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"Barack Obama is the smartest President"?

Have you heard it before? We have all heard how “dumb” George Bush is/was. I think it is about time to reveal that there is a big difference between book-smart and street-smart; Obama being the former and in no way the latter. The media being much of the former as well, has little to no respect for the latter. I guess, for the sake of honesty, I would be the reverse. I respect more what people have done and how the interact with people then I do what their grades were and where they went to school.

Obama can’t find the door.
1. Might have seen this one. Yes that is a window. Dear Sir, Please note that there are no hinges or a handle. I am sure you have seen this one (again and again). But note it has handles and hinges and is simply locked. Even when it is covered, Bush must be mentioned and bashed. Mr. Obama simply “hasn’t gotten acquainted” with his surroundings. That was not an excuse for Mr. Bush who was in CHINA. The Bush gaff was often labelled “Bush has no Exit Strategy”; including by the network news (see below). Is also became a top ten list on Letterman.

In the opening tease at 7:00am, co-host Charlie Gibson announced over video of Bush trying to open the locked doors: “No way out. President Bush tries the wrong door on his trip to Asia and has fun for the cameras. But the big question now: Does he have an exit strategy for Iraq?”

Not the same “oops, ha ha” coverage Obama got is it?

Gifts for our UK “friends”.
2. Anyone can make a silly honest mistake…but it take a special person to insult a respected ally. Have you heard about the gift exchange between President Obama and Gordon Brown (UK Prime Minister)? Probably not. This article covered it but missed one of the gifts given to our President; The framed commission from the ship that was used to make his desk. How thoughtful and personal. And from the US 25 pack of DVDs. I hope they were not Region 1 (US) encoded. I am sure their were personalized by making sure they were Region 2. Like school on the weekend… no class.

Obama the stock advisor.
3. The confidence his policies give the stock market has been pretty obvious. Maybe one of those books he reads should have include the definition of P/E Ratio (Price to Earnings). Of course, his definition may explain a lot of his policies. I am so glad we have someone so smart now running our economy. No sense in leaving it in the hands of those Bankers and Finance folks. By the way Price to Earnings only matters when there are Earnings! Otherwise, it is called speculation .. a practice that helped us all so much in the Internet boom.

More brilliance to come, I am sure.

Bad Bank.. What happened to it?

I continue to be amazed that the “Bad Bank” concept that was the impetus for the 700billion dollar bailout has yet to be used. I looked for Pros and Cons of this concept. The dominant con seems to be paying too much for the assets or “nationalization”. But what I found even less was a decent explanation as to the impact of getting these off the market. The conversation linked above is stunningly devoid of detail and value.

Let me explain it as I understand it (this comes from a conversation with a high level banker). This may help you translate the talking heads. The impact on the economy is elevated in the negative and the positive because of a combination of existing laws.

The first is the debt to asset ratio of a “bank”. I have heard that this ratio is 10:1. In other words, if a bank holds 10billion in assets they can lend as much as 100billion. The problem came into play that these Mortgaged Backed Securities were considered assets (which seems odd since they are a rollup of lending so I must be missing some element). So when these assets began to default, their overall value was reduced. Based on the “Mark to Market” laws passed with SarbanesOxley this loss of value must be accounted for on a companies balance sheet. I do not know that this is a bad idea, as some state. In the example I was given, a bank value lost because of these assets was 26billion dollars. This would mean that the bank had to reduce it outstanding debt by 260billion dollars. This number was more than there entire market capitalization. Therefore, they are bankrupt. But are they? Hence the argument against Mark to Market. The loans outside of these assets still have value and still may be repaid.

So there is argument against the practice but it exists. So the Bad Bank concept tries to reverse the problem. If the bad assets can be bought form the banks; even at a cheap price; the spiral starts to reverse. The assets that are purchased are removed from the bank’s books. The impact of removing that bad asset allows for a ten-fold multiplier in lending. But the impact spreads rapidly. With a new price set on the assets banks can rebalance their books. Some may now be able to hold the assets. With the death spiral stopped the assets may being to trade. If not the government can against but some assets off the market. Again setting a new price. Once these assets being to sell again on the market the government could sell the assets into a rising market at higher prices to offset the other bailout funding.

Well that’s what I think I know. And it made sense. So maybe that is why the government never did it. Instead they forced money onto the banks in exchanged for preferred stock. This devalued the shareholders and left the assets on the books. What I found interesting in the video above was the reasoning for the change in policy… World opinion. Europe was injecting money into banks for equity. It was decided that all of the major countries should follow a similar policy. Two problems. It sounds like an all eggs one basket solution. Additionally, we are listening to European Socialists on how to solve a banking issue caused by accounting practices in the U.S.

I am still hoping that government can follow a basic premise and buy low and sell high.

Well played, Mr. Obama

Many is the media are “confused” by the seeming contradictions in the ever expanding spending coming from Washington and the statements about the desire to “balance the budget”. Since most of them are devoid of 5th grade math skills they can’t make the connections that most of the rest of us can make…”this just does not balance out”. But I believe that it does balance out and very quickly. I believe the President is honest is his desires to get the budget deficit cut in half by the end of his first term and that this is in no way a conflict with the current spending or his budget.

The goal is not to try and pay for this or to worry about revenue at this point. The goal is to establish government dependence and control. I believe that President Obama is playing this perfectly. He is spending out of control because the public is demanding that they “do something”. True, this spending will have little impact on stimulating the economy. It will however create entire agencies and government dependence among those that will now survive based on the bailouts. Many believe that this is overplaying their hand. I think not. This is their hand. What will happen to the public economy is obvious to almost everyone and the public outcry shows this as well. But many believe that he is misjudging the economy or the American people. I believe this is exactly the intent.

As these policies and the next budget are passed (there is little chance enough Democrats will change sides to stop it) massive spending will hit many sectors of the economy. Government funding will push out private equity. Dependence will be created. More bailouts, Healthcare takeovers, locking up the energy industry will all limit the economy and limit tax revenue. But Mr. Obama has stated he wants to balance the budget and soon. Unlike many that see this in opposition to his current spending and budget, I take him at his word. Revenues will not go up. Unemployment will not go down. But this increasing crisis is exactly what is needed for the next phase of the project.

That is the “need” to tax everyone at a very high level to balance the budget. Many look at the budget as written and say that this must occur anyway. They are correct and believe that it will therefore be stopped early on. But with a complicit media, no 5th grade math, and a struggling economy, it will pass. Once you lock out private investment, once agencies are established, once your industry, your health care and your energy are a service of the Federal Government; could you (would you) “deny” yourself those services as they are transitioned back to a free market? Not enough will, a new recession and risk will be avoided by the American voters; and under a tax load of greater than 50%; the control is established.

This level of control cannot be undertaking directly. You already see the concern building based on the individual policies today. But Obama has learned from the mistakes of socialized health care that gave us the Republican Revolution in 2000. You cannot get these changes passed in a good economy and in the light of day. He is ensuring that our dependence and need are sufficient so that we have little choice.

Well played Mr. Obama.

2,239.11

Obama has stated that he wants to undo much of the “era of Reagan” and he is on the way. He is tightening the noose on capitalism taken over more industries and adding restrictions and higher taxes to others. Those with means and money in the market are reacting.

It will not be long before the market reaches the levels it was at when Reagan left office. The close on January, 19th 1989; the last full day of the Reagan presidency; was 2,239.11. At this time and not before, do I believe Obama will be complete. He will then try to remake this country in his image.

Remember the number, buy the bumper stickers.

Is Obama a muppet or the puppet master?

Those that know me well, know that, during the election, I had the opinion that Obama was a muppet. May argued he was left wing, and that may be true. Other argues that he was more center-left. Though I believed that he was likely far more left then his words, what he said and what he believed was of little consequence in this election. Besides foreign affairs the President if mostly a figurehead. He has little to do with writing or enforcing law. In this case a figurehead for Nancy Pelosi and Harry Reid.

I hoped that I was wrong or even if I was right that he would have a mandate and the quest for power would allow him to manage congress. But like the old Star Trek episode, “Patterns Of Force” where they “instituted a theoretical form of Hitler’s National Socialism upon the lawless Ekosians because he believed that it is the most efficient system of government ever devised”, the government has taken over and supplanted the figurehead.

Obama talked about “fixing roads” and “helping the states” yet the stimulus bill is full of pork and pet projects that dwarf the valuable spending. Now we have a “funding bill” that is full over 4900+ earmarked projects. So I, I believed that I was right. That he had no power and no control over the Congressional leadership and that they he was a puppet to the puppet masters.

At least I thought I was right until Tuesday and Wednesday. He spoke the other night about restoring the upper tax brackets to those under Clinton. To cut spending in non-critical programs and cut the deficit in half in 4 years. Then the news about his plan began to release on Wednesday including 650+ Billion to begin universal healthcare. The numbers simply do not add up. Then the tax increases began to to leak; including limiting home interest deductions [that should help the housing market]. A total “estimated” budget of 3.7 trillion on tax payer funded income of 2 trillion. If the economy contracts a bit more and/or the price tag goes up (duh) then we are talking about government spending on a pace that is double revenues. This does not include the “one time” spending in the bailouts. So we are looking a deficits that would require tax revenues to double or triple in the coming years.

There is no amount of taxation on “the rich” that can cover that bill. Since over 40% of wage earners already pay zero income tax, this burden will be carried by the ever decreasing population of the employed “wealthy” [which will now be defined as anyone that makes over the median income]. The GDP of the US is estimated to be 13.75 Trillion dollars in 2008. So we are talking about taxation at 30% of all GDP (higher to cover the bailouts). To put that in perspective: taxation has never been over 20% of GDP. In fact it is well understood that tax revenue and GDP are tied tightly together at about 18.5%. [I have found reputable sources that have out tax burden at about 30% already. Based on 13.75 Trillion in GDP and 2.67 Trillion in revenue..my simple math gives me 19.4%] . So we will need to get from 2.67 Trillion to well over 4 trillion [note that none of this includes growth in already expanding government programs].

Now it is possible that we will not actually pay for this. Seems that “paying for things” is simply out of vogue right now. But either we will pay for it or our children and grandchildren will pay for it with interest.

Based in these simple facts, I have come to the unfortunate conclusion that the puppet is part of the game (that reminds me of a Twlight Zone episode). That he is using his popularity and oratory skills to say what we want to hear and then turn around and sell us out. So it looks like, some where right, he is a left wing liberal and intent on creating a socialist republic within the United States with an overall tax burden of 40+%. Either that, or his economists have failed 5th grade math and they are completely inept (since they don’t pay taxes maybe this is the lesser of two evils). 2010 is coming, I pray we will not be too late.

Still not buying the Gov. Jindal story.

I saw Governor Jindal on Meet the Press with David Gregory. Governor Jindal (of Louisiana) is being touted by many Republicans and the answer to Obama or even more crazy as the next Ronald Reagan. I do not buy it. He makes some good points about “strings attached” and long term spending impacts. But he is weak and not nearly emotionally invested in he responses, like Reagan and dare I say Obama. Listen to the interview and watch for these moments. Then think about what he could have said in reply.

He is willing to say the correct things in grand generalities (like Obama) but when asked point blank to defend tax cuts, he wavered and stammered. The facts recited were fundamentally false and Jindal did not know it! He was told that revenues dropped and median incomes did not rise. FALSE! Revenues climbed as did median incomes (in real dollars). It was even a softball. After laying out the invalid numbers he was asked “Do you think these numbers are wrong?”… Come On!

Second, he was asked if stimulus was bad. That Americans were saving and buying down bills, causing the economy to contract. We need the stimulus right? and… nothing!
Answer: Americans are among the most indebted peoples in the world. The government is drunk on deficit spending. The stock market is down 40%+ will no signs of recovery! Do you think people should be spending MORE?! People are smart, people know that in times of uncertainty you need to take a solid assessment of where the money is going and your long term debt. They actually expect their Representatives in Government to do the same. Maybe even read the bill they are signing…then something he actually did say… Throwing more debt and money at the problem only delays the problem… [but missed this]… and forces solving this problem to future generations. That is wholly UNAMERICAN and obfuscating the responsibility granted to us by our electorate!

I hear some of the right words but I do not see the energy and therefore do not believe in Jindal.

The sublety of bias… Senator Gregg edition

It is sometimes tough to recognize bias. Especially, when it is the terms of “exclusion”. Simply, leaving out information that might change your view on the situation. The recent situation of Senator Gregg’s removing himself from cabinet consideration is a key example.

The media is trying to spin the message as a “partisan Republican, unwilling to work with the ever-flexible and conciliatory Obama.” It fits well into their overall massage that Republicans are trying to kill the “bipartisan” stimulus bill. Which is funny since they were not part of writing it in the house or part of the negotiations on the rewrite. Only in the Senate, could this bill itself even be categorized as bipartisan.

But what did they leave out of almost all of their newscasts? The 2010 US census and the shift of power from the Commerce Department to the White House. This purely political move was one of the reasons (labelled “slight catalyzing reason” by Gregg) for his withdrawal. Yet, in the LA Times/AP story, ABC, NBC and CBS the soundbite was trimmed or skipped. But the CBS Evening News story from Chip Reid did find time to give us this, “a top Democratic source on Capitol Hill was more blunt, saying Gregg actively campaigned for the job, then’ erratically dropped out without warning.’ CNN picked it up (yeah CNN) and had this to say, “sources close to Senator Gregg say the bigger issue for him was the White House’s effort to take control of the census.”

You see the politicalization of the US census doesn’t fit the “Obama the bipartisan” or “Republicans are partisan” spin. If you mention that the shift of power by the President had an impact you could defeat your own argument and views on the subject. Of course, Gregg refusing to vote for the porkulus bill also had impact. I like Gregg’s words as they speak volumes, “Obviously the president requires a team that is fully supportive of all his initiatives.” That does not sound bipartisan. sounds like “my way or the highway”. What did the Obama team say about this, “very clear throughout the interviewing process” that Gregg could “support, embrace and move forward” with Obama’s agenda [Fox reports].

Truth is that they are all partisan. Obama is building on his left wing agenda and there is no room for a fiscal conservative. Gregg was elected because of his views by the people he represents and should not change those views to get a cabinet post or pass a bad bill. [I am happy my Senators and congressmen voted against this bill. They are performing their duty as I would expect.] Just cover the facts, put out the quotes and do not tell me what to think or hide valuable details.

Jobs and Industries Democrats are trying to kill

This is meant to become a running list of all of the industries specifically targeted for destruction by the Democrat party. Many of these are obvious but the goal it to look at the ripple effects of each of these decisions and understand the impact on the unemployment picture and the economy as a whole.

Target: Big Oil
Impact: Rig Workers, Parts Manufacturers, Local Service, Gas Prices (which impacts inflation)

Target: Tobacco Companies
Impact: Employees, Farmers, Tax Revenue (all those pet programs “for the kids” supported by this revenue)

Target: Banks
Impact: Employees, New York Restaurants, Las Vegas (and other conference cities), Event planners, wait staff, cooks

Target: Private Jets
Impact: Manufacturer, Small Airports, Pilots, Service Technicians, Oil Companies, Steel Manufacturing, Parts Suppliers

Hope that you do not know anyone in any of these industries or reliant on these industries. The economy is connected, pick and choose winners and losers and the ripples are long and wide. The end results is always the same, lower employment; usually in the service sectors that support these businesses and towns, lower tax revenue and more government control of free enterprise. Make no mistake. This is either the end goal or they are incompetent. I believe they know full well what they are doing and government control of private business is the end game.

Daschle Out, Tax Reform In?

I think that Republicans need to take the high ground here. I know very little about Tom Daschle but he seems to be well respected, especially in Healthcare. The best course of action here is simply to express regret for the impact on a experienced public servant.

Regret that the tax code as implemented and manipulated over the years is continuing to cause President Obama issues. I believe that Republicans can begin to ask the simple questions about simplifying the tax code. Not by creating more exceptions for rich folks who get favors (like Daschle) but more to a simple tax code.

I am a recent convert from a flat tax to the Fair Tax due to an issue that is center to this argument. That issue is compliance. How difficult is it to track a foreign organizations payments to a US citizen, as in the case of Geitner? Or a gift of services as in the case of Daschle? A flat tax would likely have the same issues of compliance as the current code where that payments were simply not made. Or in the case of gifts the flat tax may simply avoid counting that as income and allow wealthy gifting to become the norm. The Fair Tax (National Consumption Tax) would tax the spending done after the income. Any services purchased even gifted have an added tax which would have been paid by the service company in either case. Income foreign of domestic is not a concern as the money spent locally is taxed. This Fair Tax also gets federal income from the wealthy as they spend their wealth.

Now is the time to take the mantel forward.