Assessing the Obama Administration’s First Thirty Months...

I received an interesting email from Captain (FDNY-retired) Bob Howell the other day and I added to it. This email really shows how far we've fallen!

	January 2009	TODAY	% chg	Source
Avg.. Retail price/gallon gas in U.S.	$1.83	$3.44	84%	1
Crude oil, European Brent (barrel)	$43..48	$99..02	127.7%	2
Crude oil, West TX Inter. (barrel)	$38..74	$91..38	135.9%	2
Gold: London (per troy oz.)	$853.25	$1,369.50	60.5%	2
Corn, No.2 yellow, Central IL	$3.56	$6.33	78.1%	2
Soybeans, No. 1 yellow, IL	$9.66	$13..75	42.3%	2
Sugar, cane, raw, world, lb. Fob	$13..37	$35..39	164.7%	2
Unemployment rate, non-farm, overall	7.6%	9.4%	23.7%	3
Unemployment rate, blacks	12.6%	15.8%	25.4%	3
Number of unemployed	11,616,000	14,485,000	24.7%	3
Number of fed. Employees	2,779,000	2,840,000	2.2%	3
Real median household income	$50,112	$49,777	-0.7%	4
Number of food stamp recipients	31,983,716	43,200,878	35.1%	5
Number of unemployment benefit recipients	7,526,598	9,193,838	22.2%	6
Number of long-term unemployed	2,600,000	6,400,000	146.2%	3
Poverty rate, individuals	13.2%	14.3%	8.3%	4
People in poverty in U.S.	39,800,000	43,600,000	9.5%	4
U.S.. Rank in Economic Freedom World Rankings	5	9	n/a	10
Present Situation Index	29.9	23.5	-21.4%	11
Failed banks	140	164	17.1%	12
U.S.. Dollar versus Japanese yen exchange rate	89.76	82.03	-8.6%	2
U.S.. Money supply, M1, in billions	1,575.1	1,865.7	18.4%	13
U.S.. Money supply, M2, in billions	8,310.9	8,852.3	6.5%	13
National debt, in trillions	$10..627	$14..052	32.2%	14

Just take this last item: In the last two years we have accumulated national debt at a rate more than 27 times as fast as during the rest of our entire nation's history.

Over 27 times as fast! Metaphorically speaking, if you are driving in the right lane doing 65 MPH and a car rockets past you in the left lane, 27 times faster, it would be doing 1,755 MPH!

Sources:

(1) U.S. Energy Information Administration;

(2) Wall Street Journal;

(3) Bureau of Labor Statistics;

(4) Census Bureau;

(5) USDA;

(6) U.S. Dept. Of Labor;
(7) FHFA;

(8) Standard & Poor's/Case-Shiller;

(9) RealtyTrac;

(10) Heritage Foundation and WSJ;

(11) The Conference Board;

(12) FDIC;
(13) Federal Reserve;

(14) U.S. Treasury

Those ARE some very frightening numbers, but we are where we are because the current administration has not only continued to follow the “Pelosi-Reid agenda” (the bulk of G W Bush’s non-military overspending came over his last few years...his “Pelosi/Reid years”) it’s accelerated those failed policies!

Accelerating those poor policies merely accelerated the poor results.

These figures are a good snapshot as to where we are.

AND for all those who’d harken back to Reagan, claiming that, “Reagan didn’t turn the economy around overnight,” au contraire, when the Reagan administration came into office in January of 1981, the Misery Index (merely the INFLATION and UNEMPLOYMENT rates added together) was appx. 21 (20.76)! By the end of 1981 the Misery Index had fallen to 17.97, by 1982 it had fallen further to 15.87 and by the end of 1983, the end of his 3^rd year in office, it had fallen even further to 12.82.

The Reagan administration saw the Misery index fall by OVER 30% in its first three years!

When the Obama administration came into office in January of 2009 the Misery Index stood at 8.92. By the end of 2010 it stood at 11.29 and now, midway through his 3^rd year (2011) it’s averaging 12.16 for the year 2011 (so far). Find the U.S. Misery Index month to month and from 1948 thru the present at; http://www.miseryindex.us/

The Obama administration has seen the Misery index rise by over 25% midway through its 3^rd year!

Look at those two sets of Misery Indexes, Reagan reduced the record-high Misery Index he inherited by over 30%, while Obama has increased the Misery Index he inherited by over 25% during the same time periods of their respective administrations – we’re clearly heading in the WRONG direction!

There’s ONLY One Question....

There’s only one question that every living human should ask...and that is, “How can I help?”

In America, a corrosive “entitlement culture” has woven the fiction that “there is some intrinsic value/worth in merely being alive.”

Nothing...NOTHING could be further from the truth.

An individual’s value is solely measured by what they produce.

How corrosive is our current, unsustainable entitlement culture? It’s almost perfectly inline with perhaps the most vile sentiments ever expressed by any human at any time, “We are socialists, we are enemies of today's capitalistic economic system for the exploitation of the economically weak, with its unfair salaries, with its unseemly evaluation of a human being according to wealth and property instead of responsibility and performance, and we are all determined to destroy this system under all conditions." (Adolf Hitler, May 1^st, 1927)

There are no sentiments that are more repulsive to human decency, more barbaric in their intent than the ones Hitler enumerated above.

The West’s amorphous grid of dependency programs (WIC, SSI, Social Security, etc.) generate dependency at a staggering cost, both in terms of lost productivity, less overall prosperity and fewer people in the workforce – government jobs are net COSTS, NOT productive jobs that add to the nation’s productivity.

Yes, our maze of dependency programs means jobs to legions of otherwise marginally employable Americans, keeping them from doing OTHER work that we that desperately needs getting done – picking fruit, slaughterhouse work, as just a couple examples.

As an example of just how absurd this has gotten, Tom Coburn recently challenged the Social Security Administration to probe into how a 350-pound man (Stanley Thornton Jr), who claims to suffer from “adult infantilism” has managed to qualify for federal disability benefits, despite being both handy enough and resourceful enough to have crafted his own wooden high chair and playpen.

Mr. Thornton can drive a car, use a computer and do basic carpentry and yet welfare administrators treat him as though he were incurably disabled.

When the Washington Times reached out to Stanley for a response to Senator Coburn, he sent off this e-mail, "You wanna test how damn serious I am about leaving this world, screw with my check that pays for this apartment and food. Try it. See how serious I am...I have no problem killing myself. "

OK, where exactly is the downside in letting Mr. Thornton simply fade to black?

Seriously, he produces nothing, his entire existence is parasitic and his abuse of a system meant to help the blind and severely physically and mentally disabled, lends itself to copying by other parasitic elements.

There are tens of thousands of people on programs like SSI and others that are scamming the system, just as there are legions of former Civil Servants now collecting huge, often tax-exempt “disability pensions” for non-disabling conditions.

ALL of that is unsustainable.

Again, “How can I help,” is the ONLY legitimate question today.

Now able-bodied worker, no matter how tired of work or comfortable of wallet should seek a non-productive retirement, instead they should ask, “HOW CAN I HELP?!”

New York City has already begun what COULD BE a promising beginning by re-evaluating many of the “disability pension” claims in recent years.

Insurance companies can help by redoubling their efforts to root out scammers and law-suit abusers and by lobbying hard for much more severe sentences for such heinous fiscal crimes.

If an esteemed financial maven like Bernie Madoff can be put away for over 400 years for his fiscal crimes (a fair sentence in my view), then why can’t we put insurance fraudsters, welfare cheats and other disability scammers away for 25 years or more?

It CAN and SHOULD BE done and it would merely take the stroke of a pen!

One of the most exciting pledges made during the 2008 campaign was made by Michelle Obama when she said, “Barack will MAKE you work...”

Well, we’re WAITING!

Now no one expects barrack Obama to actually go to the homes of deadbeats and actually force them back to work...BUT he could hire those who could...and what’s more would.

People are living longer and healthier lives and NO ONE can be promised an easy retirement, especially when so much real work remains to be done. There’s no way we can sustain so many dependents in this much more austere age.

Yes, “promises have been made,” BUT, it's also widely said that promises are also “meant to be broken.”

How many auto workers have faced unwanted buy-outs instead of long-term pension and medical benefits. Unsustainable promises cannot be kept.

We can (and MUST) do this.

Barack Obama’s Odd Easter Service.....

The First family attended Easter Services at the Shiloh Baptist Church (pictured above) in D.C. on Easter Sunday, but the Reverend Dr. Wallace Smith came off sounding strangely reminiscent of Reverend Jeremiah Wright.

“[Pastor Smith] talked about how his baby grandson’s gurgling is actually “talking” because he is saying ‘I am here...they tried to write me off as 3/5 a person in the Constitution, but I am here right now...”

Oh boy!

Where to begin?

Is it really possible that there are people so STUPID (and stupidity - the inability to comprehend properly - differs greatly from ignorance - the lack of information) that they don’t know that the “3/5^th’s compromise” was an ANTI-SLAVERY resolution?!

Apparently so.

First, a little history about the “3/5^th’s compromise” – It was proposed by two northern delegates James Wilson (PA) and Roger Sherman (CT) so that Southerners couldn’t use slaves to increase their representation in Congress.

As you might expect, the delegates opposed to slavery generally wished to count only the free inhabitants of each state, while the delegates supportive of slavery, on the other hand, generally wanted to count slaves in their actual numbers, since those increased numbers (of non-voting slaves) would deliver the benefit of increased representation in the House and the Electoral College.

The final compromise of counting "all other persons" as only three-fifths of their actual numbers reduced the power of the slave states relative to the original southern proposals.

So NO, “they didn’t try to write off Reverend Wallace or any free blacks (ironically enough there were many freed blacks who WERE counted as whole citizens even back then) as 3/5^ths of a person.” Abolitionists from the north forced a compromise on the south that decreased southern representation, WITHOUT WHICH, the slavery debate would’ve been greatly delayed in America and given that chattel slavery STILL exists in much of the world even today (in the Arab Mid-East, in large tracts of Asia and ironically enough, in sub-Saharan Africa), that delay could’ve been a long one indeed!

Apparently a lot of people who SHOULD “know better,” simply DON’T.

And that’s called STUPIDITY.

Since it can’t possibly be argued that people like Reverend Wallace Smith “don’t have access to that information” (which would be mere IGNORANCE), the only possible conclusion one can reach is that such people are “too stupid to actually understand the facts and use them correctly.”

More troubling still is Barack Obama’s penchant for seeking out these kinds of radical and rabidly anti-American “Reverends.”

That doesn't seem to be a very promising way to kick off the 2012 re-election campaign.

Does The New Government Mortgage Fix (QRM) Undermine Disparate Impact?

The recent “Mortgage Meltdown” was rooted in decades of “Fair Lending” lawsuits that forced banks via both litigation and legislation to make more loans available to “low-income Americans,” often referred to as “subprime borrowers.” Virtually ALL of those lawsuits were predicated upon the legal concept of “disparate impact,” given that traditional lending criteria (requiring expensive PMI or private mortgage insurance on purchases with less than 20% down, higher credit scores to procure the lowest interest rates, three years of tax returns, a lending cap of no more than 2½X your annual income, etc.) had and HAVE a “negative and disparate impact” on low-income Americans/subprime borrowers.

But NOW, all that has changed! Those old lending criteria, along with their “negative and disparate impacts” on low income Americans” appear to be back...and back with a vengeance!

Beyond the 20% down-payment requirement there are additional parameters in what’s being called the QRM or the “Qualified Residential Mortgage.” These include;

• Strict mandatory debt-to-income limits. Under the proposal, to get the best mortgage rates, you’d need to spend no more than 28 percent of your gross monthly income on housing-related expenses, and you couldn’t have total monthly household debt that exceeds 36 percent of your income.

• To refinance your existing mortgage and replace it with one carrying the best available interest rate, you’d need no less than a 25 percent equity stake in your house to qualify. If you sought to take any additional cash out through a refi, you’d need 30 percent equity. Today’s typical requirements for a conventional refi are nowhere near as strict.

• Pristine credit standards. For example, if you were 60 days late on any credit account during the previous 24 months, you’d be ineligible for a mortgage at the best available terms.

According to Kenneth Harney, the executive director of the National Real Estate Development Center, These are all core features of what may be the most sweeping and controversial set of changes in decades for the housing and mortgage markets. The so-called “qualified residential mortgage” (QRM) proposals were released at the end of March by banking, securities and housing regulators, along with the Department of Housing and Urban Development.”

If banks were to blame and government’s intervention in the mortgage market via “fair-lending” lawsuits was positive, wouldn’t the proper solution be even MORE government involvement, even further micromanaging of the mortgage market?

You’d certainly think that it would be.

BUT, as one Treasury Department spokesman said on Friday, the U.S. government has had “too big a footprint” in the mortgage market and the Obama administration intends to make it smaller.

That puts the Obama administration right in line with the likes of Rep. Scott Garrett (R-N.J.), who recently took over a House committee overseeing housing finance, who recently endorsed the idea of lowering loan limits in a keynote address to the conference back in February (2011). It would seem that politics certainly DOES make for some strange bedfellows.

Garrett said he wants the government to exit the mortgage market entirely, though he acknowledged it was a long-term proposition. “I realize that this will not be an easy or immediate goal, but it is one I feel strongly about,” he said.

Even Federal Deposit Insurance Corp Chairman Sheila Bair wants to require 20 percent down payments to thwart the excesses that fueled the financial crisis. If the banks had supported “loose money” or “more loans to more low-income Americans,” you’d expect them to oppose such a stance, but industry heavyweight, Wells Fargo, has proposed an even tougher standard – a 30 percent down-payment requirement.

Moreover, none of this looks like a temporary stop-gap measure, with an eye toward eventually loosening such criteria to allow more low-income Americans back into the mortgage market.

As Reuters recently reported, “We may be entering a permanent age of 20 percent down payments. High down payments may not just be a temporary post-crisis response limited to the high-end of the market. One of the long-term reform proposals being bandied about Washington would require that any loan a lender wants to sell outright into the secondary market be secured by at least a 20 percent down payment. Anything below that amount and the lender would be required to hold onto at least 5 percent of the loan value in its own investment portfolio. That’s how you keep lenders from doling out high-risk loans. A good move for the financial system, to be sure. But one that could ultimately make home buying a more expensive proposition in the future, raising the allure of renting rather than buying for many, no doubt.”

SEE: http://www.reuters.com/article/2011/02/04/us-usa-housing-mortgages-idUSTRE7136K120110204

All of this begs the questions; IF “disparate impact” has been abandoned in one area where it’s been proven a disaster (home mortgage lending), than how can its use be justified in any other context?

There’s no doubt that the deeply flawed legal concept of “disparate impact” created the “subprime mortgage crisis,” where subprime borrowers received what then HUD Secretary Andrew Cuomo called “Affirmative Action in lending.” (SEE Andrew Cuomo's April, 1996 Pres Conference lauding "affirmative action in lending"; http://www.youtube.com/watch?v=Lr1M1T2Y314&feature=PlayList&p=529CA6593D352484&playnext=1&playnext_from=PL&index=97)

Can anyone actually conceive that its use would be any less disastrous in any other venue, and if so, WHY...and HOW?!

But it’s not like “disparate impact” and loose lending parameters/lowered standards don’t have their supporters. Recently, Michael Calhoun, president of the Center for Responsible Lending, argues that if adopted in its current form, these QRM proposals will make it much tougher for lower-income consumers to afford a first home, while Jerry Howard, CEO of the National Association of Home Builders, claims that government agencies and the administration have strayed far beyond Congress’ intent, and their proposals threaten to undermine any recovery in housing and force millions of Americans to rent rather than to own.

Still, facts are stubborn things. It was government’s meddling in the mortgage market to undermine those traditional lending criteria, in the name of resolving that “disparate impact” on lower-income Americans that caused the mortgage meltdown of 2008 and the subsequent and ongoing housing collapse.

Those standards obviously served a very useful purpose and undermining them had catastrophic results!

There’s little question that the lowering of ANY standards has the potential to be equally disastrous, if not worse.

Standards are more than mere barriers to those who can’t meet them. They are, all too often, the minimum criteria needed to be able to bear the burdens they’re used to measure.

Disparate impact may have been well-intentioned, but as they say, “The road to hell is paved with such good intentions.”

In a Government-Regulated, Government-Assisted (Corporatist) Economy, Why SHOULDN’T Government Set Profit/Compensation Rates?....

.

.

We need to accept reality – we don’t have a free market economy in America. We haven’t had one since 1912, when J. P. Morgan and Bernard Baruch helped usher in the modern Corporatist economy to America.

The reason it’s so important that we accept this is because too many people erroneously believe that the economic ills that have impacted the USA since 1912, from The Great Depression to the current and ongoing global credit crisis are failures of America’s NON-EXISTENT Capitalism.

Today, America, like Western Europe and Japan has a modern Corporatist economy - a partnership between business and government.

Yes, ALL of America’s incredible rise to economic world power to its pre-1912 free market-driven explosion in economic power can be attributed to free-market Capitalism, just as you can attribute all the failings since 1912, from The Great Depression to the inflation-driven “economic malaise” of the 1970s to the current and ongoing global credit crisis squarely on America’s Corporatist economy.

Still, the fact is, we HAVE a Corporatist economy NOW!

The only question is, since government sets and controls the compensation of those who directly work for it (ie. teachers, firefighters, police officers, etc.) then why shouldn’t it also set the compensation of those it assists, bails out and otherwise regulates. These would include virtually all banks and brokerages, most auto-makers, physicians and other health care professionals and every other business that has been bailed out, financially assisted (even with tax breaks) and regulated...as all such entities are in some way dependent upon government protection.

In one regard, it would be a good thing to “dispense with the pretense” of our non-existent “Capitalist economy.”

For another, it would also move us to a more equitable wage scale backed by the power of government...and MAYBE, in the process, outrage enough Americans to galvanize enough of them in opposition to this very flawed system.

After all, why SHOULDN’T businesses that are regulated and often fiscally dependent upon government, also have their compensation levels set by the state?

Today, more than 60% of our medical dollars come from Medicare and Medicaid – our two existing “public options.” One sure way to reduce the escalating costs of health care is to have government cap and set the compensation of physicians and all other health care workers, and given how highly regulated the health care industry is, there’s no reason government shouldn’t set compensation levels for all health care workers.

Currently, social welfare benefits make up 35 percent of wages and salaries in 2010 America. That’s up from 21 percent in 2000 and 10 percent in 1960, according to TrimTabs Investment Research using Bureau of Economic Analysis data. By way of comparison, the U.K., another modern Corporatist state has social welfare benefits making up 44 percent of wages and salaries, according to TrimTabs’ economist Madeline Schnapp.

SEE: http://www.cnbc.com/id/41969508

Social welfare benefits have increased by $514 billion over the last two years, according to TrimTabs figures, in part because of measures implemented to fight the financial crisis.

With our highly regulated and government controlled economy and with more and more Americans depending on the government for their incomes/compensation, why shouldn’t the government cap the compensations of ALL those working on government-regulated/partnered industries?

Indeed, ONLY within the confines of a free market economy do bankers, physicians, attorneys etc. have a right to earn “whatever compensation the market will bear for their skills.”

With so many Americans already having their compensation rates set by government, it’s certainly worth considering expanding government’s control over compensation to all those who work in all the other government-regulated industries.

For one, it would certainly more honestly represent our real existing (Corporatist) economic system and for another it might engage more of those previously unaffected by direct government control, once their own compensation is capped.

Corporatism Done Wrong

Corporatism unlike socialism, CAN work, but it must be reined in and since it relies on the advantaged (those in government and partnered businesses and industries), to in effect rein themselves in, that generally doesn’t happen.

In the U.S. the current NFL negotiations demonstrate this. Despite the hard economic times, NFL revenues are rising and rising fast. Despite that the owners, with sweetheart tax deals a Congressional anti-Trust exemption and stadiums often paid for with taxpayer funds, want to keep more of the revenues for themselves. They’ve demanded the players take an 18% cut in compensation that would go to the owners.

In a free market, in which the owners paid the going tax rate, paid for their own stadiums and foregone that anti-Trust exemption, they’d be free to rake in as huge a portion of hat pie as they wished...but once they’ve taken the money and protection of the government (and the people), they must operate under whatever rules are set for them.

Similar scenarios are going on throughout both the private and public sector.

In a Corporatist economy (like OURS), business “owners,” who’ve been given access to public lands, sweetheart tax deals, often even taxpayer funded bailouts and most of all protection from the hordes of leaner, hungrier, more avaricious entrepreneurs barred from the market via government regulation, the PRICE of those protections is a limited/capped personal share of “the winnings.”

Perhaps the NFL owners AND the owners of all American businesses and industries should be allowed a 25% to 30% margin of the profits, including their operating expenses! In some extreme growth-scenario cases, another 20% to 25% could go toward expansion, but the other 50% would go to the workers and retirees.

Perhaps THAT is the proper COST of the government-protections under Corporatism.

Did Class Envy Bring Down the American Public Sector?.....

For eons we’ve heard the cries from liberals that “Wall Street greed caused Main Street need.”

The Left, led by its AFL/CIO, SEIU, along with its other Public Sector Union allies assailed Wall Street’s “Money Machine” at every opportunity and many honest, hard-working employees went along with it, as the “fixed economic pie” (“there’s only so much money to go around”) argument resonated with many of them.

Wittingly or, more likely not, those folks were pressing for the eradication of the same “Money machine” that supplied the revenues that funded a very bloated public sector and the very generous entitlements (defined benefits pensions, paid health-care, etc.) that often came with those jobs.

For years automation on Wall Street (online trading replaced thousands of big-buck stock trading jobs) was slowly, but steadily eroding many once high-paying, highly-taxed Wall Street jobs.

When the mortgage meltdown and the subsequent global credit crisis it spurred , caused by government’s micro-managing the banking industry (legislating and litigating what Andy Cuomo, then head of HUD, called “affirmative action in lending” in the form of subprime lending), occurred in 2008, it triggered “the end of Wall Street as we knew it.”

That’s a done deal.

Today, Wall Street is forever changed.

The stock market will go on. Sound investors will still reap huge profits (and rightly so) and new companies will continue to emerge and grow or fail as they will, but Wall Street’s high-income generating “Money machine,” which was responsible for so much of the revenues that we all depended upon (New York sent far more TO Washington than it ever got back thanks to that “Wall Street Money machine”) is gone for good.

It isn’t coming back...and neither are all those revenues that once supported all those public sector jobs.

Wall Street, GM, Ford and most of America’s private sector has already contracted greatly. It’s bloodletting and job-shedding is mostly done, but the public sector’s is only just beginning!

For better or worse, and for many people it’s going to get much, MUCH worse. Our public sectors (federal, state and local) are going to contract. Pension and other benefits like pensionable overtime, retirement after 20 years are going to be eradicated.

These benefits packages DID attract many higher skilled, more motivated people into the public sector, but with sharply reduced revenues they can no longer be afforded.

The irony is that after years of bashing “fat cats” and Wall Street’s “Money machine,” the Left has finally gotten what it’s wanted, but it’s come with some very serious “unintended consequences” – one being the ongoing decimation of America’s once bloated public sector.

Just as we witnessed "the end of Wall Street as we knew it," we will almost certainly also witness "the end of America's vaunted public service sector, as we knew it."


Cynical Politics

The Left is banking on this Public Sector bloodletting fracturing the Tea party and (hopefully, from their vantage) bringing many Independents back to their side in time for 2012.


Unfortunately, neither the facts, nor the logistics on this issue are in their favor. Numerous Democratic Governors (from Cuomo to Brown) are looking to pare down their own public sectors and a recent Rsmussen Poll shows that over 60% of Americans believe that public sector employees should pay as much of a portion of their pension and health-care benefits as private sector employees do. 

Moreover a full fifty percent (50%) of voters favor reducing their home state’s government payroll by one percent a year for 10 years either by reducing the number of state employees or by cutting the pay of state workers, while only twenty-eight percent (28%) oppose a cut of this nature. Another 23% aren’t sure about it.

The "end of Wall Street as we knew it" has made the "end of America's vaunted (and often bloated) public sector as we knew it," all but inevitable. BOTH Democratic and Republican Governors are slashing state payrolls, AND the public seems very much in support of that.

Apparently Even Unions DON'T "Buy Union" - Michigan Carpenters Union Outsources Protesters

.

In one of those "sweet ironies" of life, a Michigan Carpenter's Union has hired NON-UNION protesters to walk their picket line! I guess the Union members were just too expensive.....