Category Archives: Economy

JOBS and ECONOMICS a la BARACK OBAMA

Obama’s attempt to set Tuesday as the day for his address to a joint session of Congress was so obviously political that he quickly backed off and agreed to Speaker Boehner’s rejection of that date.  Michael Smerconish, who was filling in as host for the vacationing Chris Matthews, pointed out on the Hardball program that presidents are not empowered to order Congress to meet in joint session so that the president may address them.  A request must be made to Congress, whereupon the common practice of finding a mutually agreed upon date takes place without public involvement.  Once a date is chosen, it is announced publicly.

Smerconish and one of his two guests agreed that Obama’s choice of an open letter to the Speaker to initiate his request was unprecedented. Furthermore, they agreed that Rush Limbaugh was right when he said it was strictly a political move engineered to upstage the GOP Debate.  That was probably the first time the words “Limbaugh was right” were ever uttered on MSNBC.  Never let it be said the President did not fulfill his promise of audacity.

What should we expect to be included in this much vaunted address?  It has been billed as a “Jobs” speech and it will be presented as a stimulus for private sector job creation.  However, we expect the focus will be on jobs for government projects.  Like FDR’s WPA and CCC Camps, they will be boondoggles that improve some roads and bridges but will do little to improve the general economy while sending the nation more deeply in debt.  This is not the time to be replacing perfectly serviceable infrastructure.  If money is spent it should be spent on re-invigorating the free market system where wealth is created, not where old wealth is shuffled about.  These programs did not work for Roosevelt and they will not work for Obama.

A central point in the speech is likely to be a call for the creation of an Infrastructure Bank to fund government construction projects.  This has all the potential of becoming a Fannie Mae for bridges and tunnels.

If we give Obama the benefit of the doubt and assume that he really wants what he believes to be best for America, then we must conclude that our nation’s problem is Obama’s socialist roots.  He knows nothing about how free markets work.  He has no business experience whatsoever and sees government as the be-all end-all of everything.  The President knows not and cares not how the wealth to run a nation is created.  A nation may be imbued with wealth in its natural resources and scenic beauty, but it’s only in the private sector that wealth is created.  Government only depletes it.  A portion of that which is created is taken by government to provide essential services and hopefully to maintain the optimum environment where the creative process itself can prosper.

What Obama learned about economics he learned from his mentor and spiritual leader whose message is that it’s white man’s greed that runs a world in need.  Barack was so moved by this message that he cried as he sat in the pew at the conclusion of the sermon and knew then what  his mission in life would be.  This, in Obama’s own words as told in Dreams from My Father.  Even those who see nobleness in that dedication must acknowledge it is merely a mission of taking and giving; it is a mission devoid of creation.

There can be no doubt that Obama wants to bring down unemployment, which means to create jobs.  If he knew how to do it he would have done it.  He has been in office for 2 year and 7 months.  For the first 2 years he had the benefit of an all Democratic Congress who supported every item on his agenda.  The people he wants to help most are hurting the worst.  The man is not stupid, he is just blinded by his ideology and his ideology is in no small way born of his rage.  His heart is in expanding the government sector and not private industry whose profits he sees only as a garden of greed.

Obama is a victim of the image he created for himself with some nurturing from the media.  The slogan of Hope and Change, mixed with the audacity to bring it all about was a promise to fulfill your dreams whatever they may be.  It is not for negligence that hope — for what?, and change — to what?  were never defined.  Definitions are limiting; vagueness is not.  It was left for each person to fill in the blanks with their own personal hopes and desires.  You say voters are not that naïve?  You say voters don’t believe politicians promises?  You may remember the woman who was thrilled at Obama’s victory because it meant he was now going to pay off her mortgage.  That woman had voted.  She voted for the fulfillment of her own personal dream.  Do you suppose she was the only one?

Barack Obama has broken more than promises.  He has broken hearts as well.  He has failed his own people.  All because of his socialist roots.

THE SOLYNDRA AFFAIR

Fifty thousand dollars is a lot of money for one man to contribute to a candidate’s campaign fund.  But it is money well spent if it helps you get half of a billion dollars in stimulus money to develop a company you are promoting.

Solyndra was the poster child for Barack Obama’s Green Energy Stimulus program.  In May of last year the President splashed across the news with great fanfare and with great pride as he told the nation this was his move to save the planet and create brand new jobs.  Now, less than 16 months later, the company is bankrupt and 1,100 workers were suddenly thrown out of work with no advance notice.  Furthermore, It looks like the taxpayers will be out $535,000,000.

Rich Lowry reports

In a visit to Solyndra in May 2010, President Obama called it “a testament to American ingenuity and dynamism.” He all but redefined the traditional statement of Americanness to encompass motherhood, apple pie, and the conversion of sunlight into electricity through cylindrical thin-film solar cells, the specialty of Solyndra.

Obama and Biden were literally invested in Solyndra’s success. The company got a half-billion-dollar federal loan guarantee, the first in a highly vaunted Department of Energy green-jobs program, as part of the stimulus. This was supposed to be the new economic model: government and its favored industries cooperating to lead the country into a green, politically approved recovery.

What can you expect from a business plan to make little solar panels at a cost of $6.29 per energy unit, get a government subsidy to cover half the cost, and then offer the product for sale at $3.24 in a market where the competition is selling it for $1.75?  It gets worse.  Solyndra is backed by one of Obama’s key fundraisers, George Kaiser of Tulsa, Oklahoma.  Rich Lowry says this is Obama’s Enron, Power Line blog likens it to the Keating Savings and Loan political scandal.

From the Washington Post via American Thinker

Energy and Commerce Committee Chairman Fred Upton (R-Mich.) and Cliff Stearns (R-Fla.), chairman of the oversight and investigations subcommittee, wrote to the White House, “We have learned from our investigation that White House officials monitored Solyndra’s application, and communicated with DOE and Office of Management and Budget (OMB) officials. Documents received by the Committee also show that DOE and OMB officials were aware of the White House’s interest in the Solyndra loan guarantee.”

Solyndra’s shuttering has also raised concerns about the status of tens of billions the Obama administration has invested in other renewable-energy companies.

There is one difference between Keating or Enron and Solyndra; the press is not likely to run hard with the Solyndra affair.

RANDOM THOTS Aug 23, 2011

Recommended reading
Star Parker, writing for Town Hall, has penned a superb treatise on the confusion among blacks about the failures of Barack Obama.  Her thesis is that blacks are undecided between the ideas that Barack has sold them out or that he is just incompetent.  A few may even wonder if liberalism could be at fault.  There is much more; read it all.

Press Conferences
Obama is the first President ever to call on a member of the Press without looking up.  First he reads the name from the teleprompter, and then he looks up to locate the person in the room.  You don’t see raised hands asking for the privilege to pose a question in one of this president’s press conferences.

Methinks
The fortunes of everyday Americans are on a see-saw.  The economy is sitting on one end of the board and Barack Obama is on the other.  America was on the downswing when Obama was riding up.  Methinks Mr. Obama’s weight has peaked and America is in a bottoming phase.  The keystone tenet of Alcoholics Anonymous is: first you must acknowledge you have a problem, and then you must want to fix it.  The President’s actions, along with those of Nancy Pelosi, Harry Reid and the SEIU have exacerbated the nation’s woes to the point that everyone has come to acknowledge we do have a problem.  From the election results of 2010 to the 64 year old lady Democrat screaming that Obama is an idiot because he won’t cut Medicaid, there is ample evidence that Americans want to fix it.

We are at the bottom of a deep hole.  Call me an optimist if you must, but I think the shoveler’s shovel is finally broken.  Now we are about to fix it, (the hole, not the shovel).

THE DEBT AND DESTINY OF THE UNITED STATES

Why the Debt Ceiling Fight Is So Fierce

Really now, how serious is this national debt problem?.  Figures fly at us like a fleet of locusts.  The onslaught of numbers comes from all directions, talk radio, think tanks, politicians and from agencies of the government itself.  The size alone makes it impossible to relate.

We have been told how many freight cars it would take to hold a trillion one dollar bills and how many times a trillion dollars worth of sawbucks would go around the world laid end to end.  But that doesn’t tell us anything useful; it just shows the numbers are big.  We knew that.  Then we read about percentages of GDP.  What does that mean?  How can we relate?  How can we make sense of it?  We do it by relating expenses and debt to income, not to freight cars or GDP.  Our table relates the financial state of the nation to basic family finances.

The government numbers in the table are fixed.  Except for Unfunded Liabilities which is an estimate; the figures are reported facts.  The family side is a “what-if” table.  It answers the question — if a family had an income of 80,000 dollars with spending and debt in the same ratio to family income as the government ratios, where would the family be?

The answer is nearly unimaginable.  Such a family would have a half million dollars in outstanding debt, over 600,000 dollars in additional future commitments, no savings and still spending nearly 60% more than they earn.  Is it any wonder the rating agencies are prepping us for a downgrade?  Is it any wonder why there is a stalemate in Congress when some members, with the backing of the president, actually want to increase federal spending and debt while others insist on cutting both before it’s too late?

If your income is half the 80,000, cut the rest of the numbers on the family side in half.  If your income is double, double them.  If you have a blog please feel free to take the table and use it as you wish.  The more distribution it gets, the better.

Click the table to enlarge it.

RANDOM THOTS – THE COLUMN

Inflation
Don’t look now, but inflation is peeking around the corner.

We are getting a very, very sharp rebound in core inflation and much more than the Fed had bargained for.”  Eric Green, chief economist at TD Securities in New York.

Overall consumer prices were up 3.6 percent from a year earlier,   Reuters

Last months drop in gasoline prices masked the increases in everything else. The wholesale price of cheese is up 23% since year end, butter 45%. Grocers are absorbing much of the price increase but that won’t prevail very long.

The debt thing
Obama says the American public is crying out for higher taxes. It’s just stubborn ideologues in Congress who are opposed to paying more income tax. He may be 45% right. That’s the number of people who pay no taxes but still enjoy benefits paid for by those who do.

The President says Congress is ignoring the will of the people by keeping taxes down. The solution is simple; add another line to the income tax form so all the unhappy people can add whatever extra amount makes them happy.

Big oil profits
ExxonMobil’s has operations in more than 100 countries around the world. The part of the business that refines and sells gasoline and diesel in the United States represents less than 3 percent – or 3 cents on the dollar – of Exxon’s total earnings. For every gallon of gasoline, diesel or finished products the company manufactured and sold in the United States in the last three months of 2010, Exxon earned a little more than 2 cents. That’s not a typo. Two cents.

Large oil companies risk capital, have big holdings confiscated by nations, transport crude from well to refinery, refine or pay for refining and transport the final product to thousands of service stations.  For that they make about 2 cents a gallon.  Federal and State governments do none of it, yet they make an average 50.1 cents per gallon in taxes.  Then the demagogues call the oil companies rapists.

RANDOM THOTS on BLAGO, BACHMANN and GREECE

From Power Line
Blagojevich will be the fourth former governor of Illinois to go to jail since 1973. It is quite remarkable that President Obama has been able to avoid any significant association with the political culture from which he emerged.

About Michelle Bachmann
No, she is not a flake. She is, however, a gaffe a minute. The MSM would love to see her become the Republican candidate. I am concerned that she could suddenly blow it they way Howard Dean did. Pawlenty polls far below Bachman nationally but well ahead of her in Minnesota where they are both very well known.

Sovereign debt
Gross Domestic Product (GDP) is a measure of the size of a national economy. Comparing a nation’s level of debt to the size of their economy is a measure of prudence
in the level of borrowing. It is also a measure of their ability to make good on their loans.

We all know that Greece is deep in a pile of organic fertilizer; but few seem to realize the United States is headed even deeper. Here are some samples of debt as a percentage of GDP according to the IMF. Portugal 83, Ireland 94, Iceland 116, Greece 143. Germany and France are 74 and 82 respectively. The Congressional Budget Office currently puts the United States at 93 percent and projects it to be 140% in 1928 and 190% by 1935. And you know no one is going to bail us out.

It is no winder the Democrats have not met their obligation to present a budget for 2 ½ years. It would mean they would be held responsible following in the footsteps of Greece.

OBAMA RELEASES STRATEGIC PETROLEUM RESERVES

U.S. national security has been forfeited to political expediency.  The Strategic Petroleum Reserves (SPR) are maintained in order to be available in the event of a national emergency.  Before this release the reserves were sufficient to protect us for just 59 days in the event of total disruption of imports.  That hardly seems adequate for calmer times let alone the period of .of geo-instability we are seeing right now.

The price of crude oil is down 19% from its recent high.  There is no upward price pressure.  There is no world shortage.  There is no interruption of supply.  Expectations are for weakening demand, not an increase; the markets are telling us that.  But now, when prices at the pump continue the decline that was already underway, the President will be in position to claim credit for lowering the price of gasoline and few people will be the wiser.

In reality, the impact will be minimal no matter what quantity he ultimately orders sold from the government supply into the market.  Furthermore, it will have only a one shot effect.  About 50% of U.S. oil consumption is imported.  If perchance, 10% of the SPR is released it would be a one time injection of 3 days consumption or less than 1% of a year’s consumption.

It’s dumb acts like this that cause some to wonder if Obama does not have the weakening of America as one of his objectives.  Sometimes it is not easy to decide whether he is incredibly dumb when it comes to economics or intentionally destructive.

WHAT IS IT THAT COMPELS AMERICAN COMPANIES TO GO OVERSEAS ?

The reason manufacturing and jobs are going overseas is as plain as the chart in front of your face.  As you can see from the chart, corporate tax rates have been trending down in OECD countries while U.S. corporate tax rates have remained among the highest in the developed world.

A business can absorb the cost of a little higher tax than its rivals and still remain competitive – – up to a point.  But when the difference is as much as 50%, it starts to become a matter of survival, not just the ability to compete.  At 39% the U.S. rate is exactly 50% higher than the average rate in the OECD countries.

The OECD is the Organization for Economic Co-operation and Development.  It is a group of 34 nations, mostly but not all, located in Europe.  These are not third world countries.  Typical members and their current corporate income tax rates include Germany (15%), Switzerland (8%), and the United Kingdom (26%).  Our rate (39%) is the absolute highest on the entire list of OECD countries.  The only other nations that exceed the 30% level are Belgium and France.

It is no secret which political party is acting to keep it that way.  It is the same party whose constituents complain the loudest about U.S. corporations sending jobs overseas.  It is the same party whose shibboleth is tax the rich.  It’s the party that penalizes achievement and supports indolence.  It is the party with the least understanding of how wealth is created and the best skills for appropriating it to spend in the furtherance of central planning agendas.  It is the Democratic Party.

Onerous domestic taxation is not the only reason companies choose to go overseas.  Laws and regulations are another.  It is not that regulations are more liberal in foreign lands, although that is often the case for certain industries.  The relative attraction is that you can plan and deal with the devil you know better than you can with one you don’t.  If there is one word that describes the business policies coming from the Obama administration, that word would be uncertainty.  Given the President’s position on Card Check, health insurance price controls, drilling moratorium, corporate executive salary controls and eagerness to partially nationalize companies in the name of bailouts it would be foolish to assume the uncertainty would unfold to the favorable side.

While the ever socialistic Europe is moving slightly to the right, the bastion of free market society that is America, is rushing hell-bent for leather to the left.  Eastern Europeans know where we are going.  They have been there and it wasn’t good.  We need to change course before we find out what they already know.  If we continue on the present course, believe me; it won’t be good.