Category Archives: Economy

Economy, Media, Politics

Talking Points vs. Reality

In a swindle that would make Bernie Madoff look like an amateur, Barack Obama has gotten a substantial segment of the population to believe that he can add millions of people to the government-insured rolls without increasing the already record-breaking federal deficit.

Those who think in terms of talking points, instead of realities, can point to the fact that the Congressional Budget Office has concurred with budget numbers that the Obama administration has presented.

Anyone who is so old-fashioned as to stop and think, instead of being swept along by rhetoric, can understand that a budget— any budget— is not a record of hard facts but a projection of future financial plans. A budget tells us what will happen if everything works out according to plan.

The Congressional Budget Office can only deal with the numbers that Congress supplies. Those numbers may well be consistent with each other, even if they are wholly inconsistent with anything that is likely to happen in the real world.

The Obama health care plan can be financed without increasing the federal deficit— if the administration takes hundreds of billions of dollars from Medicare. But Medicare itself does not have enough money to pay its own way over time.

However money is juggled in the short run, the government’s financial liabilities are increased by adding this huge new entitlement of government-provided insurance. The fact that these new financial liabilities can be kept out of the official federal deficit projection, by claiming that they will be paid for with money taken from Medicare, changes nothing in the real world.

I can say that I can afford to buy a Rolls Royce, without going into debt, by using my inheritance from a rich uncle. But, in the real world, the question would arise immediately whether I in fact have a rich uncle, not to mention whether this hypothetical rich uncle would be likely to leave me enough money to buy a Rolls Royce.

In politics, however, you can say all sorts of things that have no relationship with reality.

If you have a mainstream media that sees no evil, hears no evil and speaks no evil— when it comes to Barack Obama— you can say that you will pay for a vast expansion of government-provided insurance by taking money from the Medicare budget and using other gimmicks.

Whether this administration, or any future administration, will in fact take enough money from Medicare to pay for this new massive entitlement is a question that only the future can answer, regardless of what today’s budget projection says.

On paper, you can treat Medicare like the hypothetical rich uncle who is going to leave me enough money to buy a Rolls Royce. But only on paper. In real life, you can’t get blood from a turnip, and you can’t keep on getting money from a Medicare program that is itself running out of money.

An even more transparent gimmick is collecting money for the new Obama health care program for the first ten years but delaying the payments of its benefits for four years. By collecting money for 10 years and spending it for only 6 years, you can make the program look self-supporting, but only on paper and only in the short run.

This is a game you can play just once, during the first decade. After that, you are going to be collecting money for 10 years and paying out money for 10 years. That is when you discover that your uncle doesn’t have enough money to support himself, much less leave you an inheritance to pay for a Rolls Royce.

But a postponed revelation is not part of the official federal deficit today. And that provides a talking point, in order to soothe people who take talking points seriously.

Fraud has been at the heart of this medical care takeover plan from day one. The succession of wholly arbitrary deadlines for rushing this massive legislation through, before anyone has time to read it all, serves no other purpose than to keep its specifics from being scrutinized— or even recognized— before it becomes a fait accompli and “the law of the land.”

Would you buy a used car under these conditions, even if it was a Rolls Royce?

To find out more about Thomas Sowell and read features by other Creators Syndicate columnists and cartoonists, visit the Creators Syndicate web page at www.creators.com.  Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University, Stanford, CA 94305. His Web site is www.tsowell.com.

Economy, Media, Uncategorized

Mainstream Media Breaks New Ground

The Associated Press is breaking new ground in journalism. If you pay attention to news and the news media, you are already conditioned to the method the legacy media uses to frame their bias; how they put good spin on a bad event, or bad spin on a good event, by employing the ‘more (less) than expected’ phrase.

But I’m at a loss to figure this one out. This is new.

Referring to an interview with the chief economic figure in the government, the AP makes this assessment . . .

[F]ollowing the closing of the annual session of the party-dominated national legislature, which earlier Sunday approved a blueprint to keep government spending high, though at half the rate of last year, to buffer any economic turbulence.

Can someone, anyone, explain this ‘analysis’ for me?

The bias here is in favor of government spending, which happens to be the M.O. of  economically-illiterate bleeding-heart Liberals. Otherwise, one would expect to see something like ‘draconian cuts in welfare programs.’ That there was no perspective given to either the dollar amount or the ‘rate’ also serves to obfuscate what the real news is, that government spending can be harmful to your economic health.

Maybe it is because the subject of the story is Premier Wen Jiabao of Communist China?

There are other important issues raised in this AP piece, like the global economy showing signs of unraveling (see The State Of The Welfare State), but this one kind of blew me away.

WSJ JournalNow – News – Associated Press.

2010 Election, Economy, Media, Politics

The State Of The Welfare State

And by Welfare State I’m not talking about food stamps for the poor. What I’m talking about is the focus of where President Obama and his circle of advisers want to take this country. Which is to a place where European countries are. This is a place where the government takes on the responsibility of caring for their citizens by way of their health care and retirement plans. The latter of which is called Social Security in the United States.

Right now, and before Obama became president, Social Security and Medicare are poised to bankrupt the country, if you will allow the use of the term bankrupt as an adjective. Those two programs total $42.9 trillion in unfunded mandates. Due to the demographics of our population, there will soon be people owed benefits with no money in the bank to pay for it. This isn’t a right-wing talking point. This is an economic fact.

Starting his second term, Bush opened up the debate to head off this catastrophe, but there was no support for it, and, he was derided by the media. It was labeled as the third rail, something not to be touched. Well, except to tax it. It involved ‘privatizing’ 1-1/2 percent of it and letting the person actually own his share of contribution. We all know how that ended up.

Fixing social security is still not on the President’s radar. But health care is. The solution proposed by President Obama is to essentially, increase the coverage of Medicare to include the entire country. It will also include the demise of the private health insurance industry for their inability to cover more people regardless of medical pre-conditions on the modest 3-4% profit margin they earn. This is keeping in step with the European model that Democrats in Washington seem to champion.

So what’s wrong with that?

First of all, to compare the United States with any European country is like comparing apples and oranges. Or watermelons and grapes. The economic stability of the European countries are quite shaky right now. But something deeper and more fundamental is at work which the global credit crisis has merely helped to expose. Most European countries today operate under economic and labor policies crafted during the height of the post-war baby boom, featuring middle-class entitlements like generous pension systems that allow early retirement, liberal disability programs that exempt many laborers from work, and extended unemployment systems that make going on the dole and staying there easier than in the U.S.. Europeans designed these policies in an era when there were, in many European minds, too many people competing for jobs and a bulging work population to support those who were retired or on disability.

Now, this house of cards is falling down. The demographics are nothing today like they were 60 or 70 years ago. Now, not only are there less people working, but there are more people on the government dole collecting retirement pensions. Europe has baby boomers too.  Governments, like Greece, Spain, Italy and Portugal, have no money to sustain this welfare state and they and other countries face riots in the streets at the very thought of trying to reform (take away) the unsustainable benefits they have put in place.

Back to the watermelons v. grapes comparison. Many of these countries are smaller than  most states in the United States. And they’re going bust. It takes more than the audacity of hope and hubris to suppose that a country the size of the United States, already heading to default, can pull itself out by expanding a health insurance entitlement program to include the combined populations of France, Italy, Germany, United Kingdom, Spain, and Greece. Not only that, but President Obama is still claiming that it will lower the premium costs and increase the quality and availability of care. Oh, and that’s after cutting $500 Billion from Medicare first. I think we should run that proposition by the people in Canada and Europe who travel to the United States for medical treatment and see if they think that modeling a health care system after what they have would be a good idea.

The European countries are suffering from a demographic shift that is compounding their economic situation.  In addition to their workforce shrinking, and their retired populations growing, their birth rates are falling below what is considered to be a replacement rate. Clearly, they need to change course. The old paradigm of the Welfare State is not sustainable.

Although we are demographically robust compared to Europe (our working age population will increase by a projected 17 percent over the next 40 years) and we work longer, our own baby boom was so large that we will still need substantial changes in Medicare and Social Security to meet our future obligations. Meanwhile, our states face a tough road because many of them have granted European-like retirement benefits to government workers that are exacerbating state budget problems. It doesn’t take a rocket scientist to see a trend here. But it is a trend that seems to escape Democrats in Washington.

Why is it that, despite the history and conditions in Europe, the Obama administration insists that creating our own Welfare State here is the way to go? Obama and his advisers are of the wrong century. Still high from their heyday of the 60’s, only now they are in control of our government and espousing something called ‘social justice.’ Essentially, they are heading the country southbound in the northbound lane. And instead of advising him to turn around, they’re telling him to speed up. And before too long, this great country will be in the same shape as Greece, Great Britain, Spain, Italy, and the rest of them.

Economy, Politics

Obama Presents, Govt Health Care R Us

It took Hillary Clinton many months of closed door secret meetings to come up with her version of so-called health care reform. Which had no support.

In 12 months under Barack Obama, we have a house version and a senate version. Then in 4 weeks we have a combined version. All of which were rejected.

Don't like that one? Here's another.

Last week, the President had a TV show called a bi-partisan meeting to resolve the differences and start from square two, not square one, to presumably force Republicans to surrender their principles and succumb to government run health care. So that didn’t go as he had planned.

Now, in four days time, tomorrow, the President will present yet another health care / health insurance ‘reform’ plan.

It is apparent that what we are seeing are cobbled versions of what has already been proposed, and rejected. Else we are supposed to believe that the President has done, in a matter of days, what it took probably hundreds of people many months to do.

But only he can do it. He is Barack Hussein Obama. Mmmm Mmmm Mmmm.

Question is how does he do it? Simple. He goes to Government Health Care R Us and takes a plan off the end-cap. Or maybe he just pulls one out of his, uh, hat.

Economy, Politics

Pay-Go, Or Not Pay-Go, That Is The Question

Lost in all the accusations of gridlock aimed at Sen. Jim Bunning (R-KY), as if gridlock is always a bad thing, is the fact that Bunning is holding the administration’s feet to the fire. Why? Well, because he can. And good for him.

He is holding Congress to the Pay-Go legislation that was passed that Democrats held up as being responsible and as a hedge to deficit spending. All Bunning is doing is forcing them to obey their own law.

Bunning’s case is this. If they can show how it will be paid for, he’ll not block a ‘unanimous consent.’ Besides all that, why shouldn’t every Senator be made to record their vote, not hide behind ‘unanimous consent,’ and go on record for voting for increasing the debt with this piece of legislation?

Link: One Senator Holds Up Bill, in New Level of Gridlock – WSJ.com.

Economy, Energy, Media, Politics, United Nations

Investing In Global Warming, Cap And Trade

Hardly a week goes by lately where news comes out that adds to the doubt about ‘man made’ global warming. From incomplete and manipulated data, to selective science of hand-picking tree samples, to lost or destroyed supporting data, and lately to statements of Phil Jones.

Phil Jones was forced to step down as director of the University of East Anglia’s Climatic Research Unit after a series of leaked emails and other documents suggested that the data supporting global warming theories had been “cooked” and that opposing theories were being suppressed.

But this was not the end of the revelations.

“Professor Jones also conceded the possibility that the world was warmer in medieval times than now – suggesting global warming may not be a man-made phenomenon.

“And he said that for the past 15 years there has been no ‘statistically significant’ warming.”

What do you mean ‘statistically significant‘ you ask? According to Phil Jones . . .

This trend (0.12C per decade) is positive, but not significant at the 95% significance level.

And associating climate change to man-made global warming, there’s this question to Jones . . .

“How confident are you that warming has taken place and that humans are mainly responsible?”

Jones: “I’m 100 percent confident that the climate has warmed. As to the second question, I would go along with IPCC Chapter 9 – there’s evidence that most of the warming since the 1950s is due to human activity.”

OK fine. And we now know all about their data and record keeping problems.

So what’s the point? The whole point of this ‘man-made’ global warming hysteria is to execute a transfer of wealth through whatever way possible, under the pretense that we can adjust the global thermostat as well as sea-level. It’s is a political movement that has turned into a near religion with environmentalists.

Then there’s this gem about rising sea levels . . .

Scientists have been forced to withdraw a study on projected sea level rise due to global warming after finding mistakes that undermined the findings.

Whether it by by the United Nations, the Kyoto Protocol, and more locally, the administration’s Cap & Trade legislation, all of these schemes are designed to move money from our side of the earth to the other, with the side benefit of depressing our economy and raising prices even further. I mean it just makes sense. If you’re a slip and fall lawyer, you go after the money. In the global scale, the ‘richest’ nation in the world is right here. And for anyone who was in Copenhagen, you saw who the evil one was. It was the United States, and it was capitalism.

In light of what is now known, we are starting to see signs in the US of hopping off this man-made global warming bandwagon. But not everyone.

Know who is heavily invested in this scheme? Al Gore. He probably has the most to lose when the cap and trade and carbon credit trading schemes fall through. Starting with a company he and another investor started called Generation Investment Management LLP. I’m all for capitalism, and according to Al Gore and the media, he’s just putting his money where his mouth is. The reason capitalism works is because there is risk taking. When the market demands it, entrepreneurs will provide. Responding to the market, or not, determines who wins and who looses. Gore’s company is an associate member of the Chicago Climate Exchange. A carbon credit trading exchange. (Available right now at $.10/share. Their stock fell 33% after the Copenhagen global warming festival in December.) How much Gore has invested varies from guesstimates from tens of millions to hundreds of millions of dollars. Suffice it to say, if things go the way he hopes they will, he’ll make George Soros’ wealth look like small change.

So yesterday, either in denial or a last ditch attempt to saves his investments, or both, Al Gore opines in the New York Times ‘We Can’t Wish Away Climate Change.’ The first sentence of his opinion piece says it all . . .

It would be an enormous relief if the recent attacks on the science of global warming actually indicated that we do not face an unimaginable calamity requiring large-scale, preventive measures to protect human civilization as we know it.

Right. The sky is falling. On him. Then, from high on the mountain, not far from the burning bush, Gore ends with this. From Rick Moran at American Thinker.

Finally, this bit of weirdness that shows Gore for what he is; a megalomaniac:

From the standpoint of governance, what is at stake is our ability to use the rule of law as an instrument of human redemption. After all has been said and so little done, the truth about the climate crisis – inconvenient as ever – must still be faced.

Al Gore sees himself as a redeemer – as Jesus Christ. And where is there room in a democratic republic for someone who thinks that the rule of law should be an “instrument of redemption?”

Who else has put their money where their mouth is? Well, in a more muted and covert kind of way, the BBC has. They have $12.5 billion of their pension funds invested in companies whose future depends on the success of the whole man-made global warming movement and subsequent laws and regulations.

Just something to keep in mind the next time you see an article about a man-made global warming ‘crisis.’

Economy, Politics

Geithner, Maybe Next Year We'll Fix It

The next time you hear anyone in this administration tell you how we’ve turned the corner, and that all the deficit spending that has been done has prevented the economy from sinking further, consider where housing markets and foreclosures are going.

  • Fannie Mae will seek $15.3 billion in U.S. aid, bringing the total owed under a government lifeline to $76.2 billion, after its 10th consecutive quarterly loss.
  • “Our financial results for 2009 reflected the continued adverse impact of the weak economy and housing market, which has resulted in record mortgage delinquencies and contributed to our recording significant credit-related expenses and net losses during each quarter of the year.
  • For the full year, Fannie Mae’s loss widened to $74.4 billion from $59.8 billion in 2008.
  • After the next government payout, Fannie Mae’s borrowings will carry an annual dividend cost of $7.6 billion, which the company said it will repay by borrowing more money from the Treasury. “This amount exceeds our reported annual net income for all but one of the last eight years, in most cases by a significant margin,” the company said.

What? Fannie Mae (owned by the government) will repay its bailout money by borrowing from the Treasury. Huh? This is illegal if you tried this scam. That’s why Bernie Madoff is in jail.

  • Losses at Fannie Mae are likely to grow with rising unemployment and costs to implement President Barack Obama’s plans to reduce foreclosures, the company said.

Here’s a Obamanomics for dummies refresher. Replace the word ‘investment’ with ‘bailout.’ Then replace the word ‘bailout’ with ‘takeover.’ This should make you feel better.

  • Fannie Mae and McLean, Virginia-based Freddie Mac survived last year on investments the government made in the companies. The Treasury on Christmas Eve removed a $200 billion aid limit on each company, extending unlimited backing through 2012.
  • A record 3 million U.S. homes will be repossessed by lenders this year as unemployment and depressed home values leave borrowers unable to sell or make their house payments.

Meanwhile, if you are looking for a job to keep from losing your home, it may take awhile. I think that’s the HOPE that candidate Obama was talking about. Right now, Obama is concentrating on taking over the health care decisions of all Americans instead of economic recovery through the private sector.

When President Barack Obama signed his $787 billion “stimulus” bill into law last year, he said the bill was “the beginning of what we need to do to create jobs for Americans scrambling in the wake of layoffs; to provide relief for families worried they won’t be able to pay next month’s bills; and to set our economy on a firmer foundation.”  The actual results of the stimulus tell a different story. I guess he just lied to us all. I think that’s the CHANGE part.

  • The amount of nonperforming loans that Fannie Mae guarantees for other investors rose to $174.6 billion from $163.9 billion in the third quarter.

But this might make you feel better. Or not. Treasury Secretary Timothy F. Geithner told the House Budget Committee on Feb. 24.

“We are going to propose reforms to the Congress next year to try to make sure we bring about fundamental change in the housing market and get ourselves in a position where the government is playing a less risky, but more constructive role in supporting housing markets,” Geithner said. “That’s going to be a difficult set of reforms.”

No doubt it will be to borrow our way into hyperinflation. Let’s put this old dog to sleep. Save some money on that Debt Commission Mr. President. Try this simple method. Look in the checkbook. If you see red, don’t spend. Don’t borrow. And don’t steal.

Updated 2/28/2010

Link: Fannie Taps Treasury for $15.3 Billion More After a 10th Loss – Bloomberg.com.

2010 Election, Economy, Florida, Media, Pensacola, Politics

Farid Khavari Interview, Florida Gubernatorial Candidate

Tampa community radio station WMNF 88.5 FM did their due diligence last week by informing their listeners on a candidate running for governor of the State of Florida. They broadcast a telephone interview with Dr. Farid Khavari in Miami.

There are two audio links below. The first one contains the interview. The show begins with listener comments about a previous show about oil drilling in Florida. The Khavari interview begins about 5 minutes into the show. The second link starts with the listener comments about the Khavari interview.

The interview: RadioActivity for 2/16/10
Listener comments: RadioActivity for 2/17/10

As Dr. Khavari explains his plans, his platform, you can also find it in writing on his website. You won’t find any smoke and mirrors there. You will find smoke and mirrors on the websites of his challengers, Alex Sink and Bill McCollum.

Links:

Note: Those within reach of Pensacola may pick up a Khavari for Governor campaign data sheet and bumper sticker at Philly’s, 3900 Creighton Road.

2010 Election, Economy, Florida, Politics

Alex Sink's Plan, More Of The Same

Last week, Florida’s Chief Financial Officer, and the Florida Democratic Party’s anointed choice to replace Governor Charlie Crist, Alex Sink, had a sit-down with some small business owners to discuss how they can prosper in this tough economic climate. I don’t support Alex Sink. I support Farid Khavari. The reason I’m including this article about Alex Sink is that it does show you how ill-equipped and unprepared she is to help small business and Florida’s economy.

She stressed the need for small businesses to be able to get loans for their businesses. Unfortunately, there were no new ideas from her, just more of the same bailout mentality.

And when asked about Dr. Farid Khavari’s plan for a State bank, she flat-out ignored his existence and said we have plenty of banks already, including national and international ones. And haven’t they done so well for us?

Hear her Q&A at this LINK.

What Alex Sink is talking about amounts to just more smoke and mirrors. In response to Sink’s confidence in the federal solution and big banks, Khavari spokesperson Bob Waterstripe called her out for a debate and said this . . .

Sink hears businesspeople tell her they can’t get capital/credit. Then, when asked about the Khavari plan including a state bank, she says we have plenty of banks and they can meet the needs of business. FL’s share of $30 bln TARP money is about 2 bln, $100 per FL citizen. This will have no impact, at best a few thousand jobs. We need a MILLION.

In fact, $2 billion is almost 4 times LESS than the banks made in overdraft charges in FL last year. Over a MILLION are unemployed in FL and over 800,000 FL homes in foreclosure. Khavari has a plan to create a million FL jobs without subsidies and the proposed state bank will stabilize and rejuvenate the housing market as well as the entire economy, saving $100s of $1000s per family.

Sink declines to even acknowledge Khavari? No surprise; she won’t even answer a straight question on anything. As CFO she stood by while $10s of BILLIONS were lost by the SBA on phony deals. Crist, McCollum and Sink, as the 3 trustees, met twice a month for 15 minutes to oversee the SBA (per Crist, St. Pete Times). Most of us take more time than that on our household bills. Sink’s well-publicized Blackberry crackdown nets $250K, enough to pay the interest on $50 billion for about 40 minutes. YAY! Now she’s counting paper clips. You can bet the cost of counting them is 200x the cost of the paperclips.

Here is a little advice to Ms. Sink: Take care of the tens of billions, and the paperclips can take care of themselves. What about a debate between Sink and Khavari with Rob Lorie as moderator?

Links: Sink at the Greater Tampa Chamber of Commerce

Aside from losing $60 billion of Floridians’ pensions (along with Crist and McCollum), she has a record in BIG BANKING too.

Economy, Media, Politics

Democrat Governors Want "New Strategy"

Democrat governors at the National Governors Association’s weekend meeting, are troubled about President Barack Obama’s track record on responding to Republican political attacks and urged him to better connect with anxious voters. Some calling for ‘a new election-year strategy focused on the economy.’

A new strategy? Focused on the economy? The truth finally comes out. Despite what the administration said all last year, and the media dutifully repeated, the focus never was about reviving the economy. Contrary to what candidate Obama said to get elected, that turning the economy around, fixing the home mortgage crisis, and creating jobs was going to be his top priority, once in office that priority quickly shifted to a takeover of health care .

New Mexico Gov. Bill Richardson offered this advice to Obama: “Rapidly decide what we’re doing on health care and then move to jobs and the economy.”

Bad advise Governor Bill. Democrats’ best chance of saving their political butt is to drop their version of health care. Recognize the fact that the folks (after 70 years) still don’t like it. Stop attacking businesses, and do something to promote economic activity outside of government deficit spending. Do something to help in the private sector, where money is made and jobs, permanent jobs, are created.

Unfortunately, the governors showed no regrets for the huge debt incurred with little to no results. Gov. Richardson, I think that’s Obama’s problem.

Not taking responsibility for anything he messes up is another. Community organizers like to form commissions. Takes the heat off of them, puts it elsewhere. Obama doesn’t need a commission to tell him how not to spend money he does not have. All he needs to do is what we have to do. Look in the checkbook. If you see red, don’t spend, don’t borrow, and don’t steal.

AP: Democrats worried about Obama track record.