Archive for the 'Economics' Category

Illinois To Lose Electoral Votes

By Caomhin

They raised income taxes by 66%.  That is not a type, this is what happens your Congress goes absolutely berserk and starts spending like there is no tomorrow.  Eventually tomorrow comes:

The hike increases the state’s personal income tax rate from 3 percent to 5 percent.

In real numbers, if your gross income is $50,000 a year, your state income taxes will rise from $1,500 to $2,500 a year.

The hike increases the state’s personal income tax rate from 3 percent to 5 percent.

In real numbers, if your gross income is $50,000 a year, your state income taxes will rise from $1,500 to $2,500 a year.

Addictions are hard to break.  The Illinois legislature is addicted to that sweet, sweet, taxpayer money.  I wonder how many people will begin to be behind on their own bills when they loose nearly $100 a month, will have to sacrifice things for their children, and otherwise suffer the consequences of an irresponsible legislature.   In short order you can expect the unemployment rate to increase in Illinois as lower levels of disposable income means less money being pumped into local businesses.  Couple that with the nearly doubling of the corporate income rates and that may not be a problem when businesses uproot and move out of their state.  Given the state of the economy expect people to follow as well.  As a result of the disaster they have created they have severely punished the people of Illinois and due to the impending migration that will most certainly occur, they will also lose electoral votes.  Keep an eye over the next few years how much the representatives to the Federal Government try to earmark to their state.  They will have to get money from somewhere.

Liberals Don’t Care About Lower and Middle Class Families

By Caomhin

There’s no hiding it at this point, after having rejected a 2 year compromise that was the result of negotiations between the White House and the GOP.  Liberals went off the deep end because the plan did not include provisions to soak the rich.  Their deep seated hatred of high income earners and the sheer nerve of people not wanting to have to surrender upwards of 50% of their income after all current levels of taxes are collected have caused them to go off the deep end yet again.

Noted nutjobs such Keith Olbermann are now threatening to primary Obama because he is not going to jack up the tax rates for people who invest in start up businesses, employ people, or save money that lending institutions can use to fund the purchases of homes, cars, etc. No, it’s not enough to have the estate tax go up to level in the mid 30’s, Liberals must collect much more than that if a person were to have the audacity to earn money and the utter gall to die and will their assets to their children instead of Uncle Sam.

Yes, such is the level of liberal rage that their House caucus would rather taxes go up on every single American than to have to live with the nightmare of people not being gouged by the government for two more years.  It is much more important to take away disposable income from rich people than to make sure poor people can afford such trivial things as food and water.

Liberals are probably still scratching their heads over why they had their tails handed to them in November.  It’s garbage like this.  I’m convinced that not only do Liberals not understand math or accounting in any fashion but they fail to understand business and good governance.  With Obama up there throwing around hostage analogies and calling John Boehner a “bomb thrower,” which was even more offensive considering he used that phrase on Pearl Harbor day, they have shown themselves to be utterly clueless and completely callous.  The result of their temper tantrums and blind hatred will hurt all Americans yet again.

Bush Tax Cuts Should Be Made Permanent

By Caomhin

There is talk in some people of “the new normal,” which is essentially a view that our economic situation will never vastly improve over where we are today in the sense that there will be high levels of unemployment, lowered consumption levels, and a generally poor economic climate.  I strongly disagree with this notion.  I strongly disagree with this sentiment.  We are the greatest country on the face of the Earth.  Americans can overcome any obstacle that is thrown in their way provided that we are not hindered from doing so from external forces.

Government is not inherently bad.  I am a proponent of effective, efficient, and accountable government at each level.  On the other hand, big government, is inherently bad.  A large, bloated government puts a strain on its people through unnecessary regulation, high tax burdens, and disincentives to create among other things. Contrary to what Joe Biden recently said, essentially that government should get the credit for every innovation..ever, his view is completely wrong.  Milton Friedman’s assertion is correct.  Freidman, of course, said:

The greatest advances of civilization, whether in architecture or painting, in science and literature, in industry or agriculture, have never come from centralized government.

Innovation spurs economic activity along with other factors such as certainty, the potential for profits and growth, and freedom in the market place.  “The New Normal,” does not exist if we lower tax rates and cut spending, if we eliminate inefficient, ineffective programs and focus on maintaining a streamlined government that is responsive to the needs of the people and respects them as individuals.

We have a number of crisis heading our direction from the recently passed health care abomination to social security and Medicare.  We have the means to fix these programs and eliminate billions in waste.  We have the ability to start moving towards a partially privatized system of retirement which, when proven effective, will hopefully lead to a completely privatized system.  In terms of the current economic conditions taking disposable and investible income out of the private market to put in the government’s coffers is an astonishingly bad idea.

We are Americans, we do not begrudge someone success, we wish it upon them.  We should not be green with envy when another person reaches great heights, we should congratulate them.  When the representatives of our government go on enormous and never ending spending sprees with the citizens’ money, it is shameful when they go on TV and claim the government “can’t afford” to stop their reckless indulgences.

I am whole heartedly behind Sens. Coburn and DeMint’s crusade against earmarks and I commend Sen. Coburn in particular for reminding the GOP that they can and will face primary challenges should they ignore what the people want.  What the people want, of course, is an end to the earmark process, lower taxes, more freedom, and good governance.  We are entitled to this and we are entitled to leaders who will provide this for us.  We will continue to take our fight to the ballot box and we need these tax cuts to be permanent.

Obama is destroying the American Dollar

By Caomhin

I have long since argued that the economic policies employed by the Obama Administration are foolish, reckless, and dangerous.  There have been many signs foretelling of a highly weakened American economy in the long term in part of Obama’s policies.  I have also stated that the American economy will strengthen in spite of, not because of, Obama’s economic policies.

Obama has accelerated the accumulation of federal deficit to astronomic proportions and most experts are forecasting deficits as far into the future as they can model. The deficit increased by $220.9 billion in February, the shortest month of the year, which if you do the calculations works out to a loss of $91,311.722 per second.  This is alarming at best, truly a devastating number.

It now appears that the Canadian dollar is poised to overtake the American dollar in strength by year end.  I recall many articles in the past when, for a short period of time the Loonie had gained parity or surpassed our dollar, it was sign of just how dire our economy was doing, and I mean this in disrespect to our great neighbors to the North.  For the second time now in two years, the dollar will drop below the value of the Canadian dollar.

Since the Democrats took control of Congress, the economy has suffered greatly.  We are still in the midst of a depression (again, the media does not have the stones to call it as such).  President George W. Bush was hardly the most fiscally conservative president we have ever had, and there is no excuse for him or the GOP adding to the national debt when the GOP had control of Congress, but nearly all economists had agreed that the debts that were accumulating were at least sustainable.  Since the Democrats have seized both Congress and the Executive branch the debt level has become unsustainable and we are racing towards a crisis the likes we have never seen before.

Obama’s policies, his insane spending levels, his assault on the private sector, including the auto, financial, and health care industries, coupled with his lack of foresight and leadership are leading us into what could become a death spiral.  His radical left wing agenda is moving our nation towards insolvency.  It is our duty in November to hit the polls and take down the radical left wing congress in order to restore sanity to our nation.  This is not an excuse to simply vote in a member of the GOP who will not adhere to strong fiscal conservative philosophies or are lacking in leadership skills.  We must use the primaries in order to ensure that those who are given the opportunity to seek office will address these problems before it is too late.  The American people have already stood up and said “No More!” it is time for our leaders to do the same.

More Obamanomics Lessons

By Caomhin

Obama talks, the markets listen. From Market Watch:

The dollar gave up earlier gains in afternoon trading on Thursday in a volatile session marked with conflicting signals from economic data, and stocks dropping as President Obama outlined plans to rein in banks. “Talk from the president of a major overhaul of how banks can operate appears to have scared foreign interest away from the greenback,” said analysts at Action Economics.

I have written before about Obama’s horrific plan to handicap financial institutions and drag down the economy.  Today, Obama took some time and expanded on his tax raising, job killing scheme and the markets, as expected, responded negatively.  It’s a shame those “fat cats” in the White House don’t have a 401(k) like the vast majority of Americans, or maybe they’d have been personally affected by this proposal like so many us have and will be should this idea pass.

Fox News has a bit more of the detail of his plan:

Obama is placing a new emphasis on Wall Street regulations, with a goal of limiting the financial sector to smaller, less interconnected firms.

The proposal would seek to limit bank consolidation and ensure that banks, and financial institutions that contain banks, cannot invest in hedge funds or other funds “unrelated to serving customers” for profit.

I have a goal too, to make government less complex, small, and less interconnected to the rights of individuals.  Of course that goal makes sense and empowers individuals and embraces the free markets.  Therefore, do not expect any liberal to endorse that particular idea.

All financial transactions involve risk and every single corporation has a duty to its owners (the shareholders) to maximize profits.  Financial decisions are based on a risk/reward matrix and each individual falls somewhere within this matrix.  You are willing to accept a certain level of risk in order to reach a certain level of POTENTIAL profit.  This is understood.  Now, however, Obama is essentially saying that owner of a corporation and the individuals who are consuming this product (in this case banking products) should not be allowed to make decisions based on their own needs and risk levels.  Additionally, the taxes Obama is proposing will be directly passed on to the American consumer, it is simply a lie for the Administration to state otherwise.  Furthermore, this will limit the freedom and choices available to consumers.  This is socialist, or at perhaps statist, but it runs counter to freedom.

Lastly for tonight, let me just mention that the Associated Press and every other liberal outfit in the land needs to pull their heads out of the sand and recognize that the economic policies that Liberals have imposed on this country are a complete and utter failure.  They have damaged our nation and put us into a depression.  Further, more, articles such as this one, where initial claims for unemployment increase yet again, are not “unexpected.”  This is precisely what I and others have long said would continue to happen as government intervention hampers the ability of the economy to rectify itself through the free market.  As I have long said, the economy will recover in spite of, and not because of, the role of government in the marketplace.

Democrats Gearing up to Increase the Debt Limit by $1.9 Trillion

By Caomhin

$1.9 Trillion.  In order to finish up the current fiscal year.  To avoid putting the United States in default.

Let this sink in:

Senate Democrats on Wednesday proposed allowing the federal government to borrow an additional $1.9 trillion to pay its bills, a record increase that would permit the national debt to reach $14.3 trillion.

The unpopular legislation is needed to allow the federal government to issue bonds to fund programs and prevent a first-time default on obligations.

Less than a decade ago, $1.9 trillion would have been enough to finance the operations and programs of the federal government for an entire year. Now, it’s only enough to make sure Democrats can avoid another vote before Election Day.

Democrats are fine with a national debt of $14.3 Trillion, at least until after the elections in November, when they will vote to increase the limit again.  They are looking to increase the debt $1.9 Trillion dollars over the next ten months.  It’s no secret that the liberals in Congress have many, many schemes that they are looking to unveil, all of which would accelerate the accumulation of debt.  This level of debt is unsustainable and, frankly, it is immoral of this Congress to continue to find ways to spend money, unveil new programs, and increase the size of government and foot every man, woman, and child in this nation, for untold generations, the bill for doing so.

The amount of money that the Obama Administration and the Liberal controlled Congress have spent is staggering, and from all indications, this is just a microcosm of what they are looking to do.  Not only have they demonstrated that they possess no restraint or self control, they have also demonstrated a complete and utter lack of common sense and decency.  The spin and the lies they have been perpetrating provide no cover from the truth, and as such, they must deal with the consequences of their actions.

It is imperative that spending be dramatically cut.  The crushing debt threatens to break the back of our economy and severely impacts each and every American.  There is no excuse for the amount of spending and complete and utter fiscal irresponsibility.  The madness must stop or we are literally facing a bankrupt nation and a myriad of troubles that could make our current situation look like economic times of the Roaring 20s.

Obama’s Bank Tax and Economic Failures

By Caomhin

Only an idiot would raise taxes during an economic downturn.  Obama is proposing to raise taxes during an economic downturn.  I guess the logical flow there is self evident.

Obama is seeking to impose new taxes on the financial industry for engaging in risky business, such as lending to consumers even when firms know the risk but are forced to do so by government regulation.  As we all know, people like Barney Frank refused to let anyone investigate Fannie or Freddie prior to the financial meltdown, which was a key component to the exposure that tax payers faced when TARP was enacted.  Government laws and regulations, such as the Community Reinvestment Act, signed into law by Jimmy Carter and approved by a liberal Congress, helped to create and exacerbate the financial crisis by lowering underwriting standards on lending.  As the government and elected officials provided cover for the bubble to grow, when it finally popped, they immediately tried to shift blame to the private marketplace, which in fact, would not have allowed the bubble to grow to point that it did, absent government interference.  Liberal backing media supported the government in shifting the blame onto financial firms and the free market despite overwhelming evidence to the contrary.

When the bubble forced, TARP was enacted to shore up the bottom line of financial firms, essentially to cover them from insolvency due to the number of bad loans that were issued, which were, in part, issued due to government regulations.  As you also know, many firms, have already paid back TARP funds with interest.  Some firms never wanted TARP funds in the first place but were forced to do so.  They have also paid these funds back.  Yes, there are firms out there who have yet to pay back the funds are are not back on solid footing as of yet, but Obama’s new tax scheme punishes all financial firms as well as consumers alike and must not be allowed to pass.

From Fox News:

The proposed 0.15 percent tax would last at least 10 years and generate about $90 billion over the decade, according to administration estimates. It would apply to about 50 of the nation’s biggest banks, those with more than $50 billion in assets, and include many institutions that accepted no money from the $700 financial industry bailout.

Fees and taxes, as history have taught us, are passed down to consumers as they increase the cost of operation.  If input costs are increased, we know then, that output costs are increased.  Economics is very clear on this lesson, both in theory and in practice.  At least part, if not all of these fees will be passed directly onto the consumer.  Obama is also seeking to “recoup” TARP funds from companies who didn’t receive TARP funds at all. Funny how that works, huh?

Also important to note per Market Watch:

The fee would also not apply to General Motors Co., Chrysler, Fannie Mae (FNM 1.10, -0.02, -1.79%) or Freddie Mac (FRE 1.38, 0.00, 0.00%) , but would cover most other large firms that benefited either from the TARP or from other federal assistance, including help from the Federal Reserve.

GM, Chrysler, Fannie, and Freddie, all have direct ties to the government, hence they are going to be exempt from Obama’s proposed fees.  I guess this means that if you are in part controlled by the government you are exempt from laws.  See my earlier post on Unions that also illustrates how those with close ties to Democratic Party are also being exempted from laws and taxes that Obama is attempting to implement.

Two things here seem to jump out almost immediately.  The first is that the Obama administration has no economic or business acumen.  With unemployment at 10% and rising, Obama has no answers, and the proposals he is generating will only exacerbate, not alleviate the issue.  His refusal to allow the free market to operate is crushing the American people.  The second is that Obama will only seek to punish those who oppose him and will attempt to shield his supporters from being subject to the laws that he wants to impose upon our nation.

With regards to government intervention in the mortgage market place, at least the President of the Federal Reserve Bank of Philadelphia, Charles Plosser, is speaking out:

“I believe it is important that we [complete the purchases] and reduce our participation in this market, so the private market can once again resume a significant role,” Plosser said. “It cannot do so as long as the Fed is the dominant player, and we would risk delaying the return to normal market functioning rather than promoting that return were our sizable purchases to continue.”

Plosser added that the Fed had been “crowding out” private-sector investors in the MBS market.

The Fed must unwind its other stimulus programs as well. “An appropriate exit strategy to withdraw or restrict the massive amount of liquidity that we have made available to the economy will have to be put into action to keep the inflation rate from rising to unacceptable levels,” he said.

The extra-low federal funds rate must be raised as the economy returns to growth, Plosser remarked. He expects the economy to grow between 3% and 3.5% this year and the next. However, the unemployment rate will probably remain elevated, restraining consumer spending.

There are those who recognize the disruptive force the government is having on the marketplace and it is a positive note that they are speaking up.  Not explicitly mentioned here is that Plosser is also warning about stagflation.  Reading those bolded sections makes this abundantly clear.  Plosser, as many others, included myself, have long argued, is alluding to the fact that government intervention is going to result in high rates of unemployment and inflation, aka stagflation.

Unless or until the Obama administration gets out of the way and allows the free market to operate, Americans will suffer and the economy will not be allowed to reach its full potential.  Foolish policies such as government take over of huge sections of the economy, raising taxes (see also the impending tax hikes coming next year if the Bush Tax Cuts are not expanding, impacting every tax bracket in the United States), a lack of transparency into the operations of quasi-government agencies, as well as poor fiscal and monetary policies will prolong the depression that the government has essentially created.  Whether it is pride, politics, or lack of knowledge guiding this administration we continue to pay the price for their failure.  Now, with looming tax increases, we are seeing it increasingly quantified.