T

ucked away in the pages of Porkasaurus are provisions requiring that workers on projects receiving federal stimulus funding be paid the prevailing wage – which in a curious bit of wordsmithing, given that “prevailing” means most frequent or most common, is typically higher than the average wage in any given area.

For example, the Labor Dept. says that bricklayers in Madison WI would get $30.61 per hour under the prevailing wage, nearly $5 an hour more than the average wage for bricklayers in the area.  That’s fine for a president who’s trying to suck up to unionized labor by gifting them while vilifying professional success, but to you and me, it just means stimulus dollars will not go as far, so fewer benefits will accrue to those of us not on the job site.

Put another way, taxpayers are funding Obama’s campaigning.

More details here.

1 Comment »

J

ust around the corner, on May 19, a raft of legislature-passed initiatives will go the a vote here in California. “Raft” is the perfect word: Our spending-addicted state government is clinging on to these proposals as a last hope keeping them from sinking beneath the stormy waters of the Sea of Insolvency.

It looks like California voters would rather send a message than save the state. A new statewide survey by the state’s leading nonpartisan polling outfit, the Public Policy Institute of California, the five initiatives that would rejigger state finances, robbing from Peter to pay Paul instead of making fundamental fixes, has majority support.  I expect support to wane further as the public’s understanding of the measures and frustration with governmental ineptitude increase.

Also figuring into my forecast is the overwhelming 81 percent support for the sixth proposition, 1F, which would limit salary increases for state elected officials when the state faces a budget deficit. We Californians are definitely thinking about meting out some punishment.  PPIC’s prez agrees:

“Californians are clear that the budget situation is serious, but most disapprove of the leadership in Sacramento—the people who are providing the solutions,” says Mark Baldassare, PPIC president, CEO, and survey director. “These leaders have their work cut out for them if they want to persuade voters that the ballot measures are necessary to address the problem.”

And in a note to RINOs everywhere, our barely Republican governor has become the poster boy for proving that being a political phony pleases no one.   His disapproval rate among registered voters is now 57 percent, with no one liking him much at all:  60 percent of Dems disapprove, 53 percent of GOP, 57 percent of indys.

Disapproval of the legislature, which brought us this mess by being a liberal Democrat rats nest, is far worse, with 81 percent of likely voters disapproving of them – a sign that a taxpayer revolt is roiling like magma under a thin crust.  If California voters do revolt on May 19, fiscal chaol will ensue, leading to a massive legislative turnover in subsequent elections.

I think voters in other states will watch the debacle and say, “Looks good to me – as goes California goes us!”

No Comments yet »

P

eter Ferrara doesn’t exactly hold back on his Fox op/ed on Obama’s budget; he titled it simply, Obama’s Budget: It’s Absolutely Insane! It’s worth reading and emailing to your friends (particularly your liberal ones), but for your convenience, I’ve excerpted some of the gee-whizzers for your use. Just clip out this post and carry it with you.

The budget Obama proposes for this year increases federal spending by 34% over the budget adopted for last year, with a total of $4 trillion in federal spending, the highest EVER.

Under the Obama budget, the national debt will more than double over the next 10 years from 40% of GDP today to 82%! Ronald Reagan left office with the national debt at 42% of GDP. (Congressional Budget Office stats)

If the economy does not recover permanently next year, Obama’s national debt could even top the historic World War II record of 114% of GDP. (Are we fighting Nazis here?)

The deficit would reach a $1.845 trillion this year, according to the CBO. That’s more than four times greater than Reagan’s largest deficit – and you know how much Libs and Dems howled about that!

Obama’s budget deficit will total 13.1% of GDP, more than one-eighth of the entire U.S. economy! That is the largest in U.S. history except for World War II and more than twice Reagan’s highest deficit as a percent of GDP. (CBO stats)

There is not one item in Obama’s budget that promotes saving and investment. Quite to the contrary, the capital gains and dividend tax rate increases he proposes for the top income tax brackets will reduce saving and investment.

And the GOP budget alternative? Remember how Obama lambasted the GOP for not having an alternative? Of course he knew, even as he lambasted, that the GOP alternative is coming next week from Rep. Paul Ryan (R-Wis.), the ranking Republican on the House Budget Committee.

3 Comments »

S

orry for the repetitious Geithner flag pictures, but I just can’t get over how flag-crazy the Obama admin has become since he was criticized for not wearing a flag lapel pin.  Anyway, flags or no flags, the market might be up, but the prognosticators are down, including me.

It’s obvious the latest offering is more of the same:  an offer of federal cover for downside risk in return for letting the federal fox in the financial hen house.  There is no free market at work here, since individuals’ downside risk is guaranteed, so it’s just a costly postponement of the inevitable.  As for those with more financial pundit prowess than yers truly, a quick scan of headlines at Real Clear Markets reveals that cynicism and anger are overwhelming optimism over the newest rehash of Bush’s, now Obama’s, Wall Street bailout.

I already quoted Paul Krugman; here’s one more cut at his column:

And now Mr. Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing.

It’s as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street. And by the time Mr. Obama realizes that he needs to change course, his political capital may be gone.

Even the Keynesian Klugman is seeing the wisdom of an application of free market Draino to the financial sector.

At the New Republic, John Judis is pretty straightforward, calling his piece The Geithner Disaster:

As my colleague Noam Scheiber has suggested, Geithner’s plan could work if the bad loans and seamy securities that the banks hold are actually worth something–say, 60 percent rather than 30 percent of their original value. If not–and there are plenty of skeptics who question that–then Geithner’s plan will transfer more money from taxpayers to private investors and bankers without reviving the big banks. That will amplify the growing populist outcry against the Geithner and the Obama administration, and make it more difficult to do what is necessary to revive the economy.

Sorry, Sec. Geithner, but re-naming the toxic sludge of Wall Street mega-errors “legacy” funds will not increase their value to anywhere near 60 percent of their original value.

Here’s the obvious solution from RCM columnist Louis Woodhill. Too bad it’s got zero chance of going anywhere:

Unfortunately, the government is now trying to solve a problem created by printing too much money by printing even more money (plus tax increases, plus economic-superstition-based “stimulus” borrowing and spending). This will not work.

What will work is the Constitution of the United States. On February 3, Congressman “Judge” Ted Poe (TX-02) introduced H.R. 835. This bill would require the Federal Reserve to “regulate” the value of our money by making the dollar equal in value to 0.002 ounces of gold. The Fed would do this by using its Open Market operations to establish and maintain a gold price of $500/oz. H.R. 835 would also give a powerful supply-side stimulus to the economy by providing “first year expensing” for all capital investment.

Once the integrity of the dollar (and the Constitution) is restored, the markets can begin to right themselves. Stabilizing the dollar is an essential ingredient in any recipe for economic recovery.

Finally, over to the WSJ’s story on the market’s positive response to Geithner’s announcement, where I found this cynical reader comment:

Now remind me, wasn’t this what we were told they needed the first Trillion in TARP money for? Oh, wait, we used that to pay bonuses and allow banks to make foreign loans. Why does anyone on wall street think they will actually use another Trillion for the purpose the initial Trillion was to be used for?

1 Comment »

T

im Geithner is holding his breath. Will his announced new financial plan result in a repeat of his last debacle, when Wall Street roller-coastered downward after he ineptly punted on his plans? Early signs – the Dow opening up nearly three percent, Tokyo, Hong Kong, U.S. market futures up – indicate no, he won’t single-handedly destroy billions in wealth today.

But is it a good plan? The test of any plan is simple enough:  Will people accept it and get on board, or in this case, will financial institutions bundle toxic assets – now called “legacy” assets in a ridiculous bit of sophomoric word play – and sell them through a federal program?  Here, Geithner has real problems. The AIG bonus bruhaha, complete with radical zealots on bus tours by AIG exec’s homes, has made a lot of financial institutions wary of taking public funds – and the new plan has disincentives in spades. It’s not in Geithner’s op/ed, but Bloomberg reports:

Geithner will also announce plans later this week to ask Congress to give the Treasury and the Fed authority to step in and more easily tackle problems at systemically important financial institutions that are in danger of failing. Such powers would give the government the ability to limit payments to creditors, break contracts on executive compensation commitments and provide guarantees on particular categories of debt for companies that need bailing out.

It’s not clear whether these heavy-handed new powers will be wielded on all financial institutions (gasp!) or only on those who cozy up to the feds on the new plan (suckers!), but it’s evident that Obamarx and Geithner see statism as the solution to the economic problem – we give you guarantees, you give us power. I don’t think  Wall Street is about to go cowardly into the night, giving up authority and decision-making to the folks who run Amtrak, the post office and social security.

Paul Krugman doesn’t see it that way. Of course, he sees too much Bush in the plan:

Over the weekend The Times and other newspapers reported leaked details about the Obama administration’s bank rescue plan, which is to be officially released this week. If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.

This is more than disappointing. In fact, it fills me with a sense of despair.

That’s hardly the lead Geithner was hoping for.  Krugman says the new plan is just rehash number three of the first Obama/Geithner plan, with more bells and whistles, as if they were obsessed with one idea and unable to move on to another.  He can’t quite get his fingers to type the words “free market,” but his advice to Obama:  Don’t subsidize the assets as this plan does; let the market price them, get them off the books no matter the cost, and move on.

That’s far too foreign to Obama’s belief system, so he’s let his Treasury Sec move a plan forward that is a high risk one for the admin.  If it doesn’t work out, Obama will have wasted time the economy doesn’t have to lose.

2 Comments »

W

all Street was down today but eked out its first positive week in quite some time – but don’t look for a continuation Monday as, first, the Congressional Budget Office said today Obamarx’s budget will produce losses $2.3 TRILLION worse than the White House predicts ($9.3 trillion worth from 2010-2019) and second, that the Obamarxists say damn the torpedoed economy, they’re not going to cut a single program.

Included in the programs they’re not about to cut is their greenhouse gas cap and trade program, which received endorsement of a Discovery Channel feature on alternative energy Incredible Wife and I watched this week.  With every single new technology they showed, someone looked earnestly into the camera and said:

“We need carbon emission cap and trade for this to work.  Without that financial incentive, this technology is just an overpriced waste of time and money.”

Or something to that effect.  Translation:  Unless the fuels you use get crazy expensive, you’d never be crazy enough to use the fuels the Greenies want you to use.  The price tag of this little incentive program for clean energy?

President Obama’s climate plan could cost industry close to $2 trillion, nearly three times the White House’s initial estimate of the so-called “cap-and-trade” legislation, according to Senate staffers who were briefed by the White House.

A top economic aide to Mr. Obama told a group of Senate staffers last month that the president’s climate-change plan would surely raise more than the $646 billion over eight years the White House had estimated publicly, according to multiple a number of staffers who attended the briefing Feb. 26.

“We all looked at each other like, ‘Wow, that’s a big number,’” said a top Republican staffer who attended the meeting along with between 50 and 60 other Democratic and Republican congressional aides. (WashTimes)

How reassuring do you find it that they had no clue what the program was going to cost?  But so what? Who cares? Obamarx says larger deficits and larger than expected costs for his programs mean nothing to him.

“What we will not cut are investments that will lead to real growth and prosperity over the long term. That’s why our budget … enhances America’s competitiveness by reducing our dependence on foreign oil and building a clean energy economy.”

Enhances competitiveness by making everything we make, everything we grow, more expensive?  Please explain – without a teleprompter – how that works.

But no matter. Whether we want to do it or not, we have to do it to save the fragile planet, which without alternative energy and an end to greenhouse gas over-emitting, will soon be awash in seawater from rising oceans.  Riiiiight …

How many times have you seen the word “collapse” used lately to describe what could unfold should human-caused global warming, and more particularly warming seas, erode the West Antarctic Ice Sheet? (One metric: A Google search for “West Antarctic Ice Sheet” and “collapse” gets 29,800 hits.)

The word is used again in the headline on one of two new papers in the journal Nature focusing on past comings and goings of that huge expanse of ice. But this paper, by David Pollard at Penn State and Robert M. DeConto of the University of Massachusetts at Amherst, provides an estimated time frame for the loss of ice that its authors say should be of some comfort. (If the sheet melted entirely, sea levels worldwide would rise more than 15 feet.)

Dr. Pollard and Dr. DeConto ran a five-million-year computer simulation of the ice sheet’s comings and goings, using data on past actual climate and ocean conditions gleaned from seabed samples (the subject of the other paper) to validate the resulting patterns.

The bottom line? In this simulation, the ice sheet does collapse when waters beneath fringing ice shelves warm 7 to 9 degrees Fahrenheit or so, but the process — at its fastest — takes thousands of years. Over all, the pace of sea-level rise from the resulting ice loss doesn’t go beyond about 1.5 feet per century, Dr. Pollard said …. (NYT)

That’s less than a quarter inch a year – the same amount the ocean’s been rising for the last 100,000 20,000 years or so [corrected], more than 19,800 years before human involvement (what a joke!) in our climate.  And in case you missed that attribution, folks, it says NYT, as in the New York Times – hardly a bastion of anti-Warmie journalism.

Yet Obamarx marches on with his scheme of cap and trade, despite the damage it will do to an economy that is far more stretched and fragile than he admits, despite the fact that there is no immediate threat from global warming. There’s a word for that. Demagoguery.

We may have a horrible government, but we’ve got a beautiful language.

Hat-tip: Jim. Art: Minnesotans for Global Warming

5 Comments »

T

hings are coming together rather nicely in the AIG saga, as if a divine novelist was just on the verge of pulling together the plot threads laid down over the last several chapters.  First, there’s the well-deserved comeuppance for the villain, who had stolen billions from taxpayers and was sitting pretty – if precariously – just a few chapters back:

A tidal wave of public outrage over bonus payments swamped American International Group yesterday. Hired guards stood watch outside the suburban Connecticut offices of AIG Financial Products, the division whose exotic derivatives brought the insurance giant to the brink of collapse last year. Inside, death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn’t show up at all. (WaPo)

And then, there’s the stage-setting for the next big confrontation:

WASHINGTON – The chairman and CEO of American International Group is calling some of the company’s compensation payments “distasteful” and says the firm made financial mistakes on a scale few could have imagined.

In prepared testimony to a House Financial Services panel, Edward Liddy said the company grew into an internal hedge fund that became overexposed to market risks. AIG is the largest recipient of federal government emergency assistance. It has received $170 billion in bailout help and the government holds a nearly 80 percent stake in the company. …

Now, Liddy will appear before a House Financial Services subcommittee just as lawmakers from both parties are casting his company as the symbol of excess and abuse of taxpayer dollars. (AP)

Those hearings are DC’s A-ticket event today, with lots of high-flying prose and contrived drama as the politicians who had a hand in creating this mess by mismanaging the bailout take turns flogging the man who, for better or worse, is the face of AIG.

But there needs to be more to give this story maximum oomph. Some big player needs to be drawn back in … that little hint back in the early pages needs to come back in full glory in order to throw some bloody red meat onto the storyline.  Let’s see … what have we got … oh, yeah!  This!

Senator Barack Obama received a $101,332 bonus from American International Group in the form of political contributions according to Opensecrets.org. The two biggest Congressional recipients of bonuses from the A.I.G. are – Senators Chris Dodd and Senator Barack Obama. (DC Examiner)

So those demonstrators, hate-emailers and other rebels up at the beginning of this chapter, well, they’re going to sieze on this information and we should have a pretty good cliff-hanger by the end of the chapter, eh?

No Comments yet »

Our Tuesday morning men’s group just wrapped up and while we all have a lot to be thankful for, it was all in all a pretty gloomy bunch of guys.  Every one was looking at business slowing down and had some level of worry about the short-term future.  But the group definitely wasn’t as gloomy as the president though, who as you recall regularly beats the fear drum with stuff like this:

“We are in the worst financial crisis since the Great Depression, and a lot of you I think are worried about your jobs, your pensions, your retirement accounts.” (Reuters)

But is he right?  Is it the worst financial crisis since the Great Depression?  In terms of job losses it is … but let’s not get too hysterical, shall we?

Pink equals the great depression, light blue is now … why Time stopped in December ’07 is a bit beyond me, but here’s how the writer, Justin Fox, summed it up:

Still, it’s clear that the employment downturn we’ve been dealing with, while probably the worst since the Great Depression, is much, much closer in severity to the recessions of the mid 1970s and early 1980s than to the utter disaster of the 1930s. That’s no guarantee that it won’t get worse, of course. But it is useful to know.

So, since we’re in a downturn like the 1970s or 1980s, why is Obama dealing with it like it’s the 1930s?  Because we need it – or because he needs it as a cover for his Big Deal plans for a more left-oriented America?

hat-tip: The Glittering Eye

3 Comments »

A

s a small business owner, I’m not too hot on the President’s plan for my peers and me.  He wants us to go in debt through easier SBA loans, but I’d rather have some tax relief.  The checks we have to write to the Feds for income tax and FICA withholding, and the massive penalties we must pay if we’re even a day late, cause cash flow problems when the economy is challenging. 

Even if SBA loans are easier to get, I’m not fool enough to borrow money to pay taxes – that’s a loser’s game.  And if I read the budget right, it’s only going to get worse because more tax increases are inevitable.

Obama’s plan, besides making small business loans easier to qualify for, also will rewrite regs to encourage the banks to bundle and resell SBA loans, opening up the Fed as a major bundled SBA loan purchaser.  Does this sound vaguely familiar to you?  It does to the General Accounting Office and other sane folks, according to the WSJ:

Government watchdogs fear the potential for another debacle, similar to what happened in the mortgage crisis, in which poorly documented loans were granted by mortgage brokers, then shuffled off to banks and hedge funds as securities.

By eliminating the upfront fees for banks and lenders while increasing guarantee levels, watchdogs say, the administration could be creating incentives for banks to rush credit out the door. The bank’s only risk would be the 10% of the loan left on its books, and that could be eliminated by selling the loan on the secondary market, where it could fetch a premium because of government backing.

“According to the GAO investigation, I think we have nothing more than a large, unregulated pot of money that lenders are going to scramble to get their hands on,” said one congressional investigator familiar with the report and the administration’s plan.

Businesses with expansion plans and with more inventory than mine would benefit from this program – but inventory and expansion are risky propositions in these times and require prudence on the part of lending officers, not madcap incentives.  Nothing here increases my faith in the Obama economic team, and the most obvious thing that would help small business is having an administration with an economic team one could have faith in.

1 Comment »

M

ind-blowing, eh?  That’s just one of ten such graphics posted at Mint.com, but the most chilling of all is the last one; after we learn that a trillion can fund NATO military budgets, buy up foreclosed homes, give us all 11 weeks of paid vacation, we find out this:

One trillion dollars is enough to pay for one-tenth of the spending in the current bailout.

And NanPo, Harry & O are cooking up another bailout!

No Comments yet »