People Need to Learn...Anything!

Polls show that the GOP is wise to focus most of its attacks on spending, government intervention and job losses. (Those same polls show the public has low regard for Republicans on these issues, but it's a significant development that President Barack Obama's numbers are slipping in these areas, too.)

Politico

No, I don't think the GOP will see much of a resurgence in a year, and no, I don't think Obama's numbers will plummet. However, I find the whole thing amusing, in a sad way. It shows that there really were people out there who thought Obama would magically fix the economy. The ignorance of a majority of this nation on issues such as economics and politics will never cease to amaze me.

Fleckenstein Says It Right!

The actual offending cancerous legislation that kicked off the move toward extra reckless lending did involve then-Rep. Fernand St. Germain, a Rhode Island Democrat. But the problem legislation was the Depository Institutions Deregulation and Monetary Control Act of March 31, 1980. It's important to note that the law was enacted nearly a year before Reagan took office.

MSN Money

Wow, a journalist who has enough intelligence not to blame Reagan for the current culture that led to our economic downturn. That's right, the law that some economists believe helped create out current situation was introduced by a Democrat and signed by a Democrat. But God forbid the mainstream media ever report something so damaging to their beloved party. The article goes one to say...

Deregulation didn't cause this disaster. Incompetence and greed did. The implication from Krugman's article, that regulation or re-regulation would solve the problem, is nonsense. What must happen is for people in positions of regulatory authority to do their jobs.

Wow, I think Bill Fleckenstein might be my new favorite journalist in the financial sector.

45-46% of the COuntry With Their Heads in the Sand

Only 45% of Americans approve of Obama's handling of federal spending, and 46% of his handling of the federal budget deficit.

Gallup Poll

This begs one important question: What they hell are those 45% and 46% of the country thinking?!?! Trillion dollar deficits run up to bailout failing industries? How is it possible that almost half of the country doesn't recognize how bad of an idea this is?

Who Cares About Balancing the Budget?

Federal Reserve Chairman Ben Bernanke Wednesday urged lawmakers to commit to reducing the nearly $2 trillion budget deficit, warning that the government can't borrow "indefinitely" to meet the growing demand on its resources. Mr. Bernanke also reiterated that the pace of economic contraction appears to be slowing, setting the stage for a return to growth later this year. But that growth won't be robust, he said.

WSJ

Great idea Ben! Too bad no one in power gives a damn about logic or responsibility. The final blame falls with the American people. Until we start making fiscal responsibility a high priority, and vote out those who spend money we don;t have, lawmakers are not going to have an reason to stop.

Don't Forget the Stick

When the operating theory in Washington is that deficit spending on every possible priority is conducive to economic growth, there's no justification for slamming the brakes on the defense budget. The world hasn't gotten any less dangerous, a fact to which Capt. Phillips can attest. If we ever tip below the level of capability necessary to enforce a rough global order, we -- and the world -- will regret it.

Real Clear Politics

I could not have said it better myself, which is why, I suppose, Rich Lowry gets paid for this and I do not. The fact is, we have invested billion into future combat systems and other DoD programs. And while I agree we need to take a closer look at what we are paying for, we need to be careful about gutting R&D that will help us stay ahead of the curve in military technology. I am all for this new Obama policy of taking a less aggressive position in foreign affairs, so long as he holds to Teddy Roosevelt's philosophy: Talk softly, but carry a big stick.

Trouble in Paradise?

The lessons from the week: Members of the working group — like any small collection of Democrats — can make a difference whenever they’re ready to side with the Republicans. But the group seems to lack either the appetite or the ability to work in solidarity and undermine the agenda of a popular Democratic president.

Politico

I think what they should have said is that this group of Democrats lack the backbone to go against the President with any real force. I would still recommend reading the article, as it points out the political implications of a small voting bloc within the majority can have on the dynamic in the Senate.

Sure, Let's Listen to the French

Group of 20 leaders need to give regulators oversight of unregulated markets and products, such as credit-default swaps and collateralized debt obligations, to prevent future systemic crises, according to Jean-Pierre Jouyet, head of the French market watchdog AMF and head of an international task force on unregulated markets.

WSJ

Since the French economy has done so well over the last decade, lets take their advice (please note the sarcasm).

Right Idea, Wrong Application

America is relearning an old lesson: Failure and bankruptcy are essential to capitalism.

WSJ

I am just glad somebody said it. I suggest reading the full article. I began reading it with high hopes, but this gentleman, despite having sound financial knowledge, still makes inconsistent conclusions. He has the right idea, but is using it to advocate for the wrong course of action.

Despite Funding, nature to Take its Course

The Obama's administration's leading plan to fix General Motors Corp. and Chrysler LLC would use bankruptcy filings to purge the ailing companies of their biggest problems, including bondholder debt and retiree health-care costs, according to people familiar with the matter.

WSJ

Without a federal bailout, the auto industry may have been forced to deal with various bankruptcy filings. Thank God we decided to put billions into the auto industry, so they can declare bankruptcy. Wait, WTF!?!?! Once again, that is money well spent right there.

Doing a Bang-Up Job!

Stocks fell sharply as turmoil in the auto industry and depleted hope for financial and economic stability eroded much of the market's March gains.

WSJ

Despite all the talk about more government involvement being the key to quick recovery, all of the meddling in private industries led to yet another dive in stocks, led by the banking and auto industries. With the Administration talking about expanded authority to take over banks and non-banking financial institutions, and then forcing the current GM chief exec out on his ass, stock holders are showing little or no confidence in the government's ability to micro manage private industries...and so am I. So, we should all thank the Obama Administration for having the exact opposite effect they intended. Job Well Done!

No Real Change

Notably, Democratic leaders in both houses are pushing packages that call for narrower deficits and less spending than proposed by the White House. And those levels could go lower, especially in the Senate, where moderate Democrats from conservative states will be an important factor in the debate on the floor next week.

WSJ

Even OMB Director Peter Orzag is quoted as saying that the House and Senate proposals are 98% similar to the White House proposal. So much for Congress establishing its own independence. Our only hope now is for the 51 Blue Dogs in the House to jump ship and act reasonably. I am not holding my breath.

Budget Brings Out the Hypocrites

Stan Collender, in his most recent column in Roll Call, calls out many of those Democrats who are complaining about the way Senate Budget Chairman Kent Conrad (D-ND), and other lawmakers are handling the President's Budget Proposal for fiscal year 2010 (FY10). The every same Democrats who accused the Republican-controlled Congress of merely rubber-stamping President Bush's fiscal and legislative initiatives are now criticizing Conrad for establishing Congressional independence in regards to the budget.

As with most political pundits and so-called advocates, principles only factor into decision-making when it is convenient. Now, I don't support Conrad's budget either (which should be released on Thursday), but at least it is a step in the right direction when compared to the Obama proposal.

Slippery Slope

The U.S. government needs to be able to take over and wind down a broad range of economically important non-bank financial institutions, top economic officials told Congress Tuesday, though who will get that authority was left as an open question. Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner told House lawmakers the government's experience with American International Group Inc. highlights the need to deal with increasingly complex and systemically important institutions.

WSJ Online

The way to deal with the institutions is to let them succeed or fail on their own mertis, and not bail out failing industries with taxpayer dollars. But instead, this slope keeps getting even more slippery.

Obama's First Address to Congress

I have very mixed feelings regarding Obama's first address to a joint session of Congress last night. However, when you factor in the realities we face with his political rhetoric, I am left with no real positive outlook on his Presidency. While I, like most of those present at the speech, agreed with certain priorities that the President listed, I am afraid we do not see eye to eye on how to get there.

A few points that the President brought up that I agree with in principle: lowering the deficit, cutting wasteful government spending, tax cuts, and education, health care, and energy reform. Above all else, the federal government's top priority should be paying down the national debt. The Republicans showed a complete lack of fiscal restraint when they held the majority. As the supposed party of "change," the Democrats should reign in government spending, and work at bringing down the national debt. If President Obama can pull that off without raising taxes, then I can almost promise that he will get my vote in 2012.

One way to help bring down spending is to eliminate inefficient, wasteful government programs. The President has appointed a federal official to oversee the investigation into program effectiveness. I wish her the greatest possible success. However, President Bush tried for 8 consecutive years to cut dozens of wasteful programs. His proposals would have increased federal funding for programs that were proven successes, without raising the overall bottom line, by redirecting funds from inefficient and unsuccessful programs. He could not get the Republican Congress to agree to eliminate these programs, and he could not get the Democratic Congress on board either. Hopefully, Obama can trade on his currently un-earned popularity and maybe get Congress to fall in line.

Finally, Obama mentioned a strong deisre to reform our nation's education, health care, and energy systems. I am all for reform, I just don;t believe the President and I agree on what kind of reform is necessary. I believe the only government involvement in these areas is to deregulate. That's right, I said the very unpopular phrase "deregulate." I think local educators have a much better idea of what their students need than a bureaucrat in Washington. I think that companies should be encouraged (though tax breaks) to provide health care plans for employees that are affordable and effective. I believe that the government should promote new research and production of alternative fuel sources, mainly through R&D grants and additional tax incentives. The key to success is getting government out of the way, not giving them more chains to tie down those in the field.

On other issues, such as pulling troops out of Iraq, I still have mixed feelings. Americans have been fighting and dying in an area of the country that seems less and less to appreciate what we have done. The cost of the ongoing conflict has brought out deficit up to unbelievable levels. The cost, both fiscal and human, is too high. However, we are over there, we have been involved, and therefore, we cannot just bailout and leave the region in a war-torn mess. We have to find a way to transfer authority gradually, helping to give the ungrateful bastards the best chance at a lasting peace.

In regards to taxes, I applaud an effort to give 95% of American tax breaks. However, that number is based on some very "fuzzy" math. The fact is, the so called wealthiest 1% of Americans are the ones paying the majority of our taxes. They are already shouldering the largest portion of taxes, and should not be subject to additional burden. Rather than taking more money from those who have it, lets focus on more efficient ways to spend the money they are already giving us. Besides, any increased costs are almost always passed down to the average consumer. that mean taxes on corporation eventually gets passed on to those consumers, who end up paying higher prices.

Speaking of corporate taxes, the President mentioned ending tax breaks for businesses that "ship jobs overseas." I agree, in general, with the premise that companies that outsource jobs should not be rewarded for doing so. however, increased taxes means those companies are more likely to ship all of their operations overseas. Rather than focusing on how to punish those companies, we need to work on ways to encourage domestic businesses to keep jobs in the country, as well as ways to entice foreign companies to bring their operations into the U.S.

In the end, I believe his speech was well written and delivered very well. however, it lacked in substance, and it points in a direction that will only further complicate things. We need reform, and we need change, but it needs to be the right kind of change. Instead of "Change We Can Believe In," how about "Change We Can Depend On," or "Change We Can Follow to Prosperity." I hope I am wrong, and I hope that the President does turn around the country. I am simply not convinces. My advice to the President and his supporters is to be very careful in how you chose to proceed, because the fate of the nation depends on the choices you make now.

Why Reward Failure?

Reading the news that General Motors and Chrysler are now lining up for another $20 billion or so in government aid — on top of the billions they’ve already received or requested — leaves me with the sick feeling that we are subsidizing the losers and for only one reason: because they claim that their funerals would cost more than keeping them on life support. Sorry, friends, but this is not the American way. Bailing out the losers is not how we got rich as a country, and it is not how we’ll get out of this crisis.

NYT Article

While I am not in 100% agreement with the rest of his analysis, Friedman makes a very good point. If you absolutely have to use taxpayer money to try and jump start the economy, which I am not sure you do, then why waste it on propping up failed companies? Rather than throwing away money on those who have already showed their propensity for failure, lets give new industries, with fresh new ideas, a chance to shine. If I HAVE to give my hard-earned money away, I would rather use it give an upcoming business a shot at making it, than hand it over to someone who has already flushed millions down the economic toilet. Just a thought.

Is There a Correct Mix?

Does the stimulus bill include the right combination of spending cuts and tax increases? The answer is actually very simple:

1. There is no generally agreed-upon formula for combining tax cuts and spending increases in a stimulus bill.
2. Economic policymaking is at least as much an art as it is a science.
3. The right ratio of tax cuts to spending increases is whatever it takes to get the bill enacted.
4. It looks like this bill is going to be enacted.
5. Therefore, by definition, the mix in this bill is correct.

Capital Gains and Games

Stan wrote another interesting post last week, dealing with the gap between economic theory and political reality. However, Stan's entire argument depends on the assumption that a stimulus bill is necessary. I personally believe the right combination is tax cuts along with spending cuts, not increases. However, I am not in Congress, though even I understand cutting spending in the middle of a recession, regardless of the economic benefits, has too many political consequences. It is important to always remember every elected officials first job: to get reelected.

Gregg Withdraws His Nomination

Republican Sen. Judd Gregg of New Hampshire abruptly withdrew his nomination as commerce secretary Thursday, the third Cabinet-level pick scuttled. The move left President Barack Obama without a full team to lead the government. He cited "irresolvable conflicts" with Obama's handling of the economic stimulus and 2010 census.

This is definitely a big loss for the Obama Administration. Gregg is long time budget hawk and would have brought a voice of fiscal responsibility to the White House. The President is not doing too well with his cabinet picks.


MSNB Article.

This Ball Will Keep Rolling

Stan Collender, a federal budget guru and blogger, recently wrote an article for Roll Call in which he tries to point out that the economy needs steady recovery, not an ER style infusion. While I tend to agree with his assessment, I do not condone his acquiescence to the fact that Congress will (and seeming should, according to his tone in the article) pass additional "stimulus" measures. I cannot get on board with this point of view.

Congress already approved a $700 billion bailout for the financial sector. In effect, they approved an unreal amount of money to give to companies that drove themselves into ruin. Rather than allowing the market to weed out the unsuccessful, irresponsible market navigators, the government is giving money to companies that proved they don;t know how to properly use it. Now, Congress is in the final stages of approving an $800 billion "stimulus" bill, aimed at helping so-called "main street" recover. Despite the fact that CBO estimates do not show these "stimulus" programs as actually helping the economy in the immediate future (as Congress claims), Congress is already considering moving on with additional legislative measures.

Rather than waiting to see if their course of action is the correct one, and if their programs will have the desired effect, they go full speed ahead to the next disaster. Democrats went on and on during their time in the minority regarding wasteful spending, and sticking future generations with the bill for our mistakes. Now that they have control of he government, they are continuing the failed policies of the Republican majority. Rather than waiting to see if the $1.5 trillion that was approved over a 5 month period actually helps, they are setting to dig even deeper into the debt to thrown more money away. Unbelievable.

Administration Can't Stop Market Plunge

Treasury Secretary Tim Geithner failed Tuesday to persuade Wall Street that he will succeed where his predecessor Henry Paulson failed. Geithner outlined the administration's plan to restart frozen credit markets and bolster the health of troubled banks. He said the economy will recover from its swoon only with the help of healthy financial institutions.

I agree that the economy will only recover with the felp of healthy financial institutions. I just don't believe there is anything Geithner, or anyone else in Washington, can (or should) do to speed up the recovery of those institutions.

Not Prepared for the Long Haul

Senators prepared for a vote Tuesday on the huge White House-backed economic stimulus bill, following a prime-time appeal from President Barack Obama Monday night to quickly approve the legislation and bolster the suffering U.S. economy.

What happens when the economy does not immediately bounce back in the miraculous manner that the President and Congressional Leaders claim it will? It took more than a year for us to realize how bad it would get, it will take just as long, if not longer, to realize that things are getting better. For those who are expecting a quick turn around, you should begin preparing yourself for disappointment.