Monthly Archives: September 2009

Social Security Will Go into Deficit in 2010

Hot Air is reporting that it has obtained a report from the non-partisan Congressional Budget Office (C.B.O.) that shows that Social Security is in more trouble than Obama’s Director of the Office of Management and Budget (O.M.B.), Peter Orszag,  previously reported.  The C.B.O.  and the C.B.O. website and “Director’s Blog” contain no mention  or repudiation of the report.  Apparently, they haven’t read their own memo yet.

Orszag, Obama’s “Supernerd”, is an economist that previously served as the Director of the C.B.O. and was responsible for the publication of the previous report that stated that social security would not go into deficit spending until at least 2019.  This new report, under the guidance of a new director, indicates the social security will run deficits in 2010.  The differences between the two reports, by two different directors raises questions of either Orszag’s ethics or his competence.

If Orszag manipulated the previous reports or influenced his subordinates to manipulate the them, there are serious ethics violations.  Did he do it just to get into the current Administration or because he wanted to curry favor with the liberal congress that had just effectively killed President Bush’s attempts to reform social security by claiming that the program wouldn’t have any problems for fifty (50) years or more.

On the flip side, it could simply be incompetence.  Reviewing a paper written by Orszag and Peter Diamond, they propose a combination of tax increases and benefit cuts to salvage the possibility of a deficit.  If this were his true desire, presenting social security as stronger than it actually is would not help him make the case for massive cuts and tax increases.  This would indicate that he actually believed that the government-run retirement program would be stable for longer than it actually will.

Mr. Orszag is now the minder of the White House budget.  There will be situations where the O.M.B. will publish reports that discount or contradict those of the C.B.O.  If either Director Orszag’s ethics or competence are in-question, then certainly his credibility is shot as well.

‘Public Option’ government would cut costs, improve service

Scott Ott published an article in the Washington Examiner that could very well fix everything using the Obama administration’s favorite tool – the public option.

“White House sources said today that President Obama may soon propose legislation that would save Americans billions of dollars each year while improving service by creating a ‘public option’ version of the federal government.

The new entity would introduce ‘choice and competition’ to the lethargic big-government market, currently dominated in many areas of the country…” [Read the whole darned thing]

Adjustible loan disaster looming for California

Members of Congress, the President, and anyone else with an opinion is still blaming the recession on greedy corporations.  This article isn’t about rehashing the debate, but… what about the greedy government elitists?  What about us?

The government needs us to borrow more to feed the partial-reserve economy system we have.  To get us to borrow more, they need us buying cars and houses, and not the cheap ones.  ACORN was out rioting against banks and threatening bankers to force them to give loans to people that could not afford them… ever.  Barney Franks fought against controls in Fannie Mae and Freddie Mac that would have prevented many of the bad loans that greedy wall street corporations then had no choice but to repackage, resell and pray.  God never answered.

The government has done everything it could to keep home values at ridiculous prices and had failed.  Bubble: Part Two, has been setup by the Obama administration and Franks.  Once all the liquidity they are creating has its effect, inflation will follow.  Next will be interest rates that will make the 80’s look like a picnic.

Inflation is hard enough, but what about all those homeowners  that have adjustable loans, on property that is now mortgaged at 125% of actual house value, and they’ve been making minimum payments.  Once the interest rates skyrocket and those ARMs reset… their payments could increase by up to 75% – they will have to simply walk away and leave the bank holding the bag.

According to the most-recent “Negative Equity Data Report” from First American Core Logic, California had 43,000 home owners recently slide into negative equity positions (the house is worth less than the mortgage).  Overall, California has 723,000 properties in a “severe negative equity position” (a.k.a. in real trouble).  Nearly one-third of all mortgages in California are under-water.

18% of interest-only loans are currently 60-days and Californian banks will be stretched to cover loses of that magnitude.  There are those that argue that the ARM catastrophe isn’t that bad and that it will only affect high-end states like California and Florida.  Unfortunately, when those golden and sunshine state banks fail in record numbers…wait for it…  the FDIC is already running out of money [link].

The FDIC will be awarded larger and larger lines of credit to cover the bank failures.  That credit comes from the treasury which gets its money from – the Fed.  Of course the Fed gets money from thin air – aka “printing it”.  Interest rates will go ever higher and now middle-value loans start getting affected.

The recession is not over, and it wasn’t caused by some CEO’s greed.  It was caused by the greed of the average citizen doing what their government wanted them to do – borrow more than they could afford to pay back.  That way, we could look just like them.

Breitbart Signals Blockbuster News This Week

Conservative commentator and author Andrew Breitbart hinted that a blockbuster news story would be coming this week.  Blogs are alive with speculation as to what Andrew has up his sleeve considering his early digging into the problems at ACORN that finally resulted in the current investigations.

Blogs posts and forums are filled with guesses from the masses and sparse hints from some in-the-know.  The possible topics seem to all surround the current administration are primarily around four topics.

The easiest to dismiss is the National Endowment of the Arts (NEA) scandal where it was reported that the group was using it’s resources to promote the administration’s agenda.  While a noteworthy story, it’s no blockbuster and Andrew would not be hyping-up such a dead story.

Second is the thought that perhaps the ACORN pimp-hooker films were fished around to the major television networks (ABC, NBC, CBS) and were told that they would run the story, but didn’t.  The scandal not just being that the networks said they would run it and then buried it, but perhaps they had hidden camera going during these conversations.  This is plausible, but unless there were some obviously nefarious comments or actions in the video, again… not a blockbuster.

Third is actually a story about a story – a story that didn’t happen.  Stephanie Strom had been working on an article about the links between ACORN and the Obama campaign.  Once a damning piece of evidence was found, the executives at the NYT shut her story down saying that it was a “game-changer”.  If the evidence was so good, then it’s possible that federal campaign laws had been violated.  The real question might be how much he knew?  This has the smell of the huge story that Breitbart might be pushing.

The last is still swirling and seems to have the most credibility.   The central figure in this final possibility is Buffy Wicks.  Most do not believe it is simply a tie-in to the NEA scandal although Buffy was one of the seven officials present at the white house meeting between administration representatives and NEA leadership.  Buffy had served multiple roles during the Obama campaign -western regional Field Director, Missouri state director and Texas state deputy director.  She had also previously functioned as the “Wake-up Wal-Mart” political director.  Buffy had spent considerable portions of her early career working to get higher pay and bigger benefit packages for union employees.

So how does this all roll into a blow-out news story?  So Buffy is involved, but not necessarily the center of the story.  Is it Unions (SEIU? AFL-CIO?), illegal donations during the campaign?  Could it be the NEA thing or perhaps some other malfeasance during his run for president?  The Wal-Mart thing?  It’s anyone’s guess, but we will be paying very close attention to this week’s news.

The News is Funny – in a Sad Kind of Way. Week of 9-13

  • CNN performed a second set of polls allowing Americans to judge Obama’s performance.  The first had given the President a C+ for his first 100 days and this week they released his second 100 days poll: a C-.   Obama is expected to give himself a speech on working harder and getting better grades.
  • SEIU and ACORN band together to protect worker’s rights.  The newly-formed Street-walkers Union of America has asked Kanye West to act as spokesperson and Charles Rangel for Treasurer.
  • Conservatives turned into racists and became “dangerous” as evidenced by the exactly zero people that were arrested for doing $0.00 in property damage in D.C. during the largest conservative protest in history.
  • The first glimmer of bi-partisanship felt during the Obama administration was felt as an almost-unanimous agreement that the Senate proposal on health care (Finance Committee Chairman’s Mark) is not the way to go.
  • CNN’s Wolf Blitzer got it wrong on Jeopardy, but then again, CNN tends to get it wrong and Americans think that the media gets it wrong more than 70% of the time.
  • The FDIC is running out of money.  ACORN is losing access to our money.  The Baucus bill is about giving more of our money to prop-up Medicare.
  • Jobless claims fell, but states report that more jobs got lost than before.  Obama to work with AFL-CIO and SEIU on creating the Unemployed Workers Union.  Union dues will be paid for by an excise tax on non-union working citizens wages.
  • Patrick Swayze lost his battle, Obama is losing his health care battle and now he is unable to make a decisions on the Afghan battlefield.
  • Bernanke said the recession is gone.  The FDIC said it’s money is gone.  Kanye proved that his decency was gone.
  • Congress spent millions on stimulus signs, and voted for millions more.  The Union of over-paid sign-makers claims recession is over thanks to the president’s stimulus.
  • The guiding light went off the air, Pelosi just went off, and Time Magazine said we should turn Glenn Beck off.
  • Joe Wilson got censured, ACORN got dumped from census taking, and Pelosi got frightened out of her senses.  I’m not sure how you would tell that by facial expression alone.

FDIC May Resort to Treasury Borrowing to Avoid Collapse

On September 18th,  the FDIC announced two more bank closures that would require funds from the insurance corporation in-order-to protect depositor’s money.  This month alone there have been ten bank failures and the month isn’t over yet.  There were fifteen closures in August and  at the current pace, it’s entirely possible that September will have between 14 and 20 closures. The second quarter’s failure rate was the fastest since the savings and loan crisis in the early 1990’s, and it’s not slowing down yet.

FDIC Reserve Ratio
While the fact that banks are failing is disconcerting, the real alarm that is silently going off is that the FDIC is running out of money to cover the deposits of banking customers. The FDIC is required by law to keep an amount equal to 1.25% of covered deposits on-hand.  Currently, the insurance fund contains a ration of less than .22%.

Despite the fact that at the end of June financial institutions were forced to pay a special assessment of 5-10 basis points of deposits (not including their mandatory reserves), the drain on the the insurance fund continued.

Bank failures are cited as the major reason for the collapse of the fund, but looking ahead, there is growing concern over banks that are teetering on the edge of collapse.  The number of “problem institutions” is increasing and the rate-of-increase is also quickening. Problem institutions are not yet failed, but have financials that show that they are in-danger of failing soon. In fact, roughly 13% of banks on the problem list have historically failed.

The deposit fund lost $2.6 billion in the second quarter which leaves just over ten billion dollars available to cover deposits in failed banks. At the current rate, there is just over a year’s worth of coverage in the fund, but with the rate increasing, it is more-realistic that it will run out of money in less than a year.

The FDIC is considering tapping U.S. Treasury to re-stock the fund. On Friday, Sheila Bair, FDIC chairman, indicated that the FDIC may consider borrowing money from the Treasury when it meets at the end of this month. The FDIC could borrow up to $100 billion under the Helping Families Save Their Homes Act. Congress also has the option of allowing the FDIC to have access of up to $400 billion more by temporarily increasing the ceiling of that line-of-credit.

The only other option left to the insurer is to increase fees or levy additional assessments against financial institutions. Banks argue that this might raise the risk of failures for institutions on the edge. Those banks need access to as much liquidity as possible to work through the recession. The debate over who should replenish the fund is then between taxpayers and financial institutions.

Barney Frank, Chairman of the House Financial Services Committee believes that the FDIC should go straight for the Treasury loan. While this reduces stress on the banking industry, it is more “money from nowhere” ending up in the economy. The Treasury money is simply money that the Fed “printed” to buy Treasury Securities. That liquidity would then be put into the FDIC. We would be propping up our banking system with little more than thin air and increasing the risk that we will head into a severe bought of inflation reminiscent of the 1970’s.

See Also: Inflation and How it May Affect You

America Goes Protectionist, Echos 1930’s Era Actions

cargo shipStill thickly in the middle of the biggest economic catastrophe since the great depression, American policy makers are making anti-free trade decisions that are eerily similar to the protectionist moves made during the depression.

The A.R.R.A. (stimulus bill), has provisions in it that only allow the money to be spent on “manufactured goods” that are made in America.  While a welcome gift to the American steel industry and steelworkers union, reaction from foreign trading partners much colder.  American companies now face the proposition of being blocked from bidding on contracts in other countries.  Canada and the EU have raised extreme objections to the move and are considering two counter-measures.  First, they have petitioned the World Trade Organization, which is largely for show, but also allows them to take the second action – putting tariffs on American goods going into their countries.  By petitioning the W.T.O., those countries are not vulnerable to claims from the U.S. that they are engaging in unprovoked anti-trade actions.

Caterpillar Tractor is undertaking an effort to be involved with major projects in China.  Due to the recent placement of a tariff (tax on imported goods) on Chinese tires, the American heavy equipment manufacturer may find it much tougher to sell it’s machines in the rapidly-growing Chinese economy.  China has already filed a grievance with the W.T.O. and is now moving to place counter-tariffs on American imports of chickens and auto parts.

Highly-controversial agricultural subsidies have existed for decades.  Some farm subsidies are actually larger than the cost of the product itself.  The U.N. found in 2001 that the U.S. subsidy on a pound of cotton was more than 52 cents per pound.  It costs just above 20 cents per pound to grow cotton in some countries outside the U.S.

Mercantilist policies are also being applied to our neighbors to the south.  Restrictions on Mexican trucks on U.S. highways are making it more expensive for Mexican manufacturers to put their goods on American shelves.  While not a direct tariff, it has the same effect.  How long will it be before American goods are less welcome in Mexico?

Protectionism was a major factor in turning the 1929 recession into the great depression.  It was the leading factor into making the U.S. depression up to 5 years longer than in most other nations in the world during that period.  By taking the same steps, making the same mistakes, and being naive of history, we could be inviting the next great depression.

Liberals Mount Attack on Dissenters

Pelosi wagging finger

Nancy Pelosi

In an Alisnky-style attack, liberals are attempting to ridicule, shame, and belittle critics of Obama administration policies instead of debating the actual issues.

Nancy Pelosi, a liberal leader and Speaker of the House of Representatives, today issued a dire warning while speaking to reporters.  One member of the press asked what she thought of the recent anti-Obamacare discussion.  Pelosi’s response was that she has “concerns about some of the language that is being used because I saw this myself in the late ’70s in San Francisco”.   The Speaker then when on to say that she found the rhetoric from those that disagreed with her to be, “very frightening”.

Liberals have often said that those that disagree with them don’t discuss the issues and resort to name-calling and fear-mongering.  In a turn-of-fate, the left has decided to use the tactic they often criticized others for employing.

Yesterday, another liberal congressional Representative, Maxine Waters(D-CA) stated that she wanted to see health care reform critics investigated.  She used terms like “Tea Bagger” and “Birther” to lump all of Obama’s critics together using belittling terms.

It’s no longer an isolated tactic.  Liberals from all corners of the left are signing on to the practice of labeling, generalizing, and name-calling anyone that disagrees with them. Recently, Jimmy Carter, in a television interview, commented that he believes that most of the anti-Obama sentiment is purely race-based.

In reviewing comments on multiple liberal blogs, it’s apparent that there is a growing movement within the left to label all dissent as racist and dangerous.  These claims appear to be galvanizing those that disagree with left-leaning politics and consequently increasing membership and activism in the anti-big government movement.  It is possible that by grouping different anti-liberal groups together, the left have created a daunting common enemy where there was once a bunch of much smaller ones.

Glass Houses and Rocks Easily Thrown

glass House

glass House

Liberals are going full-court press with racism. The idea of intelligent debate and discussing real issues has left the building. Conservatives must realize their current strengths and ignore these tactics. When called a racist, ignore and re-ask your question. Whatever your you asked pushed them in a corner and they threw out the race card.

For decades liberals have presented themselves as premier debaters, highly-educated mentors, the true elite. Most conservatives were happy-enough providing for families, starting businesses and getting along that they just let the noise continue.

Now is the time where the noise may cost you. Listen to the messages, interpret them. If they are simply insulting, move on. It simply means they cannot debate and have no decent message. SEIU, NEA, Steel workers, Auto workers, health care unions, ACORN… they control the liberal congress and media. They are irrelevant and just don’t know it yet.

Yesterday, former-President Carter communicated that most of the opposition to Obama is racist. Mr. Carter, you have no more a clue now than you did when you screwed this nation into the ground in the 70s.

12% of Americans agree with Carter. The rest of us do not despise Barack Obama, we abhor his ideas, ideals and politics. Do not confuse dissension with hate. We do not hate him, we are counting the days down until we get to vote him and the liberal congress out of office.

What is Racist?

September 2009 has pushed the definitions of racist to beyond the realm of logical.  Joe Wilson disagreed with the President and is labelled as impolite and RACIST.

I have called out friends, girlfriends, associates and others for spewing mis-truths and have been corrected by the same.  Some were women, others were Mexican-American, Vietnamese-American, African-American and several other international-Americans (by the way – I’d be Scots-Irish-American if I believed in anything other than being American).  None of them accused me of being racist, sexist, or any other -ist and I never considered that anyone correcting me was doing it for any other reason than pointing out my error.

Are the PC police in full-effect?  Are the union-controlled liberal politicians the nightmare that Orwell prophesied in 1984?  Who is that majority/minority actually?  Orwell was close, but it’s not corporate giants that are pushing PC’ishness, the death to religion, and the loss of individual freedoms… it’s unions and their liberal puppets.  Is this really about race, or just a way to end an arguments that liberals cannot win.  After-all, once someone throws out the “R” word, the conversation is over, it is impossible to defend against.

I’m not willing to jump off the PC cliff just yet, but this is getting ridiculous.  A white congressman is the first in history to be dealt this punishment for this kind of action, but not the first to do the crime.  Would there have been the same punishment had he been black?

Several African-Americans beat up a white child on a bus and it’s not racial hate, racism, or a hate-crime… it’s bullying (just imagine the opposite – 3 white kids repeatedly beat up a black kid for a bus seat).

We have forgotten what MLK said in his enlightening speech.  Color-BLIND.  Not only does it mean that white should treat black, yellow and brown the same, but that brown, yellow and black should treat white as equal.  King wanted us all to view each other as people, not races.  He did not intend to simply exchange racism, for reverse-racism.

The hate-speech coming from government leaders is dividing us.  Obama promised to bring us together.  By not strongly speaking out against those who would turn simple disagreement into racism, he has condoned it.

Our new President of unity, is undoing decades of unification by allowing us to regress to an earlier age.  We cannot allow our own government to turn us, any of us, into the hateful mobs of times gone-by.   We must realize them as the divisive politicians they are and relegate them to history as a failure to America.

I do not want another white vs. black era.  It was wrong, extremely wrong.  This is not the way to move forward from such terrible times.   Barack, this is not the way forward… at all.  This is not change, it’s more of 50 years ago.

The Enemies Within

Just because someone is a Republican, does not make them conservative. It only makes them a politician. A few from New Jersey, and one from Maine are figuring that out.Cap and Trade

Senator Snowe from Maine, Representatives Lance (NJ), Smith and LoBiondo all resemble Rhinos (RINO) more than elephants. Political pets aside, all are voting in a non-conservative manner. They are all taking an anti-trade, anti-economy,anti-energy policy stance that will make it impossible for America to evolve its economy for the next century. They are helping the left Europize us by voting for a government-run carbon trade exchange. In another CDN post, we discuss the challenges that cap and trade presents to the American economy.

Some supporters of cap and trade would argue that someone has to lead the way, but China, India, and other Asian nations have no interest in controlling emissions.  By going first, we are going alone and following Europe into a money pit and fundamental power-shift.

A leader, running into opposition, with no one behind him, is not a leader – he is a victim.

The Bronze Curio

A tourist walks into a curio shop. Looking around at the exotica, he notices a very lifelike life-sized bronze statue of a rat. It has no price tag, but is so striking he decides he must have it. He takes it to the owner: “How much for the bronze rat?” “$12 for the rat, $100 for the story,” says the owner.

The tourist gives the man $12. “I’ll just take the rat, you can keep the story.”

As he walks down the street carrying his bronze rat, he notices that a few real rats have crawled out of the alleys and sewers and begun following him down the street. This is disconcerting, and he begins walking faster. But within a couple of blocks, the herd of rats behind him has grown to hundreds, and they begin squealing. He begins to trot toward the bay, looking around to see that the rats now number in the MILLIONS, and are squealing and coming toward him faster and faster.

Concerned, even scared, he runs to the edge of the Bay, and throws the bronze rat as far out into the water as he can. Amazingly, the millions of rats all jump into the bay after it, and are all drowned.

The man walks back to the curio shop. “Ah ha,” says the owner, “you have come back for the story?” “No,” says the man, “I came back to see if you have a bronze liberal.”

Odd Weather

Just thought I’d share an odd weather map I ranacross when checking my own weather this evening. It appears that a giant swath of grass is going to cross the mid-Atlantic tomorrow. I’m not exactly sure how to dress for that.  I don’t think it’s politically motivated, at least… I don’t think I think it’s political.

Land mass crosses U.S.

Land mass crosses U.S.