Monthly Archives: October 2009

Mortgage Bubble Started Crisis, Isn’t Getting Better

Last year the economy crashed.  Now, the stimulus has stimulated, the Federal Reserve has eased, Geihtner has.. well done whatever he does, and Obama has spoken (certainly that should have fixed everything).  So how did we hit 9.8% unemployment since the stimulus was an emergency action that would keep unemployment from going over 8%, pumping massive amounts of liquidity into the economy should have loosened credit, little Timmy G. and Obama bought GM, AIG and Chrysler and they helped everyone buy a new car that wanted one?  It must be that G.W. Bush must still be affecting the economy from his ranch in Texas…

Today, the Mortgage Bankers Association published it’s index of applications.  The measure of home mortgage applications dropped 14% last week.  When broken-down, the measurement of refinancing applications decreased 17% and new home purchases declined 7.6%.  When combined with  yesterday’s less-than-stellar housing starts report, it’s apparent that between TARP, ARRA (stimulus), the Fed, government buyouts, the first-time buyers credit, and a truck-load of printed money.. the housing crisis is still glaring us in the face.

The trouble isn’t that the government isn’t doing enough – thankfully.  The trouble is that due to too much federal meddling, we never let the bubble fully burst.  Economies go through boom-and-bust cycles.  Even socialist countries deal with economic cycles that go up and down.  By propping up a bursting housing market we end up with artificially high housing prices and no one that can afford them.  Mortgage rates can’t get any lower and demand still isn’t there.  If you have too many goods (houses) being chased by too few dollars… that’s deflationary to that market.   Our dollar is weakening due to the government’s reckless printing.

A Yahoo! Finance article states that economists expect home sales prices to decline more than 11% by June of 2010.  That’s fairly rapid and could trigger the second half of a double-dip recession when combined with the commercial loan crisis about to hit the financial industry.

So now those few dollars chasing mortgages aren’t worth as much (notice your gas prices the last seven days or so – welcome to inflation).  The Fed has kept rates near zero so now they can only go up – and they are.  All this means those houses have got to get cheaper to get sold.  Meaning destroyed wealth for millions of Americans as their house values plummet.  The housing bubble will certainly bust and the more the government props it up, the worse that crash will be.

Voting Against Current Reform Bills Does Not Mean Inaction

Obama

Obama

President Obama has renewed his argument that we have to pass this legislation or his plan (whatever that is) because inaction is not an option.  While most people agree that inaction is not an option, why is voting for the progressive’s tax-and-spend fiasco the only alternative to doing nothing?

The conservatives in the House of Representatives proposed a health care reform bill that reduces health care costs, increases competition, makes health care portable, takes care of the pre-existing condition concerns, and does it while staying closer to the limits in the Constitution.

It would seem plausible that we could enact tort reform all by itself in a small bill that costs nothing and see how that works.  It would most-likely have been completed before the summer recess and Obama could have put his signature all over it.

Allowing the same tax advantages for individuals purchasing policies as purchasing through employers could have been done.  Again, low cost, no total re-write of the system.  No one is forced to buy anything they don’t need.  We can keep our pricey plans if we want to pay for them.  I could go on.  This could also have passed much earlier than the end of the year.

A bill could have been fashioned around inter-state competition of insurance companies.  It could even have possibly included the removal of anti-trust protections now that insurers would be in a broader market.  Wait for it… yup, low cost, no total discombobulation of the health care system…  one could feel like a broken record.

What’s being preached is common sense.  It doesn’t all have to be done at once to make progress.  In-fact, reasonable progress is most-often accomplished in increments, not by huge leaps of faith.  Let’s chop the bills apart.

Even though there are still Constitutional concerns with any bill where the Federal government is involved, how easy would it be for Americans to get behind these bills:

  • The Malpractice Reform Act of 2009
    • take the limits from H.R.3400
    • Zero cost other than the legislative process to enact the bill
    • Really should be done at the state level to abide by the 10th amendment and Article I, section 8
  • The Protection of Individual Insurance for Americans Act
    • change tax laws to make individual insurance comparable in benefit
    • Zero costs other than legislative
    • This could fall under the regulation of inter-state commerce provisions in Article I – if insurance should stay with the individual no matter where they live, they will move between states at some point
  • Inter-state Health Insurance Market Reform Act
    • Allow health insurance companies to compete across state lines
    • Insurance companies regulated by home-state’s laws (keeping in-line with limits of federal government in Constitution)
    • Obviously falls to the Federal government under inter-state commerce regulation

Why not just start with those three bills, see which ones save money, which ones fail miserably instead of theorizing?  While these get implemented, Congress can work on round two:

  • Medicare Fraud and Waste Clean-up Act
    • Would like to see this moved to the states to run as they see fit so it melded with the Constitution, but I’ll take cutting the fraud and waste out .. for now
  • Medical Pricing Transparency Act
    • All Doctors and Hospitals must document and present the actual cost of all but emergency procedures to a patient before they may consent
    • Should be a recommendation from the Federal government and the States should consider in their Congressional sessions

There’s more out there, but guess what, by not doing it all at once, we can do small things to incrementally improve the system.  So Mr. President, inaction is not an option, but the federally-mandated destruction of the American health care system is not the only alternative.

Why Dow 10,000 May Not Matter

stockUpThe last week has produced a euphoria in the market-place. The DOW has crossed (and again fallen below) this psychological barrier in the stock market. Many point at the crossing as a sign that the market is recovering. The DOW industrial index has gone from under 7,000 to 10,000 in the past several months and is certainly feeding on it’s own momentum. The real question is if the top line (revenue) growth is really out there to support these levels.

Three pieces of seemingly good news seem to have sparked the push over 10,000.  Intel announced that its sales forecast for the fourth quarter will be as much as $1 Billion higher than estimates, manufacturing output increased by .5% more than forecasters had hoped, and inflation stayed low.

The Intel story sounds great, but upon digging into the past, cracks appear in the good news.  Year-over-year, their top-line is still shrinking.  Some believe that Intel’s sales increasing is a harbinger of the overall U.S. economy improving, but as an article on Bloomberg.com stated, a large portion of the increase is coming from China.  There are also concerns that the augmented sales forecast is based on Windows 7 forcing many U.S. households to upgrade their existing PCs.  So far, the Windows marketing campaign has fallen on mostly-deaf ears as consumers seem to have shrugged-off the new operating system as a why-bother.

Manufacturing output also increased more than anyone had expected.  This comes on the trail of two prior months of output increases.  One concern might be that the industrial sector is turning around so quickly while most others are still languishing.  The output rebound does appear to be broad-based as the diffusion index, a gauge of a number of manufacturing categories, shows that more sectors than just automobiles are improving.  Autos only accounted for .2% of the .7% increase.  It is possible that manufacturers are preparing for the Christmas retail season or perhaps this is an after-effect of the trillions of dollars of spending from multiple countries.  To be sustainable, there has to be something more fundamental, because the stimuli will end, and consumer spending is estimated to be less this Christmas than last.

A fundamental return to growth would be outstanding, but to believe that we’re going from deep recession to growth so-quickly defies logic.  Searching the recent economic data it is difficult to find the real support for a true recovery.  IBM stated on the Friday that its signed contracts dropped 7% in the most-recent quarter to their lowest levels in 18 months.  Oil is approaching $80 per barrel on a weakening dollar, as if the weakened U.S. currency wasn’t a large-enough issue on its own.   Major financial houses and financial sections of companies are still showing incredible weakness.  Bank of America is in crisis as it tries to suffer-through mounting residential mortgage defaults.  General Electric posted a troubling quarter due to its financial division taking huge losses.  To top it all off, the President’s own economic team briefed him this week that the commercial lending market is on-track to follow the residential mortgage crisis.  Congress is already talking about adding more than $200 Billion to the current stimulus, but why would we need to do that if it was already working?

We should be hopeful that with signs like improving manufacturing output and technology showing signs of life, a sustainable recovery could begin.  We also have to be wary that we are pouring too much money into equity markets.  This only serves to hyper-inflate their values setting us all up for the second half of a W-shaped recovery – the double-dip recession.  If that occurs it will be a bloodbath for those who put more money into a market than they could afford to lose, hoping it would not go down, and it does.

Investors are pouring more than 17 times more money into bond funds than equity funds.  That would seem to show a flight-to-quality one would not expect in a blossoming equity market.  Optimism does not have to put investors into unrealistic positions such as houses they can’t afford, stocks they shouldn’t buy, cars they don’t need…  It should simply get us to start looking for the real, supportable recovery and how to invest in those businesses that are fundamentally sound.

Can America Elect a True Conservative?

I do not associate myself with a political party, because none of them represent my views. The Republicans are just as corrupt, mindless and manipulative as the Democrats. But what about you… the readers? Could America ever elect a true conservative.

A true conservative would look to eliminate Social Security (over time of course), eliminate Medicare (again, with thought), focus on strengthening our trade infrastructure and agreements, and eliminate the complicated tax code.

Entitlement programs would have to end. We would get nothing from our government other than the right to pursue life, liberty and the happiness. We would be defended from enemies (foreign and domestic), and trade and treaties would be handled by Congress. That’s it.]

Can we all decide that it is our responsibility to save up for medical emergencies just like other emergencies?  Can we decide that our retirement is ours to plan for, not the government?

I am losing confidence in the thought that Americans could ever do more for themselves so that government could do nothing for us.  We seem to love the gifts from father government.  We cherish them and vote for them.  I do not know if we will ever be selfless enough to say “no thank you father, we cannot afford it”.

From downsizingbiggovernment.org

From downsizing - biggovernment.org

According to the Downsizing Big Government project, in 2009 Congress is spending 38% of federal monies on entitlement programs, only 18% is spent on defense, and 5% on just servicing our debt.  We don’t need another Ronald Reagan, we need the people of the United States to decide that the Republicans spent our money almost as poorly as the Democrats.  I hope we can decide that big government is not the answer.  I hope we can realize that we need to be thinking about our children, not ourselves.  Continuing entitlement spending as we have will break the bank and leave our children to clean up our mess.

If a true conservative ever appears, I would vote for him or her, black or white, yellow or brown, small or tall, simple or complex.  Sad as it is, I believe I represent a minority.

Are You Running Your 401k? Are You Sure?

The Wall Street Journal published an article by Eleanor Laise that highlights an increasing practice by employers.  Taking more-and-more control of employee’s retirement accounts.

“The greater employer control is a philosophical shift in 401(k)s and other defined-contribution plans, which held $3.5 trillion at the end of last year. The new, more-paternalistic approach, with employers making most of the decisions, resembles a defined-benefit pension plan. But unlike a pension plan, individuals bear all the investment risk.”

The author points at a father-figure desire of employers to help employees manage their investments better.  In some cases this might be true, but some of the pressure is coming from the investment firms that manage the money.

“Fund firms and plan providers say the moves are necessary to get hands-off 401(k) savers on track for a secure retirement. Left to their own devices, some workers invest far too conservatively, others too aggressively, and many don’t save nearly enough.”

The real risk is that employers will not consider each investor and make broad-stroke moves that could pull some investors out of aggressive funds at a bottom or move them to more-conservative funds at the top of a cycle potentially creating devastating losses or preventing natural recovery of a battered fund.

“Indeed, many participants were moved from conservative stable-value funds to stock-heavy target-date funds last year as their employers switched default investments, exposing people to losses that they may not have otherwise suffered”

These typical target date funds have a date that is intended to mark when the investor will retire.  The investment mix in the fund is intended to be less-aggressive as the target-date approaches.  Unfortunately, the market is not only volatile while we are young.  In the case of last years financial collapse, being able to jump into a stable-value or other conservative investment could have benefits the 20-somethings as well as the 50-somethings.

Take a look at your 401k and make sure that you are truly the one running it.

Democrats Concerned About 2010 Vote, Bribe Voters and Illegals

Demcrat donkey
In a Hot Air post by Ed Morrissey, we learned that Democrat strategists are concerned that without the record turnout from black voters that they enjoyed in 2008, they may be in for trouble.  ACORN is just trying to survive and is in no condition to rig this one for them, so what is a Democrat to do?  If you can’t buy votes through corrupt community organizations, buy them directly.

On Wednesday, President Obama said that he was, “announcing my support for an additional $250 in emergency recovery assistance to seniors, veterans, and people with disabilities to help them make it through these difficult times.”   There are some interesting motivations for this.  Of course, Obama points at the economy, but wait, Obama and Biden have said the stimulus worked.  Are seniors in more hardship now than they were 4 months ago?

This has more to do with health care and the Democrat fears of a stunning loss in the 2010 elections.

Without an African American presidential hopeful running for office, will the heavily Democrat-leaning black voter population show up?  Probably not.  SEIU and ACORN have some publicity issues to deal with after the highly-negative exposure they gained from beating a black man near a town hall because he was selling American Flags and of course, supporting child prostitution by clearing the way for illegal tax breaks and government mortgage help.

If they can’t count on the African-American community, where will the “help” come from for the Dems in 2010?

Senior citizens are the first voting block to which the Democrats are turning.  One of the largest and strongest segments of anti-health care reform sentiment is Senior Citizens.  AARP has seen historic losses in membership after they association voiced support for the President’s plan against senior’s wishes.  Democrats cannot afford to have those anti-left feelings carry over into next year’s elections.

Senate Leader Expressing Himself

Senate Leader Expressing Himself

Second, Harry Reid has blocked a measure in the Senate to restrict Census to those in the U.S. legally.  By expanding the census to illegal aliens, a left-leaning group, it could have wide-ranging effects.  The Census decides things like how congressional districts are drawn and how many representatives a state gets.  By favoring illegals, this could give blue states more representatives than they should get.

Can $250 really by a vote.  Sure, when it’s meant to cover up the bad news that Social Security recipients won’t be getting a cost-of-living adjustment this year.  Granted, they did get an almost 6% raise last year, but it’s always about what have you done for me lately.  If the senior segment of our population gets bought off for a measly 250 bucks and the illegal count in the census is used for congressional weighting and districting, the Democrats may have found a corrupt, but effective solution to being unpopular – buy the win.

Reform: It’s All About the Money – Yours

The Senate Finance Committee passed their health care reform bill.  Unfortunately, just as the other bills that have come out of House and Senate committees, it doesn’t fix health care at all – and it costs a fortune.

I’ve written numerous articles that compare and contrast, analyze and break-down how all of the different bills have approached the problem.   What we have to realize sooner rather than later is that this isn’t about fixing health care, it’s about making it the same for everyone.  It’s about making everything the same for everyone – bad.

What kind of  bad?  Well, just from perusing the internet today, it would appear that everyone should expect their paychecks to be bad (even middle-to-low income earners), taxes to be bad (middle-class especially), the dollar to go south, and health care to be mediocre – for everyone (once it actually shows up in 2013?).  Did I mention that the public option is still on the table (add extra bad-sauce for each of the points above).

Our taxes are going to get much larger under the concepts in the new Finance bill.  The Senate’s own Committee on Taxation ran the numbers on the 40% excise tax in the bill, and they aren’t pretty.  The tax is highly-regressive so it will hit low and middle-income earners hardest.  The committee’s analysis says that a family-of-four at 150% of poverty level will see a marginal tax rate of 48% while those who make are at 450% of the federal poverty level will see a marginal rate of 28%.  Not sure Baucus did the math before proposing this mess, but the report did and it also noted that it would push many earners into the next-higher tax bracket – congratulations.  To poor salt in the wound, that’s even after 12% of their premiums are subsidized by other taxpayers money.

Our paychecks are going to shrink.  Due to the excessive big-government taxation in the Senate bill, the Senate Committee on Taxation goes on the explain the wage pressures this plan creates.  Business owners will be forced shrink wages to cover for the increased costs.  If you own your own business, you’ll have to cut your own income, and that of all the people that work for you.  If you work for someone else.. congratulation, the government just cuffed the hands of the people that sign your checks.

The cost controls aren’t in these bills at all.  Sure there are mandated fee schedules, but that just controls how much hospitals and doctors can charge.  There are no fixes for excessive lawsuits, the bills create a ton of bureaucracy that the bills even admit will add at least 4% to insurance premiums, and by adding a middle-man between health insurance companies and patients, there have to be extra costs.  That is why Medicare’s administrative costs per claim are much higher than private insurance (read the first paragraph here – data supplied).

I did mention that the dollar will go south, but what does health care have to do with it?  $900Billion in costs just from the conceptual Finance bill (yeah, it doesn’t even have the real details in it yet).  That’s $900 billion to cover 94% of Americans which works out to roughly $31,000 per covered person, per year.  We are $1.4 Trillion in the hole, for just this year.  The only reason the government doesn’t go broke is because it can create money out of thin air.  Metaphorically-speaking, we print money.  Unfortunately, when we do that, each dollar in existence goes down in value and has weakened spending power.  That makes things much more expensive.

The only thing these bills do is to make sure that anyone that wants health care and can’t afford it, can have Medicaid… wait.. isn’t that a State-run plan?  Yup, so we rob the Federal government, bankrupt the State governments, shrink our paychecks, increase taxes, and kill the dollar.  I don’t think we could do more damage if we tried.

This debate has to be about fiscal discipline and individual rights.  And it has to get louder again.  Our children are going to have European-style health care and the double-digit unemployment, long wait times, oppressive taxation, and lack of providers to go with it.  So what will the last few months of Congressional work get us:

  • Decreased wages – Yes
  • Increase taxes – Yes
  • Decreased buying power – Yes
  • Decreased insurance premiums – No
  • Increased Health Care Quality – No
  • Increased insurance plan choice – No

And the real gift from Congress –  a lifetime of indebtedness for our children so that Congress could say they delivered health care to us (psst – we already had it).

Baucus’ Bill Passes Committee, Will be Merged With ‘HELP’ Bill

So much attention has been paid to H.R.3200 and the Baucus bill that the HELP bill has been largely ignored.  Now this other Senate bill becomes very important.

This afternoon, Olympia Snowe (R-ME) crossed the aisle and helped get the Senate Finance Committee bill (Baucus Bill) passed by a 14-9 margin.  So now what?   The Baucus Bill will now be merged with the Senate Health, Education, Labor and Pensions (HELP) committee bill, otherwise known as the Affordable Health Choices Act.

HELP, is basically combines the parts of H.R.3200 with parts of the Finance committee bill.  The real purpose for this bill is probably to smooth things over in conference committee once the Senate successfully merges the Finance and HELP committee bills.  By merging HELP into the Finance bill, we get everything in the Baucus bill but would now have Medicaid for everyone that is at or below 150% times the federal poverty level – up from 133% in the Senate Finance and House Bills.  This increase would put a much larger burden on the States as Medicaid is a State-run program.  The exemption for small employers would be changed so that instead of bypassing businesses with 50 or fewer employees, any business with more than 25 would be required to pay for insurance or pay a penalty.    The most striking change is that it would put a public option into the Senate bill.  This public option is phrased very-similarly to the H.R.3200 language.

When we look at the plan from a cost perspective, there seems to be an instant 4% increase to premiums built into the State “gateway” exchange framework.  The gateway will be paid for by a 4% surcharge on premiums.  That means that health plans now have a 4% increase in administrative costs simply due to participating in the government exchange.  The cost of these exchanges is in every bill.  The HELP bill actually bothers to spell out how much they expect it to cost.  Of course, when health insurance companies are asked to pay for the government framework, you know who will that will be passed on to.

In the coming weeks, the Senate will work to merge these two bills so that a vote before the full Senate can be held.  If the composite bill passes the Senate, it will be taken to Conference Committee to be merged with H.R.3200 and that compromise bill will be voted on in both houses.  Upon passage in both houses, all that is left is Presidential signature.

Administration Says Its Saving Homes, Oversight Report Says Otherwise

The Congressional Oversight Panel published a report on October 9th assessing the effectiveness of “foreclosure mitigation efforts” for the previous six months.  Many in the media are focusing on how the administration’s foreclosure efforts are failing.  Just reading the executive summary, I was just as troubled by who these efforts are failing.  The first paragraph grabs the attention with, “The combination of federal efforts to combat the financial crisis coupled with mortgage assistance programs makes the taxpayer the ultimate guarantor of a large portion of home mortgages“.  Congratulations, even though you and I knew better than to get into real-estate investing during an obvious bubble.. the government forced us into it and we’re about to take a bath.

On a positive note, the executive summary does say that it is likely that the benefits will eventually outweigh the costs to the taxpayer.  The initiative that is expected to bring about these benefits is Making Homes Affordable (MHA) which is made up of two programs – the Home Affordable Refinance Program (HARP) and Home Affordable Modification Program (HAMP).  HARP focuses on homeowners that are in-good-standing on their home loans but the mortgages are valued higher than the actual value of the home.  HAMP focuses on those that can no-longer afford their mortgages and keeping them out of foreclosure.

HARP reconfigures the loans into stable, affordable loans and has performed almost 96,000 mortgage reconfigurations or refinances.  It is difficult to prove a negative, just as with the “jobs saved or created” angle the administration takes on the stimulus plan.  Here we have another.  Did we actually prevent any foreclosures or just guarantee a more-favorable loan for people that bought too much house?  The report does not even try to compute how many homes loans were saved or prevented from being bad.  Probably because it can’t be done.

HAMP subsidizes the mortgage payments of soon-to-be-foreclosed debtors with taxpayer dollars.  This mortgage modification program reconfigured 1,711 mortgages and put another 362,348 other borrowers into a 3-month trial program.  The U.S. Treasury expects that it will spend almost $43 billion of the $50 billion TARP funds for mortgage modification.  This amount would support about two-and-a-half million loan modifications.  Unfortunately, current estimates are for closer to 12 million foreclosures will occur which means that, “the remaining losses will be massive”.

The report stresses three main reason why these favored programs of the Obama administration may not succeed.  Size, Scope and permanence.

First, the scope of the program will limit it from helping the most-at-risk mortgages.  The eligibility requirements will not allow adjustable rate mortgages or interest-only loans to be subsidized by taxpayer money.  HAMP is also not designed to help with non-payment of mortgages due to unemployment – the main reason for many home-losses in these economic times.  The whole program is built around fixing subprime mortgages, and even the report states that it’s so “six-month-ago”.  Nothing in this bill deals with the actual mortgage crisis that Americans are dealing with.

After scope, the report explains how the size of the program is also insufficient.  Foreclosure starts are coming twice as fast as HAMP modifications and many homeowners that would qualify for the program are losing their houses while waiting for the program to catch up.  This is similar to the cash-for-clunkers issue of too many promises for too little capability.  The car dealers could decide to stop accepting deals under that program to avoid cash-flow disasters.  These homeowner’s only choice is to lose their homes.  Even once the program catches up, it will only be able to service 50% of the Treasuries own estimate for home foreclosures.

Lastly, the Congressional Oversight Panel’s report addresses permanence.  Will these modifications actually result in the prevention of a home loss?  Only a small portion of the modifications done under HAMP have resulted in permanent stable mortgages.  The panel suggests that after massive infusions of taxpayer capital, these loans default anyway.  The report states that real results of these programs will be, “that foreclosure is delayed, not avoided”.

There is some discussion of negative-equity.  If the housing market continues depressing or deflating, more people may consider walking away from their mortgages as there would be no inherent value in the home.  These wealth-lost scenarios could increase foreclosures well-beyond even the pessimistic estimates of the U.S. Treasury.  If this is added into what the report calls “payment reset shock”, due to high loan-to-value adjustable loans, it’s obvious the government has no-chance at making any real dent in the real-estate crisis.

What the report doesn’t consider is the massive de-leveraging that is occurring in the American economy.  In the Conservative Daily News article entitled, “Going Galt Without Realizing“, it is apparent that between the government’s willingness to create money for these mortgage-subsidization programs and American’s lack of willingness to continue borrowing to consume, our fractional reserve systems could add another last straw.  Bank reserves will dwindle as fewer and fewer Americans borrow for homes and autos either because they can’t (due to recent foreclosure or a barely-affordable mortgage) or because this crisis has caused a change-in-behavior towards reduced indebtedness.

Whether we look back at cash-for-clunkers or at this initiative, it becomes obvious that the administration is unable to judge the size, scope, permanence or effectiveness of the programs it supports.

Economic Situation Update

Last updated 10/15/09

Welcome to CDN’s economic situation update.  We constantly add information to this article as the economic situation changes.

Newest updates:

In this post you will find:

  • Opinion Polling Results
  • Information from the Bureau of Labor Statistics (employment/unemployment/jobs data)
  • Links to relevant articles on the economy
  • Actions our government is taking that will impact the economy
  • What’s happening in the global economic theater

Opinion Polling Results


Gallup:

  • Job creation index flat from September (10-11-09)
  • Consumer spending down 30% from year-ago levels and down roughly 5% from last month (10-11-09)
  • Consumer confidence flat (10-11-09)

Rasmussen Reports:

  • 49% believe the economy will be stronger in five years, down from 58% in July and 64% in March (10-09-09)
  • 72% tax hikes for incomes under $250,000 (10-11-09)
  • Consumer confidence falls for 6th day in-a-row
  • 62% oppose another stimulus
  • 36% believe Obama’s plan has helped economy
  • 53% oppose more regulation of corporations

Government Stats


  • Consumer Price Index up seasonally-adjusted .2 percent for September
  • Real average hourly earnings fell .1% from August to September
  • Prices increase by .6% for non-fuel imports on dollar’s weakness
  • FDIC fund balance now negative reserving for expected losses in next 12 months
  • 8% of all residential mortgages now seriously delinquent – commercial mortgages starting to show trouble
  • More than 70% of U.S. GDP is from personal spending
  • $12 trillion in personal net worth destroyed in last 7 months
  • Unemployment increases to 9.8% in October
  • Current employment numbers show that no new jobs are being created (over 263,000 jobs disappeared in last month)
  • Real earnings to be released on October 15th (key to gauging deflation vs. inflation)

Links on the Economy



Recent Actions on the Economy


  • Congress considering second stimulus
  • Bernanke likely to win second four year term as head of Federal Reserve
  • Trade deficit narrows on weak demand for imported oil and weak sinking dollar

Global Economic News


  • Canada and Australia add jobs as U.S. continues to lose them – stunning echos from 1930
  • Dollar being attacked by mid-east and Russia…
  • Central Asian banks buy up greenbacks to support the free-falling dollar – a week dollar means no one to sell to

Congressional Update

Last updated: 11/7/09

I tend to read through a lot of proposed legislation and often find nuggets that don’t necessarily merit their own articles, but would more-than-likely interest my readers. I’ll be updating this post on a regular basis as I catch legislation that might be of interest.


Most Recent Update


  • S.2750 Bill that gives Secretary of HHS the authority to make grants to States to reduce the ratio of school nurses to students
  • S.2748 Bill that extends by one year employer wage credit for those that have employees that are active duty military

Contents:

  • Public polling on Congress
  • Legislation of interest
  • Congressional News

Public Opinion Polls


Rasmussen reports:

Gallup:

  • 64% say health care reform will affect their vote in 2010
  • Democrats hold 2 point lead in Gallup generic ballot 46-44%
  • Congressional Job Approval down to 21%
  • Roughly a third of Americans believe that either Republicans or Democrats have bothered to work in a bi-partisan manner
  • Only 45% of Americans trust Congress – a record low

Legislation of Interest


  • S.2750 Bill that gives Secretary of HHS the authority to make grants to States to reduce the ratio of school nurses to students
  • S.2748 Bill that extends by one year employer wage credit for those that have employees that are active duty military
  • H.R.3221 Eliminates federal subsidies to private student loan programs – significant limitation for middle-class families seeking higher-education
  • H.R.3922 Ensures that U.S. companies are not conducting business in Iran
  • H.Res.842 – Expresses the sense of the House of Representatives that the MacDowell Colony in Peterborough, New Hampshire should be recognized for its contribution to the arts around the world and heritage of the United States.
  • H.R.3548 – Unemployment Compensation Extension Act: Adds an additional 13 weeks of unemployment benefits on top of the last extension
  • S.1792 – Amends tax code to allow energy efficient windows/doors to qualify for tax credits.
  • H.R.1283 – Military Readiness Enhancement Act: Repeals “Don’t Ask Don’t Tell” and makes the act retro-active (anyone discharged on the basis of the policy can be re-instated)
  • H.R.1283 – Military Readiness Enhancement Act: Repeals “Don’t Ask Don’t Tell” and makes the act retro-active (anyone discharged on the basis of the policy can be re-instated)
  • S.J. Res.20: Joint resolution that would force Congress to spend no more than the “certain revenue” in the current year and no more than 20% of GDP of the previous year. That is spending, not deficit. During the years of 200-2008 the spending range was between 18.4% and 19.8% of G.D.P. This seems to be a realistic and beneficial target.
  • S.Res.309: Resolution recognizing and celebrating the 145th anniversary of Nevada’s entry into the United States. Sponsored by…. yeah Harry Reid. Doesn’t the Senate have better things to do with our tax-payer funded salaries than push garbage like this through while we are at war, in economic turmoil, without jobs… I could go on… and I will
  • S.Res.307: Requires that all matters before Congress be fully scored by the Congressional Business Office for at least 72 hours before consideration by subcomittee
  • S.J.Res.7: Joint resolution that proposes an amendment to the Constitution to make it a requirement that Senators be elected by the populations of their states, even for the purpose of replacing an unexpected vacancy. This is in response to Ted Kennedy’s death and the maneuvering in the Massachusetts legislature. Teddy changed the law in the Democrat’s favor years ago and now wants it back to allowing the Governor to appoint. Senator Feingold is sponsoring good legislation here.
  • S.1692: USA Patriot Act Extension. This seeks to extend the Patriot act…. wait.. weren’t the Democrats opposed to everything in the PA
  • H.R.187: National Right-to-Carry – fairly-muddy cross-state allowance for concealed carry. Still enforces state’s rights, which is the correct move – no matter how much of a 2nf amendment supporter you may be
  • H.R.3458 – Unemployment Compensation Extension – Extends compensation by 13 weeks in states that have jobless rates above 8.5%
  • H.R.264 – Doubles the number of visas to almost 1 Million, by offering legalization to aliens who have been in the U.S. for five years or are children. Haitians are given special consideration – immediate access to lawful permanent resident status. Some enhancements for border control.
  • S.729: DREAM act: Gives states the power to allow illegal aliens access to higher education benefits (in-state tuition, grants, loans, etc)
  • H.R.3200: House Democrat’s health care bill
  • H.R.3400: House Republican’s health care bill
  • H.R.2454: American Clean Energy and Security Act of 2009: Cap and Trade pollution controls. This bill is also known as the Waxman-Markey bill and seeks to limit CO2 emission by making it more expensive to generate electricity. A lot more expensive.

Congress in the News and on the Web


Obama Administration Only Ones Left Not Watching Fox News

Conservative Mix of Ideology on Fox News

The title is a bit of hyperbole, but it makes the point. The Obama administration has gone on the offensive claiming that Fox News is, “the research arm of the Republican party”. This is out of sheer ignorance and a total misjudgment of who actually watches Fox News.

A recent Pew Research poll actually finds that Fox News has done a significantly better job at finding the middle than the other cable news outlets. In 2004, Pew showed a significant conservative bias to Fox’s viewership. Over the last 6 years the numbers have shown Fox’s push for “Fair and Balanced” has attracted liberals and independents as well as conservatives. The recent poll shows the shows that Fox News has attained a more balanced audience than the Obama administration’s chosen favorite CNN.

While Obama may believe that purposefully avoiding Fox News and having his media staff openly criticize the cable news outlet, the astronomical support for Fox News continues to climb.  Fox viewers are more numerous than CNN and MSNBC combined and Fox handily outpaces both of its competitors in every single time slot.  Bill O’Reilly’s interview of Obama during the campaign was easily the most-informative and was surely the most balanced.  Avoiding the most-watched, and certainly the news programming with the most-balanced viewership is a strategy doomed to fail.

Going on Fox would give the administration the chance it needs to persuade those on-the-fence or leaning away from them.  Instead, the White House only wants to talk to those that agree with them.  Preaching to the choir is for campaigning and Mr. President, that’s one thing you actually did win.

Get Over Nobel Prize, Focus on Health Care or He’ll Win That Too

nobel prizeWhile I do try to focus on the facts, this is a rant. A plain and simple, jumping up-and-down, pounding and screaming rant. The Nobel prize? Really? Let him have it.  Move on.  Who gives a crap?  That trophy has been a joke for decades.  If you are weak, accomplish nothing, and endanger your own country… you will win a Nobel Peace prize and a million bucks (give or take $400k).

Health care reform is set to become law while we focus on Pelosi snubbing Reid’s reach-around on T.V.  Wake-up!!  We are being fed the usual tail-wagging the dog crap and we’re swallowing it wholesale.  The economy is in the crapper, we have quadrupled the deficit in a single year, the dollar is being supported more from foreign governments than our own and we think that somehow, the government can manage our health care.  Seriously, ignore the crap on television and grow an opinion.

I’ve started to realize that we’re all fighting an apparition.  It’s not about health care or taking care of the poor.  It’s about the most-serious affront to State and individual rights since the civil war.  The Government cannot force us to buy insurance if we do not choose.  The government cannot accomplish much of what they are pushing and stay within the confines of the Constitution.  That is where we should be concentrating.  This administration and Congress have no respect for the Constitution.

The left-wing is saying that conservatives are just fighting against reform regardless of what’s in it.  They are fashioning the anti-government-run health care crowd as lacking compassion, greedy, and mentally disturbed.  Liberals would have everyone believe that there is consensus for the President’s plan and that Republicans in Congress are out-of-touch, have no ideas on health care, and are the “party of no”.

There is actually consensus out there.  We all believe some things can be done to improve health care and that some things should be done.  Conservatives simply want to do it within the guidelines of the Constitution.  Why do we need sweeping changes to make a difference?  The Congressional Budget Office said we can reduce the deficit by $54 billion simply by instituting tort reform (reduce frivolous lawsuits).  Wait, we can save 54 billion health care dollars and it would cost us nothing?  Measure that against the $81 billion that the Democrat bill in the Senate will reduce the deficit by over the next ten years – it costs $892 billion.  Tort reform will require no new taxes, it’s a spending and deficit reduction.  The Senate bill is an almost $900 billion spending increase that only reduces the deficit because of the over $900 billion in new tax dollars that have to come from somewhere – us.

Secondly, we all agree that competition is needed in health care.  Many Americans won’t tolerate true market reform in health care.  That would require exposing the consumer to the total cost of their care so that cost and quality influenced their decisions.  The $20 co-pay insulates us all from the actual cost of the office visit.  Every doctor costs the same as far as the consumer is concerned.  How do you control costs without competition?  You can’t and the government knows that.  So what can we do?  We use insurance companies to create downward pressure on provider’s (doctors and hospitals) fees.  This forces them to do whatever they can to control costs.  Because current regulations are state-by-state, competition between insurance companies is limited.  Allowing insurance companies to compete between states is something we can all get behind, costs nothing, and could lower premiums.

Everyone would like to see insurance become more portable.  The fact that our health care is tied to our employment is not because the “evil” insurance companies want it to be so.  The Federal government only gives tax incentives for health care plans purchased through employer groups.  This is a gift to the unions and makes employer-provided health insurance much cheaper than individually-purchased plans.  One of two things should happen.  Either we drop the tax-incentive for employers to provide health insurance or extend those same tax benefits to individuals.  I would push for giving tax breaks to individuals which would enable them to buy whatever insurance they want, keep it even if they lose their jobs (and the tax benefit), and keeps premiums affordable with the tax-break.

Lastly, we should all be able to come-to-agreement on the fact that everyone should have access to health insurance.  That is different that requiring everyone to have it.  It is actually illegal for the government to require that we purchase health care insurance.  Many would point at auto insurance as if to show that there is precedent for this kind of mandate.  The government does not require that we purchase auto insurance.  We can choose to not drive.  Where is the choice in the government-mandated health insurance?  That being said, we should make health care available to everyone including those with pre-existing conditions.  If you’re already sick let’s use high-risk plans that pool together those with similar needs.  Insurance plans should also not be able to drop your coverage if you get sick.  What we have to realize is that by accepting that these things should be done, our costs will go up.  It simply costs more to keep high-cost patients insured.

Health care reform is coming.  We need to shape it or we’ll end-up with something costs more than our economy can support, doesn’t improve anything, and will put conditions in-place that will cause you to change from the insurance that you already have and like.  So don’t get upset because the Nobel panel thinks Obama is cool.  Don’t get guilted into supporting the unconstitutional, costly, ineffective reforms the Democrats are ramming down our throats.  Tax-and-spend does not work (it’s bankrupting California at this very moment).  Support tort reform, tax-breaks for individually-owned insurance plans, and increasing competition – the things that make sense.

Call your Senators and Representatives – right now.

www.senate.gov

www.house.gov

Foreign Impact on Dollar: A Love-Hate Relationship

In the past few weeks several news stories purporting foreign actions against and for the dollar.  Which is it?

There have been stories that say that China and Russia have been looking to remove the dollar as the predominate reserve currency for the world.  They had to know that such uncertainty would cause mass-selling of the greenback.  Then on Thursday we see that central Asian banks (and Russia) are buying up Dollars in huge quantities.  Of course that will buoy the dollar in these troubling times, but why badmouth the U.S. currency, then prop it up?

They have economies too.  If the dollar gets too weak while it is still the currency for purchasing oil and other commodities, it starts to cost much more to purchase those things.  Many Asian countries are also mass-exporters so a weak dollar means that the largest consumer nation in the world cannot afford their products.  In order to keep their own currencies from getting too strong, they divest in their nations money and put it into the dollar.

In the last week, it has been reported that Russia bought as much as $4 billion U.S. dollars in effort to pull the dollar of it’s lowest point in over a year.  Why would someone so interested in seeing the Dollar replaced by another global currency by floating it?  Timing is everything.

Russia, China, and the middle-eastern OPEC nations would love nothing more than to see the U.S. currency replaced as the global standard.  That doesn’t happen overnight and if they aren’t careful, their economies will be crushed during this coup-de-currency.  They are using backroom maneuvers to position the IMF’s (international monetary fund) global currency, the SDR as the world’s new reserve currency and the OPEC is considering using the SDR for oil purchases.  There is no way to do that quietly so the world has to prop up the failing dollar while the change takes place.  Make no mistake, the change will happen.

The real risk is what happens when the double-dip recession takes hold.  All of these nations are dumping billions into the American dollar and if it continues downward, those other countries lose significant wealth.  There will not only be no American economy to buy their goods, as their currencies strengthen, no one will be able to afford their goods.

It is obvious that a serious push to support the U.S. currency is occurring.  If the dollar continues downward, the second portion of our double-dip recession could be  blood-bath.

Deficit Neutral is Good?

So Obama won’t sign any bill that isn’t “deficit-nuetral”. Max Baucus leads the charge to create a health care bill that fits that description. Unfortunately, that is not the same as fiscally-responsible.

Deficit neutral simply means that Congress has decided to tax us enough to pay for whatever program is in the bill. Normally, we enact new spending programs separate from revenue programs to avoid parliamentary complexities. By combining the two, Congress has found the secret sauce to get by conservatives – deficit-neutrality. Are we stupid? Apparently.

The CBO says that the Baucus bill would reduce the deficit by $81 Billion. Wow! It’s billions in new taxes and we are cheering. If we didn’t enact the bill at all, we could achieve $81 billion in savings and we wouldn’t have to pay billions in taxes to get it. But we don’t get it. According to Beltway Blips, the GOP are giving in and looking for concessions. Time to start writing, emailing, and calling again to remind them that GOP does NOT equal conservative.  We certainly learned that during the Bush years, and maybe they haven’t figured it out yet.

Tax and spend is not new.  It is the foundation of the liberal party.  Spend whatever, but tax to cover.  That is a deficit-neutral strategy.  I don’t want deficit neutral, I want spending-neutral.  If they can give everyone health care and no business, entity or person pays increased taxes to cover it, well, then I might have to go for it.  We all know that’s not possible.

Obama’s promise of deficit-neutrality is nothing more than promising to tax you to cover for every dime of spending he intends to enact.  If he wants to make a promise that we can all live with, make taxes fair, decrease what we pay, and balance the budget.  He won’t, because no new programs can be implemented in a spending-neutral scheme and if he can’t give the people things, they won’t vote for him.