since there is no limit to the economic "rights" of the citizenry, everything, under the Obama blueprint, will be government controlled and provided. This means something akin to old Soviet system or the Chinese system prior to the 1990s. Everyone will be guaranteed access to a worthless product. So, rhetoric triumphs reality and the greatest economic engine in history (the US economy) will be permanently mired in stagnation.

This is what happens when public policy is determined in the coffee houses of Harvard.

Sunday, March 21, 2010

Listen to Tim Cahill

Tim Cahill is the Treasurer of Massachusetts. He says the Obamacare plan, that was put in to place in Massachusetts by then-Governor Mitt Romney and the Democratic Legislature, is bankrupting the state. He says it has added $ 4.2 billion to Massachusetts spending while insuring an additional 400,000 (a pitifully low number given the costs) to the ranks of the insured.

Cahill says that all of the cost estimates turned out to be woefully low. The actual cost of Obamacare is Massachusetts is turning out to be dramatically higher than projections. Additionally, community hospitals are closing in droves as the reimbursement rates are being forced lower.

So, the upshot of the Massachusetts plan? Higher costs and declining quality of health care for everyone.

Massachusetts, like Europe, cannot afford "free" health care. Another promise that can't be funded.

When Obama says, "we are the only civilized nation that cannot afford universal health care," he is dead wrong. No one can afford "free" universal health care. Massachusetts and Europe are finding this out. We will find it out if Obamacare makes it through the House today.

Saturday, March 20, 2010

How to Blunt the Recovery

The main short run impact of Obamacare, if it passes, will be to drive a stake into the heart of the fledgling economic recovery. Already, the current recovery is the most anemic since the end of World War II. Congratulations Barrack! You are setting some new records -- record deficits and record economic paralysis.

Now, if Obamacare makes it, look for a decade of stagnation unless this thing is repealed. Even then, the Obama stranglehold on the financial system is likely to prevent any serious economic growth until that stranglehold is removed.

Obama's ignorance of economics is going to have real effects. We are now much more like Europe and will begin to grow accustomed to double digit unemployment rates. The kind of economic growth that the US saw in the 1980s and 1990s have no shot of reappearing until the political climate gets more favorable to free markets.

This means, at the very least, that until Obama is voted out of office, look for economic stagnation and a continuing effort by Obama to nationalize every aspect of every economic life. Whether you call it socialist or whatever, Obama's policies are a continued and direct assault on the American economy. All his pretty rhetoric can't change the facts, which aren't so pretty.

Obama and Chavez are heading down the same road and the economic impact on their countries will be devastating.

The Entitlement Future

If health care passes on Sunday (which includes the nationalization of the student loan program), you will dramatically shift the balance between government-run and privately-run business in the United States. Victory for Barrack Obama means that America moves closer to the Greece-Venezuela model of national economics.

The essential core of the Obama-Chavez philosophy is that you make completely outlandish promises that cannot conceivably be funded and you create the public enthusiasm for these promises by arguing that the problems people face are caused by specific industries. In the US, these industries are financial services, insurance, and energy. Obama has devoted much of his efforts to demonizing these industries to gin up support for nationalizing much of these industries under the guise of "protecting consumers." Chavez used exactly the same strategy. The only difference was that Chavez' initial targets were foreign-owned business, though, in time, Chavez nationalized the major domestic Venezuelan industries as well.

Obama, so far, has nationalized the auto industry, the financial service industry, and much of the energy industry (his EPA guidelines, if left in place, have this effect). Tomorrow, Obama hopes to nationalize the health care industry (and the student loan business). Obama, like Chavez, has seen his popularity collapse as he made these nationalization moves, but both of these megalomaniacs are undeterred. Neither gives much thought to public opinion and they surge ahead with their own ideological program.

Obama will probably be stopped by the voters in November, unless he finds a way to "deem" the election without a vote by the American people. This suggestion may strike some as far-fetched, but who would have thought that the most important legislation in a generation could be "deemed" to have passed without a vote?

The Obama-Chavez clique is bent on controlling what their populations do from cradle to grave. Already, Venezuela is suffering rolling blackouts in electricity and shortages in most basic necessities and the Venezuelan economy is in serious danger of collapse. The US can not be far behind. If health care passes, Americans will begin to have serious problems getting health care. While Americans will have insurance, they will no longer have health care. At least one-third of all hospitals will close their doors, if the $ 1/2 Trillion in "medicare savings," contained in the Obamacare legislation, becomes a reality. Insurance, but no health care, will become the day-to-day reality for America's senior citizens.

Obama doesn't care about health care. This entire legislative debate is about who controls the process, not the quality of care or the quantity available. Both quality and quantity will dramatically decline if Obamacare becomes law. Everyone will have insurance, but few, if any, will receive quality health care. Already, medicaid patients have trouble finding doctors that will treat them. Being insured is of little comfort, if no doctor can be found that will treat you. That is our future, if Sunday is a victory for Barrack Obama.

Friday, March 19, 2010

Averting the Bubble

Alan Greenspan has plead guilty to the charge of not recognizing the housing bubble and not putting an end to it. This is nonsense. No one can even define what we mean by a bubble, much less recognize and put an end to it. Even the infamous "Tulip Bubble" craze was only recognized as a bubble after the fact.

During a bubble everyone feels that they are being rewarded for their good judgment and good sense. Few, if any, think that they are engaged in some kind of irrational bubble. Indeed, given the tax laws in the US and the (continued) existence of Fannie and Freddie, American citizens rationally speculate on the housing market. Where else can you get tax free capital gains (and deductions for interest expense along the way)?

Alan Greenspan did not cause or even abet the bubble. He did not keep interest rates low (Asian saving rates accomplished that). The bubble, if you can call it that, was pure and simple the result of deliberate government policy in the US to tax subsidize housing and the absurd policies of Fannie and Freddie, spurred on by Barney Frank, Chris Dodd, and other Congressional buffoons.

The Wall Street Journal today has an article pointing out that Canada did not have a bubble in housing, even though the differences, culturally and economically, between Americans and Canadians are not that great. Why? Canada has no Fannie and no Freddie and no tax breaks for housing (and no Barney Frank and no Chris Dodd). The result -- no bubble.

Greenspan and his policies were irrelevant, regardless of what he may think.

John Harwood is an Obama Hack

CNBC should get rid of John Harwood. He is nothing more than a mouthpiece for the Obama administration. Harwood never deviates from the Obama line...never...not one time. He is supposed to be the political analyst for CNBC, but the truth is, all one ever gets from Harwood is the same message you get from any other spokesman for the administration. Whatever happened to reporting the news objectively? Harwood is the worst of the new breed of political hacks masquerading as a newsman.

Thursday, March 18, 2010

"Voting for the Status Quo": Another Obama False Choice

Yesterday, Barrack Obama repeated the strange and bizarre statement that either you support his proposed Obamacare or you are "voting for the status quo." That's like saying that if you don't commit suicide today that you are saying that your life is perfect. That is ridiculous and is another infamous Obama "false choice." The choice is not between Obamacare and the status quo. This is just Obama's way of saying, once more, "my way or the highway."

There are many, many other choices. Almost all alternatives are preferable to Obamacare.

Wednesday, March 17, 2010

Have Insurance, Where's The Care?

A great article in Monday's NYTimes (yes, the NYTimes, of all places) gives a glimpse into our collective future, if Obamacare makes it into law. The story, written by Kevin Sack, tells of a woman in Flint, Michigan who is covered by medicaid, but can no longer locate a doctor who accepts medicaid patients. The article then goes on to describe this as a growing problem nationwide. This is a problem, not only for medicaid, but for medicare as well.

Why can't a medicaid patient find a doctor? Because there is no funding. States have begun to pare back their medicaid spending (they are the federal "partners" on medicaid). Medicaid payments (reimbursements they call it) are pitifully small and doctors cannot make a living if they accept too many medicaid patients. As the Times article points out, doctors tend to lose money treating medicaid patients. The same is often true for medicare patients. If Obamacare passes, the $ 500 billion reduction in medicare reimbursements that are cited in the bill virtually guarantees that more and more doctors will quit accepting medicare patients as well.

It is now estimated that more than one-third of all public hospitals will be forced to close their doors if Obamacare passes.

This is our future. Everyone will be insured, but there will be no place to go to get care. This is the nature of public entitlements. Pass them, make big promises, and then callously let those promises collapse just when people really need them.

Read the article in the NYTimes by Kevin Sack. This is where social security, medicare and medicaid are headed. It is one thing to make promises; it is quite another thing to follow through on those promises.

Tuesday, March 16, 2010

The New Transparency Goes Underground

Now it appears that Nancy Pelosi and Barrack Obama are plotting to get the Senate-passed health care bill passed in the House of Representatives without taking a vote. Instead, the House will vote on another bill (the so-called "reconciliation bill" and "deem" the Senate bill to have passed). Wow! That is a new way to govern. This is definitely "change."

A new transparency has emerged. House members can now pass a bill without a single member of the House having to have voted for it. That is designed to keep House members from defending an unpopular vote. I think I am beginning to see what Barrack Obama means by transparency. Try to find a way to pass the most unpopular legislation in American history and try to arrange things so that no one has to answer to the people, since no one has to vote for it! Great idea. I wonder if Barrack got that idea from his good buddy Hugo Chavez.

November is looking better and better.

Friday, March 12, 2010

Raising Tax Rates Can Raise or Lower Revenues

You don't have to be a devotee of Arthur Laffer to see that raising tax rates may lead to lower revenues. The Wall Street Journal has a great story today on the story of Maryland. Maryland dramatically raised "taxes on the rich" and all of a sudden there were far fewer rich folks filing tax returns. The drop off was astounding. There were 30 percent fewer milionaire tax returns filed in 2008 than in 2007 after Maryland raised the tax rates on the highest earner. For those who think this is just a product of the financial crash, try this data point on for size: one of every eight milionaire taxpayers filing Maryland returns in 2007 filed no return at all in 2008 in Maryland. Guess what! They moved.

Rich folks can either move (out of the US if necessary) or they can simply hold their wealth in a form that taxing authorities cannot reach. If they want, they can simply borrow to support their lifestyle. The folks that get trapped in the tax system are the middle class whose income comes predominantly from w-2s. They can't escape.

It is completely hypocritical for Warren Buffett and Bill Gates to urge higher taxes on the rich. They know full well that they will never pay those higher rates and that sooner or later the "soak the rich" tax argument is enabling to a spending policy that is completely out of control. At the end of the day, the middle class will be left to pick up that tab, as they always are.

The rich don't really care what the tax rates are. They don't pay those rates anyway.

Thursday, March 11, 2010

Pass with 51, Repeal with 51

If Democrats are able to cram down health care reform with 51 Senate votes, then that will be precisely the number of votes required to repeal it. Sooner or later there will be 51 Republican Senate votes and when that day comes -- it might be this November -- then the same vote criteria used to pass the bill will be used to repeal it. The rule of 51 can be used to repeal anything passed by the rule of 51.

How to Make Things Worse by Barrack Obama

Now the President is "fixing" the airlines. The Department of Transportation (DOT) has now announced fines of up to $27,500 per passenger per flight for delays on the tarmac. Interesting fine for a $ 400 flight!

The response from the airline industry: easy to predict. Anytime it looks like a flight might get delayed for whatever reason, then simply cancel it. That solves the problem. Instead of a late flight, lets have no flights. That's the Obama way. Here's a quote from the CEO Jeff Smisek of Continental Airlines:

"the government by God says 'We're going to fine you $ 27,500,'......Here's what we're going to do. We're going to the cancel the flight."

Makes sense to me. I think Obama should raise the penalty and perhaps all flights will be cancelled. Then there won't be any more flight delays since there will be no more flights. Sounds like a plan (an Obama plan).

Wednesday, March 10, 2010

Could Have Fooled Me

"I'm tired of talking about it," said the President today. You would never guess what the President was tired of talking about. Health Care Reform! Shocking. I sort of had the impression that Obama loved talking about health care reform, since that is about all he has talked about in his first thirteen months in office.

The suicide mission that the Democrats have embarked upon is in full motion. Will they end up at the bottom of the lake or merely struggling in deep water? That is the question. If Obama succeeds, the vast majority of Americans will find out, even before November of 2012 that Obama has lied to them. Their current health insurance will become a thing of the past. The concern and anger that this will engender will last for generations.

Democrats are always pointing to the passage of social security and medicare, but in those two cases, no citizen lost their current retirement system or was forced to give up their current health insurance. The only people affected (leaving aside taxpayers) were folks who now had a new entitlement. The Congress did not fund either of these programs properly and it was not until many years later that it became apparent that these were ponzi schemes. So, at least in the early years, there were no losers, only winners, when social security and medicare were born.

Not so with Obamacare. The 85 percent of Americans who have health insurance (and the vast majority like what they have) will lose their current plan. Then they will find out what Obamacare really is: much higher premiums (at least double current premiums in the short run) and dramatically reduced health care reimbursements. So, they will get to pay a lot more for significantly less. It's not likely they will warm to this. Or begin to like it better with time as the American health care system degenerates to the quality level of American public schools, which have already felt the imprimatur of the big government crowd.

Obama, Pelosi and Reid are leading the Democrats over the cliff and if they are successful, the public will not forgive the Democratic party for generations. The losers, which will be the vast majority of Americans, will not soon get used to reduced health care availability at a dramatically higher cost thanks to Barrack Obama. Obama is asking Democrats to swallow a poison pill. No wonder he's tired of talking about it.

Insurance By Any Other Name

Now, the Euro zone and their American counterparts are blaming the CDS market for the troubles in Greece and in the Eurozone generally. What is a CDS? CDS stands for Credit Default Swap. That name is not very edifying. Try this. A CDS is a plain vanilla insurance contract. Yes, insurance. If you own a CDS contract on a Greek bond, then you get paid the full value of the Greek bond if it defaults. For this insurance protection you pay a quarterly premium. Whoever sold you this CDS is functioning like an insurance company. In fact, historically, insurance companies were the main supplier of CDS contracts. Think AIG.

Now ask yourself. If you abolish home insurance, which mainly insures homes against fire damage, would that eliminate fires? If you abolish car insurance, would that eliminate car wrecks? How about eliminating health insurance (which Obama seems dead set on doing), would that eliminate health problems? What the Euro and US regulators, including our friend Bernanke, are arguing is that abolishing the insurance market for Greek bonds will eliminate the likelihood of default for those bonds. Is that absurd or what?

You can't make this stuff up.

Tuesday, March 9, 2010

Summers and Romer Should Return to Academe

To use the word "economist" in the same breath as the words "Obama Administration" is to justapose two concepts that are foreign to one another. The Obama Administration is the least economically literate administration in the past 100 years (and that is saying a lot). One could charitably argue that no one listens to Summers (the Presidents chief White House economic advisor) and Romer (the President's Chairwoman of the Council of Economic Advisors). But, when you hear Romer and Summers on TV being interviewed, the things they say are contradictory and, when in agreement, are patently absurd. So, maybe Obama is right not to listen to them. But, then, who does Obama listen to on economics? Michele?

Paul Volcker seems to be the only economist associated with this White House that, when he speaks, makes any sense whatsoever. The others just seem to spout political babble -- this includes Austin Goolsbee and Cass Sunstein (remember those guys?).

After a blithering array of proposals that seem to mainly batter an already weak economy, the Obama Administration is a collosal failure in combatting this recession. It may be time to send Summers, Romer, Goolsbee, Sunstein, etal back to academe and go back to the drawing boards.

Too Big to Bail

Just imagine. Suppose the government were to announce that, henceforth, once a firm got sufficiently large, it was on its own -- no government bailouts would ever, ever be forthcoming. "Too big to bail" as opposed to current policy. What would happen?

The market itself would discipline a firm that was "too big to bail." Bondholders would be leery of providing the funding for excessively poor behavior. Higher interest rates would be required for bondholders and management would take heed that the market would not endorse their foolishness. The market itself would rein in firms that are "too big to bail."

Compare this to "too big to fail." Here the market is irrelevant. If a firm is too big to fail, then it can easily finance absurd behavior at low rates. Why not? If the government is there as a backstop, why should management and bondholders not indulge themselves at taxpayers' expense. It's heads I win tails you lose.

I prefer "too big to bail."

Monday, March 8, 2010

Blame the Hedge Funds

Politicians could not survive without someone to blame. Obama never opens his mouth without blaming someone: George W. Bush, insurance companies, big oil, Wall Street, whatever. There is always someone to blame. Recently, Bernanke has decided to see if Goldman Sachs is to blame for the Greek fiscal collapse and now hedge funds are seen as the villain behind the collapse of the Euro.

I like this idea. The reason my life is not going exactly as planned is the existence of hedge funds. Yes! That's it. Hedge funds caused the recent earthquakes in Haiti and Chile. Yes! Not only that, hedge funds are behind the collapse of the UVA basketball team's season. Yes!! What about our failure to get enough gold medals at the Olympics? You guessed it! The evil hedge funds (or was it the insurance companies, I forget).

Sunday, March 7, 2010

Three Cheers for the Voters in Iceland

Voters in Iceland resoundingly defeated the referendum to pay back the UK and Denmark for those countries bailout of Iceland bank debt. (The final vote was more than 85 percent against pay back)! What happened is that Brits and Danes bought bank debt from commercial banks domiciled in Iceland. It was a great bubble. Interest rates were sky high and the Brits and Danes couldn't buy enough of it. Then, when it soured (as all such things must), British and Danish investors demanded that their own governments make them whole...the governments of the UK and Denmark complied. They bailed out their own domestic investors in Icelandic bank debt.

Now the UK and Denmark want Iceland to pay up. Why? Why not just let the banks go bankrupt? Why the bailout? If I were a citizen of Iceland, I would not pay one red cent to the UK and to Denmark. Investors in those countries took a risk and...guess what?....the risk didn't pay off. Too bad...better luck next time. There is no reason for the citizens of Iceland to pay the UK or Denmark anything. There should have been no bailout.

The Virtue of Simplicity

Most Americans have no idea how the tax system works including what they pay and what anyone else pays. The tax laws are so complicated and so impossible to comply with that the vast majority of taxpayers are, unwittingly, paying the wrong amount of taxes, year-in and year-out. The same complexity pervades the Obama health care reform package that passed the Senate. It is clear that the President doesn't understand it, because he often describes the bill in ways that run precisely counter to its actual provisions. How can anyone else understand what neither the Prsident nor his Congressional supporters understand about his proposal?

Why does it have to be like this? Is there some reason why laws cannot be simple and easy to understand for the average citizen? The answer is "no." Laws can be made simple and should be made simple.

Take taxes, for example. Why not just have one rate on income and that is that, regardless of the type of income: labor, capital, dividends, whatever. Yes, there would be inequities. So what. There are always inequities. Simplicity is the more significant virtue. How can a government be controlled by its citizenry, if the citizenry doesn't understand the laws of the country?

Think of the resources that are wasted every year in the United States by citizens trying to comply with our income tax laws. How many man (woman) hours go down the drain in this silly exercise, every single year!

This bring us to the recent jobs bill. A complicated tax credit, so full of exceptions and legalese, is not understandable by the small businessman without calling in a tax expert. This makes the credit really only valuable to companies who: 1) were already planning to hire employees; 2) can afford good tax advice. Basically, this bill will be "gamed." There will be no new net creation of jobs by such legislation. Far more effective would be a bill that cut all taxes -- all taxes -- by, say 5 percent. Everyone can understand that bill and act accordingly. And jobs will be created!

As long as laws are too complicated for even their sponsors to understand, then democracy will not be well served.

Saturday, March 6, 2010

Greece and California -- Two Peas in a Pod

Note the similarities. Both have out-of-control budgets that promise public employees the moon, massive entitlement spending (California is forced by law to pick up its share of medicare/medicaid), have extremely heavy regulation of business, and absurd tax rates that attempt to tax only the rich. So, what's happened? Both Greece and California are out of chips. OPM (Other people's money) only lasts as long as the OP (other people) don't wise up. The OP have wised up.

So, now what. Demonstrations, what else? At Berkeley, these demonstrations have turned into riots. The wealthiest part of the California community (yes, Berkeley don't think that they are any serious number of poor people attending Berkeley do you?) are now demanding that the average taxpayer provide more in taxes to support rich folks! What a great idea! Soak the poor and the middle class, so the affluent can relax, smoke a little dope and attend an occasional class. This sounds like a cause even Nancy Pelosi could relate to.

Not to be outdone, the Greeks are also rioting. How dare the German middle class refuse to let us retire at 58 on full pay with free health care. They should be willing to support us in the style to which we have become accustomed. Where are the rich? Let's get them to pay. They left Greece..that's where they are. They left to avoid the absurd tax system. The California wealthy are fleeing California for similar reasons.

All of these pampered, spoiled, protected ingrates are now turning on their benefactors. Their benefactors, bondholders, have figured out this silly game and are balking. This "reverse Robin Hood" program may be seeing the beginning of its death throes.

Goodbye California...goodbye Greece. Who's next?

$ 1.2 Trillion -- A Minor Revision

The Congressional Budget Office yesterday released a revised projection of the increase in the U.S. national debt over the next decade. The earlier, optimistic, forecast, from the White, was that a mere $ 8.5 Trillion would be added to the national debt in ten years (yes, that will more than double the national debt since Obama was sworn into office). Now, the CBO has calmly announced a minor uptick to $ 9.7 Trillion. These, of course, are optimistic projections, coming from the Democratically controlled CBO. The reality will be far worse. Move over Greece, here we come!

Friday, March 5, 2010

Greece Sells Some Bonds

Yesterday, Greece managed to sell $ 6.85 billion of ten year notes and an eye-popping 6.3 % coupon. Good start!

Meanwhile, all the major unions in Greece are on strike. They think it is terribly unfair that bondholders do not provide the good life for Greek citizens.

What's next? Greece has another $ 30 billion coming to market in the next few weeks and nearly $ 70 billion over the course of the year. All of this to support retirements at the earliest ages in the world, free medical care for all, and a shrinking and government bureaucratized private sector that now employs a minority of working (?) Greeks. Wonder why the economy has collapsed?

Is Obama watching? This is our future.

But, before the US gets the front page headlines, let's watch developments in Spain, Portugal, Italy. On another stage, watch the vote in Iceland later this week, where Icelanders refuse to pay back the Brits for bailing out (all of) their banks.

The Entitlement World is blowing up. Meanwhile, the Obama folks are urging America to get into the entitlement lead, as our national debt is blowing off the roof. If Obama gets his way, we could be Greece. Greece is one of the countries that, according to Obama, can afford universal health care. Yep, looks like a plan.

We can pattern ourselves after the Greeks. If they can live high without paying for it, why can't we?

Stay tuned. The unraveling of Entitlement World is just beginning.

Thursday, March 4, 2010

Put a Lawyer in Charge -- More on the Obama Way

Elizabeth Warren is now the guru about how Wall Street should operate. Her background? Economics? Finance? No...she is a lawyer. Her knowledge of Wall Street is zip. Now she will decide our future. Instead of letting Citigroup decide its future, it is now up to lawyers like Elizabeth Warren. No point in letting any economists or financial experts opine on this. Warren is another arrogant Obama appointment. In case you are wondering, Warren is the head of the, ironically named, "Oversight Committee" that now runs the US financial services industry. So much for capitalism and the free market. Now lawyers run the show.

Wednesday, March 3, 2010

Once More With Feeling

He just can't leave the insurance companies alone, can he. Dig this quote:

"Now is the time to make a decision about how to finally reform health care so that it works, not just for the insurance companies, but for America's families and businesses."

You wouldn't know from that comment that 85 percent of Americans have health insurance and something like 90 percent of those 85 percent are satisfied with their current health insurance. Who is the current system not working for? What other industry has satisfaction rates like that? Certainly the White House polling numbers are nowhere near that.

As for insurance companies, they have one of the worst profit rates in the American economy. Why does Obama think they are making so much money? Does he know anything about this subject? If so, why are his statements almost always incorrect when he discusses this subject? Does he care about the real facts?

Every day there are more and more inane quotes from the President revealing how out of touch this White House is with the real issues of our time. Has the President noticed the unemployed or the tripling of the deficit since he took office? When he is going to get off the health care kick and begin to notice the real problems of the American economy.

The only consolation from the rhetoric coming out of this White House is that voters will have a chance, finally, in November to have their say. Voters tried to get their point across in Virginia, New Jersey and Massachusetts, but the President, so far, isn't listening. Can't wait for November!

Blame It on Goldman

As Greece and the Euro begin their long slide into fiscal bankruptcy, all eyes turn to Goldman. Even Bernanke can't resist. As Greece doubled the pay of its public employees in the last few years and dramatically increased its retirement and health care benefits, the fiscal deficit moved to nearly 14 percent of GDP. It turns out, this is all Goldman's fault. Yes!

Here's how. In 2001, Goldman arranged a $ 2.2 billion swap, which was essentially equivalent to debt financing. This amounted to 1/10th of one percent of GDP for 2001. Yes! 1/10 of one percent of GDP for the 2001 fiscal year. That transaction, according to Ben Bernanke and the Greek government is the villain. Gee, if Goldman hadn't done that, all would be well in Greece.

Sound familiar? This was the excuse given for the housing bubble -- the evil lender! Never at fault is the borrower, who takes the money, indulge themselves and then fail to pay back the money. The borrower is always innocent in these scenarios. It is the always the evil lender. As for the borrower, "the devil made them do it."

Poor Greece, I guess they didn't understand that full retirements at 58, free health care for everyone, having over 50 percent of the labor force working (?) for the government -- those things were A-okay.

You wonder why Greece is going bankrupt. After all, Goldman hasn't arranged a swap for them since 2001. Must be some other predatory lender, that's it!

Tuesday, March 2, 2010

You Gotta Love It

For sheer entertainment, nothing beats Obama. Here's today's quote:

"The economy was my focus last year and that is my focus this year. This depends on not just spurring hiring but doing so in the areas that will create lasting opportunities and prosperity."

He can really turn a phrase can't he. Is he kidding?

Political Systems Broken in the West

Western countries have always prided themselves on their "Enlightenment" tradition of representative government in contrast to the authoritarian regimes that predominate in much of the rest of the world. Now, you have to wonder whether the Western experiment can survive.

Let's begin with Greece. Greece is simply an icon for all of the rest of the European countries and the US. Greece has entitlements that it cannot afford and over half of Greece's employees work for the government. Their budget deficit is now over 13 percent of GDP and GDP is falling and the deficit is rising. Retirement age is in the 50s and tax fraud is commonplace. The tax fraud is so bad in Greece that it is suggestive that most Greeks have little or no respect for their legal institutions.

So, the Greeks spend money and indulge themselves with money that they do not have. Bondholders, outside of Greece, have been funding this nonsense for years, but are now balking at continuing to do so. Naturally, the Greek government now looks to other countries for a bailout, instead of taking steps on their own to curb the enormous stupidity that passes for social policy in Greece. Greece is a protypical European welfare state. They are a small version of the situation that exists in every single European country.

Greece, of course, is now demanding that other countries bail them out -- Germany is at the top of their list. Germany has insisted that the Greeks take steps to reign in their out-of-control, unfunded, spending habits. So, what is happening? Greece's largest government employee union is now planning a 24 hour strike. The political system in Greece is breaking down. Not willing to stop living off of other people, the Greeks are now threatening to bring down their own economy and their own political system. This is only the beginning. This political breakdown will spread to other countries in Europe and dominate the future of Europe. All of these pampered and protected groups who think they are entitled to free retirements at early ages and free health care are now finding that there is no one left to pay for all of this. There are no squirrels left that are willing to gather acorns in the Spring and Summer for the Greeks to eat in the Winter. So, now it is time to fight it out in a broken political process.

It won't matter. Simple arithmetic tells you that the Greek experiment, like the European experiment, in the welfare state will fail ultimately, for the simple reason that there is no longer any group of folks that will pay for this. This ponzi scheme has run its course, though the political posturing will go on for another decade or two. It will take some time for Europe to realize that the European welfare state model is untenable. Whether Europe will opt for another round of fascism or move toward free markets is an open question and much in doubt. But, the welfare state is entering its death throes, though the final death will take some time.

Meanwhile, the "poat-partisan" Obama Administration is planning to ram down the throats of an unwilling public, a radical restructuring of American health care that will deny coverage and choice, dramatically raise health care costs and put nearly 20 percent of the economy under direct government control. The public is overwhelmingly against this legislation. But, that doesn't matter. The arrogant Administration and their allies in Congress are determined to cram down this unpopular legislation regardless of public opposition. This Chavez-like strategy that Obama is embarked upon shows the dangers of putting an untested, inexperienced team in the White House, that has a condescending view of the average American. Obama and his crowd have nothing but contempt for the opinion of the average American and the average American knows it.

It is doubtful that Obama-Pelosi will get their way, even with their irresponsible assault upon American political institutions and the economy. But, the very effort to do so, shows that the American political system is broken as well. Never has a bill so unpopular been presented to the Congress and never has a President and his political party been so willing to slap the American people in the face. "The public be damned" is an apt description of the operating style of the Obama Administration. They simply do not care what anyone thinks. Chavez doesn't either. No wonder Obama was busily smiling and shaking Chavez's hand early in his administration. They have very similar views. Neither has much respect for free institutions.

Monday, March 1, 2010

Senator Bunning is Right on Both Counts

Current law provides 99 weeks of unemployment benefits. Research on search efforts of the unemployed concludes that interest in looking for a job is relatively dormant until the last four weeks before unemployment compensation runs out. The benefits run as high $ 30,000 annually in some states (New Jersey, for example). Why work?

Senator Jim Bunning of Kentucky, who is retiring this year and not running for re-election, is currently filibustering a bill to "temporarily" extend long term unemployment benefits. Bunning says the money should come out of the Stimulus Act and not be a new addition to the deficit. Bunning is right. But, he is also right that long term unemployment benefits are a bad idea. It is a subsidy to the unemployed and whatever you subsidize you will get more of. Two years is enough for unemployment benefits. Beyond that, you are simply creating a new welfare entitlement.

Euro Bailout Won't Work

Buying time, the German and French governments have agreed to provide guarantees to their own banks who purchase Greek debt. This does nothing to stem the massive deficits that plague the Greek government. This will encourage the Greeks to take no steps toward solving their own fiscal problems. In time, the problems in Greece will spread and magnify. Ultimately, both Germany and France will be looking for someone to bailout themselves out. The ticking time bomb that is the bankruptcy of the European welfare state inexorably continues to tick. The bailout proposed by Germany and France reveals the weakness inherent in the Euro union and makes it easy to forecast the future collapse of the Euro and the bankruptcy of most of Europe.

The simple truth is that you cannot retire folks in their mid-50s at nearly full compensation and provide everyone in your country with free health care. It's a nice idea that sounds good, but it implies bankruptcy. Germany and France are the suckers, for the moment, and they will be looking for other suckers in time.