Archive for February, 2009

Obama’s Self-Serving Budget

February 26, 2009

I read somewhere once, this theory:

“If you took all the money in the world and gave an equal amount to each person, within a decade, the same people would end up with all the money again.”

Then, today, I read about Obama’s budget proposal, where he wants to increase taxes on people earning more than $100,000 a year, while giving 80% of the population an $800 a year tax break.  I really do not understand Obama and other socialist(or “progressive”) thinkers where $66 a month is going to change things.  It’s mostly a symbolic, self-serving gesture by Obama, where he wants to take from the rich and give to the poor.

The funny thing, though, is that those receiving the $66 (me included) will probably spend the money and not save it.  Then they will have goods they don’t need, but the money will be transferred back to those that own the stores or make the products.  It will go right back into the hands of the wealthy.

How about a real change in the tax policy?  How about we cut taxes across the board by half?  If you make $40,000, you would pay $10,000 in taxes now, but would pay only $5,000 a year if we cut taxes.  What do you think will help more?  Obama’s 800 bucks or five grand in your pocket?

That’s the problem with Obama’s thinking.  Rather than letting us keep more of our hard earned money, he would rather give us a nominal tax cut and call it “change.”

I know, you’re probably saying, “If we cut taxes by half, how will the government make money to fund all our programs?”

This tax cut would have to come with an even bigger spending cut.  In 2007, our government spent about $2.7 trillion and took in about $2.4 trillion in taxes and fees.  So, if we cut taxes in half, you could say we would have about $1.2 trillion to spend.  Our spending on our military empire totals about $600 billion, and social security and medicare costs almost $1.2 trillion.  You can do the math that if we end our empire and bring our troops home, and stop or cut some of the welfare programs, we could easily balance the budget.

The point of this post though, is that Obama’s goals are for his own devices only, and not for the good of the American people.  He says he wants to cut taxes, but the cuts aren’t enough to make a difference.  All he really wants to do is shift the tax burden around, but not really bring any change or hope to the government.  It’s all a sham, and everyone is falling for it, hook, line and sinker.

Step One in Screwing the Taxpayers

February 26, 2009

When President Bush was pushing for his massive bank bailout plan, the concept was for the government to take a stake in the failing banks and eventually make money for taxpayers.  I was not in favor of the bailout  because I knew that in the end, the taxpayers would get nothing.

The new scheme for Citi to get more government funding is step one in this process of screwing over the taxpayers.

When the government gave Citi $45 billion of taxpayer dollars in the TARP package, it got warrants for preferred shares.  These could be converted to common stock, which could then be sold by the government, hopefully at a profit.

Now, Citi is in need of more money, and their plan is to have the government to convert their preferred shares of common stock, at or close to the current share price of $2.50.  This will give Citi about $45 billion in cash and the government would become the shareholder of 40% of the company.

When the TARP was enacted, Citi’s share price was just below $20, so in order for the taxpayers to make money, we would have to convert the shares above that price.  By converting them at $2.50, we are taking a 88% loss! 

Serving the best interest of Citi is NOT the protection taxpayers were supposed to receive in the TARP program!

Also, the bigger side effect of the government becoming a 40% shareholder in Citi is that we will not be able to let it fail or nationalize it.  If either of those occur, shareholders (taxpayers) are wiped out.  We will have to keep pumping more money into the failed bank, keeping it on life support.

The bank bailout was a horrible program and idea from the start.  We were sold the fact that the taxpayers would be protected by taking a stake in the failing banks, and then selling the stake for a profit down the road.  This new plan by Citi is a direct contradiction of these protections, and is the first step of screwing over the taxpayers.  This turns the plan into a huge transfer of wealth and a direct giveaway to banks.  We will never see a penny of returns on the $700 billion we “invested” in the failing banking industry.

Obama’s State of the Union Address Leaked

February 23, 2009

Here’s the transcript:

“Oh crap, we’re screwed.  I have no idea what I’m doing, but I’ll keep doing it.  Whatever Bush did, I’m going to do 10 times bigger, and pretty soon I’ll spend this country into oblivion, causing hyperinflation and the collapse of the dollar.”

Actually, you already know what it’s going to be about.  He’s going to talk about sacrifice.  Then he’ll talk about how we need the stimulus and how great the extra $13 a week is for everyone.  Next, it will be about how great his programs are going to work months from now.  Just more of the same rhetoric and then the next day his actions will completely contradict what he said.

The Fallacy of Obama’s Foreclosure Plan

February 23, 2009

I am adamantly against President Obama’s new $275 billion foreclosure prevention plan.  The idea of helping people stay in their homes is a noble one, however government is ill-equipped to take on such a task.

The main argument I’ve heard is that foreclosures are bad for everyone because they lower the value of homes in your neighborhood.  Therefore, we have to help people avoid foreclosure and stay in their homes.

My question to anyone who supports this plan is simple:  How will helping a person across the country avoid foreclosure help my property value?

If we wanted to help our neighborhood home values so much, why wouldn’t we all pool our money together and get $10 from each household to go to a fund to help pay our neighbor’s mortgage?  That would do more good than Obama’s massive spending plan.  Wouldn’t we, as a neighborhood know who to help and who to let fail?  Wouldn’t we be able to see what homes are worth saving?  How is a government bureaucracy going to know better?

The amount of faith we are placing in the Federal Government baffles me more and more every day.  We continue to think that politicians in Washington who have never been to your neighborhood are smarter than experts that work there every day.  If I really wanted to pay for my neighbor’s mortgage, I would.  What I really don’t want to have is my tax dollars used to pay off someone all the way across the country.  The program makes absolutely no sense.

It is the constant meddling of government in the markets that is dragging our economy into a deeper hole.  Until we let the market work, we are going to keep delaying the inevitable.  Even if the government reduced the interest rate to ZERO on 40% of the homes facing foreclosure, the people still wouldn’t be able to make the payments.  Why waste our tax dollars on supporting something that is bound to fail?

Staving off foreclosures sounds like a great idea, but in reality, Obama’s plan is just spreading the wealth all over the country, taking your tax dollars and giving to someone across the country who made bad decisions.

More Government Equals More Recession

February 22, 2009

The latest headlines have the government taking a larger stake in Citi, upping it’s share to 40%.  This is just going to stretch out the recession we’re in even longer.  If they are going to take a stake in the failing bank, the Feds need to stop taking baby steps and flat out nationalize already.

Of course, letting the banks fail and letting the free markets work is out of the question now.  The reason is that government intervention has eliminated failure as an option.  It’s a tangled mess that all went back to the original TARP plan, that in hindsight, looks like what we needed.

The entire problem with the system right now is that there is too much bad debt and malinvestment.  The original goal of the TARP was to eliminate this debt.  Instead, though, the Feds realized that if they actually determined the market value for these securities, a lot of banks would fail.  They then modified the TARP to give money directly to the banks, so they could offset their bad assets.  This failed because the assets were basically worthless and no amount of money could offset the malinvestment.

So, here we are, with the banks still in the same predicament, and the taxpayers on the hook for $300-$700 billion.  We don’t the exact number because the government lost count somewhere along the way.  Remember, as protection for the taxpayers, we got shares in the banks.  So if they fail or get nationalized, we lose all our money.  Everyone else gets away for free while the taxpayers are left holding the bag.

Everyone talks about how bad the failures of Bear Stearns, Lehman Brothers, and Washington Mutual were.  Honestly, though, they weren’t that bad compared to the Great Depression II Obama is trying to create.  Shareholders lost everything, the bond holders got 20 cents on the dollar and a lot of people got screwed, but the failure was pretty orderly.  The bankruptcy system and the method of failure works.  Sure, it’s painful, but at least we know what we’re getting and we can move on.

We’re in a situation now where no one wants to let the banks fail, and we will bankrupt the nation and the taxpayers in order to make it work.  We’ve already been screwed over enough, and a couple more months of pain from the failure of a few more banks isn’t going to kill us.  Just get it over with so we can move on.  Don’t keep stringing this charade out.

The more the government gets involved, the bigger the conflict of interest and the bigger the problem gets.  We need the liquidate the bad debt.  Plain and simple.  We need failure and we need the free markets to work.  Why are we going to prop up these banks that made the terrible decisions that got us here?  It’s absolute nonsense.

More Rhetoric From Obama

February 21, 2009

Tonight, I read on CNN.com that President Obama wants to cut the national deficit in half by the end of his first term in 2013.  This is absolute nonsense, and I have no idea why he would even say something like this.  We are in the middle of one of the most massive government spending programs ever, and he has the gall to say he’s going to be able to actually cut the deficit.  When will we stop buying all the garbage that is coming out of his mouth?

There is no chance Obama will be able to even get the deficit back to what it was when he inherited it from Bush!  How are we going to balance it when we can’t even pay for the trillions of dollars we are printing right now?  He says he’ll do it by raising taxes on those making more than $250,000 a year.  Can our President be any more idealistic and naive?  We aren’t paying for all the stimulus and bailouts right now to begin with!  It’s all borrowed money from China!  In order to cut the deficit, you’re going to need to cut spending!

All I know is right now, all of this Hope and Change sucks.  He talks about urgency and needing to act now, and then when the stimulus package is passed, he says we’ll see our extra $13 a week in April!  Like that’s a tax cut in the first place!  And then he brags about how fast the tax cut happened, when it’s still 2 months away!

Then he wants to spend $275 billion more of taxpayer money to help fight off foreclosures for irresponsible borrowers.  Sure, some people might have lost their jobs and are falling behind on their payments who might need some help.  But I just read statistics where even if rates were cut to 2%, forty percent of these people facing foreclosure still wouldn’t be able to make their payments!

If they are going to give taxpayer money away, they should give it to the people who are current on their mortgage and who can make their payments.  Let them pay off their debt or buy a car or a foreclosed home.  Give the money to people who will be able to do something with it!

I cannot believe that there is not more of an outrage at the actions of our government.  I can guarantee you that over half the population disagrees with all of these bailouts, yet our government shows no signs of stopping.  Why should we all just sit back and watch our hard earned money go to pay some stranger’s mortgage?  At what point is enough going to be enough?  I can see now the “change” Obama was talking about.  It’s going to be the revolt of the American Taxpayer kicking his hypocrite butt out of office.

Source:  CNN

Obama’s Victory is America’s Loss

February 16, 2009

So, President Obama got his first “political victory” last week with the passage of his $700 billion stimulus package.  His win is now a loss for every taxpayer in America.

Is this what Obama’s “Hope” and “Change” has already come down to?  Political victories? What happened to reaching across the aisle and all the change he was supposed to bring?  So far, Obama’s policies and tactics look a lot like those of the last administration.

I understand the urge to help.  We all have our ideas on how to get this country going again.  I just don’t see how throwing a huge amount of money like a blanket on the nation is going to help anything.  How is building roads or filling potholes going to create lasting jobs?  This is just a huge patch job on a horribly broken system.

Also, this plan was so hastily put together that massive amounts of wasteful government spending has been packed into it.  How did the government come up with all the dollar amounts?  Was it calculated using all available data, or was it pulled out of some Senator’s butt? And how does $50 million towards the arts, $1 billion for ACORN, and tax breaks for golf carts and motorcycles help the economy?  It’s just “pork” under a new name.

And please don’t try to tell me about all the pork the trimmed from this stimulus package.  It was $850 billion and reduced to just over $700 billion.  We’re still talking about hundreds of billions of dollars!  If they really want to cut it, they should have cut it by about $800 billion.  This was all just eye-wash, making us think that our government is looking out for how they spend our money.

Instead of spending so much taxpayer money, Obama should be letting us keep more of our hard-earned money.  His “Make Work Pay” tax cut is downright laughable.  Thirteen bucks a week!  Hooray, now I can afford to pay off my mortgage and go out and buy a new car and plasma TV.

The Federal Government gets about $2.1 trillion each year in income tax receipts.  Instead of spending $700 billion, how about we cut all of our taxes by 33 percent?  Wouldn’t that benefit each and every one of us and stimulate our economy more than just handing out money to pet projects?

I know Obama is trying to help, but his “victory” is really a huge loss for America.  He had a chance to really help our economy, but instead is resorting to the printing presses just like the Bush Administration.  Government intervention and spending is what got us into the hole we’re in now, and more of it is not going to get us out.

Bank Bailout a Failure Already

February 8, 2009

New Treasury Secretary, Tim Geithner, is supposed to announce his new and improved Bank Bailout Plan on Tuesday.  Supposedly, the gist of his plan is to have private investors buy the bad assets from banks, with the US Government setting a floor for the minimum return on investment.

So, basically, the banks will be able to unload their assets on investors.  Then, when the assets prove to be worthless, the Federal Government will backstop the deals.  This results in the losses being shouldered by you and me, the American taxpayer.

First, some comments on the plan in general.  Why will someone buy these assets if the government is already setting a floor price?  Why not just buy them for that floor price amount?

Also, this plan seems to allow the Wall Street firms and big banks to get out of this unharmed.  That makes no sense.  Why do they get to unload all their bad investments, but homeowners across the country are stuck with upside down mortgages?  Wouldn’t this money be better served attacking upside down mortgages?  Those are the root of the problem.  Bailing out the banks is just treating a symptom, but not the real problem.

If you step back though, and look at this from the bigger picture, you realize that this plan is going to fail already.  There should be one goal and one goal only right now:  Liquidate the Bad Debt.  Don’t move it around, don’t artificially set a higher price for it.  Just get rid of it.

If the banks had been required to declare bankruptcy before getting government help (like was done in Sweden), we’d be on our road to recovery by now.  The pain might have been a little worse, but it would have been short lived.

Instead, we have spent the last four months throwing almost $2 trillion around, with nothing to show for it.  We might have “staved off a financial collapse,” as the pundits like to say, but who’s to say it’s still not going to happen?  The bad assets are still there, and they are getting worse!  We might have just prolonged it by four months and dug a deeper hole from which we have to get out.

Currently, the actions of the government are making a bad situation worse.  We have attacked this crisis without any sort of plan, and we have changed course too many times.  When will we learn that we are going to have to take our medicine?  Actually, the American public already has.  We are feeling this more than the elite in Washington are!  How bad do you think Geithner is feeling this when he makes enough to owe $34,000 in back taxes?  That’s a lot of people’s yearly salaries!

We have learned to deal with this recession and just want it to be over.  Instead, our leaders are trying to make themselves feel important and are trying to “save us.”  Right now, we don’t need saving.  We need the government to get out of the way and let the banks fail.  After that, the Feds and investors can step in to help rebuild our economy.  Until they let that happen, though, we’re just in for more pain, more recession, and more government failure.

Too Much Stimulus Too Late?

February 8, 2009

There’s been a lot of talk this weekend about Obama’s stimulus plan, which is set to be voted on this week by the US Senate.

While Obama was slow to unveil his plan, and now Congress has delayed the passage, we’ve all gone on with our lives.  We might not be making as many big purchases like cars, plasma TVs or ATVs, but we are still getting by.  The standard of living has been adjusted, but it’s not the end of the world.

The question now is if need such a huge package anymore.

Sure, the jobs picture is bad, but will adding jobs building roads in Montana and filling potholes in the middle of nowhere really “stimulate” the economy?  Will out of work people be willing to move and perform manual labor instead of collecting their unemployment checks?  How can we create jobs when we are still supporting these people on extended unemployment benefits?

What we really need right now is more money in the pockets of individuals and businesses.  All of this stimulus is going to be funded by taxpayer dollars in the first place, so why not put the money back in our pockets?  I’m not talking about the nominal $14 a pay period that has been hyped up either.  Why not cut our taxes in half or more?

This will allow business to invest in employees, new equipment, or shore up their balance sheets.  It will allow consumers to make larger purchases, pay off debts, or spend a little on non-essential items.

Instead, we are going to take the tax dollars of those that are still working, to pay someone minimum wage fixing potholes across the country.  The whole package is a trillion dollar “bridge to nowhere.”

If we want to invest in alternative energy, pull that out and make it it’s own bill.  Don’t co-mingle it with all sorts of ill-advised programs.

We need to start questioning the plans of the flawless new President.  Instead of Hope, Change and Progress, this looks a lot more like Desperation and Socialism.  All of these programs will be funded with our tax dollars, whether we like it or not.  This is taxation without representation, and one of the reasons we rebelled from the British.  As Americans we should be outraged, but instead we are placing faith in the new President because he gives fancy speeches.  Personally, I’d like to have that money in my pocket, not in the hands of bureaucrats building their pet projects.

More Obama “Change”

February 4, 2009

Today, President Obama warned of a “catastrophe” that would happen if Congress did not pass his $900 billion stimulus package.

Isn’t this just more of the same fear-mongering that has been going on in Washington for the last eight years?  Weren’t we scared with all the weapons of mass destruction Saddam Hussein supposedly had?  Weren’t we just scared into passing the first TARP bill because we were about to fall into an abyss? 

Now we’re supposed to sit back and not fight a wasteful trillion dollar package because of an impending “catastrophe?”

Aren’t we already into the “abyss” and in a “catastrophe?”  We’re in the deepest recession in 20 years, the stock market lost 30% of it’s value, failing banks are being propped up, and every day there are thousands of layoffs.  Attention to Obama – we’re already there, bud.

Spending and debt is what got us here in the first place.  It’s not going to get us out.  We need real change and real plans, not just huge dollar amounts and catchy names for the next bailout.  We need to cut spending and restore order to our economy, not make it worse by running around like a chciken with it’s head cut off, without a plan throwing trillions of dollars around.

So far, Obama’s “change” is looking like a continuation of the same failed policies of the Bush Administration.

Source:  AP