Mortgages a Bellweather on Property Rights?

Businessweek recently ran an opening article on the recent foreclosure debacle. The center piece of the article was focused on how the mortgage industry has been unable to effectively upgrade title record systems out of paper and into a more modern system. This was one of the major contributors to the foreclosure debacle. Another point the author comments on is how the ability to enforce and rely on property rights is critical to successful, developed, capitalistic systems.

I think the author is completely right in arguing that the current mess in mortgage re-sale and packaging has weakened the sanctity of property rights. These things changed hands so often and were so poorly documented that in some cases no one can figure out who ultimately owns what and even if they can they don't have documents proving that ownership that are acceptable to the courts.

Our government has taken steps into the private system that have only served to cloud the issue of property rights. They have weakened our rights to own and benefit from the use of property in the form of regulation, taxation, and bailouts. While some of these actions can arguably be justified (more or less) by the extraordinary circumstances of the recent financial crisis - the question we need to be asking ourselves is have we undermined the very system that made our nation great?

Strong and clear property rights, along with the courts' respect for contracts, are probably the two single most important facets of our economy and legal system and they have allowed us to grow as we have. We shouldn't be messing with them unless we have very carefully thought through the consequences...which I don't believe we have done.

Economy Set To Grow in Q4?

Most economists are currently worried about deflation and are expecting tepid economic growth through the rest of this year and into next year. I just found this article, M2 Velocity Suggests A Stronger Q4 GDP, which uses the M2 measure of money supply to comment on Q4 2010 economic growth. Using this measure the author predicts somewhat higher economic growth than the current consensus among economists. The logic behind the argument is quite sound and it's an interesting approach to analyzing near-term growth forecasts. I think we are still more likely to see growth closer to the consensus, because I believe consumers and business will likely continue hoarding cash (increases in the demand for money) until after the elections end and we see what the new make up of Congress will mean for policy.

Mankiw on Taxes

Dr. Gregory Mankiw recently wrote an article that ran in the New York Times. In the article he describes how taxes impact the decisions of high-income earners regarding how much work to perform. It's a simple and quick explanation, but dead on.

Can Cutting Taxes Raise Tax Revenue?

Yes! - and if you want to know more click here. This is one of the better explanations for how cutting taxes can increase tax revenues, and lower deficits if we don't increase spending at the same time, I have seen in a while. If you are inclined to check up on it the economic principle at work here is the simple observation that people can think about logical consequences. The logic goes like this if I work very hard at running my own business and take some risks I might get rewarded with $1 million in personal income, but if I know that tax rates are increasing so I get to keep less of my $1 million then I don't have the incentive to invest the money needed to earn that million because I need to protect myself from higher taxes so I work less and put money into non-productive and non-taxable investments. The result is I earn less so the tax I pay declines in dollar terms even though the percentage is higher...multiply this effect across the economy at large (and corporations not just individuals do this too) and you get a decline in the economic activity supporting the tax base and the tax base shrinks, which means that despite higher tax rates - a higher percentage collected on a lower base still yields a lower tax revenue number!

Financial Reform and a Whole Lot More

Business Week recently ran an article about the financial reform bill that passed and it included a list of little known add-ons...

No Such Things as Secrets...

At least not if you are in the financial industry. The new financial reform bill that passed includes a new research office that is part of the Treasury. It is authorized to compel financial companies of all sorts to turn over data so it can look for "systemic risks." Data that was previously confidential such as counter-parties to credit default swaps and information on individual loans - such as interest rates. This is information that these companies place a high value on keeping confidential - in fact in come cases the value of a credit default swap may only exist if the purchaser is kept confidential.

The research office is required to keep confidential information protected, but it is also required to make it's data available for public use and is subject to the "Freedom of Information Act." One of the major bedrock principles of our economy is the ability of companies or individuals to create knowledge and information that gives them a competitive advantage and the ability to protect that information. This is an assault on the very basics of a knowledge based economic system.

Obama Calls for Infrastructure Spending

Obama is planning on calling for a multi-year effort to rebuild America's transportation infrastructure as part of series of proposals to breathe life into the economy. The administration plans for the spending, $50 billion initially, to be deficit neutral by closing tax loop-holes. It seems unlikely that spending money and then taking an equivalent amount from targeted industries will be net positive to the economy. I don't know where Obama learned math.

A Window into China's Currency Reserves

The make-up of China's foreign currency reserves has long been speculated at but recent information suggests they are overwhelmingly comprised of dollars.

Obama Takes on Mortgages

The Obama administration is going to take another wack at mortgage modification. Since the previous program had so many rules and restrictions it basically did nothing to aid the housing market or underwater home owners and was a waste of taxpayers' dollars. This time they are going after people that are not yet behind on payments, but are underwater. In order to entice banks to take the necessary hair cut the administration plans for the FHA to take ownership of the newly reduced mortgages.  This will shift the risk of default to the taxpayers! Hopefully the upcoming elections will change the tune out of Washington.

Jobless Rate Hits 9.6%

The August unemployment rate is up to 9.6% from 9.5% which has many people questioning the policies the Obama administration has put in place. The administration has pursued a policy of massive spending, coupled with small targeted tax breaks, and large new social programs and regulation as its general economic strategy.

This is exactly what the economy doesn't need! All the new social programs and regulation just stifle business by forcing business-owners to try to comprehend all the new costs and hurdles they have to deal with it.

Generally, spending has some stimulative effect, but the level of debt the US has incurred is dangerous to our future and so the stimulative effects of spending may be partly or entirely off-set by declines in private spending and investment caused by fear/uncertainty.

Tax reductions would probably help, but without cuts in spending they only worsen the debt problem of our government. Also - what our economy really needs is massive tax overhaul not just minor cuts/deductions.

Debt Clock

This is scary!

Immigration Policy Changes to Prevent Deportations

The Immigration and Customs Enforcement department issued new policies that aim to stop deportation hearings on any illegal with a legal US relative. The policy would not apply to illegals convicted of a crime or involving things like fraud. It will, however; likely prevent a significant number of the nearly 17,000 cases pending from resulting in a deportation. This is basically a pass that lets anyone that is related to a legal US resident enter the US illegally without fear of deportation. They basically get rewarded for violating our laws. If they have relatives here then let those relatives sponsor them to enter the nation legally.

Texas Economy Holds Up Well

The national economy seems to be slowing again. Fears of a double-dip recession are growing - but the economy in Texas seems to be holding up a little better. The question for Texas is how long can its economy hold up if the national economy continues to soften. So far Texas has been a relatively bright spot in the national economic picture, but for how much longer.

Economic Downturn Reduces Birth Rates?

The birth rate in the U.S. has been declining for sometime, but apparently is down a little sharper over the last year or so. Some think that economic conditions might be making people decide not to have children or to delay having them. There are many other factors that affect birth rate, but perhaps this deep recession we are in is having an unusually strong impact.

China and Others Stop Buying Treasuries

The Wall Street Journal recently reported that China and other central banks have all but stopped their purchases of treasuries. While this is likely not a long- or medium- term change because China is so intertwined with the U.S. that it would suffer great economic pain if it tried to cut itself off from treasuries. It is a reminder that our current level of borrowing is unsustainable and if other countries really lost faith in our creditworthiness we would be in dire trouble.

More Quotes...

Great leaders are almost always great simplifiers, who can cut through argument, debate and doubt, to offer a solution everybody can understand.
-Colin Powell

Management is doing things right; leadership is doing the right things.
-Peter Drucker

Everyone is a genius at least once a year. The real geniuses simply have their bright ideas closer together.
-Georg C. Lichtenberg

The Dismal Jobs Picture

Unemployment has been one of the major problems with the current economic malaise. The government projected that the unemployment rate would hit 8% if we didn't do stimulus - so we did stimulus and the unemployment rate peaked at ~10% and now has settled down around 9.5%. The breadth and depth of job losses are hard to comprehend, but a picture is worth a thousand words:

The chart below shows the depth and length of job losses (in percentages) over the last half century. You can see the original at: http://calculatedriskimages.blogspot.com/2010/08/employment-recessions-aligned-at-bottom.html.

That is one scary picture!

Don't worry it gets worse. Obama's economic policies should have been generating 292,000 new jobs a month beginning in Feb. 2010 in order for the nation to hit a 5% unemployment rate by 2015! We are not even close to this level of job growth...in fact almost all the recent job growth was temporary Census workers. It seems very unlikely that the unemployment rate is going down anytime soon.

U.S. May Sell F-15s to Saudi Arabia

The Obama administration is planning to sell $30 billion of arms over ten years to the Saudis including advanced F-15 fighters. I think the U.S. should think very carefully about who and how it sells arms to other nations. We trained the Taliban and equipped Iraq during the cold war when we would basically give money, training, and arms to anyone that didn't like the USSR. Now we are paying the price for those mistakes. The Saudis are relatively friendly to us now, but the whole region is unstable so maybe we should stop shipping weapons there.

Students Told Not to Sing at Lincoln Memorial

Apparently singing is forbidden if you are too close to the Lincoln memorial - even singing the national anthem. The explanation the park police give is that the memorial is to remain "content neutral." I struggle to figure out how any sort of speech, song, or conversation could really be truly content neutral?

Quote

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly; who errs and comes short again and again; because there is not effort without error and shortcomings; but who does actually strive to do the deed; who knows the great enthusiasm, the great devotion, who spends himself in a worthy cause, who at the best knows in the end the triumph of high achievement and who at the worst, if he fails, at least he fails while daring greatly. So that his place shall never be with those cold and timid souls who know neither victory nor defeat.
Theodore Roosevelt, "Man in the Arena" Speech given April 23, 1910
26th president of US (1858 - 1919)

Recovery Stalled?

Has the recovery stalled out? The changes in the jobs market may indicate it has...the unemployment rate has held steady at 9.5%, but mostly because of a quirk of how the government calculates the number. As people stop looking for jobs they drop out of the calculation. The private sector simply isn't generating enough jobs to sustain the recovery. Perhaps the reason for the slow jobs growth is the increased use of technology to replace workers.

Balance the Budget - DIY

Think you know what it takes to get the federal budget in line? Then give it a try and see how you do...I managed to get debt to GDP down to 60% by 2023 - a little later than the goal of hard-core fiscal conservatives. If you try it leave a comment with how you did so others can see.

Chevy Volt

The true costs of an American-made electric hybrid are insane. The car will apparently cost just over $80k per unit by the time you factor in subsidies and grants from the federal government. The government is spending more money it doesn't have to fund an electric car as a "green alternative" to gasoline.

Except here's the catch - since about 70% of our electricity is generated from coal which is dirtier than gasoline engines we're not actually helping the environment, but possibly making it worse. Not mention the fact that our nation's electric grid couldn't support a major shift to electric cars. You never hear anyone talk about that on the news!

AZ Immigration

A federal court granted an injunction blocking the enactment of several key provisions of the AZ immigration law that was recently passed. The same judge also denied a request by AZ to have their appeal hearing date moved up. The push from the left to kill this law has so far failed, but it has certainly delayed it's taking effect and removed some of the teeth from the bill. Unfortunately for the Democrats supporting the efforts to block the law it is extremely popular in AZ leading to protests following the ruling. It's also relatively popular with the general national public and this injunction may be just one more reason the Democrats will struggle in November. At least that is a positive.

The Deteriorating State of Mexico

Our neighbor to the south seems to slowly slipping into complete chaos. Mexico's security and law enforcement continue to deteriorate - particularly along the U.S. border where drug and gang related violence have caused massive spikes in the murder rate. Corruption also plagues the government...recently it seems prison officials used prisoners as executioners. The U.S. needs to start thinking long and hard about what a lawless Mexico means for our national security.

Gov. Christie

Just watch and enjoy!

Mexico Allowed to Submit Brief on AZ Immigration Law

A federal judge ruled that Mexico's brief can be considered in the law suit pending against AZ's new immigration law. This is insane...AZ is a state in the United States of America not Mexico, the court case is filed in U.S. Federal Court not Mexico...allowing Mexico to have a say on U.S. law regarding illegal immigration from Mexico into the U.S. is ludicrous. Mexico has no right nor legal standing to be able to voice it's opinion about our laws in our courts! Mexico has tacitly allowed and supported the flow of illegals into the U.S. in violation of our territorial sovereignty.  This is nuts!

Supreme Court Alters Major Federal Prosecution Tool

The Supreme Court recently issued a trio of unanimous rulings that limited the governments ability to bring charges under certain federal laws. The rulings limit prosecutor's ability to stretch the definition of laws against "depriving others of one's 'honest services.'" The high court held that it violated due process because by stretching the definition the federal government had blurred the lines between criminal and non-criminal behavior. Finally - some justice!

Supreme Court Gun Ruling Binding

Elena Kagan, Obama's Supreme Court nominee, indicated that she felt the Supreme Court's ruling regarding gun rights was binding precedent. At least she knows that much about judiciary...

Crazy Congressman

A California congressman mocks his constituents at a town hall style meeting. It is truly amazing how arrogant and completely insensitive he is to the concerns of the people he represents. This man has clearly forgotten that as an elected representative his job is to be the people's voice in government.

Quote

"Democracy is a process by which people are free to choose the man who will get the blame."
 -Laurence J. Peter

Afghan Soldiers Disappear in Texas

Apparently our government brought over 17 Afghan soldiers for training. Now over the course of the last 2 years they have all disappeared. If that wasn't bad enough they all have DOD access badges that give them access to DOD secure facilities. Makes you wonder about how safe we really are?

Tax Insanity

Forest Laboratories is going to great lengths to avoid paying US income taxes - legally. I suspect that many people that read this article will be out-raged at the lengths this company is going to and the cost of the lost taxes on the federal budget. My takeaway is somewhat different. The fact that a company would incur such complexity and cost to avoid taxes (and the fact that the tax code is complex enough to allow these loopholes) tells me we are over taxing business. Just think of all the creative energy and money that we could save by lowering taxes and reducing the complexity of the tax code...business could increase investment, cut prices, improve efficiency, and/or hire more workers. All of which are better for the economy and the federal budget in the long-term than simply collecting that money in the form of taxes....think about it.

FOXNews.com - Senate Passes Financial Overhaul Bill

FOXNews.com - Senate Passes Financial Overhaul Bill

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Immigration Debate - You gotta hear this

I don't think anyone could have said it better! Watch it now.

FOXNews.com - Top Official Says Feds May Not Process Illegals Referred From Arizona

The Arizona immigration law is definitely getting lots of media attention (though if you look at the percentage of Americans that believe it is the right thing to do you could hardly call it divisive). Apparently though Homeland Security's ICE (Immigration and Customs Enforcement) is now saying they will not necessarily enforce the law by accepting people arrested under this Arizona law.

The whole point behind the Arizona law is that illegal immigration is costing the state a huge amount of money and the federal government is policing the immigration laws very poorly (read "basically not at all"). Now the federal agency charged with enforcing this law is saying they won't do anything even if the state does all the investigation and hands the illegals over to them. This is nuts! Only in government would you be able to get away with that kind of attitude and still have a job. We need to change the leadership of this nation to get idiots like the ones running ICE out of there. What they heck is the point of a law that will not be enforced?

FOXNews.com - Senators Press for National Guard Troops on Border

The need to get troops to the border to stem the overflow of violence from Mexico is apparently lost in inter-agency hell at the moment. The Pentagon, White House, and Dept. of Homeland Security cannot seem to get together and agree. This is just another example of the government being unable to operate efficiently - and we just handed health care over to them. This time it actually endangers American citizens' lives.

FOXNews.com - SKorea accuses North in deadly torpedo attack on warship; Pyongyang warns of war

FOXNews.com - SKorea accuses North in deadly torpedo attack on warship; Pyongyang warns of war

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North Korea is at it again...making lots of threats - only this time it all started with them actually torpedoing a ship. This has the potential to get interesting...

FOXNews.com - EU Creates $1 Trillion Package to Save Euro

FOXNews.com - EU Creates $1 Trillion Package to Save Euro

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The Latest Govt Program - Cash for Caulkers?

The federal government may end up passing a huge rebate program for home energy efficiency improvements. The program could cost up to $6 billion...the good news they are at least planning on spending unspent stimulus money on this and not appropriating new funds.

The Cost of Federal Incompetence

The federal government is charged with enforcing immigration laws, but apparently they are so bad at it that taxpayers have to pay up....

FOXNews.com - Ice Crystals Cause Problems Inside Oil Box

FOXNews.com - Ice Crystals Cause Problems Inside Oil Box

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Greece is in Turmoil

Greece is saw widespread day long riots - some violent - in response to the governments actions to secure a loan from the EU. Greece was forced to do widespread cuts in spending and raise some taxes in order to secure the needed loans to repay maturing debt. The major question is how long before other EU nations are in the same situation?

Stimulus Architect Obey Retires

Supporter, A sign the momentum is building...Democrat Chairman of the House Appropriations Committee, David Obey, just announced he will not seek reelection - he has been in Congress since 1969. This is more than a symbolic retirement - the Architect of the Failed Stimulus has decided he cannot justify his votes in Congress to a district that has elected him for over 40 years. You made this happen. Your support of the NRCC has out-of-touch Democrats scrambling or choosing to retire, rather than face the electorate this fall. Your support of the NRCC continues to allow us to run ads like these - sending the message to Democrats there time is almost up. We cannot let up. This is a sign that our goal of Retiring Nancy Pelosi is within our grasp, but we still have two special elections and six months until election day. However, your support is reaping results today. Thank you for your support of the NRCC as every dollar you donate goes towards defeating Democrats...or encouraging them to retire Thank you Guy Harrison NRCC Executive Director P.S. Rep. Obey's retirement proves that, thanks to Nancy Pelosi's radical agenda, no Democrat is safe this fall. Democrats who have marched in lockstep with the Speaker are finding their reelection chances fading. Your continued support is critical to ensure we keep the pressure on Democrats through November. Unsubscribe Paid for by the National Republican Congressional Committee and not authorized by any candidate or candidate's committee. www.nrcc.org 320 First Street SE | Washington, DC 20003 Contributions to the National Republican Congressional Committee are not tax-deductible for Federal income tax purposes. Contributions are subject to Federal contribution limits.

---

Is PA after you?

The State of Pennsylvania may be after you....

Democrats Have Outstayed Their Welcome

I don't think anyone would be surprised to hear the prediction that Republicans will show big wins in this year's mid-term elections. It is possible they could retake the House. As a point of personal embarrassment though it seems the Senate seats held by Obama and Biden before their win in 2008 may go Republican this year.

Obama Wants Your Money

FDR and The Great Depression

Did FDR's New Deal end The Great Depression? Many people have been led to believe so but the truth is that it really did very little to get the economy moving again. Read more from the Wall Street Journal.

The interesting thing about this article is that points out that lower taxes are what really help to increase economic output and create sustainable jobs...anybody see a conflict with this and our current Congress and President?

Visit the fairtax.org to if you want to learn about ways we can change our tax system and jump start the economy at the same time.

Health Care Reform?

The recently passed health care reform legislation does virtually nothing to control costs in the health care industry and will do nothing to stop the ongoing rise in health insurance premiums. This is contrary to several of the goals the President originally outlined in his proposal - a major one being to make health care affordable again. The article in the link above points out that public anger over rising premiums likely helped to get the bill passed but the bill doesn't even address rising premiums.

Approval Ratings - US Presidents

This link shows a USA Today comparison of Presidents' approval ratings....

Math Problem...

Just follow the link and read the headline....

How could we not have a budget deficit problem?

Unemployment Programs Reduce Incentive to Work

Basic economics pretty much sums up what happens when we give richer and longer unemployment benefits to people that lose their jobs...they are less motivated to go back to work thus they stay unemployed longer leading to more federal and state expenditures to pay their benefits. This in turn leads to increases in state unemployment taxes - 2010 saw record increases by the way. The higher taxes raise the cost of hiring workers and thereby reduce the jobs available and contribute to higher unemployment.

Anybody see how this becomes a viscous cycle very quickly?

The Wall Street Journal recently ran an article discussing this and interestingly enough one of the people quoting on this phenomenon was Laurence Summers - one of Obama's top economic advisers....interesting.

Fed Chairman Attempts to Educate Congress

In the video below Bernanke tries to get across two major points to Congress:

1. The current budget deficit and national debt projections are almost certainly understated because they assume Congress will stop doing things they have been doing for decades.
2. We really need to start fixing our fiscal problems sooner rather than later

I can only hope someone was listening because this is the problem that left unaddressed will be the end of this nation...

Medicare Payment Decreases

It's that time of year again...Medicare payment rates to doctors are scheduled to decline again unless Congress delays them. This kick the can down the road patch to one of medicare's major problems has been going on since about 1997.

The only way the government could seem to wring costs our of medicare was to cut what they pay to doctors for services making medicare patients more costly for doctors to serve than patients with private insurance. The result - as anyone who stayed awake for about 5 minutes in an introductory economics class would know - is that fewer doctors are taking medicare patients on. This drives medicare patients to use ERs and urgent-care facilities which in turn drives up the cost of medicare...anyone see a problem?

Texas Stadium Implosion

Here is a video of today's implosion of Texas Stadium...

Media Bias

A classified military video was recently leaked to the public that showed what the media outlet leaking the video claimed was indiscriminate firing on civilians by US troops. The Secretary of Defense has supported the soldiers' actions and claimed the video didn't show the whole story. Apparently if the video is slowed down you can clearly see one man armed with a RPG launcher and another with an AK-47. This is just one example of the media making news instead of reporting facts.

Read the article at Fox News' Website

FOXNews.com - Verizon to Take $970 Million Charge From Health Care Law

FOXNews.com - Verizon to Take $970 Million Charge From Health Care Law

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Obama Opens Drilling/ Increases Emissions Standards

President Obama recently announced he intends to remove a long standing ban on drilling for oil and gas off the Eastern seaboard. At least this move will help to ease our growing energy dependence on nations unfriendly to us, but not to accused of doing something useful outright the President also reaffirmed commitments to raise fuel economy standards and set stricter emissions limits. Obama giveth and Obama taketh away!

The Cost of Modern Medicine

The March 4th edition of Business Week ran a very interesting article entitled: "Lessons of a $618,616 Death." In the article a woman describes her husband's battle with cancer and ultimately his death and uses it to discuss how our health care system works (or doesn't depending on your point of view). While I don't necessarily agree with all her conclusions or points the article is very interesting nonetheless. Please take some time to read it....


http://www.businessweek.com/magazine/content/10_11/b4170032321836.htm?chan=magazine+channel_top+stories

and watch the video below:

Interesting Cartoon from 1948

Thought this video was interesting:




From - http://nationaljuggernaut.blogspot.com/2009/09/this-cartoon-seemed-far-fetched-in-1948.html

Let the Health Care Wars Begin

The House just declared war on states and individual freedom and sovereignty with the passage of the health care reform bill that Obama is certain to sign. The good news is that about 20% of the States are not going to take this lightly:

The CNN article below shows how states are going to fight back.

States Plan to Sue over Health Care

Obama's Tax Promise

The President may be slowly changing his mind about not raising taxes on those making less than $250k a year...after all someone has to pay for all his programs to help those folks out!

FOXNews.com - Geithner: No Risk to U.S. Credit Rating

FOXNews.com - Geithner: No Risk to U.S. Credit Rating

Debt is approaching record levels in proportion to our economic output (we broke records a long time ago in dollar terms), but it's all ok according to the Treasury Secretary. Many economists are becoming very concerned that we are fast approaching a tipping point on the national debt. Once we hit that point investors will demand higher interest rates to buy out debt which will cost our government billions and the resulting increase in rates could cripple our economy. The really scary part is that no one knows exactly where that tipping point is and we will not until we hit it. But have no fear Geithner is here and he says all is well...right!

American Airlines plans to start charging its stand-by fliers | Dallas Morning News

American Airlines plans to start charging its stand-by fliers | News for Dallas, Texas | Dallas Morning News | Latest News

Anyone feel like they are getting nickle and dimed?

AMERICAN VS. SOUTHWEST

American Airlines' other fees:
• First checked bag: $25
• Second checked bag: $35; $50 international
• Ticket change fees: $150/varies by destination
• Booking fee: $20 (on phone); $30 (in person)
• Unaccompanied minor: $100
• Pet in cabin: $100
• In-flight food: $3-$10 (alcoholic beverage: $6)
• Blanket/pillow set: $8

Southwest Airlines' fees:
• Unaccompanied minor: $25
• Pet in cabin: $75
• Priority boarding: $10
• Alcoholic beverage: $5
SOURCE: Smarter Travel's Ultimate Guide to Airline Fees

Ahmadinejad Says Iran Is Now a Nuclear State - FOXNews.com

Ahmadinejad Says Iran Is Now a 'Nuclear State' - Iran | Map | News - FOXNews.com


Iran continues it's antagonism of the developed world by continuing its efforts to enrich uranium further. If and when they manager to enrich it enough to hit 90% they will have the ability to create nuclear warheads which could definitely pose a risk to international security.

Obama Cuts NASA

Obama recently announced large cuts to NASA's budget that all but guarantee the US will fall behind China and Russia in space and missile technology. In general I am a strong supporter of reduced government spending, but given what else our President is spending on this seems misguided.

Protecting Yourself From the Giant New Deficit - WSJ.com

Protecting Yourself From the Giant New Deficit - WSJ.com


This Wall Street Journal article covers some basic concepts and tips for dealing with the effects of huge government deficits, higher taxes, and higher inflation that are all sure to come soon. Probably worth a look!

FOXNews.com - What Should Be Done About Unemployment?

FOXNews.com - What Should Be Done About Unemployment?

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Click on the link above and share your view with the world. The smart money is on doing nothing for the sake of our children and grandchildren that will have to pay off our national debt.

FOXNews.com - Palin Goes After Obama at Tea Party Convention

FOXNews.com - Palin Goes After Obama at Tea Party Convention

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 Hopefully we can ride this voter angst to a more balanced Congress!

Obama Budget

Obama unveiled his budget proposal. He is suggesting significant tax increases for the "wealthy" and corporations along with spending freezes. Most of his spending cuts are just for show though as his spending freezes don't address the three largest budget components nor do they do anything to fix underlying issues with social security or medicare. Also, given the weak state of the economy tax increase seem like a risky move not to mention that most if not all tax increases get passed on to consumers so they are just stealthy income tax increases in many ways. Our national debt is approaching dangerous levels and no one is taking the serious steps necessary to fix it. This link will take you to some pretty neat graphics on the budget. Time to seriously consider the Fair Tax! Check out the calculator...

$200 Millions to Host Terror Trials!

The President's budget proposal includes nearly $200 million to help pay for the security services required to host 9/11 terror trials in U.S. courts rather than military tribunals at Gitmo. Obama recently proposed freezing most federal spending other than defense. It seems to me he is using this as a license to spend recklessly on defense. Not only is his he allowing these terrorists the full protections of our constitution (which was intended by our founding fathers for only citizens) but he is also sending our government into even greater debt!

Obama Defends Health Care Reform

Obama defends his health care reform to Republicans at their issues gathering...sounds a little desperate to me! The President is struggling to stem the public wrath over this enormous entitlement program that will almost certainly balloon the national debt. The end of this bill is in sight all we have to do is stick to our convictions.

War Strategy

Bernanke's Confimation Woes

The chairman of the Federal Reserve Board of Governors is up for re-confirmation in the Senate. Public support for Bernanke has eroded as voters associate him with the bailouts of major banks. Many Democrats are hesitant to publicly support him since they want to appear concerned about voters in an election year. The White House however desperately needs a win for Obama's nomination because many see it as a referendum on Obama's economic policies. Obama is applying all the pressure he can to Senate democrats. This could be another embarrassing failure for Obama if he fails to sway enough Senators to secure the necessary votes.

This vote could have dramatic consequences for the economy as the current easy money policies of the fed run the risk of re-igniting inflation. This could damage the fragile recovery because inflation is notoriously hard to kill once it starts climbing. Bernanke has shown too much concern for preventing a depression and too much willingness to lend money to any institution that comes calling to have any credibility as an inflation fighter. In the game of inflation fighting credibility is often as important (maybe more important) than actual efforts to curb inflation. We can only hope our elected officials will listen to public opinion - but of course they almost never do.

Economic Freedom Index

The US declined significantly on the Economic Freedom Index this year. Thanks to government intervention in our financial lives the US is no longer in top 7, the so called "Economically Free" nations. We have been in the top 7 fro the last 16 years, but just one year under Obama (though Bush did some damage too) and we are out.

Brown Wins - The Tide Is Turning!

Republican Scott Brown won the former Senate seat of Ted Kennedy. This is the first time Massachusetts has sent a Republican to the Senate since 1972. Angst over the policies of the current administration is now starting to show in the polls. This race may have been a good bellwether for the upcoming November elections.

This loss seems to have shaken Democratic resolve with at least two Democrats calling for a halt on the health care vote until Brown is seated!

Scott Brown Rally

The 60 Vote Majority On Life Support

The democrats' crucial 60-vote majority in the Senate may be slipping away in Massachusetts. The battle for Ted Kennedy's vacant Senate seat originally looked like a no-brainer for democratic candidate Croakley. Angst over the pending health care legislation and a poorly run campaign by Croakley have left her fighting to the bitter end with her Republican challenger Brown. The latest reports show Brown just slightly ahead...the race is on!

If Massachusetts Republicans can come together and close this thing the health care bill may not clear the Senate. It could be now or never folks!

The Fed - Part 2 (Monetary Policy)

The second major responsibility of the Fed is to conduct monetary policy and control inflation. Monetary policy is at its most basic level the manipulation of the money supply to control interest rates and ultimately inflation. The execution of monetary policy and the organization of our monetary system is the only remaining sector of the economy where total monopoly government control is supported by most economists.

The Fed seeks to control inflation by controlling the supply of money available to lend by banks. Interest rates are basically just the price of using someone else’s money – that price like all others moves inversely (opposite) of supply. If the Fed reduces the supply of money available to banks for lending it raises the cost, interest rate, of that money. If it adds money (also known as creating money) the cost declines. Inflation is the rate of decline of the value of money or the rate of increase of prices. Inflation exists because of the recognition by the public that if the money supply increases are not matched by increases in output of our economy then the only way to balance the economy is for the value of a unit of money (dollar) to decline – inflation increases/prices rise. Interest rates affect inflation because if it costs more to borrow money people borrow less and money can only affect the prices of goods/services if it enters the economy not sitting on banks’ books. It is through this intricate web of banks, money, prices, and interest that the Fed exercises monetary policy to control inflation. Interestingly, inflation’s risks to the economy come in no small way from the very existence of the Fed and the government’s spending addiction.

One reason for the need of monetary policy is the existence of the Fed as the lender-of-last-resort. This occurs because if banks are lending too much money the extra currency can lead to inflation. This happens because if the amount of money in the system grows without proportional increase in economic output then people do not have more things to buy with that money so they use the extra money to bid up the prices of goods/services in an attempt to purchase a larger portion of the goods/services. This of course doesn’t work since others are doing the same thing – everyone ends up paying more for the same goods/services as before. The long-term damage comes from the fact that prices don’t tend to decline once they have gone up so we end up paying more forever. This begs the questions why might banks lend too much? They have the Fed as their lender-of-last-resort to backstop them so they can take the risks associated with excess lending.

The Fed’s ability to manipulate interest rates and pump money into the economy also supports the government’s deficit spending habits and ability to interfere with the economy. Since the Fed can lower interest rates by pumping money into the economy it can induce people to borrow money. This was a factor in the housing bubble, which the Fed ended up bailing out many of these institutions. The Fed supports the government’s deficit spending because it can create money for the government to use to its debts and can induce banks to buy treasuries to meet capital requirements. This only works because the Fed has a monopoly on the printing of money in the U.S. This monopoly means the economy cannot escape the impact of the Fed’s actions because there is no currency to use if the Fed messes with the dollar. The monetary policies of the Fed put our economy at the mercy of a weakly regulated arm of the government.

Sir Patrick

Patrick Stewart will soon be a knight...