Archive for September, 2010
Dangerous U.S. Debt Management
Posted by Tom in Deficit, Economics, Entitlements, Financial Policy, Fiscal Policy, Foreign Policy on September 12, 2010
Over 60%, $5.2 Trillion of the $8.3 Trillion, of U.S.debt will mature within the next three years! Financing long term obligations with short term debt is crap shooting. Tim Geithner is one helluva gambler! The upside is low cost, 1.21% effective rate, according to Jason Trennert’s op-ed in Friday’s WSJ.
But the downside!
- $133 Billion added annual interest costs at the 10 year average of the five year yield of 3.77%, or
- $190 Billion added annual interest cost at the 20 year average of the five year yield of 4.87%
Conservative debt management would stretch the maturities to meet the obligations as closely as possible; in other words approach match funding. The Obama deficits are choking: 2009-$1.9 Trillion, 2010-$1.3 Trillion, and 2011-$1.1 Trillion. So why crap shoot with such high risk consequences? Is it to hide or minimize true deficits? Or, is it because our creditors at the margin fear Obama’s profligacy?
Whatever the answer we do know a couple of things: One, we are burying our grandchildren and now our great-grandchildren in debt and committing them to a much worse life than we have enjoyed. It seems unnatural to steal from future generations! Two, as Secretary Clinton suggested recently, “…our rising debt level poses a national security threat and it poses a national security threat in two ways: it undermines our capacity to act in our own interests and it does constrain us where constraint may be undesirable. And it also sends a message of weakness, internationally.”
So this progressivism, Obamaism, socialism, or whatever other leftist ism we are suffering under is robbing future generations and putting us at risk internationally.
Pray that Obama gets sensible and starts to reform Medicare and Social Security, and repeal Obamacare. Hopefully the November elections will help him see the light.
Remembering 911…Then Imagining Islam
Posted by Tom in Defense, Foreign Policy, Homeland Security, Military Policy, National Character, Terrorism on September 11, 2010
On this 9th anniversary of 911, I think back to that early morning phone call–”turn on your television.” Dede and I watched in horror from our California home, smoke and flames from the gaping tear in the WTC North Tower, then a plane hitting the South Tower. The Pentagon explosion and the heroic flight 93 Pennsylvania crash followed. Our planned vacation that morning was cancelled….no matter, I did not feel like a vacation.
There were plenty of good memorials posted today. Some will bring tears, like “Remembering Patrick Sullivan” by Jack Dumphy who tells of a brother naming his kids “Mary Patrick and Shane Patrice.” You get the picture.
But the one that impressed me most is less poignant and more accusatory, more an indictment of our progressive, politically correct, and invincibly naive ignorance. Andrew McCarthy’s NRO post “Imagining Islam” is a wake up call to all sensible Americans, no all sensible Westerners.
Andy posits a fantasy Islam that is secular and moderate. This religion is dedicated to human rights, against slavery, modern and tolerant of other religions and cultures. Arguably such a religion would have condemned the murderous killing of innocents that preceded and followed those of the WTC. It would have issued those condemnations loudly and en masse for at least the last nine years.
But for the last nine years we have heard nothing but silence.
“What excruciating truths have we yet failed to grasp on this ninth anniversary of 9/11? The first is that such an Islam does not exist. The second is that, despite this fact, American foreign and domestic policy continues to proceed as though it does exist — and as though it were the only real Islam. That is, nine years after Islamists made their commitment to our destruction as unmistakable as possible, nine years after the non-occurrence of all the wonderful things that would certainly have happened if the Islam of our dreams were the Islam of our reality, our national-security strategy is still steeped in fiction.”
Hussein Obama has put America on a foreign policy of “self delusion.” We no longer wage a “war on terror” but instead engage in sporadic “overseas contingency operations.” If we avoid saying whom we are fighting and why, we soon forget. Our president, our commander in chief, goes through the Arab world bowing and appeasing. He fights our natural allies and weakens our defenses. He now tolerates a nuclear Iran whose president shouts “Death to America!” He has our troops in Iraq and Afghanistan pursuing “nation building” with Shria law! This the law that stones women and kills homosexuals and bans religious minorities.
In the U.S. we defend the Islamists monument to the 911 slaughter at ground zero proffered by an imam paid by the U.S. State Department. This part of the religion of peace intends to take over our country not by violence but by out populating us and enacting Shria law as it is now doing in Europe.
But the violent wing of this fantasy religion of peace is still alive and healthy: “At home, even as al-Qaeda continues its efforts to reprise 9/11, a network of Islamist organizations — coordinated by the Muslim Brotherhood and financially backed by our friends, the Saudis — proceeds with what it calls its “grand jihad” to eliminate and destroy Western civilization by sabotage. This is not a secret. The Brotherhood’s internal memoranda were seized by the FBI. They boldly announce these claims in black and white. Two years ago, the Justice Department aptly labeled the constituent organizations — including the Islamic Society of North America and the Council onAmerican Islamic Relations — as unindicted co-conspirators in a terrorism-financing case in which several of their partners were convicted of funneling millions of dollars to Hamas. Today, those Islamist organizations are right back in business, with an open door to “engaging” government policymakers, as if nothing ever happened. In our imagination, they’re moderates, too.”
Hussein Obama’s policies weaken us. By failing to recognize our enemy and the values it seeks to impose, we eventually fail to recognize our own values and will soon lose them, to our regret.
No Limits To This Dictatorship
Posted by Tom in Centrally Managed Economy, Constitution, Democrats, Nationalized Health Care, Statism on September 11, 2010
Here’s a chilling headline: “U.S. Rebukes Health Insurers.” Seems that the Democrats in Congress passed Obamacare, although some of them are hiding from that fact. Now Obamacare is that gigantic step to socialized medicine that was highly unpopular with the American public. While advertised as lowering costs, it is now pretty well conceded that it will increase costs.
And it’s easy to see how that will happen. The law requires certain “one size fits all” basic coverage to be included in all medical policies. It requires medical policies to cover “children” until they are 26 years of age. It requires the elimination of co-payments for certain preventive care medical services.
So if a policy covers more medical services because of Obamacare, it would be logical to expect premiums to increase. Ya get more, ya pay more. Not unexpectedly for those of us who live in the real world, medical insurance premiums are going up. Increases from 10 to 20 percent are common.
Well this didn’t sit too well with Comrade Obama. Remember costs were supposed to go down not up! And, on top of that, Obamacare is good, not bad. He therefore sent his Health Tzar Kathleen Sebelius to threaten insurers against “unjustified rate increases!”
“There will be zero tolerance for this type of misinformation and unjustified rate increases,” Ms. Sebelius wrote. “We will not stand idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections.”
The threat is that the insurance companies will be excluded from the new “state run insurance exchanges.” In short, they will be put out of business!
This sounds like Russia in the days of Stalin. Apparently Hussein Obama and his health tzar don’t believe in the 5th Amendment to the Constitution which precludes “taking without just compensation.” This threat is one of pure and simple confiscation!
These people know no limits, they must be stopped in November!
Transparent Nevada, an NPRI Jewel
If you look to the right side of this page, you see our BLOGROLL and on that you see Nevada Policy Research Institute, a public policy think tank based in Las Vegas. I was formerly on its advisory board and can attest to the excellent work it produces.
One such public service is “Transparent Nevada.” This website publishes the most current available information on: salaries, official opinion, contracts, congressional voting, and finance reports for the state and its municipal subdivisions. It also has a blog on treating current NV topics. The home page ulr is: http://transparentnevada.com.
Perhaps the most hits are directed to the salaries page. We’ve heard of Bell California and the outrage generated by exorbitant public salaries. Well, we have pretty rich salaries in Nevada. And as we know the salaries are only the tip of the iceberg, the rich pension benefits will leave our grandchildren with unsustainable taxes to pay for the gross unfunded liabilities related to those pensions. Here’s sample of the salaries data:
Of course, it goes without saying that public employee salaries and benefits far exceed the salaries and benefits in the private sector. The private sector’s taxes pay those rich salaries. Unfortunate truths are that: there are no checks and balances on these salaries, no market efforts at efficiency, and no constitutional efforts to preclude public employees from participating in the Nevada legislature. Over 50% of NV legislators are public employees or their family members!
I heartedly recommend your support of NPRI.
Taxpayer Tim Has Company
Give the Washington Post credit, it reported the fast and loose attitude of Obama’s staff when it comes to paying the taxes that you and I pay. T.W.Farmam did the investigative reporting, but the LA Times focused on the White House staff, 41 Obama aides owe the IRS $831,000 in back taxes!
So Tim Geithner’s OOPS on taxes, which he blamed on Turbotax, is not an isolated incident. Seems that the governing elite, none of whom have ever worked for a living, are above the rest of us. Yes they can rule us, they can tax us, they can regulate our medical care, they can govern our retirement, but they are exempt from all those rules they foist upon us. THIS IS PROGRESSIVISM, THIS IS OBAMAISM!
Reminds me of George Orwell’s Pig, “all of us are equal, but some of us are more equal than others.” The November elections can’t come too soon; and November 2012 can’t come even sooner!
Brain Dead on Taxes
Posted by Tom in Centrally Managed Economy, Economics, Fiscal Policy, Statism, Taxation on September 10, 2010
It’s telling that there is not one businessman in the Obama administration. Obama has no concept of the function of capital in an economy. He doesn’t understand that private competitive capital investment drives productivity, jobs, profits and prosperity. He doesn’t understand Adam Smith’s conclusions that the prosperity driven by capital benefits all citizens; a rising tide lifts all boats, as it were. Given his socialists leanings he really resents this as “trickle down” economics. In fact, trickle down is good—poor people don’t create prosperity and they don’t hire the unemployed.
Thus his tax contradictions on capital are not totally unexpected. Yesterday’s WSJ editorial, Tax Contradictions, points this out well: He promotes a temporary write off of business capital investments for one year which is good as a stimulus even though it borrows from future investment.
“He wants to cut taxes on capital because he says the economy needs the stimulus, even as he wants to raise other taxes on capital that he says won’t hurt growth. Huh?
“Yesterday in Cleveland, Mr. Obama said he still wants tax rates to rise sharply in January on small business profits, dividends, capital gains and high-income earners. These are marginal rate tax increases on the very capital and R&D that his new tax cuts are supposed to nurture. And while the expensing tax breaks would be temporary, the tax increases would be permanent.”
The net effect of this is to discourage capital investment, hiring, and prosperity. But he does have the socialistic pleasure of punishing the successful small businesses.
This is what you get when you have a “community organizer” as president!
Three Charts-Obamanomics in Action
Posted by Tom in Centrally Managed Economy, Democrats, Economics, Fiscal Policy, Stimulus/Bailout on September 9, 2010
Here are three charts from the federal government dealing with long term unemployment and the severity of the current recession.
As you can see until 2009 our economy was in a fairly normal recession. Then after TARP and The “Stimulus Program” was passed in February 2009 is when our economy diverged from the norm and it become about 100% worse that any recession in our lifetime in terms of how hard it is to get a job and how long the recession has lasted. In fact the third chart below shows that the median of the last ten recessions started worse than this one did.
Like the Great Depression, the last time the federal government massively intervened in our economy, the actions the federal government have taken have been counterproductive. It has not only run the national debt way up, it has turned a recession into a depression by historic standards. So if we had a very brisk recovery starting today, which seems unlikely, the “Stimulus Program” was a total failure making the recession far worse than if this wasteful program had never been passed.
Credit this post to Dana Allen, America Media Revolution
Germany Bests the United States Hands Down!
Posted by Tom in Deficit, Democrats, Economics, Fiscal Policy, National Debt on September 8, 2010
I’ll put my money on Germany’s Finance Minister Wolfgang Schauble over Taxpayer Tim Geithner any day of the week. Germany’s growth last quarter was a robust 9% annually while ours was a token 1.6%!
As pointed out in Lawrence White’s op-ed in today’s WSJ, George Soros, rent seeker par excellence, and his Keynesian economists friends were criticizing Germany’s fiscal austerity and advocating instead Obama’s borrowed money spending spree. Wolfgang justified his policies on Germany’s “aversion to deficits and inflationary fears.”
White discusses the roots of the aversion and fears in the wonderful story of post war Germany’s dramatic return to fiscal and financial strength. The devastated industrial powerhouse was under rationing and price controls continued by the Allied occupiers. John Kenneth Galbraith, FDR’s price control tzar, dismissed the idea of reviving the economy through decontrol. But Ludwig Erhard an economics professor who called the mess Der Papierkrieg, “the Paper War,” thought otherwise. He became the director of economics for the U.S.-UK. occupation Bizone. As part of a currency exchange of the old Deutsche mark with the new Deutsche mark and without approval from the Allied military command, he issues a sweeping decree abolishing most price controls and rationing directives.
Overnight almost, the “animal spirits”of Adam Smith’s “invisible hand” were unleashed! Construction started, factories were rebuilt, deals–buying and selling–were done! Erhard “later told friends that the American commander, Gen. Lucius Clay, phoned him when he heard about the decree and said: “Professor Erhard, my advisers tell me that you are making a big mistake.” Erhard replied, “So my advisers also tell me.” Between June and December of 1948, industrial production in the three Western zones increased by an astounding 50%!
So Schauble is justified in his free market thinking and his long view austerity decisions. And he can take pride in his predecessors like Erhard. Would that our socialists Obama administration had only half his smarts and guts! I highly commend a full reading of White’s article linked above.
Mitch Daniels For President
Posted by Tom in Centrally Managed Economy, Congress, Democrats, Fiscal Policy, National Debt, Stimulus/Bailout on September 8, 2010
There’s nothing like experience when choosing a leader, a president. We now are stuck with a “community organizer” as president. For the uninformed, a “community organizer” is one who ferments dissent, promotes dissension, and organizes one community against: “the man,” other communities, and perceived injustice otherwise undefined. Perhaps that’s why Hussein Obama has us in the mess we are in. He is and was simply unqualified for the job. But that’s water under the dam.
Mitch Daniels in the governor of a state, Indiana. It’s a well run midwestern state. Has a AAA credit rating, as contrasted to say the bankrupt state of California. Mitch offeres the Community Organizer in Chief some advice in today’s WSJ, “Time for Emergency Economic Reform.”
Like any good leader he assesses the situation: dire. “Funneling borrowed billions to government workers hasn’t stimulated anything where it counts in the private sector.” Yep, that’s right Obama still thinks the government creates prosperity! He goes on to state that the impending and yet uncertain regulatory and tax regiemes are holding back investment and jobs. This is like the announcement of an impending rule change in the midst of a chess match. Damn if the match doesn’t stop until certainty of rules is restored!
He emphasizes the lack of growth necessary to get us even to break-even, to avoid national bankruptcy. We are currently at half the growth necessary to achieve disaster “with debt rising to 90% of GNP.”
Mitch offers a few specifics to counter the impending catastrophe:
- Payroll Tax Holiday of one year offset easily by a combination of the following:
- Impoundment Power: the president spends less than Congress has authorized on any number of programs which the taxpayers would never miss.
- Recall federal funds. Rescind unspent TARP funds, now in the hundreds of billions.
- Federal hiring and pay freeze. Cut the fat cats by 10% and freeze going forward. This may get the bloated bureaucracy more in line with the private sector that really produces wealth!
- Initiate a “freedom window” of regulatory forbearance in which job killing regulation is stopped.
- And, encourage business investment with accelerated write offs.
All, save for the frist and last, could be permanent reforms which get us back on track. Suffice to say we are in deep trouble and emergency solutions are in order and way overdue.
Historically, Peaceful Majorities Are Irrelevant
Posted by Tom in Law, Morality & Religion in the Public Square, Statism, Terrorism on September 1, 2010
I recently received an email tagged as “A German’s View on Islam” which essentially advanced the proposition that complacency of the “silent majorities” in Stalin’s Russia, Hitler’s Germany, or Tojo’s Japan is responsible for the fanatics accession to power. The email is taken from a dated article by Paul E. Marek and is currently applied to Islam. It reads in part:
“The fact is that the fanatics rule Islam at this moment in history; it is
the fanatics who march…it is the fanatics who wage any one of 50 shooting
wars worldwide. It is the fanatics who systematically slaughter Christian
or tribal groups throughout Africa and are gradually taking over the entire
continent in an Islamic wave. It is the fanatics who bomb, behead, murder,
or honour-kill. It is the fanatics who take over mosque after mosque. It
is the fanatics who zealously spread the stoning and hanging of rape victims
and homosexuals. It is the fanatics who teach their young to kill and to
become suicide bombers..” In other words, peace-loving Muslims have been made irrelevant by their silence!
With this historical logic difficult to refute, it was heartening to see today’s WSJ article, “A Symposium: What Is Moderate Islam?” This is a collection of six answers given by Islamic scholars and commentators. I commend a full reading to the piece, but I was particularly drawn to the last two essays, “Don’t Gloss Over The Violent Texts” and “Mystics, Modernists and Literalists.”
From the first, “Radical Islam is not limited to the act of terrorism; it also includes the embrace of teachings within the religion that promote hatred and ultimately breed terrorism. Those who limit the definition of radical Islam to terrorism are ignoring—and indirectly approving of—the Shariah teachings that permit killing apostates, violence against women and gays, and anti-Semitism.”
“Moderate Islam must not be passive. It needs to actively reinterpret the violent parts of the religious text rather than simply cherry-picking the peaceful ones. Ignoring, rather than confronting or contextualizing, the violent texts leaves young Muslims vulnerable to such teachings at a later stage in their lives.”
And, from the second: “The literalists believe that Muslim behavior must approximate that of the Prophet in seventh-century Arabia. Their belief that Islam is under attack forces many of them to adopt a defensive posture. And while not all literalists advocate violence, many do. Movements like the Muslim Brotherhood, Hamas, and the Taliban belong to this category.”
Islam has a foundational text problem which gives rise to the terrorists. It is difficult to see how that will be solved even if the silent majorities rise up in force in their totalitarian societies.
By modern analogy, silent majorities are responsible for the ills of great democratic nations. We have witnessed as much here over the last half century with our gradual descent on the road to serfdom, our slip into socialism. Hopefully we wake up soon!