Polls continue to indicate Barack Obama has a lead over Mitt Romney among American voters. That is despite the fact that under nearly four years of Obama's 'leadership' we have a comatose economy that is not creating jobs, an explosion in our national debt that impoverishes future generations, an increasingly autocratic government that is dictating our personal behavior and beliefs, an industrial and commercial system that cannot function due to the imposition of excessive rules and regulations, and a foreign policy that ignores the growth of global threats while cutting spending on our national security. I have been around long enough to realize that human brains are wired differently and huge differences of opinion naturally exist. But I really don't understand why voters who bought Obama's bullshit the first time would even consider voting for him again. The only people in American better off under Obama are those living in Washington, DC. How in the hell can a person with Obama's record even be considered a viable candidate?
The appeal of Barack Obama to American voters is nothing short of mystifying, incomprehensible, insane - and heartbreaking. The only possible explanation is that half the people in this country are not paying attention to the real issues or are just too gullible to realize they are being conned. American history has proven that the world's most effective weapons against poverty have been private enterprise, free markets and limited government. Barack Obama has repudiated each of those principles and is imposing socialist policies, government intervention and state control over all aspects of our lives. Under Obama we are becoming an autocratic dictatorship, the kind of country that throughout history our soldiers have given their lives to keep away from our shores. Today we are being subjugated from within.
Barack Obama is right about one thing. America is not an exceptional country - at least not any more. That is because we have let left wing ideology and politically correct philosophies take over the country. Hard working, productive Americans have been asleep at the switch while a growing number of citizens have bought into the Democratic Party promises of being able to have it all without having to work for it because the government will provide it. The problem is that what the Dems apparently believe will happen in theory never does in reality. Either that, or they are just snake oil salesmen making promises they know they can't keep in order to gain and remain in power.
For the first time in American history we now hear people say "My children and grandchildren will be worse off than my generation". That defeatist attitude can and must be changed. Mitt Romney has had a career in the private sector creating successful companies as well as some that have failed. That is the way capitalism works. Not every company is a winner as the competitive marketplace decides who is. But over time the most efficient, innovative and productive companies create economic growth that benefits all of us, creating new jobs and new products that lead to further innovation and growth. This process works best when government has only a limited influence by ensuring a fair, honest and orderly marketplace and stays out of the business of picking winners and losers. That type of economic environment must be restored, and Mitt Romney knows it.
Romney's selection of Paul Ryan as Vice-President means that his right hand man will be someone who understands budgets and knows how to gain control over out of control federal spending. Americans will get a real opportunity to choose whether they want the country to survive and their children to prosper or whether they are too selfish and self-centered to understand or even care about the consequences of current socialist policies. Voters can choose between the economic growth generating dynamism of capitalism or the downward spiral resulting from the welfare state, expanding government budget deficits and bureaucratic interference in private enterprise. Unfortunately, a large segment of the voting public does not understand economics and the dynamics of capitalism and therefore do not have a clue about the consequences of their actions.
The major problem regarding the public comprehension of the issues is the bullshit coming from the campaign rhetoric of the Democrats. Frankly, those who actually believe the Democratic Party's traditional portrayal of Republicans as mean, selfish, evil monsters intent on raping, pillaging and plundering the poor to satisfy their heartless greed are of questionable sanity. How does further impoverishing the poor and the middle class help the rich become richer? In order for businessmen to be successful they must create products and services that satisfy the demands of consumers who have the money to buy those products and services. The leaders of industry cannot make money if their customers cannot afford what they are selling. Destroying the financial resources of your customer base would be self-defeating.
Of course there is one sector of the economy where people can get rich by doing nothing productive for society or the economy. These are the folks in the big banks and Wall Street money managers who get wealthy by trading worthless pieces of paper using debt leverage that cause whole economies to collapse. That hurts everyone but them, because they are the same ones who have politicians and regulators in their pockets and get bailed out by government, most recently under both Bush and Obama. For those who are unaware, let me be the first to inform you that those assholes generously support both parties, Republicans and Democrats. Look it up. Hopefully someday those who vote Democrat will understand that their claims of being the party of the little guy is a crock of shit.
Furthermore, those who buy the crap that Republicans want to raise taxes on the middle class to give to the top 1% as many Democrats claim must be Kool-Aid drinking lunatics (the bottom 47% already don't pay taxes, so how can taxes be raised on them? Oh, yeah, they just get less back from the government than they do now). Nowhere in any policy proposals from the Republicans does it mention raising taxes on the middle class. Furthermore, the top 1% knows that raising taxes on the middle class to give to them is what causes political revolutions where they come out the losers. The traditional campaign trash produced by the Democratic Party strategists is nothing but creative lies that defy common sense, logic and rationality.
It would be a good idea for those who always blindly vote for Democrats to consider what happens to them and their offspring when those who generate the jobs that provide income for government to tax decide it isn't worth the effort. Raising taxes on the wealthy will not generate an equal percentage increase in revenues. If there are no incentives, there are no motivated producers. If you don't bait the hook you don't catch the fish. If that is too difficult to understand, the doubters could just go to Greece and find out the reality. Greece is in deep shit for following the same policies that Barack Obama is implementing here, and Greeks will be suffering declines in standards of living and quality of life for many years to come.
Basically, politics is all about the size of the economic pie. Throughout American history the size of the pie has been expanding due to private enterprise and free market incentives stimulating innovation and productivity, providing a bigger piece of the pie for everyone, including those at the bottom of the income scale. Today's Democrats, or more accurately the socialist progressives since these aren't the same Democrats of just a generation ago, believe the pie does not grow as it most certainly won't under their policies. Therefore their agenda is to appeal to those who want a bigger piece of the pie by promising to take it from someone else. That is not an agenda for maintaining a healthy or productive society.
One has to ask, is it really compassionate to impose policies that make people dependent on government support, or maybe a better idea to try and implement policies that help people support themselves? Do those who buy into the 'progressives' bullshit really believe conservatives are racist ogres whose goals are to destroy the environment, throw little old ladies in wheel chairs off cliffs, starve the poor, shoot up the mall, keep the black man down (whatever that means), exploit society to satisfy greed, etc., etc., etc? Who is really the most corrupt, businessmen who produce goods and services that consumers want while collecting some profit for their efforts, or politicians who use political office to gain wealth and power by confiscating money from taxpayers to pay off special interests and collecting bribes from lobbyists and supporters, all while making promises they know they can't keep in order to stay on the gravy train?
The result of 'progressives' policies are so bad they actually have only one campaign strategy they can pursue, the same one they always use. It is called divide and conquer. While claiming they are unifiers they create lies that appeal to the majority and promote hatred of those with opposing vews. These nominal Democrats know that is the only chance they have of winning elections, so they take advantage of the unfortunate human weakness of jealousy, the reality that the have nots will always want what the haves have without having to work for it. This class warfare strategy works best when society is the most polarized, and that is why the left wing politicians keep dividing society as much as they do. But government policies based on retribution and redistribution are no way to generate social harmony or economic prosperity. As government consumes an ever greater portion of resources while producing nothing in return the country will be doomed to a perpetual depression that erodes our quality of life.
Barack Obama and his attack dogs claim that Mitt Romney's and Paul Ryan's blueprint for restoring progress and prosperity to America is 'extreme' and 'radical'. Since when did limited government, private enterprise, free markets, personal responsibility, individual rights, rule of law and strong national security become extreme and radical. They are the traditional principles that have been responsible for generating unprecedented affluence and preserving the freedoms Americans have long enjoyed. This election will be decided by whether voters mindlessly buy into the lies of the left or take the time to learn the reality of Barack Obama, his policies and the consequences of where they are taking us. Paul Ryan is the only man in Washington offering serious, workable solutions that can save us from disaster. Mitt Romney would not have picked him for VP if he didn't intend to gain control over government spending, which is priority number one in preserving the country for future generations. We can only wait and see if enough Americans are smart enough to see that Romney and Ryan get the chance.
Barack Obama arrived on the political scene with no experience, no qualifications and no clue. He now has experience, but experience that is ruining the country. He lives in a fantasy world that does not exist. He has no idea how the world works and dictates policies that have never been successful and never will be. The country cannot survive his naivete and his ideology that history has proven over and over again is destructive to economic progress and quality of human life. Continuing to do what doesn't work is the definition of insanity. Barack Obama has been taking this country down the wrong path for four years. One has to wonder how he can still even be in the political big leagues. Americans really couldn't be dumb enough to give him another four years to completely destroy what our forefathers have built, could they?
p.s. - About the likeability thing. What is there to like about an arrogant, condescending, polarizing, serially lying know-it-all who has done nothing to improve the sick condition our country is in during the three and half years he has been in office? He does nothing but blame others for our problems while continually demonizing the people who are really trying to do the right thing to get the country moving back in the right direction. Likeable my ass!!!! And even if he was, what good is that doing us?
p.s. 2 - I am not a Republican. I am an independent. The Republican Party has its share of sleazeballs, too. Up until a decade or so ago the liberals and conservatives in this country may have disagreed on a lot of things, but they all generally believed in private enterprise, free markets, individual liberty and the rule of law. Today's Democratic Party leaders don't. They believe in big government control (i.e., their control) of everything that happens in this country. If traditional Democrats don't figure that out in the next couple of months then we are all in big trouble.
p.s. 3 - The polls say Obama has a big lead among women, minorities and the college educated. I wouldn't pretend to have a clue what makes women tick, and the minorities are just proving that the only ethnic groups in America where a significant portion of them are racist are the minorities themselves. As for the college educated, I can only recommend that you get the money back you obviously wasted on college. Maybe this time you could tune out the talking airheads and poison pens of the institutions of higher indoctrination and the major media disinformation networks and think for yourself. If not, and you are one of those under the age of 35 with a college education who voted for Obama in 2008, think you're pretty damn smart and plan on voting for him again, don't say you weren't warned. But please do feel guilty when you realize you were compliant in the descent into mediocrity, or worse, of the greatest country that ever existed on earth. Being fooled once can happen to anybody. Being fooled twice is inexcusable.
Monday, August 27, 2012
Wednesday, July 25, 2012
Ayatollah Obama
There is nothing more depressing than reading polls that claim Barack Obama still has a large lead among voters in the 2012 presidential election. America as we have known it is apparently gone. It is beyond sad what we have become, an anti-capitalist centrally controlled socialist welfare state that ignores the Constitution, suppresses our freedom, confiscates our wealth, polarizes our society, destroys our living standards and creates an authoritarian dictatorship of privileged cronies. America is becoming like Iran, ruled by an autocratic clique of self-righteous fanatics who dictate our behavior according to their holy principles. The only difference is that America's dictators religion is Marxism rather than Shiite Islam, and their holy principles are found in "Das Kapital" and "The Communist Manifesto" rather than The Koran.
Only morons can believe the way to sustain living standards is to encourage the unemployed to stay unemployed with generous welfare checks, food stamps and health care support, financed by either going further in debt or taking more money from the productive members of society who already provide nearly all of the resources that government consumes. Certainly every country needs a safety net for those who truly need it, but we cannot afford to maintain a parasitical lifestyle for those who just take advantage of the system.
The big government, cradle to grave social policies being forced on us by Obama and his communist cronies are the same policies that have brought Europe to its knees and California, Illinois, Michigan and other 'progressive' states to insolvency. I know the majority of black folks will vote for Obama because they think he is one of them, even if they look around the neighborhood and realize he hasn't done a damn thing for them. I am disappointed in Latinos since I thought they were more interested in improving the living standards of their families by participating in our traditional capitalist job creating economy than the polls indicate they are. But I cannot comprehend what it is that women and young people don't understand about the ultimate result of the policies that have ruined Europe and bankrupted the states controlled by the Democratic Party. Are they so uninterested in the truth that they buy into Obama's bullshit but don't see the disastrous consequences.
It is not too late to preserve what we have. It can certainly be argued that the United States is a mature country and that its period of strong growth is behind it. But the standards of living we have gained over the last century do not have to disappear. Even though we may be entering a period of more modest economic growth, life can still be pretty good. That is, if we can all realize the opportunities people have available to improve themselves that capitalism and private enterprise can still offer rather than polarizing into jealous adversaries demanding more freebies from the more affluent who already carry the load.
Unfortunately, the favorable outcome is not likely to occur with the anti-capitalist income redistributors and social polarizers now in the White House and in charge of the Senate. We can only hope that America's women and children will open their eyes, observe where we are headed and realize that Barack Obama and his propagandists in the major media networks are lying to them.
Only morons can believe the way to sustain living standards is to encourage the unemployed to stay unemployed with generous welfare checks, food stamps and health care support, financed by either going further in debt or taking more money from the productive members of society who already provide nearly all of the resources that government consumes. Certainly every country needs a safety net for those who truly need it, but we cannot afford to maintain a parasitical lifestyle for those who just take advantage of the system.
The big government, cradle to grave social policies being forced on us by Obama and his communist cronies are the same policies that have brought Europe to its knees and California, Illinois, Michigan and other 'progressive' states to insolvency. I know the majority of black folks will vote for Obama because they think he is one of them, even if they look around the neighborhood and realize he hasn't done a damn thing for them. I am disappointed in Latinos since I thought they were more interested in improving the living standards of their families by participating in our traditional capitalist job creating economy than the polls indicate they are. But I cannot comprehend what it is that women and young people don't understand about the ultimate result of the policies that have ruined Europe and bankrupted the states controlled by the Democratic Party. Are they so uninterested in the truth that they buy into Obama's bullshit but don't see the disastrous consequences.
It is not too late to preserve what we have. It can certainly be argued that the United States is a mature country and that its period of strong growth is behind it. But the standards of living we have gained over the last century do not have to disappear. Even though we may be entering a period of more modest economic growth, life can still be pretty good. That is, if we can all realize the opportunities people have available to improve themselves that capitalism and private enterprise can still offer rather than polarizing into jealous adversaries demanding more freebies from the more affluent who already carry the load.
Unfortunately, the favorable outcome is not likely to occur with the anti-capitalist income redistributors and social polarizers now in the White House and in charge of the Senate. We can only hope that America's women and children will open their eyes, observe where we are headed and realize that Barack Obama and his propagandists in the major media networks are lying to them.
The Blame Game
Somebody has to take the blame. When the shit hits the fan it has to be somebody's fault. When the whole country goes down the drain it has to be the president's fault. The only question is which president - the one who was in office at the time things went bad or the one who has done nothing but make things worse over the following three years. In reality, the blame game being played by both political parties about who is responsible for our dormant economy is way off the mark.
The policies that led to our current situation span several presidencies and are the product of a political system that has ceased to represent the electorate as a result of the irresponsible promises, self serving agendas and corrupt activities of politicians on both sides of the aisle. And over the last decade the inevitable collapse was intensified and accelerated due to the removal of restraints on the activities of the big Wall Street financial institutions and facilitated by their incestuous relationship with the financial authorities and regulators in Washington.
The fact is that neither George Bush nor Barack Obama caused our current economic lethargy, although they both made the situation worse with the wrong policy responses. But those policy responses were due to the advice of their economic advisers, all of whom were members in good standing of the Wall Street Banking - Ivy League Academic - Federal Financial Regulator fraternity who were the real names and faces behind the financial bubble and market collapse. These were also the same folks who survived the debacle with their fortunes intact, thanks to their self-engineered government bailout, while the rest of America lost 40% of its net worth.
Harvard, Yale, Columbia and Princeton used to produce many of the captains of commerce, industry, finance, and the legal profession who were instrumental in building America into the wealthiest nation on earth. Now they produce those who control and manipulate the financial markets to rape, pillage and loot the country. They play lucrative but dangerous games with other people's money trading highly leveraged derivatives of high risk securities, winning big when the bets work out and causing catastrophic damage to the markets when they don't. But it doesn't really matter to these folks because they are 'too big to fail', and they just call on their fellow Ivy League graduates and (former and future) business partners in Washington to bail them out when the losses mount.
But we are getting ahead of ourselves. The seeds of the meltdown go farther back before the predators on Wall Street figured out how to capitalize on government programs and policies to build outrageous fortunes creating, selling and trading securities that no one understood using debt leverage that invited disaster. Actually the whole thing started in the halls and meeting rooms of Congress as a substantial number of liberal senators and representatives decided that everyone in America should own a home. Since 1992, with primarily Democratic Party Congressional support, federal housing laws have focused on using the Federal Housing Enterprises, Fannie Mae and Freddie Mac, to expand their participation in the home loan market and make homes more affordable for those who may not otherwise qualify for mortgage loans. In response to that Congressional mandate Fannie and Freddie lowered their mortgage lending standards, or more accurately, eliminated their lending standards so that anyone could get a home loan. That is where the problem started.
The enabling legislation that allowed the high stakes financial games trading sub-prime mortgages to develop was the Financial Services Modernization Act of 1999, sponsored by Republicans Phil Gramm, Jim Leach, and Thomas Bliley, and signed into law by Democratic President Bill Clinton. This law allowed commercial banks to engage in the more speculative activities of investment banking, investment brokerage, insurance and proprietary trading. The legislation had the same effect as lighting a blowtorch in a fireworks factory. The natural ingenuity of Wall Street investment bankers resulted in the creation of not only portfolios of high risk sub-prime mortgage loans but also the use of borrowed money to increase the potential returns from those portfolios. For those who had the foresight to recognize that those securities may not be a good investment, they also created credit default swaps to profit from the default of the portfolios. Unforeseen by the overpaid geniuses was that credit default swaps would also become worthless when everyone defaulted at the same time and the underwriter could not cover the payout. The accumulation of exceedingly high risk investments and leverage was inevitably destined to end badly, and it did.
So who is responsible for our current economic predicament? Lots of people. Start with the Democrats in Congress who pushed the ludicrous idea that all Americans should own homes, encouraging Fannie and Freddie to lend money to people who had no ability to pay it back. The blame can be laid squarely on Democrats because Republicans tried to reform these insane lending policies with the Federal Housing Enterprise Regulatory Reform Act of 2005, which was unanimously rejected by Democrats. Next look at the Wall Street bankers, money managers and traders, mostly apolitical fellows who play both sides of the political aisle with emphasis on which side is in power. They set the timer on the debt bomb with the creation of high risk securities based on massively leveraged trading of mortgage debt and its derivatives. Top that off with federal financial regulators, mostly Democratic Party supporting bureaucrats at the operations level and Wall Street veterans and/or puppets at the top, who weren't regulating anything. Ironically, most of these folks are still in the same chairs playing the same games.
The question now is not whom to blame, but who and what policies will get us out of the situation. Barack Obama's answer is to pour more gasoline on the fire by just expanding the same programs that caused the conflagration in the first place. He is also forcing more rules, regulations and requirements on private sector businesses, straight-jacketing the efficient functioning of capitalism and free markets. The reported 50% of voters in this country who plan to vote for him again this fall must be brain dead.
Changes in tax policy can contribute to solving our problems, but only changes that simplify the process and eliminate loopholes. Eliminating loopholes would increase revenues and restore fairness while ending widespread avoidance and time wasted with compliance. The answer is not raising tax rates. Some people do make too much money, and I don't believe raising taxes on those making over half a million dollars a year would would hurt their lifestyle much. But the amount of revenue gained would be a drop in the barrel compared to how much revenue is needed to begin to reduce the deficit, and it would quickly result in diminishing revenues as the incentive to maximize income subject to taxation falls.
Spending cuts are the only real solution. We must eliminate unnecessary programs and rationalize those that are necessary, ban public unions and restrain public employee compensation, eliminate inefficient job duplication while demanding accountability, and reform the lobbying process by removing opportunities for corrupt legislative influence. We must also revise health care and retirement programs to establish fiscal responsibility and sustainability, and require elected offficials and their staffs to be subject to the same rules as the general public.
It shouldn't be that hard. Everyone without blinders on can see that Barack Obama is taking us down the drain. But just voting for a Republican will not turn the country around. Go along to get along Republicans are part of the problem, not the solution. Out of control government spending is a bipartisan effort, complete with the acquiescence of so-called 'conservatives' in Congress. In the first decade of the 21st Century, compromise has been defined as surrendering to the liberal agenda. That has to stop.
Republicans need to learn you cannot win a debate with ideologues who will create any lie or impossible scenario they can exploit to brainwash the public; you cannot reach a compromise with those who refuse to give any concessions; you cannot compete against dishonest charlatans and snake oil salesmen who make promises they do not intend to keep; and you cannot give concessions to assholes who will blame you anyway when the impossible promises are not kept.
The campaign dirt is beginning to fly, and each side will blame the other for the economic catastrophe we find ourselves in. There is plenty of blame to go around, but it is quite clear that Congressional Democrats were responsible for creating the sub-prime mortgage mess, apolitical bankers and traders produced the financial market bubble and meltdown, and cronyism among Wall Street and its regulators allowed it all to happen. Capitalism and free markets did not cause our current problems. Growth of big, invasive, dominating government did with the help of its friends on Wall Street. Barack Obama wants to make the government bigger, more invasive, more dominating than it already is. What we critically need is to return America to the people and let the private sector do what it has always done, create innovative new ideas, products and efficiencies that generate progress and rising living standards. Barack Obama and his 'Progressive' (a.k.a. state socialist; a.k.a. communist) posse must be defeated.
The policies that led to our current situation span several presidencies and are the product of a political system that has ceased to represent the electorate as a result of the irresponsible promises, self serving agendas and corrupt activities of politicians on both sides of the aisle. And over the last decade the inevitable collapse was intensified and accelerated due to the removal of restraints on the activities of the big Wall Street financial institutions and facilitated by their incestuous relationship with the financial authorities and regulators in Washington.
The fact is that neither George Bush nor Barack Obama caused our current economic lethargy, although they both made the situation worse with the wrong policy responses. But those policy responses were due to the advice of their economic advisers, all of whom were members in good standing of the Wall Street Banking - Ivy League Academic - Federal Financial Regulator fraternity who were the real names and faces behind the financial bubble and market collapse. These were also the same folks who survived the debacle with their fortunes intact, thanks to their self-engineered government bailout, while the rest of America lost 40% of its net worth.
Harvard, Yale, Columbia and Princeton used to produce many of the captains of commerce, industry, finance, and the legal profession who were instrumental in building America into the wealthiest nation on earth. Now they produce those who control and manipulate the financial markets to rape, pillage and loot the country. They play lucrative but dangerous games with other people's money trading highly leveraged derivatives of high risk securities, winning big when the bets work out and causing catastrophic damage to the markets when they don't. But it doesn't really matter to these folks because they are 'too big to fail', and they just call on their fellow Ivy League graduates and (former and future) business partners in Washington to bail them out when the losses mount.
But we are getting ahead of ourselves. The seeds of the meltdown go farther back before the predators on Wall Street figured out how to capitalize on government programs and policies to build outrageous fortunes creating, selling and trading securities that no one understood using debt leverage that invited disaster. Actually the whole thing started in the halls and meeting rooms of Congress as a substantial number of liberal senators and representatives decided that everyone in America should own a home. Since 1992, with primarily Democratic Party Congressional support, federal housing laws have focused on using the Federal Housing Enterprises, Fannie Mae and Freddie Mac, to expand their participation in the home loan market and make homes more affordable for those who may not otherwise qualify for mortgage loans. In response to that Congressional mandate Fannie and Freddie lowered their mortgage lending standards, or more accurately, eliminated their lending standards so that anyone could get a home loan. That is where the problem started.
The enabling legislation that allowed the high stakes financial games trading sub-prime mortgages to develop was the Financial Services Modernization Act of 1999, sponsored by Republicans Phil Gramm, Jim Leach, and Thomas Bliley, and signed into law by Democratic President Bill Clinton. This law allowed commercial banks to engage in the more speculative activities of investment banking, investment brokerage, insurance and proprietary trading. The legislation had the same effect as lighting a blowtorch in a fireworks factory. The natural ingenuity of Wall Street investment bankers resulted in the creation of not only portfolios of high risk sub-prime mortgage loans but also the use of borrowed money to increase the potential returns from those portfolios. For those who had the foresight to recognize that those securities may not be a good investment, they also created credit default swaps to profit from the default of the portfolios. Unforeseen by the overpaid geniuses was that credit default swaps would also become worthless when everyone defaulted at the same time and the underwriter could not cover the payout. The accumulation of exceedingly high risk investments and leverage was inevitably destined to end badly, and it did.
So who is responsible for our current economic predicament? Lots of people. Start with the Democrats in Congress who pushed the ludicrous idea that all Americans should own homes, encouraging Fannie and Freddie to lend money to people who had no ability to pay it back. The blame can be laid squarely on Democrats because Republicans tried to reform these insane lending policies with the Federal Housing Enterprise Regulatory Reform Act of 2005, which was unanimously rejected by Democrats. Next look at the Wall Street bankers, money managers and traders, mostly apolitical fellows who play both sides of the political aisle with emphasis on which side is in power. They set the timer on the debt bomb with the creation of high risk securities based on massively leveraged trading of mortgage debt and its derivatives. Top that off with federal financial regulators, mostly Democratic Party supporting bureaucrats at the operations level and Wall Street veterans and/or puppets at the top, who weren't regulating anything. Ironically, most of these folks are still in the same chairs playing the same games.
The question now is not whom to blame, but who and what policies will get us out of the situation. Barack Obama's answer is to pour more gasoline on the fire by just expanding the same programs that caused the conflagration in the first place. He is also forcing more rules, regulations and requirements on private sector businesses, straight-jacketing the efficient functioning of capitalism and free markets. The reported 50% of voters in this country who plan to vote for him again this fall must be brain dead.
Changes in tax policy can contribute to solving our problems, but only changes that simplify the process and eliminate loopholes. Eliminating loopholes would increase revenues and restore fairness while ending widespread avoidance and time wasted with compliance. The answer is not raising tax rates. Some people do make too much money, and I don't believe raising taxes on those making over half a million dollars a year would would hurt their lifestyle much. But the amount of revenue gained would be a drop in the barrel compared to how much revenue is needed to begin to reduce the deficit, and it would quickly result in diminishing revenues as the incentive to maximize income subject to taxation falls.
Spending cuts are the only real solution. We must eliminate unnecessary programs and rationalize those that are necessary, ban public unions and restrain public employee compensation, eliminate inefficient job duplication while demanding accountability, and reform the lobbying process by removing opportunities for corrupt legislative influence. We must also revise health care and retirement programs to establish fiscal responsibility and sustainability, and require elected offficials and their staffs to be subject to the same rules as the general public.
It shouldn't be that hard. Everyone without blinders on can see that Barack Obama is taking us down the drain. But just voting for a Republican will not turn the country around. Go along to get along Republicans are part of the problem, not the solution. Out of control government spending is a bipartisan effort, complete with the acquiescence of so-called 'conservatives' in Congress. In the first decade of the 21st Century, compromise has been defined as surrendering to the liberal agenda. That has to stop.
Republicans need to learn you cannot win a debate with ideologues who will create any lie or impossible scenario they can exploit to brainwash the public; you cannot reach a compromise with those who refuse to give any concessions; you cannot compete against dishonest charlatans and snake oil salesmen who make promises they do not intend to keep; and you cannot give concessions to assholes who will blame you anyway when the impossible promises are not kept.
The campaign dirt is beginning to fly, and each side will blame the other for the economic catastrophe we find ourselves in. There is plenty of blame to go around, but it is quite clear that Congressional Democrats were responsible for creating the sub-prime mortgage mess, apolitical bankers and traders produced the financial market bubble and meltdown, and cronyism among Wall Street and its regulators allowed it all to happen. Capitalism and free markets did not cause our current problems. Growth of big, invasive, dominating government did with the help of its friends on Wall Street. Barack Obama wants to make the government bigger, more invasive, more dominating than it already is. What we critically need is to return America to the people and let the private sector do what it has always done, create innovative new ideas, products and efficiencies that generate progress and rising living standards. Barack Obama and his 'Progressive' (a.k.a. state socialist; a.k.a. communist) posse must be defeated.
Tuesday, June 26, 2012
The Bond Bubble and America's Survival
The survival of Western Civilization is today at risk, and that risk is being reflected in the global financial markets. We are currently experiencing the most widespread, pervasive financial bubble of all time. It is a bubble that is not widely recognized because it involves US government debt, considered by most to be the safest asset on earth, and because it is being encouraged by the Federal Reserve. But the massive accumulation of government bonds, notes and bills by all types of investors over the last several years has created a bond bubble that indicates collective insanity. Real returns are now negative on US Treasuries, the most broadly held financial asset in the world and an obligation of an entity that everyone knows is rushing rapidly towards insolvency. Buyers of Treasuries today cannot possibly earn a reasonable return on their investment. Yet institutional investors and individuals continue to throw money at government debt and increasingly high risk junk bond funds while throwing away stocks. That makes absolutely no sense.
One has to wonder why investors are punishing stocks when it is interest bearing debt securities and their derivatives that have caused all the trouble in the last ten years. Apparently investors are now scared shitless of investing in the common stocks of American corporations, which are the very essence of capitalism, following two significant bear markets in less than a decade. The pummeling of equities began more than a decade ago with the bursting of the dot-com bubble. The realization that internet companies producing nothing but a fantasy vision of future riches were not really worth anything caused a 46% collapse in the stock market beginning in the year 2000 and lasting until the summer of 2002. Stocks gradually recovered following the tax cuts of 2001, and reached a new peak 2% higher than the previous one in the summer of 2007 before the meltdown of the housing bubble slammed the market again, causing it to drop 48% over the next eighteen months. That disaster was a bit more bizarre since it had everything to do with mortgage debt and debt derivatives and very little to do with common stocks, unless you were talking about the common stocks of the big financial institutions at the center of the calamity.
In retrospect it is clear that an event prior to even the dot-com collapse set the course for the wholesale abandonment of equities over the last decade. The flight from stocks into fixed income (bonds, notes, bills) began with the effective repeal of the Glass-Steagall Banking Act of 1933 as a result of the enactment of The Financial Services Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act. The repeal of Glass-Steagall let commercial banks back into the businesses of investment banking, investment brokerage, money management and insurance services. Each of these businesses create conflicts of interest with commercial banking operations, a situation that should not be tolerated since it opens the door to fraud. But most devastating, the repeal let banks engage in the high risk business of proprietary trading, or trading securities speculatively for their own account, in which they promptly increased their unmeasurable risk exponentially with the massive use of leverage.
The investment vehicles of choice for the financial geniuses at the big institutions became leveraged mortgage debt, derivatives of that same leveraged mortgage debt and creative securities (credit default swaps) designed to hedge against the collapse of those securities. And when yields became too low for some, they moved into the even more high risk speculative trading of junk bonds. Trading crap became much more lucrative than investing in stocks of profitable companies, and trading the crap is what led to the financial meltdown. Despite the bailout, those activities have continued to this day as the big institutions distribute and trade debt at record low yields while shunning stocks, even while many companies experience rising earnings and display strong balance sheets. Go figure.
The only fundamental factor weighing on stocks today that makes any logical sense is the concern over whether or not capitalism will survive the policies of the politicians currently in charge of the US government. There is no question that if we stay on the current political course of massive government deficit spending, continuing to flood the global markets with more and more government debt that cannot be repaid, it can be said with near certainty that we are all doomed. That course is unsustainable. If it is maintained the collapse of the Bond Bubble will likely occur suddenly and swiftly, will utterly devastate the US and world economy, and take many difficult and turbulent years from which to recover, if we ever can.
But it doesn't have to happen that way. If a government is elected that can manage a gradual reversal in current trends of excessive government spending and remove the impediments to the efficient and productive operation of free enterprise, then there is hope we can all get through this without severe economic depression, catastrophic political turmoil and collapsed living standards. It is clear that America is in a critical life and death situation, and it is imperative that we boot the Progressives (i.e., state socialists a.k.a. communists) out of government and elect responsible leadership that can get us back on track. We need a president who has experience as an organizational manager. We need a president who understands economics while having a social conscience, one who also understands the basic American principles that produced both freedom and unprecedented prosperity. We need the anti-Obama. After all the damage he has done, if Barack Obama truly loved this country he would vote for Mitt Romney, too.
The most important policy moves government must make is to remove the legal and regulatory shackles from private enterprise, reform tax policy to eliminate preferences and re-establish an operating environment where the rules and regulations don't change every year. We must reduce the size of government. It employs too many people who make too much money. Public employees serving the people should not be compensated with salaries, benefits and job security that is better than those who pay for them. Government jobs are inefficient because they have too many people doing the same unnecessary jobs, which means the public work force must be reduced. And it would certainly help to make consumers and investors responsible for their own actions rather than expect government to protect them from their own ignorance and irresponsibility. Of course businesses must be held responsible for their activities and products, particularly when negligence or fraud is involved. But frivolous class action lawsuits for losses or damages sustained because the buyer did something stupid must end.
Even more important, we must stop spending federal money for programs that have no purpose other than politicians buying votes. One example is absurd agricultural subsidies to rich farmers. Another is subsidized student loans to anyone who wants one, even though there are no jobs available for them to generate income to pay the loans back even if the recipient did finish college. Perhaps the most bizarre is the food stamp program that has doubled the number of eligible participants and the cost in just the last three years. One out of seven Americans is now eligible for food stamps, including folks who make 130% of the federal poverty guideline, have thousands of dollars in savings and perhaps own a million dollar home. How ridiculous is it that the Agriculture Department runs radio and TV ads promoting the food stamp program? Those who truly need food assistance know it is availabe. Those who don't need it but see the ads like the idea of free food, paid for by the chumps who pay taxes. And the list of such programs goes on and on. The bureaucracy is out of control.
America must make a clean sweep of its elected officials. If Barack Obama is re-elected, the Democrats retain the Senate, or any big spending Republicans masquerading as conservatives remain in office it will be time to turn out the lights because the party is over. We don't have more time. The presidency, the Senate and the House must be controlled by statesmen who are on the same page regarding what must be done. It won't be easy. Even if capable and competent leaders do win office, the policies required to stop, reverse and recover from our current course towards economic and social Armageddon will cause hardship and suffering that the political opposition can and will exploit in their attempt to regain office and resume their policies of mass destruction. It will be difficult to stay the course. But it must be done, or else the United States of America is done. Yes, it is that critical.
The big question for many folks who still have some investable assets and know they can't count on social security to support them when they retire is what does one do with their financial assets? Great question. Unfortunately it depends on many factors, including whether the bond bubble implosion happens rapidly or over time, leads to global economic collapse or a division into strong and weak countries, results in inflation or deflation, and what currencies emerge to dominate what is left of global commerce. The answer to the question is that no one knows. But the prospects for a favorable outcome improve substantially if responsible conservatives resoundingly win the elections this fall.
Assuming the real economic conservatives win, how does one invest their personal money now? Investors could keep their money in fixed income expecting to retain some principal value while we go through tough times, but the inevitable increase in interest rates will eventually cause bonds and bond funds to fall in price, potentially producing significant losses. Personally, I believe that if we can achieve all of the objectives mentioned above it would mean the rebirth of capitalism and the end of the assault on common stocks. Right now could be a perfect time to take advantage of the overwhelming negative sentiment towards American and foreign stocks. Equity prices always reflect future results, and a re-awakening of free enterprise around the globe could produce strong gains over the next several years. That is the way I am betting. If I am wrong, I am going down with the ship. That is not as risky of a bet as it may seem, because if I am wrong and the current government remains in office there is little doubt that the ship is going down. And then we are all screwed.
One has to wonder why investors are punishing stocks when it is interest bearing debt securities and their derivatives that have caused all the trouble in the last ten years. Apparently investors are now scared shitless of investing in the common stocks of American corporations, which are the very essence of capitalism, following two significant bear markets in less than a decade. The pummeling of equities began more than a decade ago with the bursting of the dot-com bubble. The realization that internet companies producing nothing but a fantasy vision of future riches were not really worth anything caused a 46% collapse in the stock market beginning in the year 2000 and lasting until the summer of 2002. Stocks gradually recovered following the tax cuts of 2001, and reached a new peak 2% higher than the previous one in the summer of 2007 before the meltdown of the housing bubble slammed the market again, causing it to drop 48% over the next eighteen months. That disaster was a bit more bizarre since it had everything to do with mortgage debt and debt derivatives and very little to do with common stocks, unless you were talking about the common stocks of the big financial institutions at the center of the calamity.
In retrospect it is clear that an event prior to even the dot-com collapse set the course for the wholesale abandonment of equities over the last decade. The flight from stocks into fixed income (bonds, notes, bills) began with the effective repeal of the Glass-Steagall Banking Act of 1933 as a result of the enactment of The Financial Services Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act. The repeal of Glass-Steagall let commercial banks back into the businesses of investment banking, investment brokerage, money management and insurance services. Each of these businesses create conflicts of interest with commercial banking operations, a situation that should not be tolerated since it opens the door to fraud. But most devastating, the repeal let banks engage in the high risk business of proprietary trading, or trading securities speculatively for their own account, in which they promptly increased their unmeasurable risk exponentially with the massive use of leverage.
The investment vehicles of choice for the financial geniuses at the big institutions became leveraged mortgage debt, derivatives of that same leveraged mortgage debt and creative securities (credit default swaps) designed to hedge against the collapse of those securities. And when yields became too low for some, they moved into the even more high risk speculative trading of junk bonds. Trading crap became much more lucrative than investing in stocks of profitable companies, and trading the crap is what led to the financial meltdown. Despite the bailout, those activities have continued to this day as the big institutions distribute and trade debt at record low yields while shunning stocks, even while many companies experience rising earnings and display strong balance sheets. Go figure.
The only fundamental factor weighing on stocks today that makes any logical sense is the concern over whether or not capitalism will survive the policies of the politicians currently in charge of the US government. There is no question that if we stay on the current political course of massive government deficit spending, continuing to flood the global markets with more and more government debt that cannot be repaid, it can be said with near certainty that we are all doomed. That course is unsustainable. If it is maintained the collapse of the Bond Bubble will likely occur suddenly and swiftly, will utterly devastate the US and world economy, and take many difficult and turbulent years from which to recover, if we ever can.
But it doesn't have to happen that way. If a government is elected that can manage a gradual reversal in current trends of excessive government spending and remove the impediments to the efficient and productive operation of free enterprise, then there is hope we can all get through this without severe economic depression, catastrophic political turmoil and collapsed living standards. It is clear that America is in a critical life and death situation, and it is imperative that we boot the Progressives (i.e., state socialists a.k.a. communists) out of government and elect responsible leadership that can get us back on track. We need a president who has experience as an organizational manager. We need a president who understands economics while having a social conscience, one who also understands the basic American principles that produced both freedom and unprecedented prosperity. We need the anti-Obama. After all the damage he has done, if Barack Obama truly loved this country he would vote for Mitt Romney, too.
The most important policy moves government must make is to remove the legal and regulatory shackles from private enterprise, reform tax policy to eliminate preferences and re-establish an operating environment where the rules and regulations don't change every year. We must reduce the size of government. It employs too many people who make too much money. Public employees serving the people should not be compensated with salaries, benefits and job security that is better than those who pay for them. Government jobs are inefficient because they have too many people doing the same unnecessary jobs, which means the public work force must be reduced. And it would certainly help to make consumers and investors responsible for their own actions rather than expect government to protect them from their own ignorance and irresponsibility. Of course businesses must be held responsible for their activities and products, particularly when negligence or fraud is involved. But frivolous class action lawsuits for losses or damages sustained because the buyer did something stupid must end.
Even more important, we must stop spending federal money for programs that have no purpose other than politicians buying votes. One example is absurd agricultural subsidies to rich farmers. Another is subsidized student loans to anyone who wants one, even though there are no jobs available for them to generate income to pay the loans back even if the recipient did finish college. Perhaps the most bizarre is the food stamp program that has doubled the number of eligible participants and the cost in just the last three years. One out of seven Americans is now eligible for food stamps, including folks who make 130% of the federal poverty guideline, have thousands of dollars in savings and perhaps own a million dollar home. How ridiculous is it that the Agriculture Department runs radio and TV ads promoting the food stamp program? Those who truly need food assistance know it is availabe. Those who don't need it but see the ads like the idea of free food, paid for by the chumps who pay taxes. And the list of such programs goes on and on. The bureaucracy is out of control.
America must make a clean sweep of its elected officials. If Barack Obama is re-elected, the Democrats retain the Senate, or any big spending Republicans masquerading as conservatives remain in office it will be time to turn out the lights because the party is over. We don't have more time. The presidency, the Senate and the House must be controlled by statesmen who are on the same page regarding what must be done. It won't be easy. Even if capable and competent leaders do win office, the policies required to stop, reverse and recover from our current course towards economic and social Armageddon will cause hardship and suffering that the political opposition can and will exploit in their attempt to regain office and resume their policies of mass destruction. It will be difficult to stay the course. But it must be done, or else the United States of America is done. Yes, it is that critical.
The big question for many folks who still have some investable assets and know they can't count on social security to support them when they retire is what does one do with their financial assets? Great question. Unfortunately it depends on many factors, including whether the bond bubble implosion happens rapidly or over time, leads to global economic collapse or a division into strong and weak countries, results in inflation or deflation, and what currencies emerge to dominate what is left of global commerce. The answer to the question is that no one knows. But the prospects for a favorable outcome improve substantially if responsible conservatives resoundingly win the elections this fall.
Assuming the real economic conservatives win, how does one invest their personal money now? Investors could keep their money in fixed income expecting to retain some principal value while we go through tough times, but the inevitable increase in interest rates will eventually cause bonds and bond funds to fall in price, potentially producing significant losses. Personally, I believe that if we can achieve all of the objectives mentioned above it would mean the rebirth of capitalism and the end of the assault on common stocks. Right now could be a perfect time to take advantage of the overwhelming negative sentiment towards American and foreign stocks. Equity prices always reflect future results, and a re-awakening of free enterprise around the globe could produce strong gains over the next several years. That is the way I am betting. If I am wrong, I am going down with the ship. That is not as risky of a bet as it may seem, because if I am wrong and the current government remains in office there is little doubt that the ship is going down. And then we are all screwed.
Wednesday, May 30, 2012
Propaganda versus Reality
Given much of the junk floating around the internet, and even more dangerously, published on the pages of supposedly respectable newspapers and magazines, it has become impossible to believe anything you read anymore. Each side of the political spectrum publishes propaganda extolling the virtues of their candidates for public office and condemning the wickedness of their opponents. Neither side has a monopoly on veracity, and a lot of what is said, published or broadcast is distorted, misleading, inaccurate and often outright lies. Unfortunately, a lot of people do believe the biased propaganda without question. Which makes it all the more interesting that so many ignore the information that is indisputable.
Most American political leaders over the years have believed in the values and goals established by our founding fathers. Of course many of the politicians have been corrupt charlatans focused on their own self-interest rather than the interests of those who elected them. But generally they understood and believed in the American legacy of individual liberty, personal responsibility, free enterprise and democracy. Today that is no longer true. One party seems to believe in none of those things.
We now have a president whose formative years were spent associating with and under the tutelage of radical and subversive Marxist mentors. Barack Obama has always identified with and been influenced by anti-American radicals. These include Bill Ayers, a co-founder of the Weather Underground, a self-described communist revolutionary group that bombed several public buildings in the 60's and 70's; Rev. Jeremiah Wright, a pastor who preached condemnation and hatred of white Americans; leftist agitator Franklin Davis Marshall; and many others whose goals are to destroy the traditional economic system and society that gave America freedom, justice, prosperity and equal opportunity. Obama's relationships with these people is indisputable, and nearly every action he has taken as president has advanced their goals of rejecting our economic system and traditional social values. But of course in this campaign season it is off limits to question those relationships.
Throughout our history Americans have always been able to improve our aggregate standard of living through individual initiative and taking advantage of opportunities that exist provided by the incentives of private enterprise and limited government interference. That is what has driven progress and created widespread affluence. But this president and his supporters believe big government is the solution to every aspect of our existence, with government bureaucrats dictating the proper way to conduct our lives. They prescribe what is best for everyone, eliminating freedom of choice. They think that providing subsidies and grants encouraging their agenda and a politically correct education for the young will produce the ideal society. But they are wrong.
Government determined industrial policy and generous welfare programs destroy progress and living standards. Already we are near the inflection point where the majority of the population has become dependent on government to sustain their current lifestyle, and a government directed economy cannot possibly do that. A government subsidized college education is worthless when there are no jobs for the younger generation to fill. Those with the ability and ambition to better their lives through personal achievement will find they do not have the opportunity to do so. They will not enjoy the lives their parents did because the government will determine what opportunities they have, and they will be limited.
All one has to do is observe how such policies have worked out elsewhere around the globe whenever they have been tried. One can observe the limited choices of low quality merchandise available to buy and the depressing tenements that are prevalent in socialist countries to see that dependency on government cannot possibly improve their lives. One can look to Europe today to see the result of decades of policies that support people from cradle to grave. Greece is on fire as the citizens riot in the streets demanding the lifestyle that can no longer be provided. Other European countries are next unless they pull their heads out and confront reality. Those countries are Obama's vision for us as he strives to implement the same policies here that have brought 'progressive' countries to their knees. The historical record of inevitable failure of socialist policies is indisputable. Those who vote for Obama this fall may get lucky and die before the most serious consequences of that mistake arrive in America. But they will have doomed our children.
Most American political leaders over the years have believed in the values and goals established by our founding fathers. Of course many of the politicians have been corrupt charlatans focused on their own self-interest rather than the interests of those who elected them. But generally they understood and believed in the American legacy of individual liberty, personal responsibility, free enterprise and democracy. Today that is no longer true. One party seems to believe in none of those things.
We now have a president whose formative years were spent associating with and under the tutelage of radical and subversive Marxist mentors. Barack Obama has always identified with and been influenced by anti-American radicals. These include Bill Ayers, a co-founder of the Weather Underground, a self-described communist revolutionary group that bombed several public buildings in the 60's and 70's; Rev. Jeremiah Wright, a pastor who preached condemnation and hatred of white Americans; leftist agitator Franklin Davis Marshall; and many others whose goals are to destroy the traditional economic system and society that gave America freedom, justice, prosperity and equal opportunity. Obama's relationships with these people is indisputable, and nearly every action he has taken as president has advanced their goals of rejecting our economic system and traditional social values. But of course in this campaign season it is off limits to question those relationships.
Throughout our history Americans have always been able to improve our aggregate standard of living through individual initiative and taking advantage of opportunities that exist provided by the incentives of private enterprise and limited government interference. That is what has driven progress and created widespread affluence. But this president and his supporters believe big government is the solution to every aspect of our existence, with government bureaucrats dictating the proper way to conduct our lives. They prescribe what is best for everyone, eliminating freedom of choice. They think that providing subsidies and grants encouraging their agenda and a politically correct education for the young will produce the ideal society. But they are wrong.
Government determined industrial policy and generous welfare programs destroy progress and living standards. Already we are near the inflection point where the majority of the population has become dependent on government to sustain their current lifestyle, and a government directed economy cannot possibly do that. A government subsidized college education is worthless when there are no jobs for the younger generation to fill. Those with the ability and ambition to better their lives through personal achievement will find they do not have the opportunity to do so. They will not enjoy the lives their parents did because the government will determine what opportunities they have, and they will be limited.
All one has to do is observe how such policies have worked out elsewhere around the globe whenever they have been tried. One can observe the limited choices of low quality merchandise available to buy and the depressing tenements that are prevalent in socialist countries to see that dependency on government cannot possibly improve their lives. One can look to Europe today to see the result of decades of policies that support people from cradle to grave. Greece is on fire as the citizens riot in the streets demanding the lifestyle that can no longer be provided. Other European countries are next unless they pull their heads out and confront reality. Those countries are Obama's vision for us as he strives to implement the same policies here that have brought 'progressive' countries to their knees. The historical record of inevitable failure of socialist policies is indisputable. Those who vote for Obama this fall may get lucky and die before the most serious consequences of that mistake arrive in America. But they will have doomed our children.
Wednesday, May 23, 2012
The Real Fairness Issue
Barack Obama likes to talk about fairness. He continually vilifies Republicans as being against fairness while at the same time supporting the public employee unions against any reform of their compensation and benefit packages that are better than the average non-government worker performing similar jobs. An April 11, 2012 Wall Street Journal editorial reported that a Bureau of Labor Statistics study published in the Winter 2012 Journal of Economic Perspectives found that state and local government employees receive salaries 10% higher and current benefits 21% higher on average than private sector employees. Similarly, a recent Congressional Budget Office report found that federal employees retirement packages of pensions plus health care benefits were 3.5 times more generous than those in the private sector.
How fair is that given that the private sector workers are the very people paying the salaries of those government employees? Maybe it would be a good idea for Republicans to make that a fairness issue and campaign for reform of the overly generous government compensation deals. I suppose it is possible that reducing the pay of government employees might cause minor disruptions in the provision of some government services. Therefore the changes could be gradual but on a specific schedule in order to get the bloated ship of state turned around and heading in a more fair and rational direction.
Perhaps we need something like what the airlines have gone through, basically abandoning the old operating methods through attrition and starting over with a lower cost structure with new employees. Freezing salaries for some period of time may be all that is needed regarding current payroll outlays. But changes definitely need to be made in retirement and health care benefits. Even though most private sector employers have changed to the more rational defined contribution pension plans, most government employees still enjoy unaffordable defined benefit retirement plans. Defined benefit plans assuming 8% returns in a 3% world is unsustainable, and these funds will run out of money to maintain benefits much sooner than most expect unless we mandate that our children and grandchildren sacrifice their living standards to support us. Are people today really that selfish as to not care about what legacy we leave our children?
Over the last two decades the salaries and benefits for public employees have grown much faster than they have for those in the private sector. That disparity has to be addressed whether the public unions like it or not, or we will be in the same situation Europe finds itself in with bankrupt governments, high unemployment, no growth and civil unrest. That is clearly the direction we are heading. European countries must make across the board cuts in public sector salaries and benefits in order to reduce their government debt and reposition their economies for future growth. That will take time and be very painful, but they really have no choice. It would be much better for our country to undertake those actions now before we get into the same chaotic situation as Europe. Why is that reality so hard for Congress and public employee union leaders to understand?
How fair is that given that the private sector workers are the very people paying the salaries of those government employees? Maybe it would be a good idea for Republicans to make that a fairness issue and campaign for reform of the overly generous government compensation deals. I suppose it is possible that reducing the pay of government employees might cause minor disruptions in the provision of some government services. Therefore the changes could be gradual but on a specific schedule in order to get the bloated ship of state turned around and heading in a more fair and rational direction.
Perhaps we need something like what the airlines have gone through, basically abandoning the old operating methods through attrition and starting over with a lower cost structure with new employees. Freezing salaries for some period of time may be all that is needed regarding current payroll outlays. But changes definitely need to be made in retirement and health care benefits. Even though most private sector employers have changed to the more rational defined contribution pension plans, most government employees still enjoy unaffordable defined benefit retirement plans. Defined benefit plans assuming 8% returns in a 3% world is unsustainable, and these funds will run out of money to maintain benefits much sooner than most expect unless we mandate that our children and grandchildren sacrifice their living standards to support us. Are people today really that selfish as to not care about what legacy we leave our children?
Over the last two decades the salaries and benefits for public employees have grown much faster than they have for those in the private sector. That disparity has to be addressed whether the public unions like it or not, or we will be in the same situation Europe finds itself in with bankrupt governments, high unemployment, no growth and civil unrest. That is clearly the direction we are heading. European countries must make across the board cuts in public sector salaries and benefits in order to reduce their government debt and reposition their economies for future growth. That will take time and be very painful, but they really have no choice. It would be much better for our country to undertake those actions now before we get into the same chaotic situation as Europe. Why is that reality so hard for Congress and public employee union leaders to understand?
Thursday, May 03, 2012
A Day In The Life
A day in the life of our beloved leader. This is President Barack Obama's schedule every day of the year, Sunday through Saturday -
8:00 a.m. - Check in with my PR Department at the New York Times and the Networks and tell them to step up the propaganda and invent more denigrating bullshit, better yet some criminal charges, against my opponents and their supporters.
8:15 a.m. - Call up Genachowski at the FCC and tell him to step up the effort to get Limbaugh and Hannity off the air.
8:30 a.m. - Press Conference. Remember to -
1. Blame Bush for something bad that happened.
2. Take credit for something good that happened.
9:30 a.m. - Give campaign speech to impressionable college students who think I'm a rock star. Make sure to include:
1. Slandering of Republicans and the Supreme Court.
2. Promise to give free health care, abortions, birth control, food, and money for all other necessities such as big screen HD TV's, iPhones, bling, tats and recreational drugs of their choice to everyone who votes for me. Oh, yeah, and also student loans they don't have to pay back.
3. Lie about how much these freebies will cost and say we can pay for it by taking money from the rich.
11:30 a.m. - Ride on Air Force One.
1:00 p.m. - Play golf.
4:30 p.m. - Touch base with my homies Dmitri, Vlad, Cristina and Hugo. If Hugo croaks before I make the call, check with the other three to pick a suitable successor. Remind them all I will have more flexibility after my next election.
4:45 p.m. - Call Bill Ayers and Rev. Wright and tell them to say something outrageous about the unfairness and greed of America and capitalism.
5:00 p.m. - Call Eric at the Justice Department and have him locate something that occurred somewhere in the country and have our inhouse PR people blow it up into a hate crime that demands justice for whichever side is the minority - doesn't matter which was the perp and which was the victim. If both are minorities, prosecute the one that is the lightest color.
5:15 p.m. - Tell Jack (Jack Lew, Chief of Staff) to spend whatever it takes to keep Michelle and the kids on vacation.
7:30 p.m. - Party with my entourage. Invite some Wall Street and union backers.
8:00 a.m. - Check in with my PR Department at the New York Times and the Networks and tell them to step up the propaganda and invent more denigrating bullshit, better yet some criminal charges, against my opponents and their supporters.
8:15 a.m. - Call up Genachowski at the FCC and tell him to step up the effort to get Limbaugh and Hannity off the air.
8:30 a.m. - Press Conference. Remember to -
1. Blame Bush for something bad that happened.
2. Take credit for something good that happened.
9:30 a.m. - Give campaign speech to impressionable college students who think I'm a rock star. Make sure to include:
1. Slandering of Republicans and the Supreme Court.
2. Promise to give free health care, abortions, birth control, food, and money for all other necessities such as big screen HD TV's, iPhones, bling, tats and recreational drugs of their choice to everyone who votes for me. Oh, yeah, and also student loans they don't have to pay back.
3. Lie about how much these freebies will cost and say we can pay for it by taking money from the rich.
11:30 a.m. - Ride on Air Force One.
1:00 p.m. - Play golf.
4:30 p.m. - Touch base with my homies Dmitri, Vlad, Cristina and Hugo. If Hugo croaks before I make the call, check with the other three to pick a suitable successor. Remind them all I will have more flexibility after my next election.
4:45 p.m. - Call Bill Ayers and Rev. Wright and tell them to say something outrageous about the unfairness and greed of America and capitalism.
5:00 p.m. - Call Eric at the Justice Department and have him locate something that occurred somewhere in the country and have our inhouse PR people blow it up into a hate crime that demands justice for whichever side is the minority - doesn't matter which was the perp and which was the victim. If both are minorities, prosecute the one that is the lightest color.
5:15 p.m. - Tell Jack (Jack Lew, Chief of Staff) to spend whatever it takes to keep Michelle and the kids on vacation.
7:30 p.m. - Party with my entourage. Invite some Wall Street and union backers.
Wednesday, May 02, 2012
The Left's Big Opportunity
People's Socialist Workers of the World Unite -
The Progressives (i.e., communists) of the world are outraged. This blatant crime against humanity must be avenged at the very top (does anyone remember what the crime was?). Left wingers in the UK Parliament have gone into full scale attack mode as they see an opportunity to rid the world of all capitalist and conservative news sources by declaring war on News Corp. The socialist backbenchers have determined that Rupert Murdoch is unfit to lead a major international company, and naturally the liberal press around the globe has gone ballistic in reporting the news.
Did one British tabloid (News of the World), one small component of a company that owns over 300 separate entities throughout the world (see below), do something wrong? Certainly. Was Rupert Murdoch intimately involved in the wrongdoing? Almost certainly not. Does the crime deserve the attention it is getting? Of course not, but that doesn't matter. The vast majority of the global media is liberal, and they will go for the throat when they see a chance to kill off the dominant opposing voice. And the world's Marxist politicians will most assuredly go all out to help them do it.
It makes one wonder which category of media outlet is more legitimate, the traditionally creative sensationalist tabloids found at the grocery store checkout counters or the formerly respectable but newly creative sensationalist rag sheets of the mainstream press? When it comes to newspapers it might be most informative to stick to the sports pages.
A sample of News Corporations global holdings -
Publishing -
More than 150 newspapers, including:
The Wall Street Journal
The New York Post
Barron's
The London Times
The Sun
The Australian
Dozens of books and magazines, including:
HarperCollins Books
Zondervan Christian Books
Cable Programming -
Fox News Channel
Fox Sports Network
Fox Movie Channel
FX
Fox College Sports
Big 10 Network
National Geographic Channel
Filmed Entertainment -
20th Century Fox
20th Century Fox TV
Fox Filmed Entertainment
Television -
Fox Broadcasting Company
Satellite TV -
BSkyB
And countless more business entities, including probably just for the hell of it, 15% of the Colorado Rockies baseball team. Rupert Murdoch would have to be one hell of a multi-tasker to know what is going on in all of these organizations.
The Progressives (i.e., communists) of the world are outraged. This blatant crime against humanity must be avenged at the very top (does anyone remember what the crime was?). Left wingers in the UK Parliament have gone into full scale attack mode as they see an opportunity to rid the world of all capitalist and conservative news sources by declaring war on News Corp. The socialist backbenchers have determined that Rupert Murdoch is unfit to lead a major international company, and naturally the liberal press around the globe has gone ballistic in reporting the news.
Did one British tabloid (News of the World), one small component of a company that owns over 300 separate entities throughout the world (see below), do something wrong? Certainly. Was Rupert Murdoch intimately involved in the wrongdoing? Almost certainly not. Does the crime deserve the attention it is getting? Of course not, but that doesn't matter. The vast majority of the global media is liberal, and they will go for the throat when they see a chance to kill off the dominant opposing voice. And the world's Marxist politicians will most assuredly go all out to help them do it.
It makes one wonder which category of media outlet is more legitimate, the traditionally creative sensationalist tabloids found at the grocery store checkout counters or the formerly respectable but newly creative sensationalist rag sheets of the mainstream press? When it comes to newspapers it might be most informative to stick to the sports pages.
A sample of News Corporations global holdings -
Publishing -
More than 150 newspapers, including:
The Wall Street Journal
The New York Post
Barron's
The London Times
The Sun
The Australian
Dozens of books and magazines, including:
HarperCollins Books
Zondervan Christian Books
Cable Programming -
Fox News Channel
Fox Sports Network
Fox Movie Channel
FX
Fox College Sports
Big 10 Network
National Geographic Channel
Filmed Entertainment -
20th Century Fox
20th Century Fox TV
Fox Filmed Entertainment
Television -
Fox Broadcasting Company
Satellite TV -
BSkyB
And countless more business entities, including probably just for the hell of it, 15% of the Colorado Rockies baseball team. Rupert Murdoch would have to be one hell of a multi-tasker to know what is going on in all of these organizations.
Tuesday, April 24, 2012
Understanding Politics
Politics is really quite simple. The first thing that should be understood is there are plenty of corrupt politicians in both parties more than willing to sell themselves to the special interests that help them get elected and remain in office. Those folks are really all the same no matter what the party label. So the best way to differentiate between the two parties is to identify who they generally represent. Republicans represent the productive. Democrats represent the parasites.
Democrats understand it is basic human nature that the have nots will always want what the haves have. That is why they always make elections all about the politics of envy. As usual for Democrats, Barack Obama's reelection strategy is to promise to give the have nots what they want without having to work for it by taking it from the haves. This is the strategy of class warfare, and it states that the have nots deserve to be given what they didn't earn because the haves are evil, selfish beings who must be punished for their greed.
In other words, Democrats claim they are the party of compassion for the underprivileged and that Republicans are cold-hearted monsters who conspire to gain and keep all the wealth for themselves. That is a crock of shit, but people who vote for Democrats apparently believe the lie. The truth is that conservatives agree that society certainly has a responsibility to provide a safety net for those who truly need it. But that safety net must be designed to encourage recipients of public support to work towards escaping that status by seeking opportunities to do so rather than spending their lives at the bottom of the barrel.
Unfortunately, the safety net in America today is so generous that it encourages recipients to remain dependent on government support rather than providing strong incentives for self-improvement. Democrats win votes by promising to maintain and expand the current structure of government support by extorting those who pay for it with even higher taxes. Hence, their appeal to the parasites. It does not matter one bit that biting the hand that feeds you is a prescription for running out of food, nor that no matter how high taxes are raised on the productive the amount of money available for government programs will never be enough.
A government that encourages the productive creates an environment of innovation, sustained progress, rising living standards and widely diffused affluence, often referred to as a rising tide that lifts all boats. It results in a system that expands the economic pie to everyone's benefit. It is also a system that leads to relatively high levels of income inequality. There is no doubt that many people who have attained great wealth do not deserve it. Wall Street bankers should feel guilty, but I am sure they don't. But that is not the real issue. The real issue is the improvement in living standards that productive enterprise creates for everyone, including those at the very bottom of the social and income ladder. The poor in America today, with big screen HD TV's, the latest cell phones and access to food stamps and health care live much better than they did fifty years ago, and better than most people in the rest of the world.
On the other hand, a government that panders to the parasites leads to an economy that produces nothing but widespread destitution, chaos and anarchy, leading to dictatorship, subjugation and oppression. This is a system that sinks all the boats and where everyone has to desperately fight for a piece of the shrinking pie. Reelection of Barack Obama, the most blatant parasite panderer this country has ever seen, will turn America into the Titanic and leave nothing but crumbs from the devoured pie. We are at the inflection point where nearly half the people in this country pay no taxes, and therefore are parasites receiving public services and support that others pay for. Four more years of Obama would send us over the edge. Everyone needs to think long and hard before they vote this November.
Democrats understand it is basic human nature that the have nots will always want what the haves have. That is why they always make elections all about the politics of envy. As usual for Democrats, Barack Obama's reelection strategy is to promise to give the have nots what they want without having to work for it by taking it from the haves. This is the strategy of class warfare, and it states that the have nots deserve to be given what they didn't earn because the haves are evil, selfish beings who must be punished for their greed.
In other words, Democrats claim they are the party of compassion for the underprivileged and that Republicans are cold-hearted monsters who conspire to gain and keep all the wealth for themselves. That is a crock of shit, but people who vote for Democrats apparently believe the lie. The truth is that conservatives agree that society certainly has a responsibility to provide a safety net for those who truly need it. But that safety net must be designed to encourage recipients of public support to work towards escaping that status by seeking opportunities to do so rather than spending their lives at the bottom of the barrel.
Unfortunately, the safety net in America today is so generous that it encourages recipients to remain dependent on government support rather than providing strong incentives for self-improvement. Democrats win votes by promising to maintain and expand the current structure of government support by extorting those who pay for it with even higher taxes. Hence, their appeal to the parasites. It does not matter one bit that biting the hand that feeds you is a prescription for running out of food, nor that no matter how high taxes are raised on the productive the amount of money available for government programs will never be enough.
A government that encourages the productive creates an environment of innovation, sustained progress, rising living standards and widely diffused affluence, often referred to as a rising tide that lifts all boats. It results in a system that expands the economic pie to everyone's benefit. It is also a system that leads to relatively high levels of income inequality. There is no doubt that many people who have attained great wealth do not deserve it. Wall Street bankers should feel guilty, but I am sure they don't. But that is not the real issue. The real issue is the improvement in living standards that productive enterprise creates for everyone, including those at the very bottom of the social and income ladder. The poor in America today, with big screen HD TV's, the latest cell phones and access to food stamps and health care live much better than they did fifty years ago, and better than most people in the rest of the world.
On the other hand, a government that panders to the parasites leads to an economy that produces nothing but widespread destitution, chaos and anarchy, leading to dictatorship, subjugation and oppression. This is a system that sinks all the boats and where everyone has to desperately fight for a piece of the shrinking pie. Reelection of Barack Obama, the most blatant parasite panderer this country has ever seen, will turn America into the Titanic and leave nothing but crumbs from the devoured pie. We are at the inflection point where nearly half the people in this country pay no taxes, and therefore are parasites receiving public services and support that others pay for. Four more years of Obama would send us over the edge. Everyone needs to think long and hard before they vote this November.
Saturday, April 21, 2012
It Is Time!
The firestorm created by the shooting of Trayvon Martin in Florida by a neighborhood watch volunteer is a prime example of the difficulties we face as a coherent, unified nation. The politically correct politicians and journalists created a hysterical reaction to the event before the facts were even known. They have committed a great disservice to the country by creating a racial conflagration that is not justified no matter what really happened. It is time for journalists and politicians to stop fanning the flames of polarization.
It is time for everyone in America to think for themselves, wake up and smell the coffee. It is time for Latinos to realize they are in the United States of America, not Northern Mexico, and to stop supporting those who come to this country illegally and consume our resources. They need to get more involved in politics, and adapt to the American culture, laws, language and educational system. Most of those who have been here for several generations have already done so, and their influence is growing as it should. They must help the newer legal arrivals to integrate into our society as well.
It is time for Asian-Americans to come out of their familial rabbit holes and intermingle with the rest of the American people. Asians don't seem to hate anybody even though they remain on the fringes of society by their own choice, focusing on making sure their children excel in academics. Promoting intellectual achievement is certainly a good thing, but it wouldn't hurt for them to get out and hang out with the rest of us a bit more.
It is past time for African-Americans to stop their ingrained hatred of whites. They need to throw off the yoke of low expectations and dependency, blame themselves now and then for the crime, victimization and welfare centric attitudes rampant in their community, stop listening to the pandering of politicians who never improve their situation, and reach out to take advantage of the opportunities America offers to all its citizens. A great many African-Americans have already taken advantage of those opportunities and become great leaders in business, politics, education, medicine and military endeavors. They should be the ones serving as role models to young blacks, not rappers, gangbangers or Jesse Jackson and Al Sharpton.
Multiculturalism is a wonderful thing as long as it does not dominate the over-riding national culture. We are all Americans and we are in this together. The intermingling of the different races has progressed exponentially over the last several decades, but obviously there is still a ways to go. There will always be a very small minority of dimwitted bigots running around, but the fact is the vast majority of white people have evolved to a post-racial, inclusive society. Despite the tired old rhetoric of the Jesse Jackson's and Al Sharpton's, there is really nothing more white folks can do to change anyone's mind about that. If black people still don't believe it, then they never will no matter how accomodative white's become.
But let's all be honest rather than politically correct. A majority of black people still hate all of the other racial groups in America, particularly the whites. Black's believe they are being racially oppressed, think they are owed something by white America, and refuse to acknowledge any evidence to the contrary. They believe this because the media and liberal politicians continually tell them so. Liberal political policies encourage that sense of entitlement, leaving them dependent on government programs and holding them back from joining and participating in the more affluent world. That is the real oppression, and it is inflicted upon them by the politicians they support.
Of course now I will be called a racist by the knee-jerk reactionaries who don't ever want to hear anything that challenges the politically correct narrative. Certainly the comments I have made here are all generalizations, as many folks from each community have already worked hard and moved up in the world. But there is also a lot of truth to what has been written, and most people know it even if they are afraid to say it. Unfortunately, our society will never become truly integrated until we all recognize those basic truths. It is time for politicians and journalists to dispose of their politically correct attitudes of moral superiority and recognize the real world the rest of us live in.
It is time for everyone in America to think for themselves, wake up and smell the coffee. It is time for Latinos to realize they are in the United States of America, not Northern Mexico, and to stop supporting those who come to this country illegally and consume our resources. They need to get more involved in politics, and adapt to the American culture, laws, language and educational system. Most of those who have been here for several generations have already done so, and their influence is growing as it should. They must help the newer legal arrivals to integrate into our society as well.
It is time for Asian-Americans to come out of their familial rabbit holes and intermingle with the rest of the American people. Asians don't seem to hate anybody even though they remain on the fringes of society by their own choice, focusing on making sure their children excel in academics. Promoting intellectual achievement is certainly a good thing, but it wouldn't hurt for them to get out and hang out with the rest of us a bit more.
It is past time for African-Americans to stop their ingrained hatred of whites. They need to throw off the yoke of low expectations and dependency, blame themselves now and then for the crime, victimization and welfare centric attitudes rampant in their community, stop listening to the pandering of politicians who never improve their situation, and reach out to take advantage of the opportunities America offers to all its citizens. A great many African-Americans have already taken advantage of those opportunities and become great leaders in business, politics, education, medicine and military endeavors. They should be the ones serving as role models to young blacks, not rappers, gangbangers or Jesse Jackson and Al Sharpton.
Multiculturalism is a wonderful thing as long as it does not dominate the over-riding national culture. We are all Americans and we are in this together. The intermingling of the different races has progressed exponentially over the last several decades, but obviously there is still a ways to go. There will always be a very small minority of dimwitted bigots running around, but the fact is the vast majority of white people have evolved to a post-racial, inclusive society. Despite the tired old rhetoric of the Jesse Jackson's and Al Sharpton's, there is really nothing more white folks can do to change anyone's mind about that. If black people still don't believe it, then they never will no matter how accomodative white's become.
But let's all be honest rather than politically correct. A majority of black people still hate all of the other racial groups in America, particularly the whites. Black's believe they are being racially oppressed, think they are owed something by white America, and refuse to acknowledge any evidence to the contrary. They believe this because the media and liberal politicians continually tell them so. Liberal political policies encourage that sense of entitlement, leaving them dependent on government programs and holding them back from joining and participating in the more affluent world. That is the real oppression, and it is inflicted upon them by the politicians they support.
Of course now I will be called a racist by the knee-jerk reactionaries who don't ever want to hear anything that challenges the politically correct narrative. Certainly the comments I have made here are all generalizations, as many folks from each community have already worked hard and moved up in the world. But there is also a lot of truth to what has been written, and most people know it even if they are afraid to say it. Unfortunately, our society will never become truly integrated until we all recognize those basic truths. It is time for politicians and journalists to dispose of their politically correct attitudes of moral superiority and recognize the real world the rest of us live in.
Tuesday, April 17, 2012
Bankers Are Not Rock Stars
Personally, I don't understand why anyone thinks any of the types of derivatives that have been created and traded over the last twenty years by Wall Street masterminds are vital to the financial system or markets. The country got along just fine without them for a very long time. Their only reason for being today is to allow traders to make outrageous amounts of money while destroying a nation's financial system.
The root of the problem is that bankers wanted to make rock star, professional athlete and hedge fund manager type money even though conventional banking is the easiest business there is. A traditional bankers job is to lend money to creditworthy entities at higher rates than they pay depositors on checking and savings accounts. Not too tough if one applies a little credit analysis to the borrowers.
But bankers wanted to be able to take higher risks so they could make more money, which is why they lobbied to repeal the Glass-Steagall Act legislated during the Depression of the 1930's. They wanted to be in the same businesses as Merrill Lynch, Goldman Sachs, Morgan Stanley, Lehman Brothers and Bear Stearns. Remember that less than five years ago none of those firms were banks. The bankers also wanted to engage in the even higher risk, higher potential return game of proprietary trading of derivatives and other lucrative but pointless securities. They succeeded with the enactment of the Gramm-Leach-Bliley Financial Services Modernization Act of 1999.
Sure enough, less than ten years later the whole system collapsed. Lehman Brothers went bankrupt, Merrill Lynch was acquired by Bank of America, and Bear Stearns was acquired by JPMorgan Chase. Goldman Sachs and Morgan Stanley changed their charters in 2008 to become bank holding companies, primarily so they could participate in the bailout cash being handed out by the government.
My first job after graduation from college in 1971 was in a bank, one that stuck to the basics of attracting deposits, making personal, commercial and industrial loans, and providing trust services. Only the CEO made as much money then as the average bank employee does today. It was not a high paying profession because it didn't need to be.
Banks provide a vital service in the functioning of the financial system, one that must be conducted conservatively. They don't need to be in the investment banking, securities brokerage, insurance or proprietary trading businesses. The Volcker Bill now being debated in Congress would preclude banks from conducting those higher risk businesses, and must be passed so we can all live happily ever after - except maybe the bankers who may not make the six and seven figure compensation packages they ludicrously believe they deserve. If someone's primary goal in life is to make the big bucks playing mindless trading games, then they should seek employment with firms operating in the high risk businesses, not banks. Banks are too important to the efficient operation of the financial system to be gambling with depositors, shareholders, and unfortunately today, taxpayers money.
The root of the problem is that bankers wanted to make rock star, professional athlete and hedge fund manager type money even though conventional banking is the easiest business there is. A traditional bankers job is to lend money to creditworthy entities at higher rates than they pay depositors on checking and savings accounts. Not too tough if one applies a little credit analysis to the borrowers.
But bankers wanted to be able to take higher risks so they could make more money, which is why they lobbied to repeal the Glass-Steagall Act legislated during the Depression of the 1930's. They wanted to be in the same businesses as Merrill Lynch, Goldman Sachs, Morgan Stanley, Lehman Brothers and Bear Stearns. Remember that less than five years ago none of those firms were banks. The bankers also wanted to engage in the even higher risk, higher potential return game of proprietary trading of derivatives and other lucrative but pointless securities. They succeeded with the enactment of the Gramm-Leach-Bliley Financial Services Modernization Act of 1999.
Sure enough, less than ten years later the whole system collapsed. Lehman Brothers went bankrupt, Merrill Lynch was acquired by Bank of America, and Bear Stearns was acquired by JPMorgan Chase. Goldman Sachs and Morgan Stanley changed their charters in 2008 to become bank holding companies, primarily so they could participate in the bailout cash being handed out by the government.
My first job after graduation from college in 1971 was in a bank, one that stuck to the basics of attracting deposits, making personal, commercial and industrial loans, and providing trust services. Only the CEO made as much money then as the average bank employee does today. It was not a high paying profession because it didn't need to be.
Banks provide a vital service in the functioning of the financial system, one that must be conducted conservatively. They don't need to be in the investment banking, securities brokerage, insurance or proprietary trading businesses. The Volcker Bill now being debated in Congress would preclude banks from conducting those higher risk businesses, and must be passed so we can all live happily ever after - except maybe the bankers who may not make the six and seven figure compensation packages they ludicrously believe they deserve. If someone's primary goal in life is to make the big bucks playing mindless trading games, then they should seek employment with firms operating in the high risk businesses, not banks. Banks are too important to the efficient operation of the financial system to be gambling with depositors, shareholders, and unfortunately today, taxpayers money.
Wednesday, February 29, 2012
Obama's Ace In The Hole
Be prepared for Barack Obama to pull out what he believes will be his ace in the hole sometime this summer or fall when he will argue that the stock market has done much better since he became president. He was inaugurated on January 20, 2009, and the Standard and Poor's 500 Index did bottom at 667 seven weeks later. To a very large segment of the voting public he would seem to have a point. But as one who spent 33 years managing stock portfolios for mutual funds and pension funds, I would not be one to give Obama the credit for that occurrence. In fact, I would argue the reason the market plunged as far as it did from October, 2008, to March of 2009 was because of Barack Obama.
Basic investment management textbooks teach those who pursue a career in professional money management that the stock market is what is known as a discounting mechanism. That means it discounts the future, traditionally anticipating the economic and market environment nine to eighteen months out. In other words, the market today reflects what aggregate investor expectations are for corporate operating conditions approximately a year ahead.
Following the Bush tax cuts of 2001, the stock market as represented by the Standard and Poor's 500 Index of large company stocks doubled over the five years from the summer of 2002 through the fall of 2007, peaking in October at 1565. From October 2007 into September 2008 the market underwent a typical consolidation following an extended advance, dropping nearly 20% as the bull market aged and details of the magnitude of the housing bubble, related mortgage debt derivatives activities and their impact on the financial system began to become known. Then the proverbial shit hit the fan. The Bush administration decided it was necessary to rescue Fannie Mae and Freddie Mac, Lehman went bankrupt and the Fed bailed out AIG. Reasonable people can disagree on who bears the burden for what happened next, but over the next seven months the market plunged another 46%, finally bottoming in March of 2009 at 667 for a total decline of 57% from the October 2007 peak, the worst stock market collapse since the 1930's.
I know that some folks would contend otherwise, particularly those with a vested interest in getting bailed out from their high risk speculation gone bad, but in my mind there is no question that the Bush Administration's response to the financial system's liquidity crisis was the wrong thing to do. There was no need for bailouts. Financial institutions that suffered trading losses should have suffered the consequences. Bankruptcy laws are on the books to deal with the situation, and the failed banks should have been reorganized and operated by the FDIC as stipulated by law. Few depositors would have lost any money, but greedy speculators in high risk fixed income securities and derivatives would have suffered the substantial losses they should have sustained for making irresponsible bets.
But I would argue that wasn't the primary reason for the stock market debacle. In September of 2008 the presidential election polls swung sharply in favor of Barack Obama over John McCain following months of a near dead heat. The stock market promptly accelerated its plunge when it became clear Obama was going to win the election. This was a man who had very little experience legislating or managing anything. He had no noticeable accomplishments other than winning elections. He rose meteorically through the most corrupt political system in America. He associated with many questionable and contemptible personalities over the years, and he had the most liberal voting record in Congress when he actually did take the time to show up to vote. Plus, he certainly had a vested interest in making the financial system turmoil look worse than it really was so he could claim credit for an eventual 'miraculous' recovery from the brink of epic disaster. Unfortunately, we will never truly know what would have happened without the bailouts.
Furthermore, during his campaign Obama had made many promises that scared the hell out of businessmen and investors. He said he was going to raise taxes by letting the Bush tax cuts expire. He said he would institute Universal Health Care, driving up costs of insurance for both consumers and businesses. He promised to enact windfall profit taxes on oil companies. He vowed to pass the Employer Free Choice Act, an ironic euphemism for legislation to make it easier for productivity killing labor unions to force unionization of business enterprises. In essence, he promised to mandate into government policy the dominant themes of the Democratic Party - environmentalism, income redistribution, more government support programs and stronger regulation of commerce and industry.
Once he was elected he proceeded to pursue implementation of those promises while undertaking an exponential expansion of the questionable financial system bailouts. Under Obama the US government became much more involved in the private sector of the economy than ever before with the help of Democratic Party control of both houses of Congress. They ignored public opinion and enacted Universal Health Care. They engineered a take-over of General Motors accompanied by abrogation of legal contracts to give more power and ownership interest to labor unions. And they created new regulatory agencies and hundreds of new rules and regulations to bog down and straightjacket private enterprise.
As I said at the beginning, the stock market is a discounting mechanism, anticipating the economic and market environment approximately a year into the future. Sure enough, the two years ending in December 2009 saw corporate earnings for the Index of large companies drop 31%. For smaller companies the decline was worse - 35% for the mid-size companies and 60% for the Small Cap Index. The market anticipated the environment quite well. Today, March 2012, the large company index has recovered to 1365, only 8% above the level of September 2008 when the second stage of the market decline began and still down 13% from the peak in 2007. This poor performance relative to other recoveries can be attributed to the anti-capitalist policies Obama has pursued since his election which have resulted in the slowest economic recovery since the 1930's, the only other time these big government policies and extensive interference in private enterprise have been conducted. They didn't work then and they are not working now. Official unemployment is still in the neighborhood of 8%, with actual unemployment much higher counting those who have stopped looking for work, and economic growth remains below average.
Obama will certainly argue that he saved the American economy from the incompetence of George Bush and that he now has the economy back on track and moving up. That is more misleading propaganda. His policies are responsible for keeping economic growth well below what it should be. All he has truly done is doom us to painfully sub-standard growth, high unemployment and progress killing stagflation into the foreseeable future. That is the credit he deserves.
All that still leaves one question unanswered. Why is the stock market going up despite the growing concerns of market strategists about valuations and falling earnings estimates? I would argue there are several reasons. One is that you can't keep capitalism down for long no matter how hard you try. Business is improving slowly because people cannot postpone their need for a new car, new clothes or a new computer forever. Pent-up demand is being unleashed. Another reason is that the Fed's unprecedented easy money policies, keeping interest rates historically low by buying up nearly all of the new government debt being issued to fund massive deficit spending, is causing some of the money being created to leak into equities. And of course, the stock market could be enjoying a boost from the anticipation of an end to the four year nightmare of Obama in the Oval Office.
Perhaps the most powerful and sustainable reason the market is in an uptrend is due to what one might call the pendulum effect. Financial markets over time swing back and forth between asset classes, just like a pendulum. Over the last decade fixed income investments have grown as the investment of choice for institutional investors, the folks who dominate the markets. So much money has gone out of stocks and into bonds, collateralized debt obligations and their derivatives over the last several years that the total size of the stock market has shrunk considerably. For example, IPO's (Initial Public Offerings) in the United States have declined to around 100 a year from 360 a decade ago, and listings on American stock exchanges have dropped to under 5000 from 8,800 fifteen years ago. The pendulum has swung so far to fixed income that bonds are now in a speculative bubble while stocks have been ignored.
When the fixed income and derivatives bubble collapses, the rush out of those asset classes back into stocks could fuel a bull market of substantial proportions. It won't necessarily be about the economy, corporate earnings or market valuation. It will be about supply and demand. We are just at the beginning of the pendulum beginning to swing back towards the equilibrium and on up the other side. As interest rates start to rise investors won't be able to get out of bonds fast enough. Bonds have been in a bull market for 30 years. The pendulum swinging back into stocks may not last that long or provide the 15% annualized annual returns stocks achieved during the 18 years from 1982 through 2000, but the gains should be more than satisfactory.
Finally, Barack Obama is proving that in order to become a successful politician one must master the ethically and morally dubious arts of self-righteous condemnation, artificial indignation, sanctimonious condescension, character assassination, contrived passion and choreographed press conferences, all while taking credit for the good things that you had nothing to do with and proclaiming oneself a virtuous steward for the public good. In other words, one must have the ability to convince folks of things that aren't true - to take credit when credit is not due and deny responsibility when it is. Barack Obama may be the best we have ever seen at that game.
Basic investment management textbooks teach those who pursue a career in professional money management that the stock market is what is known as a discounting mechanism. That means it discounts the future, traditionally anticipating the economic and market environment nine to eighteen months out. In other words, the market today reflects what aggregate investor expectations are for corporate operating conditions approximately a year ahead.
Following the Bush tax cuts of 2001, the stock market as represented by the Standard and Poor's 500 Index of large company stocks doubled over the five years from the summer of 2002 through the fall of 2007, peaking in October at 1565. From October 2007 into September 2008 the market underwent a typical consolidation following an extended advance, dropping nearly 20% as the bull market aged and details of the magnitude of the housing bubble, related mortgage debt derivatives activities and their impact on the financial system began to become known. Then the proverbial shit hit the fan. The Bush administration decided it was necessary to rescue Fannie Mae and Freddie Mac, Lehman went bankrupt and the Fed bailed out AIG. Reasonable people can disagree on who bears the burden for what happened next, but over the next seven months the market plunged another 46%, finally bottoming in March of 2009 at 667 for a total decline of 57% from the October 2007 peak, the worst stock market collapse since the 1930's.
I know that some folks would contend otherwise, particularly those with a vested interest in getting bailed out from their high risk speculation gone bad, but in my mind there is no question that the Bush Administration's response to the financial system's liquidity crisis was the wrong thing to do. There was no need for bailouts. Financial institutions that suffered trading losses should have suffered the consequences. Bankruptcy laws are on the books to deal with the situation, and the failed banks should have been reorganized and operated by the FDIC as stipulated by law. Few depositors would have lost any money, but greedy speculators in high risk fixed income securities and derivatives would have suffered the substantial losses they should have sustained for making irresponsible bets.
But I would argue that wasn't the primary reason for the stock market debacle. In September of 2008 the presidential election polls swung sharply in favor of Barack Obama over John McCain following months of a near dead heat. The stock market promptly accelerated its plunge when it became clear Obama was going to win the election. This was a man who had very little experience legislating or managing anything. He had no noticeable accomplishments other than winning elections. He rose meteorically through the most corrupt political system in America. He associated with many questionable and contemptible personalities over the years, and he had the most liberal voting record in Congress when he actually did take the time to show up to vote. Plus, he certainly had a vested interest in making the financial system turmoil look worse than it really was so he could claim credit for an eventual 'miraculous' recovery from the brink of epic disaster. Unfortunately, we will never truly know what would have happened without the bailouts.
Furthermore, during his campaign Obama had made many promises that scared the hell out of businessmen and investors. He said he was going to raise taxes by letting the Bush tax cuts expire. He said he would institute Universal Health Care, driving up costs of insurance for both consumers and businesses. He promised to enact windfall profit taxes on oil companies. He vowed to pass the Employer Free Choice Act, an ironic euphemism for legislation to make it easier for productivity killing labor unions to force unionization of business enterprises. In essence, he promised to mandate into government policy the dominant themes of the Democratic Party - environmentalism, income redistribution, more government support programs and stronger regulation of commerce and industry.
Once he was elected he proceeded to pursue implementation of those promises while undertaking an exponential expansion of the questionable financial system bailouts. Under Obama the US government became much more involved in the private sector of the economy than ever before with the help of Democratic Party control of both houses of Congress. They ignored public opinion and enacted Universal Health Care. They engineered a take-over of General Motors accompanied by abrogation of legal contracts to give more power and ownership interest to labor unions. And they created new regulatory agencies and hundreds of new rules and regulations to bog down and straightjacket private enterprise.
As I said at the beginning, the stock market is a discounting mechanism, anticipating the economic and market environment approximately a year into the future. Sure enough, the two years ending in December 2009 saw corporate earnings for the Index of large companies drop 31%. For smaller companies the decline was worse - 35% for the mid-size companies and 60% for the Small Cap Index. The market anticipated the environment quite well. Today, March 2012, the large company index has recovered to 1365, only 8% above the level of September 2008 when the second stage of the market decline began and still down 13% from the peak in 2007. This poor performance relative to other recoveries can be attributed to the anti-capitalist policies Obama has pursued since his election which have resulted in the slowest economic recovery since the 1930's, the only other time these big government policies and extensive interference in private enterprise have been conducted. They didn't work then and they are not working now. Official unemployment is still in the neighborhood of 8%, with actual unemployment much higher counting those who have stopped looking for work, and economic growth remains below average.
Obama will certainly argue that he saved the American economy from the incompetence of George Bush and that he now has the economy back on track and moving up. That is more misleading propaganda. His policies are responsible for keeping economic growth well below what it should be. All he has truly done is doom us to painfully sub-standard growth, high unemployment and progress killing stagflation into the foreseeable future. That is the credit he deserves.
All that still leaves one question unanswered. Why is the stock market going up despite the growing concerns of market strategists about valuations and falling earnings estimates? I would argue there are several reasons. One is that you can't keep capitalism down for long no matter how hard you try. Business is improving slowly because people cannot postpone their need for a new car, new clothes or a new computer forever. Pent-up demand is being unleashed. Another reason is that the Fed's unprecedented easy money policies, keeping interest rates historically low by buying up nearly all of the new government debt being issued to fund massive deficit spending, is causing some of the money being created to leak into equities. And of course, the stock market could be enjoying a boost from the anticipation of an end to the four year nightmare of Obama in the Oval Office.
Perhaps the most powerful and sustainable reason the market is in an uptrend is due to what one might call the pendulum effect. Financial markets over time swing back and forth between asset classes, just like a pendulum. Over the last decade fixed income investments have grown as the investment of choice for institutional investors, the folks who dominate the markets. So much money has gone out of stocks and into bonds, collateralized debt obligations and their derivatives over the last several years that the total size of the stock market has shrunk considerably. For example, IPO's (Initial Public Offerings) in the United States have declined to around 100 a year from 360 a decade ago, and listings on American stock exchanges have dropped to under 5000 from 8,800 fifteen years ago. The pendulum has swung so far to fixed income that bonds are now in a speculative bubble while stocks have been ignored.
When the fixed income and derivatives bubble collapses, the rush out of those asset classes back into stocks could fuel a bull market of substantial proportions. It won't necessarily be about the economy, corporate earnings or market valuation. It will be about supply and demand. We are just at the beginning of the pendulum beginning to swing back towards the equilibrium and on up the other side. As interest rates start to rise investors won't be able to get out of bonds fast enough. Bonds have been in a bull market for 30 years. The pendulum swinging back into stocks may not last that long or provide the 15% annualized annual returns stocks achieved during the 18 years from 1982 through 2000, but the gains should be more than satisfactory.
Finally, Barack Obama is proving that in order to become a successful politician one must master the ethically and morally dubious arts of self-righteous condemnation, artificial indignation, sanctimonious condescension, character assassination, contrived passion and choreographed press conferences, all while taking credit for the good things that you had nothing to do with and proclaiming oneself a virtuous steward for the public good. In other words, one must have the ability to convince folks of things that aren't true - to take credit when credit is not due and deny responsibility when it is. Barack Obama may be the best we have ever seen at that game.
Tuesday, February 28, 2012
Why Not The Best?
Why not the best and the brightest?
America is fast approaching perhaps the most important election crossroads of its 236 year existence. Will we remain the world's beacon of liberty and the engine of global prosperity or will we sink into the doldrums of apathy and dependence, or even worse, the abyss of oppression and destitution. It is time to elect real leaders instead of settling for the best of poor choices. Mitt Romney, Rick Santorum, Newt Gingrich and Ron Paul each have excessive baggage that is likely to prove fatal in the general election unless Barack Obama does something really stupid. It is time for Republicans to reboot and offer candidates with proven ability, integrity and substance to the voters. Now would be as good a time as any to start replacing the professional politicians who dominate our nation's government.
David Petraeus is an experienced, recognized leader with a long term record of success in the world's most challenging and vitally important arena's. No one in America has an impressive resume' as he does. He has shown all Americans that he is an intelligent, hard-working, decisive, strong patriot who is in love with his country, not himself. Thomas Sowell has been rendering wise, rational, pragmatic opinions on social and economic policies for nearly four decades. O.K., he is 81 years old, which rather than being a liability means to me he has seen it all. He would be the perfect choice to be responsible for giving enlightened advice to a chief executive who knows how to get things done.
Neither of these men have displayed the desire to run for the top political offices in the country, which in my opinion is a huge plus factor. Anyone who really wants the presidency so badly as to run the gauntlet of a political campaign is on a power trip, and probably should be among the last people on earth to have the job. I think it is time to appeal to General Petraeus and Mr. Sowell to lead the Republican ticket to get America back on track to regain the principles and policies established by our founders that made America great.
Of course neither man might want the job. Who could blame them? But there have to be other men and women in America whose experience, qualifications and character would make them much better choices than the ones we have. We must find them. With people such as a David Petraeus in the White House and a Thomas Sowell as Vice-President, we would have an excellent chance of restoring our country to its traditional greatness and leave a United States of America to our children and grandchildren that continues a legacy of freedom and economic strength instead of a ruined hulk of once what was.
Wednesday, January 25, 2012
State of the Union?
No one asked for it, but here it is anyway - my take on the president's state of his re-election speech disguised as the State of the Union address.
The president said he wanted to address America's growing income gap. Doesn't everybody? The problem is that the gap effecting most Americans exists primarily between the private sector and government employees. The secret is now out that public sector employees have higher incomes, significantly better benefits and more job security than those who work in private enterprise. Personally, I don't think the president plans on closing the gap by cutting or even restraining the growth in government employees compensation packages.
The president said he wants to restore an economy where everyone enjoys prosperity, not just a few. Really! What a concept! I guess he thinks he is the only person in America with that objective. Be that as it may, he unfortunately believes socialism, income redistribution and placing shackles on free enterprise is the way to do that. Apparently he has little knowledge of history. He additionally said he wants an economic system where everyone plays by the same rules, again as if that is a singular desire on his part alone. He then proceeds to announce new programs and subsidized benefits available only to targeted interest groups. So much for everyone playing by the same rules.
In America we have always envied those who have more than we do. We haven't hated them. Until now. For generations immigrants came to America because they knew capitalism and free markets offered them the opportunity to build better lives for themselves and their families through hard work. Until now. That has been the change produced by our current president and his political party.
An American making $343,000 a year qualifies to be in the top one percent of earners, and $36,000 a year to qualify as a member of the middle class. Globally those numbers are $34,000 and $1,225 a year, respectively, as reported by CNN. This staggering difference in relative affluence was not created by socialist economic and political policies. It was created by capitalism and free enterprise.
The president always says he is willing to compromise and work with Republicans. Unfortunately, his idea of compromise is for Republicans to bend over while he shoves his agenda up their ass. But of course claiming this false willingness to compromise certainly goes down well with the fawning 'words speak louder than actions' crowd who worship every cliche he reads off his teleprompter.
Regarding specific issues, the president wants to eliminate all oil and gas subsidies. That prompts the question, what oil and gas subsidies? Does he mean the depreciation and amortization allowances on capital expenditures and intangible assets available to every business in America? Wouldn't denying those allowances to oil and gas companies be a contradiction of his equal playing field objectives? Or is he talking about depletion allowances for natural resources, without which there would be little incentive to spend money exploring for new reserves? Wouldn't that contradict and impede his stated goals of achieving energy independence for America? Gee, I don't know, maybe he doesn't let those kind of details bother him. After all, they don't seem to bother the folks who vote for him.
Another subject is national security, which he claims to be in favor of. That is good to know. The president announced he will cut the number of troops in the Army and focus on drones and small special operations units to defend against our adversaries. That is a good idea given the nature of the immediate threats we face today. In fact, that strategy is what my book "The Paladin Principle" is all about. But cutting vital next generation weapons systems is a very bad idea. Potential opponents are always improving their capabilities, so it is imperative that we always stay a step or two ahead. Over his three years in office Obama has cancelled vital programs such as the F-22 Air Superiority Strealth Fighter, and made substantial cuts in others such as the F-35 Joint Strike Fighter, our ballistic missile defense shield, and the CGX Next Generation Cruiser - all programs geared towards protecting the country from the more sophisticated threats we may encounter in the future.
Yes, high tech weapons do reduce the need for ground troops. But today's weapons of mass destruction can destroy whole cities and eliminate massive numbers of military personnel in an instant. In order to prevent that from happening to our cities and our soldiers our super weapons must be better than our opponents super weapons. We do not get to choose where our next threat will come from. If it comes from non-government sponsored terrorist organizations or Middle Eastern nations who are not as strong as they think they are we will most likely prevail. But if it comes from an increasingly belligerent world power, then we will be the ones who are defenseless. Perhaps the president thinks we can just whip advanced weapons systems out whenever we might need them in response to aggressive moves by the Russians, the Chinese, the Iranians or the North Koreans. But that is not a plan to provide for the common defense. That is a plan for extinction.
And then of course there are taxes. He wants everybody to pay their fair share. Again he appears to believe that is a concept no one else has thought of. Or maybe his inspiration is that he gets to decide what is fair. Contrary to his rhetoric, there is a majority of people on both sides of the ideological spectrum that agree America needs serious tax reform. But the president is not advocating tax reform. He just wants to raise tax rates on his definition of the wealthy. Not that I object to that, but it is kind of like using a child's sand shovel to dig the Panama Canal. There aren't enough rich people to make a dent in bringing down the nuclear bomb of a budget deficit he has created over the last three years. Furthermore, is it really fair for 50% of Americans to pay no income taxes at all while 10% bear 70% of the load?
It is past time to blow up the current tax system and start all over. There are lots of good ideas floating around about a tax system that truly is more fair for every American, and doesn't rely on just raising income tax rates on the rich and, if the Democrats were honest, the middle class. A flat tax, a value added tax, maybe even a wealth tax should be considered. For starters there should be the elimination of all tax preferences, which are nothing more than unfair subsidies benefitting special interest groups. Real fairness will be difficult to achieve without upsetting a lot of folks who have grown accustomed to their cherished credits and deductions. But if we are talking about real reform, that is the place to start.
The president continues to blame all of America's woes on George Bush and the Republicans in Congress, conveniently ignoring the fact his party controlled both houses of Congress his first two years and the Senate last year. He is trying to convince the nation that our economic sluggishness couldn't possibly be due to his enlightened vision of progressive leadership. Fortunately for him, capitalism has an inherent propensity to generate growth even when shackled with the burdens of unnecessary regulations and restraints. But too many of those restraints keep the economy from growing at a rate strong enough to maintain a society's standard of living. That is where this president's leadership now has us trapped. But of course he will never admit his ideology does not work.
Perhaps one of the biggest problems we face today as a nation is that the majority of voters do not understand economics. They seem to believe left wing politicians' bullshit that the government will provide for them by taking money from those who have more of it, as if that is fair. Another major problem is that elections are nothing more than popularity contests, not a rational process of learning about and electing qualified, knowledgeable, capable leaders. That is why every so often we end up with unqualified, dishonest egomaniacs who promise unattainable, fantasyland Utopias. A government run by deceitful, corrupt socialists and their like-minded supporters results in a self-righteous aristocracy dominating a moribund society that cannot produce enough to sustain itself.
It is almost expected these days that politicians are dishonest, devious and corrupt. Our president takes these undesirable attributes to new levels. He has been president for more than three years, but everything bad is always someone else's fault. He tries to tell us our problems couldn't possibly be caused by the discredited anti-growth Keynesian economic and illogical socialist policies he resurrected from the trash dump of history. But the fact is that no country's economic and social problems have ever been solved by printing money, redistributing income and adding to already bloated government bureaucracies.
If Republicans were smart they would agree with Obama's stated objectives, and then strongly argue why their solutions would provide more success in meeting those objectives. All the rational arguments are in their favor. But they probably won't. Republicans have never been good at public relations. In fact they are currently engaging in exercises that may achieve nothing but self-destruction. Sometimes you almost think they want to lose. It would almost be humorous if the stakes weren't so critical to the future of our country.
The president said he wanted to address America's growing income gap. Doesn't everybody? The problem is that the gap effecting most Americans exists primarily between the private sector and government employees. The secret is now out that public sector employees have higher incomes, significantly better benefits and more job security than those who work in private enterprise. Personally, I don't think the president plans on closing the gap by cutting or even restraining the growth in government employees compensation packages.
The president said he wants to restore an economy where everyone enjoys prosperity, not just a few. Really! What a concept! I guess he thinks he is the only person in America with that objective. Be that as it may, he unfortunately believes socialism, income redistribution and placing shackles on free enterprise is the way to do that. Apparently he has little knowledge of history. He additionally said he wants an economic system where everyone plays by the same rules, again as if that is a singular desire on his part alone. He then proceeds to announce new programs and subsidized benefits available only to targeted interest groups. So much for everyone playing by the same rules.
In America we have always envied those who have more than we do. We haven't hated them. Until now. For generations immigrants came to America because they knew capitalism and free markets offered them the opportunity to build better lives for themselves and their families through hard work. Until now. That has been the change produced by our current president and his political party.
An American making $343,000 a year qualifies to be in the top one percent of earners, and $36,000 a year to qualify as a member of the middle class. Globally those numbers are $34,000 and $1,225 a year, respectively, as reported by CNN. This staggering difference in relative affluence was not created by socialist economic and political policies. It was created by capitalism and free enterprise.
The president always says he is willing to compromise and work with Republicans. Unfortunately, his idea of compromise is for Republicans to bend over while he shoves his agenda up their ass. But of course claiming this false willingness to compromise certainly goes down well with the fawning 'words speak louder than actions' crowd who worship every cliche he reads off his teleprompter.
Regarding specific issues, the president wants to eliminate all oil and gas subsidies. That prompts the question, what oil and gas subsidies? Does he mean the depreciation and amortization allowances on capital expenditures and intangible assets available to every business in America? Wouldn't denying those allowances to oil and gas companies be a contradiction of his equal playing field objectives? Or is he talking about depletion allowances for natural resources, without which there would be little incentive to spend money exploring for new reserves? Wouldn't that contradict and impede his stated goals of achieving energy independence for America? Gee, I don't know, maybe he doesn't let those kind of details bother him. After all, they don't seem to bother the folks who vote for him.
Another subject is national security, which he claims to be in favor of. That is good to know. The president announced he will cut the number of troops in the Army and focus on drones and small special operations units to defend against our adversaries. That is a good idea given the nature of the immediate threats we face today. In fact, that strategy is what my book "The Paladin Principle" is all about. But cutting vital next generation weapons systems is a very bad idea. Potential opponents are always improving their capabilities, so it is imperative that we always stay a step or two ahead. Over his three years in office Obama has cancelled vital programs such as the F-22 Air Superiority Strealth Fighter, and made substantial cuts in others such as the F-35 Joint Strike Fighter, our ballistic missile defense shield, and the CGX Next Generation Cruiser - all programs geared towards protecting the country from the more sophisticated threats we may encounter in the future.
Yes, high tech weapons do reduce the need for ground troops. But today's weapons of mass destruction can destroy whole cities and eliminate massive numbers of military personnel in an instant. In order to prevent that from happening to our cities and our soldiers our super weapons must be better than our opponents super weapons. We do not get to choose where our next threat will come from. If it comes from non-government sponsored terrorist organizations or Middle Eastern nations who are not as strong as they think they are we will most likely prevail. But if it comes from an increasingly belligerent world power, then we will be the ones who are defenseless. Perhaps the president thinks we can just whip advanced weapons systems out whenever we might need them in response to aggressive moves by the Russians, the Chinese, the Iranians or the North Koreans. But that is not a plan to provide for the common defense. That is a plan for extinction.
And then of course there are taxes. He wants everybody to pay their fair share. Again he appears to believe that is a concept no one else has thought of. Or maybe his inspiration is that he gets to decide what is fair. Contrary to his rhetoric, there is a majority of people on both sides of the ideological spectrum that agree America needs serious tax reform. But the president is not advocating tax reform. He just wants to raise tax rates on his definition of the wealthy. Not that I object to that, but it is kind of like using a child's sand shovel to dig the Panama Canal. There aren't enough rich people to make a dent in bringing down the nuclear bomb of a budget deficit he has created over the last three years. Furthermore, is it really fair for 50% of Americans to pay no income taxes at all while 10% bear 70% of the load?
It is past time to blow up the current tax system and start all over. There are lots of good ideas floating around about a tax system that truly is more fair for every American, and doesn't rely on just raising income tax rates on the rich and, if the Democrats were honest, the middle class. A flat tax, a value added tax, maybe even a wealth tax should be considered. For starters there should be the elimination of all tax preferences, which are nothing more than unfair subsidies benefitting special interest groups. Real fairness will be difficult to achieve without upsetting a lot of folks who have grown accustomed to their cherished credits and deductions. But if we are talking about real reform, that is the place to start.
The president continues to blame all of America's woes on George Bush and the Republicans in Congress, conveniently ignoring the fact his party controlled both houses of Congress his first two years and the Senate last year. He is trying to convince the nation that our economic sluggishness couldn't possibly be due to his enlightened vision of progressive leadership. Fortunately for him, capitalism has an inherent propensity to generate growth even when shackled with the burdens of unnecessary regulations and restraints. But too many of those restraints keep the economy from growing at a rate strong enough to maintain a society's standard of living. That is where this president's leadership now has us trapped. But of course he will never admit his ideology does not work.
Perhaps one of the biggest problems we face today as a nation is that the majority of voters do not understand economics. They seem to believe left wing politicians' bullshit that the government will provide for them by taking money from those who have more of it, as if that is fair. Another major problem is that elections are nothing more than popularity contests, not a rational process of learning about and electing qualified, knowledgeable, capable leaders. That is why every so often we end up with unqualified, dishonest egomaniacs who promise unattainable, fantasyland Utopias. A government run by deceitful, corrupt socialists and their like-minded supporters results in a self-righteous aristocracy dominating a moribund society that cannot produce enough to sustain itself.
It is almost expected these days that politicians are dishonest, devious and corrupt. Our president takes these undesirable attributes to new levels. He has been president for more than three years, but everything bad is always someone else's fault. He tries to tell us our problems couldn't possibly be caused by the discredited anti-growth Keynesian economic and illogical socialist policies he resurrected from the trash dump of history. But the fact is that no country's economic and social problems have ever been solved by printing money, redistributing income and adding to already bloated government bureaucracies.
If Republicans were smart they would agree with Obama's stated objectives, and then strongly argue why their solutions would provide more success in meeting those objectives. All the rational arguments are in their favor. But they probably won't. Republicans have never been good at public relations. In fact they are currently engaging in exercises that may achieve nothing but self-destruction. Sometimes you almost think they want to lose. It would almost be humorous if the stakes weren't so critical to the future of our country.
Tuesday, January 17, 2012
A Golden Opportunity
Apparently Mitt Romney will be the Republican candidate for president next fall. Consequently, it was inevitable that his career as head of a private equity firm would become an issue he would have to deal with as he runs for president. Over the last two decades many of these deal-makers have grown fabulously wealthy by acquiring struggling companies and restructuring them in order to improve their value and sell them for a profit. In the process many jobs were lost. Of course many jobs were also created if the firms were eventually successful. But some have used the loss of any jobs as an indictment of capitalism, and it is far better the debate regarding capitalism and private equity comes to the forefront now rather than next fall. Barack Obama will certainly press the issue hard in attempting to demonize his opponent, but at least now it will be out in the open and hopefully the arguments well known.
Many folks regard private equity investors as the epitome of the kind of rapacious bandits that represent the unrestrained greed and reckless behavior that has destroyed the global financial system and brought the Western economies to their knees. That is a bit of a stretch, since private equity firms generally did not indulge in the leveraged trading orgy of collateralized mortgage obligations and credit default swaps carried on by the too big to fail banking institutions at the epicenter of the financial collapse.
But the critics do have a few legitimate arguments. Some private equity firms are guilty of buying struggling companies solely for the purpose of leveraging them up with debt, paying themselves huge dividends from the borrowed money that oftentimes exceeded their investment (providing an instant profit), arbitrarily laying off large numbers of people to reduce expenses, then selling the over-leveraged carcass off to go bankrupt a couple years down the road. That is called looting and it is inexcusable, irresponsible and immoral. It should also have been illegal. The private equity executives that engaged in this behavior should be in jail and required to forfeit all of their earnings from the activity.
However, not all private equity firms operated in this despicable fashion. Private equity, when conducted in a responsible manner, may be the purest form of capitalism and one of the most beneficial when companies that would have gone bankrupt without outside intervention and restructuring manage to regain profitability and grow. Instead of everyone losing their job, the company can retain a significant portion of its people while replacing those at the top with more effective managers. The company may even become a substantial new job generator as profitable operations resume. To date I have seen no credible evidence that Bain and Company pursued the looting strategy rather than the objective of corporate regeneration for the benefit of all. If evidence that I am mistaken comes to light, then Romney is toast, as he should be.
Unfortunately, it appears that many Republicans are not doing the Party a favor by disparaging capitalism and accusing Romney in particular, and private equity investors in general, of plundering and pillaging. Either they do not really understand capitalism or they are political opportunists who desire to tap into the voters concern over the unfortunate growth of income inequality in America. In order to combat these perceptions, Romney must produce a verifiable report that proves Bain and Company did not engage in looting and that the firm was responsible for creating far more jobs than were lost by their investment and restructuring operations. If he doesn't, Obama will tear him to pieces with this issue next fall.
Certainly income inequality and Wall Street excess needs to be rationally addressed and reversed, but the redistribution of income policies of the current administration will not get it done. There ain't enough rich folks for that to succeed. 'Tax the rich, feed the poor til there are no rich no more' may have been a great line in an early 70's counterculture song (Alvin Lee, Ten Years After, 1971), but it is not a viable long term policy. Europe is the living proof. Only the economic growth generating attributes inherent in capitalism have the potential ability to raise living standards for all rather than for a privileged few.
Actually, all of this creates a tremendous, and critical, opportunity for Mitt Romney and our country. Romney must make a strong case for the job creation and abundant affluence that has been the legacy of capitalism in America versus the inevitable decline of living standards resulting from government control of the economy. Again, the ace in the hole for making this case is Europe. Unfortunately, with nearly half of Americans today receiving more from the government than they pay in, the majority of voters may not be listening. Something for nothing always appeals to people, particularly when it is legitimized by society. That has to change.
Democracy made America free. Capitalism made it great. Like it or not, Mitt Romney has perhaps been chosen by fate to be the man to lead America back from the precipice, to restore the United States back to its basic principles of individual liberty, equal opportunity, impartial justice, limited government and free enterprise. To regenerate an industrious work ethic in Americans we must be able to gain rewards from our efforts. That message must be eloquently and convincingly delivered. It would help if Romney would lose his patrician mannerisms as quickly as Obama acquired his. Regardless, Mitt Romney may be our last chance. He may not be up to it. Let's pray that he is.
Many folks regard private equity investors as the epitome of the kind of rapacious bandits that represent the unrestrained greed and reckless behavior that has destroyed the global financial system and brought the Western economies to their knees. That is a bit of a stretch, since private equity firms generally did not indulge in the leveraged trading orgy of collateralized mortgage obligations and credit default swaps carried on by the too big to fail banking institutions at the epicenter of the financial collapse.
But the critics do have a few legitimate arguments. Some private equity firms are guilty of buying struggling companies solely for the purpose of leveraging them up with debt, paying themselves huge dividends from the borrowed money that oftentimes exceeded their investment (providing an instant profit), arbitrarily laying off large numbers of people to reduce expenses, then selling the over-leveraged carcass off to go bankrupt a couple years down the road. That is called looting and it is inexcusable, irresponsible and immoral. It should also have been illegal. The private equity executives that engaged in this behavior should be in jail and required to forfeit all of their earnings from the activity.
However, not all private equity firms operated in this despicable fashion. Private equity, when conducted in a responsible manner, may be the purest form of capitalism and one of the most beneficial when companies that would have gone bankrupt without outside intervention and restructuring manage to regain profitability and grow. Instead of everyone losing their job, the company can retain a significant portion of its people while replacing those at the top with more effective managers. The company may even become a substantial new job generator as profitable operations resume. To date I have seen no credible evidence that Bain and Company pursued the looting strategy rather than the objective of corporate regeneration for the benefit of all. If evidence that I am mistaken comes to light, then Romney is toast, as he should be.
Unfortunately, it appears that many Republicans are not doing the Party a favor by disparaging capitalism and accusing Romney in particular, and private equity investors in general, of plundering and pillaging. Either they do not really understand capitalism or they are political opportunists who desire to tap into the voters concern over the unfortunate growth of income inequality in America. In order to combat these perceptions, Romney must produce a verifiable report that proves Bain and Company did not engage in looting and that the firm was responsible for creating far more jobs than were lost by their investment and restructuring operations. If he doesn't, Obama will tear him to pieces with this issue next fall.
Certainly income inequality and Wall Street excess needs to be rationally addressed and reversed, but the redistribution of income policies of the current administration will not get it done. There ain't enough rich folks for that to succeed. 'Tax the rich, feed the poor til there are no rich no more' may have been a great line in an early 70's counterculture song (Alvin Lee, Ten Years After, 1971), but it is not a viable long term policy. Europe is the living proof. Only the economic growth generating attributes inherent in capitalism have the potential ability to raise living standards for all rather than for a privileged few.
Actually, all of this creates a tremendous, and critical, opportunity for Mitt Romney and our country. Romney must make a strong case for the job creation and abundant affluence that has been the legacy of capitalism in America versus the inevitable decline of living standards resulting from government control of the economy. Again, the ace in the hole for making this case is Europe. Unfortunately, with nearly half of Americans today receiving more from the government than they pay in, the majority of voters may not be listening. Something for nothing always appeals to people, particularly when it is legitimized by society. That has to change.
Democracy made America free. Capitalism made it great. Like it or not, Mitt Romney has perhaps been chosen by fate to be the man to lead America back from the precipice, to restore the United States back to its basic principles of individual liberty, equal opportunity, impartial justice, limited government and free enterprise. To regenerate an industrious work ethic in Americans we must be able to gain rewards from our efforts. That message must be eloquently and convincingly delivered. It would help if Romney would lose his patrician mannerisms as quickly as Obama acquired his. Regardless, Mitt Romney may be our last chance. He may not be up to it. Let's pray that he is.
Friday, October 07, 2011
The Audacity of Blaming Everyone Else
Republicans really suck at public relations. Americans are protesting on Wall Street and at Federal Reserve Banks around the country about the weak economy, high unemployment, and the huge disparity in wealth distribution. Republicans would be better off supporting these protests rather than criticizing them. The protests are justified.
Wall Streeters and executives at the big banks are guilty of stuffing obscene amounts of money in their own pockets while destroying the financial markets. They did this by mindlessly leveraging trades of pointless debt based derivatives and collateralized debt obligations backed by worthless mortgages rather than performing their real duties of providing capital to growth generating private enterprise.
The Federal Reserve and Treasury Department is guilty of bailing out bankers and bondholders (the wealthy) with low interest rates and more borrowed money at the expense of wiping out shareholders of stocks, which formed the basis of most retirement funds and middle class investments. The real question is why have this president and the financial authorities forgotten (or ignored) the fact that capitalism is based on equity ownership, not debt? And how could they expect consumers to spend money when they have destroyed their life savings?
But what I really don't understand is why people are not protesting the other guilty party of the economic quagmire we find ourselves in. There should be protests in front of the White House, the Capitol Building, the U.S. Treasury and Fannie Mae headquarters as well since this president, this Congress and the financial regulatory agencies encouraged the high risk behavior in the first place and subsequently have done nothing but make the situation worse. Could this be Comrade B.O.'s expertise as a community organizer at work? Are these protests being organized by the Demo-rats to deflect blame from themselves? After all, that is the only thing they are good at.
Demo-rats love to feed and exploit the misconception that all rich people are Republicans. If that is true, then how does Obama attract substantially more campaign contributions than the Republicans do? According to the Center for Responsive Politics based on analysis of Federal Election Commission data, individuals working in finance, insurance and real estate markets were among Obama's largest campaign contributors. And executives from Goldman Sachs were his biggest backers. Obama talks tough about Wall Street and then bails them out. They laugh all the way to the bank while B.O. remains comfortably seated in the oval office. Talk is cheap, and when it comes from left wing politicians it is usually a lie to deceive and mislead the voting public.
Furthermore, governors of the Federal Reserve Bank are appointed by the president. The Chairman of the Fed, Ben Bernanke, was first nominated by George Bush. He was then renominated by Obama in 2009 and confirmed by the Senate, which happens to be controlled by Demo-rats. It all makes you wonder how stupid Americans can be to always blame our economic troubles on the Republicans.
As usual Obama is demaguoging and chastising straw men he creates to demonize conservatives. It is typical Obama. His policies kill millions of American jobs and he blames everyone else. It is quite clear that Obama and his politburo believe the only real jobs are government jobs. Look at his "jobs bill", which is designed to fund almost exclusively more public sector jobs for public labor union employees.
Kinky Friedman recently said that Charlie Sheen would be a better president than the current imposter in the White House. He is right. Charlie Sheen would be drunk, stoned and partying all the time. He would do no damage at all to our economy because doing nothing is better than pursuing the wrong policies as our current president does.
Wall Streeters and executives at the big banks are guilty of stuffing obscene amounts of money in their own pockets while destroying the financial markets. They did this by mindlessly leveraging trades of pointless debt based derivatives and collateralized debt obligations backed by worthless mortgages rather than performing their real duties of providing capital to growth generating private enterprise.
The Federal Reserve and Treasury Department is guilty of bailing out bankers and bondholders (the wealthy) with low interest rates and more borrowed money at the expense of wiping out shareholders of stocks, which formed the basis of most retirement funds and middle class investments. The real question is why have this president and the financial authorities forgotten (or ignored) the fact that capitalism is based on equity ownership, not debt? And how could they expect consumers to spend money when they have destroyed their life savings?
But what I really don't understand is why people are not protesting the other guilty party of the economic quagmire we find ourselves in. There should be protests in front of the White House, the Capitol Building, the U.S. Treasury and Fannie Mae headquarters as well since this president, this Congress and the financial regulatory agencies encouraged the high risk behavior in the first place and subsequently have done nothing but make the situation worse. Could this be Comrade B.O.'s expertise as a community organizer at work? Are these protests being organized by the Demo-rats to deflect blame from themselves? After all, that is the only thing they are good at.
Demo-rats love to feed and exploit the misconception that all rich people are Republicans. If that is true, then how does Obama attract substantially more campaign contributions than the Republicans do? According to the Center for Responsive Politics based on analysis of Federal Election Commission data, individuals working in finance, insurance and real estate markets were among Obama's largest campaign contributors. And executives from Goldman Sachs were his biggest backers. Obama talks tough about Wall Street and then bails them out. They laugh all the way to the bank while B.O. remains comfortably seated in the oval office. Talk is cheap, and when it comes from left wing politicians it is usually a lie to deceive and mislead the voting public.
Furthermore, governors of the Federal Reserve Bank are appointed by the president. The Chairman of the Fed, Ben Bernanke, was first nominated by George Bush. He was then renominated by Obama in 2009 and confirmed by the Senate, which happens to be controlled by Demo-rats. It all makes you wonder how stupid Americans can be to always blame our economic troubles on the Republicans.
As usual Obama is demaguoging and chastising straw men he creates to demonize conservatives. It is typical Obama. His policies kill millions of American jobs and he blames everyone else. It is quite clear that Obama and his politburo believe the only real jobs are government jobs. Look at his "jobs bill", which is designed to fund almost exclusively more public sector jobs for public labor union employees.
Kinky Friedman recently said that Charlie Sheen would be a better president than the current imposter in the White House. He is right. Charlie Sheen would be drunk, stoned and partying all the time. He would do no damage at all to our economy because doing nothing is better than pursuing the wrong policies as our current president does.
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