When I read this headline from December 9:
“PARIS -- The United States ranks near the bottom in life expectancy among wealthy nations despite spending more than double per person on healthcare than the industrialized world's average, an economic group said Tuesday.”
Something didn’t sit right with me. The study, published by the Organization for Economic Cooperation and Development, indicated that “Life expectancy at birth in the U.S. was 78.1 years in 2007.”
It also said that “That's a year less than the OECD average of 79.1, and puts the U.S. just ahead of the Czech Republic, Poland and Mexico, where spending on healthcare is many times less per person.” The Paris-based organization reported this in its latest survey of health trends among its 30 member countries.
Now, let’s put this in context. Research show that the U.S. counts every live birth toward our statistics, even if the infant lives only a few hours. European countries may only count infants that live at least a day or which meet other health criteria. Thus they can claim fewer infant deaths, which in turn dramatically alters the average life expectancy in years.
In Austria and Germany, fetal weight must be at least 500 grams to classify as a live birth; Switzerland, has a length (30 centimeters) requirement. In Belgium and France, births before the 27th week of pregnancy are not registered as live.
Here in the U.S., such very low birth weight babies are considered live births. It follows that the mortality rate of these infants is extraordinarily high; up to 869 per 1,000 in the first month of life alone. This causes the U.S. to report higher infant mortality rates and distorts U.S. infant mortality statistics
Also, many deaths are not caused by illness, and countries have differing rates and types of illness and subsequent deaths. For example, the Center for Disease Control statistics show that that 75% of more than 40,000 deaths each year, among persons aged 10-24 in the U.S., are related to motor-vehicle accidents (37%), homicide (14%), suicide (12%), and other injuries (drowning, poisoning, and burns - 12%). These are unfortunate parts of our culture and way of life, and are not a measure of our health care system.
We also have far more fatal transportation accidents than other countries, and our homicide rate is 10 times greater than in the U.K., eight times greater than in France, and five times greater than in Canada. Also, 25 Americans are killed every day of the year by illegal immigrants. Is this an indictment of our healthcare system?
When you adjust for these metrics, U.S. life expectancy is substantially higher, and likely higher than that of other industrialized nations. Yet these deaths are included in U.S. life expectancy statistics for the purpose making an argument against our non-government run health care system. This makes no sense, and is disingenuous.
The study also went on to make these points:
“Total U.S. spending on healthcare was $7,290 a person in 2007, nearly two-and-a-half times the OECD average of $2,984. The figures include spending by both individuals and governments.”
“Spending on healthcare in the U.S. grew more quickly between 1997 and 2007 than in France, Italy, Germany and Spain, averaging 3.4 percent annually over the period. The U.S. far outspent the next biggest healthcare spenders, Norway and Switzerland, despite the fact that those countries' life expectancies are two to four years longer, according to the report.”
What is conveniently ignored is that government-run healthcare does not measure up when compared to the ability of the U.S. system to treat cancer, for example. The ranking is U.S. (first), then Canada, France, and Norway. Britain ranked fifth, with some of the lowest cancer survival rates in the civilized world. This is from the medical journal the Lancet.
For example, the U.S. has the highest prostate and breast cancer survival rates. For all cancers, Europe as a whole had a much lower survival rate than the US. for prostate cancer; with the US at 91.9% compared to 57.1% in Europe - a 34% difference. The survival rate for prostate cancer in Britain is just 51%. Now, while there are certainly areas that can be targeted to reduce overall health care costs in the U.S., (malpractice reform, interstate portability, requiring that ‘undocumented workers’ actually pay for care, living a healthier lifestyle - to name a few) it’s certainly not a stretch to draw a correlation between increased cancer research and development spending and increased cancer survival rates in the U.S. If you talk to someone about this and they push back, ask them if they’d rather have more money in the bank and be dead, or have a lighter wallet but still be walking around.
Each time you read a report or study by an ‘economic group’, ‘think tank’, or ‘organization of experts’ and you take it at face value without doing some research and questioning the logic and real motive behind it - you’re doing yourself a disservice. This is especially true if the study was funded by a government research grant or otherwise received funding from another organization that may have a vested interest in a particular outcome or study result. Then, you should assume that there’s something rotten in Denmark. (And I don’t mean the globe-trotting, carbon producing, email deleting climate change hypocrites in Copenhagen… but that’s a story for another day).
The OECD is a Paris-based think tank funded by its 30 member countries. National contributions are based on a formula which takes into account the size of each member's economy. Did you know that the largest contributor is the United States, which provides nearly 25% of the budget? This pro-government healthcare report was released by an organization which receives direct funding from the U.S. government just as the U.S. Senate is considering a healthcare overhaul promised by President Barack Obama during his presidential campaign. What an astounding coincidence.
Our government, through a select few individuals, is directly (and indirectly through other organizations who do its bidding), using fear and every other tactic at its disposal to push forth a political agenda in an attempt to achieve unchecked control and create increasing dependency on the state. And they just may succeed unless more people rise from their slumber and unless we keep fighting. Of course, statists would attempt to marginalize this line of thought and discount it as ridiculous and unfounded while they quietly fund their next study, prepare to take over or render toothless another industry, levy new taxes or fees, and continue to debase our currency.
One of our biggest obstacles is that many of us have never really had to fight for anything life changing. Many simply refuse to believe that there are those who, using the element of fear and under the guise of reform and doing ‘what is right’, are gaining astonishing wealth and power – and they have someone’s best interest in mind – they’re own.
Don’t assume your neighbor will take up the fight. Knock on his door and wake him up. (Well, figuratively, especially if he’s a staunch believer in the second amendment). Stand up and speak out, pick up the phone and call your Congressman or Senator, write a letter. Question motives. Get in someone’s face. Educate them. Make them understand that this country belongs to its people, not to the beguiling political types and bureaucrats with their ulterior albeit single-minded motives. Explain that your flag means more to you than a $10 purchase at Walmart on the 4th of July. Explain that many, many more people are proud of this country and its generosity and accomplishments than the few resentful apologists who are not and who seek to tear it down. If they think you’re over-reacting, or that Socialism can never become entrenched in my United States of America, ask if they read or heard Hugo Chavez’ comments in Copenhagen, where on a world stage the irrational Dictator said there was a “silent and terrible ghost in the room and that ghost was called capitalism”, to this the applause was deafening. Or if they know that he said “Socialism, the other ghost that is probably wandering around this room, that’s the way to save the planet, capitalism is the road to hell....let’s fight against capitalism and make it obey us.” For this, he won a standing ovation.
Explain that there are other countries more suited for such types to take up residence.
This country is not one of them.
Make no mistake, the socialist agenda is real, and its drive relentless. Its sound is silent to some but deafening to others. America is the ultimate prize. Are you listening and willing to meet the challenge? The pro-America patriotic onslaught of every-day Americans must be greater today than yesterday, more formidable tomorrow than today. Doing nothing is not an option. Complacency and apathy are a recipe for an America I never want my children to see.
Thursday, December 17, 2009
Friday, October 23, 2009
Stocks Are Up – Everything Must Be Fine, Right?
Your stocks are up for the year, granted they are still well off the October 2007 peak. Many companies have reported better than expected earnings. The recession may finally be over. All these things are true. So we’re out of the woods, right? This is precisely what media spin doctors and government experts would have you believe. After all, they don’t want people scratching below the surface and actually finding something unsightly. That would ruin all the hard work that has been done aimed at getting investors to buy stocks and consumers to spend. They prefer to cultivate a superficial and semi-informed consumer/investor. The thinking man knows better. Look, it’s natural for people to WANT to believe that everything is fine. The fact is there is a deep chasm between current market sentiment and reality.
Strict technical definitions may suggest the U.S. is emerging from economic recession if we discontinue the pattern of two consecutive quarters of negative GDP growth. While this may happen, in the case of the U.S. economy this is akin to a cardiac patient having a couple of good days amongst many bad ones.
When Wall Street reports news that is marginally better than expected; people cheer. This is more indicative of the collective bar being set extremely low by analysts, and organizations operating with vastly reduced staff (translating into bolstered operating margins); rather than sound business growth and expansion.
This is perhaps the most troubling. A country’s currency (direction) is supposed to be a reflection of its economic strength. Therefore, when an economy is robust, the currency will gain in value, along with stocks. Since early this year, the U.S dollar has declined, yet stocks have risen. Why? Is it based on fundamental strength? The fact is the majority of the run-up in the major U.S. stock indices can be seen in the correlation between the U.S. dollar and foreign currencies, and the bond market. Simply put, a weak U.S. dollar means higher stock prices as global investors essentially buy U.S stocks at a discount. With their home currencies strong against the dollar, they have more purchasing power.
With bond yields extremely low - institutions, mutual funds, and pension funds across the world that are holding huge amounts of cash need to look elsewhere for a decent return. Much of this money has been pouring into U.S. equities.
All this demand has led to a resurgence in the stock market. What we are seeing is not so much a stock rally based on sound fundamentals as much as an adjustment to global prices. The majority of the increases in the major U.S. stock indices can be attributed to this.
When a country has huge deficit spending and its central bank is printing money as is the case in the U.S., this further de-values the currency and it becomes a less attractive investment, so investors go towards gold, other commodities, and other currencies as alternatives. This would account for the increase in the value of gold, which cannot be devalued like a paper currency by printing.
This phenomenon would be played out in reverse if and when the U.S. dollar ever regains strength relative to other currencies. Then, foreign currencies will weaken against the dollar and global investors’ purchasing power will be eroded. Bond yields (and interest rates) would increase. Foreign demand for U.S. equities will drop, while bond demand increases and these forces combine to cause a pullback in the stock market.
The problem is, there are indications that the U.S. dollar will continue its decline given massive U.S. deficit spending and proposed (‘reform’) programs that are completely unfunded. In short, our government is spending money it does not have and proposing programs it cannot possibly pay for without economy-crippling tax increases and selling ever increasing amounts of debt to foreign governments. If the current situation holds, you have to assume that foreign investors will at some point reach a saturation point (there are signs that this has already begun) with respect to U.S. equities (and treasury debt). They will look to diversify, take profits or cut losses, if for no other reasons than sheer common sense and capital preservation. Over the last three months, banks poured 63 percent of their new cash into other currencies – the Euro and the Yen – instead of the dollar. This is the complete opposite of what used to be the norm.
Here are some sobering facts:
• 98 U.S. banks have quietly failed so far this year.
• The President and many on Capitol Hill are calling for a $1 trillion+ healthcare bill — to be funded by additional borrowing and/or higher taxes on income and through some sort of value added tax scheme, - all of which will further slow economic growth.
• Federal government expenditures are growing much faster than the economy, and thus the government is becoming a larger and larger share of our nation’s GDP.
• Entitlement programs like Social Security, Medicare, and Medicaid all continue to grow faster than the economy. These will account for all federal tax revenue this year, requiring that other government spending programs, including defense and interest payments on the national debt be funded by selling even more treasury debt and by printing money.
• Our government cannot tax its way out of staggering deficits because increasing income tax rates on high wage earners will ultimately have a negative impact on jobs and GDP as less private sector money is available to invest in and grow businesses; and productivity decreases as the rich spend more of their time searching for ways to decrease their tax bill, and less time actually producing more revenue since more of it is now taxable.
• The Chinese and other holders of U.S. treasury debt are diversifying their holdings — many are buying large quantities of tradable commodities which are in part, a hedge against a plummeting U.S. dollar. Therefore, at the same time, the U.S. government needs to sell trillions of dollars of new bonds to compensate for the diversification. Our government is by its own actions driving away foreign bond buyers, which can only inevitably result in higher interest rates in the U.S., further slowing economic growth.
The life blood of our economy is the consumer and he’s not consuming. Credit still isn't widely available. Even if it were, people are very hesitant to borrow as they are in saving mode. The prospect of continued high unemployment will succeed in keeping wages down. Increasing taxes will slice further into budgets. So where is the disposable income supposed to come from that will revive our economy? The answer is that people will once again begin to open their wallets only after they have first saved to a level of some comfort; and when they have confidence in an economic policy and in leadership that places a much greater emphasis on fiscal restraint and in rebuilding an economy without instituting massive borrowing and promoting a continued debasement in the value of our currency.
The supply-side solutions are surprisingly simple:
• Cut taxes to create more available cash and stimulate business and consumer spending;
• The Federal Reserve must stop printing money and begin to remove excess cash from the money supply to begin to stop the bleeding;
• The Treasury should buy U.S. Dollars in the currency markets to begin to instill confidence in our currency;
• The Government must stop spending money it does not have and stop borrowing money it cannot repay;
Neither political party has put forth a viable plan for reversing the explosion of government (taxpayer) debt. Most Democrats are proposing accelerating spending, while most Republicans are doing nothing more than attempting to slow it down.
The U.S. economy and stock market cannot be artificially driven and sustained over the long term as Americans suffer in a jobless recovery, while our collective quality of life deteriorates relative to the rest of the world.
Strict technical definitions may suggest the U.S. is emerging from economic recession if we discontinue the pattern of two consecutive quarters of negative GDP growth. While this may happen, in the case of the U.S. economy this is akin to a cardiac patient having a couple of good days amongst many bad ones.
When Wall Street reports news that is marginally better than expected; people cheer. This is more indicative of the collective bar being set extremely low by analysts, and organizations operating with vastly reduced staff (translating into bolstered operating margins); rather than sound business growth and expansion.
This is perhaps the most troubling. A country’s currency (direction) is supposed to be a reflection of its economic strength. Therefore, when an economy is robust, the currency will gain in value, along with stocks. Since early this year, the U.S dollar has declined, yet stocks have risen. Why? Is it based on fundamental strength? The fact is the majority of the run-up in the major U.S. stock indices can be seen in the correlation between the U.S. dollar and foreign currencies, and the bond market. Simply put, a weak U.S. dollar means higher stock prices as global investors essentially buy U.S stocks at a discount. With their home currencies strong against the dollar, they have more purchasing power.
With bond yields extremely low - institutions, mutual funds, and pension funds across the world that are holding huge amounts of cash need to look elsewhere for a decent return. Much of this money has been pouring into U.S. equities.
All this demand has led to a resurgence in the stock market. What we are seeing is not so much a stock rally based on sound fundamentals as much as an adjustment to global prices. The majority of the increases in the major U.S. stock indices can be attributed to this.
When a country has huge deficit spending and its central bank is printing money as is the case in the U.S., this further de-values the currency and it becomes a less attractive investment, so investors go towards gold, other commodities, and other currencies as alternatives. This would account for the increase in the value of gold, which cannot be devalued like a paper currency by printing.
This phenomenon would be played out in reverse if and when the U.S. dollar ever regains strength relative to other currencies. Then, foreign currencies will weaken against the dollar and global investors’ purchasing power will be eroded. Bond yields (and interest rates) would increase. Foreign demand for U.S. equities will drop, while bond demand increases and these forces combine to cause a pullback in the stock market.
The problem is, there are indications that the U.S. dollar will continue its decline given massive U.S. deficit spending and proposed (‘reform’) programs that are completely unfunded. In short, our government is spending money it does not have and proposing programs it cannot possibly pay for without economy-crippling tax increases and selling ever increasing amounts of debt to foreign governments. If the current situation holds, you have to assume that foreign investors will at some point reach a saturation point (there are signs that this has already begun) with respect to U.S. equities (and treasury debt). They will look to diversify, take profits or cut losses, if for no other reasons than sheer common sense and capital preservation. Over the last three months, banks poured 63 percent of their new cash into other currencies – the Euro and the Yen – instead of the dollar. This is the complete opposite of what used to be the norm.
Here are some sobering facts:
• 98 U.S. banks have quietly failed so far this year.
• The President and many on Capitol Hill are calling for a $1 trillion+ healthcare bill — to be funded by additional borrowing and/or higher taxes on income and through some sort of value added tax scheme, - all of which will further slow economic growth.
• Federal government expenditures are growing much faster than the economy, and thus the government is becoming a larger and larger share of our nation’s GDP.
• Entitlement programs like Social Security, Medicare, and Medicaid all continue to grow faster than the economy. These will account for all federal tax revenue this year, requiring that other government spending programs, including defense and interest payments on the national debt be funded by selling even more treasury debt and by printing money.
• Our government cannot tax its way out of staggering deficits because increasing income tax rates on high wage earners will ultimately have a negative impact on jobs and GDP as less private sector money is available to invest in and grow businesses; and productivity decreases as the rich spend more of their time searching for ways to decrease their tax bill, and less time actually producing more revenue since more of it is now taxable.
• The Chinese and other holders of U.S. treasury debt are diversifying their holdings — many are buying large quantities of tradable commodities which are in part, a hedge against a plummeting U.S. dollar. Therefore, at the same time, the U.S. government needs to sell trillions of dollars of new bonds to compensate for the diversification. Our government is by its own actions driving away foreign bond buyers, which can only inevitably result in higher interest rates in the U.S., further slowing economic growth.
The life blood of our economy is the consumer and he’s not consuming. Credit still isn't widely available. Even if it were, people are very hesitant to borrow as they are in saving mode. The prospect of continued high unemployment will succeed in keeping wages down. Increasing taxes will slice further into budgets. So where is the disposable income supposed to come from that will revive our economy? The answer is that people will once again begin to open their wallets only after they have first saved to a level of some comfort; and when they have confidence in an economic policy and in leadership that places a much greater emphasis on fiscal restraint and in rebuilding an economy without instituting massive borrowing and promoting a continued debasement in the value of our currency.
The supply-side solutions are surprisingly simple:
• Cut taxes to create more available cash and stimulate business and consumer spending;
• The Federal Reserve must stop printing money and begin to remove excess cash from the money supply to begin to stop the bleeding;
• The Treasury should buy U.S. Dollars in the currency markets to begin to instill confidence in our currency;
• The Government must stop spending money it does not have and stop borrowing money it cannot repay;
Neither political party has put forth a viable plan for reversing the explosion of government (taxpayer) debt. Most Democrats are proposing accelerating spending, while most Republicans are doing nothing more than attempting to slow it down.
The U.S. economy and stock market cannot be artificially driven and sustained over the long term as Americans suffer in a jobless recovery, while our collective quality of life deteriorates relative to the rest of the world.
Thursday, August 20, 2009
Attack the Cost, not the Care
Memo to Speaker Pelosi, et al:
As you stump for healthcare ‘reform’, it would not be advisable to refer to salt of the earth Americans as ‘Un-American’ or to compare them to Nazis. This may actually have a negative affect, as you may have begun to witness. It would be advisable that you prepare for the relentless grass-roots onslaught being brought forth by every-day American Patriots who understand the difference between tyranny and liberty. It would be advisable that you conduct yourself in a manner consistent with the office that you hold; with honor, dignity, integrity, and class. What’s that you say? Don’t have time for this banter with the ‘little people?’ Just as well, we have the time; in fact we have all that you lack. And we’re just getting started, Madam Speaker.
Now, to you and your 534 colleagues, and to the President, here are some thoughts and ideas for ‘fixing healthcare’ - a term that has been thrown about. Ironically, it’s not the care the needs fixing, as we have the finest healthcare on the planet. It’s the cost that must be attacked. Also, please understand that I am not a member of the elite class, do not run in the circles with intelligentsia, did not attend an Ivy League school via affirmative action or otherwise, do not share Al Gore’s carbon footprint, and will never utter the words, “Do you know who I am?” Still, I would appreciate if you would take a few moments out of your schedule, perhaps in between Gulfstream jet requests, to read and try to comprehend what follows.
First, let’s be clear. Health insurance is not a right. For that matter, neither is a job, housing, an automobile, or a lobster dinner paid for with a welfare card. Look it up. Sorry, I forgot, those of you in Congress aren’t big on reading. You’ll have to take my word for it, or have one of your aides read the relevant part of the Constitution to you. Yes, we do have to care for those who can’t care for themselves. Of course, this is our obligation as a compassionate and moral society, and we do so gladly. But make no mistake. What is being pushed upon the American people by you and the rest of the liberal left on Capitol Hill is not about caring for the less fortunate. It is not about the panacea of guaranteeing affordable health care for all. It is nothing more than a massive and unprecedented pursuit of power and control during a period in history when your liberal stars have aligned, and the timing for such an endeavor may not be better. And so it begins. Unfortunately for you and your ilk, you are transparent, and it is abundantly clear that your far left policies seek to excoriate American values and Constitutional principles under the guise of reform, compassion, and tolerance. You, our esteemed Speaker, and other leftists, appear surprisingly stunned – that we, the chattering class, (which includes - sshhh.. even some Democrats) - every day people from every walk of life are standing up and not having any of what you’re selling. The plain truth is that we believe our children deserve better than the likes of you and your cohorts in Congress and what you peddle; no less than the country that has provided hope and dreams to us and to our parents - through hard work and perseverance, not through entitlements and apathy. You may speak for a few, but YOU DON’T SPEAK FOR US. Let’s get started.
Malpractice/Tort Reform
President Obama’s budget reads:
“One of the other big drains on family budgets and on the performance of the economy as a whole has been the increasing costs of health care. Yet the evidence suggests that substantial reductions in costs could be achieved without sacrificing the quality of health care delivered.”
Absolutely true. What you in Congress and the President should do is implement the Texas model of tort reform, which has been an overwhelming success. There, medical malpractice awards have been capped and frivolous lawsuits against doctors greatly decreased. The result is over 7,000 new doctors have moved to Texas in 3 years. Doctors and hospitals have been able to cut costs and actually care for patients. Charity care has increased. I say again - charity care has increased. Money previously spent defending bogus lawsuits and paying huge insurance premiums is now helping to care for the poor. Yes, caring for the poor. Those damn Republicans do have a heart after all.
This would not cost the taxpayers a dime. Who would suffer? Well, you and your colleagues in Congress and the Lawyer lobby. The fact is, from 1998 - 2008, total contributions to Congress from Lawyers and Law Firms exceeded a staggering $800 Million. (Source OpenSecrets.org - Center for Responsive Politics). This was the most of any industry during this time. Isn’t this is good place to start?
The Cost of Healthcare for Illegal Aliens
A recent AP article put the total number of uninsured at 46 million. Of these, 20%, or roughly 10 million are estimated to be illegal aliens. So, since recent estimates of TOTAL illegal aliens in the United States put the number at about 20 million, this means that roughly half of all illegals actually have health insurance. How is this possible? The fact of the matter is, whether or not they have insurance, they are still receiving care – and what is important is that we, the taxpayers, are footing the bill. This increases everyone’s cost. According to the Federation for American Immigration Reform, the cost of treating illegal aliens amounts to nearly $11 billion a year. I have an idea. Why not insure only people who are here legally? What’s that you say – ‘undocumented workers’ provide a valuable service in executing the mundane tasks that Americans can’t bothered with? Wrong. There are many unemployed Americans who would gladly work if only given the opportunity. What your ‘undocumented workers’ represent is a valuable voting base down the line in your next ‘reform’ endeavor - immigration. Very clever. Don’t worry, no one will see THIS coming.
I have another idea. Since most of these illegals wire money out of the country, benefiting from our system while contributing little or nothing to it, I propose a mandatory 20% tax on all outgoing wire transfers to be collected at the point of origin. This revenue would go to offset health care or other costs subsidized by – you guessed it - me. Think of it as a sort of modified “value added tax”, where the value is added to my wallet. We’ll even pretend it was your idea, so you can have a press conference and take credit for it.
More Doctors, not More Patients
Imagine the ramifications of changing a system by injecting tens of millions of new patients into it, with the same or fewer doctors as we now have. It would be chaos. We would likely lose doctors in the process as they realize that in addition to huge patient loads and skyrocketing malpractice premiums, the government would dictate what they could charge to provide care. Wait times for basic and critical care would increase to levels seen in Canada and the U.K., maybe beyond, and the quality of care would suffer. We need more doctors, not fewer. Here’s a real example of socialized medicine at work. My aunt in Italy was in great pain and needed rotator cuff surgery. After waiting months to get a surgery date, she was called and the procedure was performed. The cost of the surgery, hospitalization, and medications were covered. That’s where it ended. She had to foot the bill for her own food and anything else provided in the hospital. And, when it came time for physical therapy, that was also 100% out of pocket, twice a week for 6 months. She’s one of the lucky ones.
In Canada, surgery was postponed indefinitely for 1,000 Kelowna, B.C. patients because the Interior Health Dept. ended its contract with the private operating facility that was to perform the procedures. (April 8, 2008 - The Globe and Mail)
About 70 per cent of Quebec's dentists have opted out of the public health-care system.
The dentists opted out after demands for more money were not met by the provincial government. (March 28, 2008 CTV.ca)
The average wait time for a Canadian awaiting surgery or other medical treatment is over 18 weeks, with some areas a high as 27 weeks. (October 15, 2007 - CBC News Canada)
Would you be willing to accept these conditions for your own care, Madam Speaker?
Reduce Costs via Interstate Commerce
Currently, if I want health insurance I have to buy it from one of a handful of companies who offer it in my area. Well, a little more competition could go a long way.
Here’s a simple yet brilliant idea that’s been floated about: Allow Americans to buy health insurance from companies nationwide. How Capitalistic! Thanks to you and your colleagues, we now find ourselves at the mercy of the legislators and insurance commissioners in our own states. People are forced to buy health insurance policies that not only cover catastrophic illness and hospitalization, but also anything from podiatry, acupuncture, massage therapy, osteopathy, and chiropractic care. Why can’t we just buy what we need? These mandates, when combined with having a small pool of insurers from which to select, add to the cost of policies. In addition, community rating is a failure and should be scrapped. The fact that people pay the same price regardless of age and health status is ludicrous.
Now, I understand that there may be some pushback on this whole ‘competition’ thing from certain companies like BlueCross/BlueShield, for example - who would probably list more competition as their biggest fear - but this is exactly what needs to happen to help bring costs down. What’s that you say - BlueCross/BlueShield and companies like it provide an extremely important and valuable service to millions of subscribers? Yes, I know, especially to Congress. In fact, BlueCross/BlueShield is one of the top all-time donors to Congress, donating nearly $11 million since 2000. (Source OpenSecrets.org - Center for Responsive Politics). But, I understand that this in no way influences your thinking.
A 2008 study showed that interstate health insurance competition would reduce premiums and the number of uninsured. From the American Enterprise Institute for Public Policy Research:
“Two University of Minnesota health economists, Stephen Parente and Roger Feldman, presented their new analysis of the impact of state laws and regulations on health insurance premiums. Parente and Feldman analyzed three scenarios for insurance competition: among the five largest states, among all fifty states, and within four geographical regions. They found that the most plausible scenario could produce a net increase of more than 11 million newly insured individuals. In addition, states with the largest regulatory burden (for example, New Jersey and Massachusetts) would experience the greatest movement of their resident insurance customers to insurers based in a less regulated state.”
How about this angle - interstate commerce in health insurance would actually help our economy. Currently, many people are scared to relocate, change jobs or start their own businesses for fear of losing their current health insurance. Imagine if those obstacles were removed. People could move on and move up, start new businesses, make more money, drive the economy, and yes, even deliver more tax revenue. Think about it.
Reduce Medical Office Administrative and Paperwork Costs
The cost of providing care is also being pushed up by system inefficiencies linked to paper processing in medical offices. These offices deal with a never-ending flow of invoices, checks, statements, and records. A New England Journal of Medicine report that noted that paperwork and administrative costs account for 31% of the total cost of healthcare. Offering private sector innovators incentives to create more efficient digitally-based medical administrative systems, while offering incentives to physicians to use these systems, would reduce the cost to practice and free up dollars better spent in other areas, like patient care. What do you think?
Incentives to be More Healthy
Congress should urge companies to follow the lead of Steven Burd, CEO of Safeway Inc. Rewarding healthy behavior has helped keep Safeway’s health care costs flat while other companies’ costs have increased some 38% in 4 years.
Burd testified before Congress on June 11, 2009, and authored a Wall Street Journal article the following day. He wrote:
“The big difference between Safeway and most employers is that we have pronounced differences in premiums that reflect each covered member's behaviors. Our plan utilizes a provision in the 1996 Health Insurance Portability and Accountability Act that permits employers to differentiate premiums based on behaviors. Currently we are focused on tobacco usage, healthy weight, blood pressure and cholesterol levels.
At Safeway, we are building a culture of health and fitness. The numbers speak for themselves. Our obesity and smoking rates are roughly 70% of the national average and our health-care costs for four years have been held constant. When surveyed, 78% of our employees rated our plan good, very good or excellent. In addition, 76% asked for more financial incentives to reward healthy behaviors. We have heard from dozens of employees who lost weight, lowered their blood-pressure and cholesterol levels, and are enjoying better health because of this program. Many discovered for the first time that they have high blood pressure, and others have been told by their doctor that they have added years to their life. We reward plan members $312 per year for not using tobacco.
By our calculation, if the nation had adopted our approach in 2005, the nation's direct health-care bill would be $550 billion less than it is today. This is almost four times the $150 billion that most experts estimate to be the cost of covering today's 47 million uninsured.”
When Possible and Applicable, Consider Alternative Remedies.
Doctors are often reluctant to even discuss alternative, drug-free remedies because the FDA is not involved in formal approval, for fear of lawsuits, or because the pharmaceutical lobby uses its influence in Washington to ensure that expensive drugs are considered the end-all and continue to flow and be distributed from doctor to patient. From 2000 - 2008, total contributions to Congress from the pharmaceutical industry exceeded $123 Million. (Source OpenSecrets.org - Center for Responsive Politics).
The fact is that many safe and effective herbal supplements have undergone extensive clinical trials by independent organizations, medical centers, and universities. If doctors were more open-minded about this and didn’t have the litigation concerns they have today, perhaps they would be more apt to research and suggest natural and less expensive and damaging treatments for certain aliments and diseases outside of FDA-approved drugs. While there certainly are many wonder-drugs that have helped people and likely saved lives, there are instances where the effects of a drug have proven to be worse than the illness or disease it’s intended to treat. It is in these situations where there are opportunities to both help patients AND save real dollars, and perhaps lives, in the process.
Here is a real-world example. My mother has liver problems. She has Hepatitis-C and was later diagnosed with liver fibrosis, with very high liver enzymes. Having already undergone treatments of Interferon and Rebetol (Ribavirin), two very strong drugs which rendered her weak and barely able to walk due to low blood cell counts, she was reluctant to go through that process a second time. We discussed it as a family and were unaware of other options at the time. So, she decided to proceed at the advice of her physicians. After several tests, she was again placed on a treatment of Interferon and Rebetol. She became so weak that she was admitted to the hospital for several days. Her blood cell counts plummeted, and she nearly died in the hospital. The treatments were stopped. During this time, I started researching other remedies for liver problems and came across an herbal supplements called Milk Thistle. I read testimonials, clinical trial information, and any other information I could find. It was found to be very effective in helping the liver function properly, especially helpful to Hep-C and fibrosis patients, and had no side effects. There was no downside. When we asked mom’s doctors about the Milk Thistle, only then did they admit that, as an alternative, it could help. When pressed as to why it was not suggested by them earlier, they explained that they could not recommend non-FDA approved supplements. When I printed pages and pages of positive documentation on the subject and brought it to my own doctor for an opinion, he discounted it and said he didn’t have time to read it. Mom began taking the supplement, and with no side effects, her liver enzymes returned to normal within months and the fibrosis stopped advancing. This treatment costs $30/month, and we still have mom. The point here is this. Thousands upon thousands of dollars were spent for blood work, various tests, specialists, hospitalization, and drugs - all of which in this case - was not only unnecessary, but almost killed my mother. In a nation of 300 + million, how many people have been in similar situations with various ailments? Probably more than just a few. The potential savings could be staggering. If a paradigm shift can be realized such that doctors are more open minded to other avenues of treatment, again - when possible and applicable - consider how much money could be saved in healthcare overall by refraining from making the first course of action be traditional, ultra-expensive drug-based treatments, and instead at least exploring other potential natural cures. And more importantly, someone’s life could be prolonged or saved.
No Radicals, Please
This may be the most frightening of all. Dr. Ezekiel Emanuel is the brother of White House Chief of Staff Rahm Emanuel. He has been appointed to two key positions: health-policy adviser at the Office of Management and Budget and a member of Federal Council on Comparative Effectiveness Research. He wrote: "Vague promises of savings from cutting waste, enhancing prevention and wellness, installing electronic medical records and improving quality are merely 'lipstick' cost control, more for show and public relations than for true change.” (Health Affairs February 27, 2008).
In the Journal of the American Medical Association, June 18, 2008, he wrote:
“Doctors take the Hippocratic Oath too seriously, as an imperative to do everything for the patient regardless of the cost or effects on others."
In a Hastings Center Report from November 1996, Emanuel implies that medical care should be reserved for the non-disabled:
“Services provided to individuals who are irreversibly prevented from being or becoming participating citizens are not basic and should not be guaranteed. An obvious example is not guaranteeing health services to patients with dementia. A less obvious example is guaranteeing neuropsychological services to ensure children with learning disabilities can read and learn to reason.”
Translation – if you’re elderly or disabled, you’re out of luck.
He even professes discrimination against older patients: "Unlike allocation by sex or race, allocation by age is not invidious discrimination; every person lives through different life stages rather than being a single age. Even if 25-year-olds receive priority over 65-year-olds, everyone who is 65 years now was previously 25 years" (Lancet, January 31, 2009).
We don’t need panels and radical experts placing a value on human life and suggesting that doctors place less importance and emphasis on their oaths. This is not only un-American, it is inhuman. Yet, these are the types that Obama is surrounding himself with. This ideology is not only accepted, it is promoted by the statist intelligentsia. This is not openly advertised by the liberal statists – it cannot be – it must be stealthily implemented if it is to succeed to support their agenda.
It has been said that you get the government you deserve. Well, what if you don’t get the government you deserve? What then? We certainly deserve better. That’s when we have to fight with everything we have. Complacency and apathy will only result in regrettable failure and an unthinkable America. What we need is an Administration and Congress who will truly and in fact - not just in lip service and sound bites - represent OUR collective will. We need Executive and Legislative branches who will not be allowed to create a lesser society in the name of remaking America or for political expediency and advancement. This is the ultimate injustice – and one that we cannot and will not stand for – at any cost.
If you’re an American citizen and well informed, you have cause for concern.
If you’re an American citizen and not concerned, you’re not well informed.
Only relentless conservatism, knowledge, and unending determination will allow us to win these battles – and the war has just started. Please stand up and fight.
-Michael DiLuca
As you stump for healthcare ‘reform’, it would not be advisable to refer to salt of the earth Americans as ‘Un-American’ or to compare them to Nazis. This may actually have a negative affect, as you may have begun to witness. It would be advisable that you prepare for the relentless grass-roots onslaught being brought forth by every-day American Patriots who understand the difference between tyranny and liberty. It would be advisable that you conduct yourself in a manner consistent with the office that you hold; with honor, dignity, integrity, and class. What’s that you say? Don’t have time for this banter with the ‘little people?’ Just as well, we have the time; in fact we have all that you lack. And we’re just getting started, Madam Speaker.
Now, to you and your 534 colleagues, and to the President, here are some thoughts and ideas for ‘fixing healthcare’ - a term that has been thrown about. Ironically, it’s not the care the needs fixing, as we have the finest healthcare on the planet. It’s the cost that must be attacked. Also, please understand that I am not a member of the elite class, do not run in the circles with intelligentsia, did not attend an Ivy League school via affirmative action or otherwise, do not share Al Gore’s carbon footprint, and will never utter the words, “Do you know who I am?” Still, I would appreciate if you would take a few moments out of your schedule, perhaps in between Gulfstream jet requests, to read and try to comprehend what follows.
First, let’s be clear. Health insurance is not a right. For that matter, neither is a job, housing, an automobile, or a lobster dinner paid for with a welfare card. Look it up. Sorry, I forgot, those of you in Congress aren’t big on reading. You’ll have to take my word for it, or have one of your aides read the relevant part of the Constitution to you. Yes, we do have to care for those who can’t care for themselves. Of course, this is our obligation as a compassionate and moral society, and we do so gladly. But make no mistake. What is being pushed upon the American people by you and the rest of the liberal left on Capitol Hill is not about caring for the less fortunate. It is not about the panacea of guaranteeing affordable health care for all. It is nothing more than a massive and unprecedented pursuit of power and control during a period in history when your liberal stars have aligned, and the timing for such an endeavor may not be better. And so it begins. Unfortunately for you and your ilk, you are transparent, and it is abundantly clear that your far left policies seek to excoriate American values and Constitutional principles under the guise of reform, compassion, and tolerance. You, our esteemed Speaker, and other leftists, appear surprisingly stunned – that we, the chattering class, (which includes - sshhh.. even some Democrats) - every day people from every walk of life are standing up and not having any of what you’re selling. The plain truth is that we believe our children deserve better than the likes of you and your cohorts in Congress and what you peddle; no less than the country that has provided hope and dreams to us and to our parents - through hard work and perseverance, not through entitlements and apathy. You may speak for a few, but YOU DON’T SPEAK FOR US. Let’s get started.
Malpractice/Tort Reform
President Obama’s budget reads:
“One of the other big drains on family budgets and on the performance of the economy as a whole has been the increasing costs of health care. Yet the evidence suggests that substantial reductions in costs could be achieved without sacrificing the quality of health care delivered.”
Absolutely true. What you in Congress and the President should do is implement the Texas model of tort reform, which has been an overwhelming success. There, medical malpractice awards have been capped and frivolous lawsuits against doctors greatly decreased. The result is over 7,000 new doctors have moved to Texas in 3 years. Doctors and hospitals have been able to cut costs and actually care for patients. Charity care has increased. I say again - charity care has increased. Money previously spent defending bogus lawsuits and paying huge insurance premiums is now helping to care for the poor. Yes, caring for the poor. Those damn Republicans do have a heart after all.
This would not cost the taxpayers a dime. Who would suffer? Well, you and your colleagues in Congress and the Lawyer lobby. The fact is, from 1998 - 2008, total contributions to Congress from Lawyers and Law Firms exceeded a staggering $800 Million. (Source OpenSecrets.org - Center for Responsive Politics). This was the most of any industry during this time. Isn’t this is good place to start?
The Cost of Healthcare for Illegal Aliens
A recent AP article put the total number of uninsured at 46 million. Of these, 20%, or roughly 10 million are estimated to be illegal aliens. So, since recent estimates of TOTAL illegal aliens in the United States put the number at about 20 million, this means that roughly half of all illegals actually have health insurance. How is this possible? The fact of the matter is, whether or not they have insurance, they are still receiving care – and what is important is that we, the taxpayers, are footing the bill. This increases everyone’s cost. According to the Federation for American Immigration Reform, the cost of treating illegal aliens amounts to nearly $11 billion a year. I have an idea. Why not insure only people who are here legally? What’s that you say – ‘undocumented workers’ provide a valuable service in executing the mundane tasks that Americans can’t bothered with? Wrong. There are many unemployed Americans who would gladly work if only given the opportunity. What your ‘undocumented workers’ represent is a valuable voting base down the line in your next ‘reform’ endeavor - immigration. Very clever. Don’t worry, no one will see THIS coming.
I have another idea. Since most of these illegals wire money out of the country, benefiting from our system while contributing little or nothing to it, I propose a mandatory 20% tax on all outgoing wire transfers to be collected at the point of origin. This revenue would go to offset health care or other costs subsidized by – you guessed it - me. Think of it as a sort of modified “value added tax”, where the value is added to my wallet. We’ll even pretend it was your idea, so you can have a press conference and take credit for it.
More Doctors, not More Patients
Imagine the ramifications of changing a system by injecting tens of millions of new patients into it, with the same or fewer doctors as we now have. It would be chaos. We would likely lose doctors in the process as they realize that in addition to huge patient loads and skyrocketing malpractice premiums, the government would dictate what they could charge to provide care. Wait times for basic and critical care would increase to levels seen in Canada and the U.K., maybe beyond, and the quality of care would suffer. We need more doctors, not fewer. Here’s a real example of socialized medicine at work. My aunt in Italy was in great pain and needed rotator cuff surgery. After waiting months to get a surgery date, she was called and the procedure was performed. The cost of the surgery, hospitalization, and medications were covered. That’s where it ended. She had to foot the bill for her own food and anything else provided in the hospital. And, when it came time for physical therapy, that was also 100% out of pocket, twice a week for 6 months. She’s one of the lucky ones.
In Canada, surgery was postponed indefinitely for 1,000 Kelowna, B.C. patients because the Interior Health Dept. ended its contract with the private operating facility that was to perform the procedures. (April 8, 2008 - The Globe and Mail)
About 70 per cent of Quebec's dentists have opted out of the public health-care system.
The dentists opted out after demands for more money were not met by the provincial government. (March 28, 2008 CTV.ca)
The average wait time for a Canadian awaiting surgery or other medical treatment is over 18 weeks, with some areas a high as 27 weeks. (October 15, 2007 - CBC News Canada)
Would you be willing to accept these conditions for your own care, Madam Speaker?
Reduce Costs via Interstate Commerce
Currently, if I want health insurance I have to buy it from one of a handful of companies who offer it in my area. Well, a little more competition could go a long way.
Here’s a simple yet brilliant idea that’s been floated about: Allow Americans to buy health insurance from companies nationwide. How Capitalistic! Thanks to you and your colleagues, we now find ourselves at the mercy of the legislators and insurance commissioners in our own states. People are forced to buy health insurance policies that not only cover catastrophic illness and hospitalization, but also anything from podiatry, acupuncture, massage therapy, osteopathy, and chiropractic care. Why can’t we just buy what we need? These mandates, when combined with having a small pool of insurers from which to select, add to the cost of policies. In addition, community rating is a failure and should be scrapped. The fact that people pay the same price regardless of age and health status is ludicrous.
Now, I understand that there may be some pushback on this whole ‘competition’ thing from certain companies like BlueCross/BlueShield, for example - who would probably list more competition as their biggest fear - but this is exactly what needs to happen to help bring costs down. What’s that you say - BlueCross/BlueShield and companies like it provide an extremely important and valuable service to millions of subscribers? Yes, I know, especially to Congress. In fact, BlueCross/BlueShield is one of the top all-time donors to Congress, donating nearly $11 million since 2000. (Source OpenSecrets.org - Center for Responsive Politics). But, I understand that this in no way influences your thinking.
A 2008 study showed that interstate health insurance competition would reduce premiums and the number of uninsured. From the American Enterprise Institute for Public Policy Research:
“Two University of Minnesota health economists, Stephen Parente and Roger Feldman, presented their new analysis of the impact of state laws and regulations on health insurance premiums. Parente and Feldman analyzed three scenarios for insurance competition: among the five largest states, among all fifty states, and within four geographical regions. They found that the most plausible scenario could produce a net increase of more than 11 million newly insured individuals. In addition, states with the largest regulatory burden (for example, New Jersey and Massachusetts) would experience the greatest movement of their resident insurance customers to insurers based in a less regulated state.”
How about this angle - interstate commerce in health insurance would actually help our economy. Currently, many people are scared to relocate, change jobs or start their own businesses for fear of losing their current health insurance. Imagine if those obstacles were removed. People could move on and move up, start new businesses, make more money, drive the economy, and yes, even deliver more tax revenue. Think about it.
Reduce Medical Office Administrative and Paperwork Costs
The cost of providing care is also being pushed up by system inefficiencies linked to paper processing in medical offices. These offices deal with a never-ending flow of invoices, checks, statements, and records. A New England Journal of Medicine report that noted that paperwork and administrative costs account for 31% of the total cost of healthcare. Offering private sector innovators incentives to create more efficient digitally-based medical administrative systems, while offering incentives to physicians to use these systems, would reduce the cost to practice and free up dollars better spent in other areas, like patient care. What do you think?
Incentives to be More Healthy
Congress should urge companies to follow the lead of Steven Burd, CEO of Safeway Inc. Rewarding healthy behavior has helped keep Safeway’s health care costs flat while other companies’ costs have increased some 38% in 4 years.
Burd testified before Congress on June 11, 2009, and authored a Wall Street Journal article the following day. He wrote:
“The big difference between Safeway and most employers is that we have pronounced differences in premiums that reflect each covered member's behaviors. Our plan utilizes a provision in the 1996 Health Insurance Portability and Accountability Act that permits employers to differentiate premiums based on behaviors. Currently we are focused on tobacco usage, healthy weight, blood pressure and cholesterol levels.
At Safeway, we are building a culture of health and fitness. The numbers speak for themselves. Our obesity and smoking rates are roughly 70% of the national average and our health-care costs for four years have been held constant. When surveyed, 78% of our employees rated our plan good, very good or excellent. In addition, 76% asked for more financial incentives to reward healthy behaviors. We have heard from dozens of employees who lost weight, lowered their blood-pressure and cholesterol levels, and are enjoying better health because of this program. Many discovered for the first time that they have high blood pressure, and others have been told by their doctor that they have added years to their life. We reward plan members $312 per year for not using tobacco.
By our calculation, if the nation had adopted our approach in 2005, the nation's direct health-care bill would be $550 billion less than it is today. This is almost four times the $150 billion that most experts estimate to be the cost of covering today's 47 million uninsured.”
When Possible and Applicable, Consider Alternative Remedies.
Doctors are often reluctant to even discuss alternative, drug-free remedies because the FDA is not involved in formal approval, for fear of lawsuits, or because the pharmaceutical lobby uses its influence in Washington to ensure that expensive drugs are considered the end-all and continue to flow and be distributed from doctor to patient. From 2000 - 2008, total contributions to Congress from the pharmaceutical industry exceeded $123 Million. (Source OpenSecrets.org - Center for Responsive Politics).
The fact is that many safe and effective herbal supplements have undergone extensive clinical trials by independent organizations, medical centers, and universities. If doctors were more open-minded about this and didn’t have the litigation concerns they have today, perhaps they would be more apt to research and suggest natural and less expensive and damaging treatments for certain aliments and diseases outside of FDA-approved drugs. While there certainly are many wonder-drugs that have helped people and likely saved lives, there are instances where the effects of a drug have proven to be worse than the illness or disease it’s intended to treat. It is in these situations where there are opportunities to both help patients AND save real dollars, and perhaps lives, in the process.
Here is a real-world example. My mother has liver problems. She has Hepatitis-C and was later diagnosed with liver fibrosis, with very high liver enzymes. Having already undergone treatments of Interferon and Rebetol (Ribavirin), two very strong drugs which rendered her weak and barely able to walk due to low blood cell counts, she was reluctant to go through that process a second time. We discussed it as a family and were unaware of other options at the time. So, she decided to proceed at the advice of her physicians. After several tests, she was again placed on a treatment of Interferon and Rebetol. She became so weak that she was admitted to the hospital for several days. Her blood cell counts plummeted, and she nearly died in the hospital. The treatments were stopped. During this time, I started researching other remedies for liver problems and came across an herbal supplements called Milk Thistle. I read testimonials, clinical trial information, and any other information I could find. It was found to be very effective in helping the liver function properly, especially helpful to Hep-C and fibrosis patients, and had no side effects. There was no downside. When we asked mom’s doctors about the Milk Thistle, only then did they admit that, as an alternative, it could help. When pressed as to why it was not suggested by them earlier, they explained that they could not recommend non-FDA approved supplements. When I printed pages and pages of positive documentation on the subject and brought it to my own doctor for an opinion, he discounted it and said he didn’t have time to read it. Mom began taking the supplement, and with no side effects, her liver enzymes returned to normal within months and the fibrosis stopped advancing. This treatment costs $30/month, and we still have mom. The point here is this. Thousands upon thousands of dollars were spent for blood work, various tests, specialists, hospitalization, and drugs - all of which in this case - was not only unnecessary, but almost killed my mother. In a nation of 300 + million, how many people have been in similar situations with various ailments? Probably more than just a few. The potential savings could be staggering. If a paradigm shift can be realized such that doctors are more open minded to other avenues of treatment, again - when possible and applicable - consider how much money could be saved in healthcare overall by refraining from making the first course of action be traditional, ultra-expensive drug-based treatments, and instead at least exploring other potential natural cures. And more importantly, someone’s life could be prolonged or saved.
No Radicals, Please
This may be the most frightening of all. Dr. Ezekiel Emanuel is the brother of White House Chief of Staff Rahm Emanuel. He has been appointed to two key positions: health-policy adviser at the Office of Management and Budget and a member of Federal Council on Comparative Effectiveness Research. He wrote: "Vague promises of savings from cutting waste, enhancing prevention and wellness, installing electronic medical records and improving quality are merely 'lipstick' cost control, more for show and public relations than for true change.” (Health Affairs February 27, 2008).
In the Journal of the American Medical Association, June 18, 2008, he wrote:
“Doctors take the Hippocratic Oath too seriously, as an imperative to do everything for the patient regardless of the cost or effects on others."
In a Hastings Center Report from November 1996, Emanuel implies that medical care should be reserved for the non-disabled:
“Services provided to individuals who are irreversibly prevented from being or becoming participating citizens are not basic and should not be guaranteed. An obvious example is not guaranteeing health services to patients with dementia. A less obvious example is guaranteeing neuropsychological services to ensure children with learning disabilities can read and learn to reason.”
Translation – if you’re elderly or disabled, you’re out of luck.
He even professes discrimination against older patients: "Unlike allocation by sex or race, allocation by age is not invidious discrimination; every person lives through different life stages rather than being a single age. Even if 25-year-olds receive priority over 65-year-olds, everyone who is 65 years now was previously 25 years" (Lancet, January 31, 2009).
We don’t need panels and radical experts placing a value on human life and suggesting that doctors place less importance and emphasis on their oaths. This is not only un-American, it is inhuman. Yet, these are the types that Obama is surrounding himself with. This ideology is not only accepted, it is promoted by the statist intelligentsia. This is not openly advertised by the liberal statists – it cannot be – it must be stealthily implemented if it is to succeed to support their agenda.
It has been said that you get the government you deserve. Well, what if you don’t get the government you deserve? What then? We certainly deserve better. That’s when we have to fight with everything we have. Complacency and apathy will only result in regrettable failure and an unthinkable America. What we need is an Administration and Congress who will truly and in fact - not just in lip service and sound bites - represent OUR collective will. We need Executive and Legislative branches who will not be allowed to create a lesser society in the name of remaking America or for political expediency and advancement. This is the ultimate injustice – and one that we cannot and will not stand for – at any cost.
If you’re an American citizen and well informed, you have cause for concern.
If you’re an American citizen and not concerned, you’re not well informed.
Only relentless conservatism, knowledge, and unending determination will allow us to win these battles – and the war has just started. Please stand up and fight.
-Michael DiLuca
Friday, June 19, 2009
Green Shoots, Yellow Weeds and the Sleeping Giant
Last week, legislators sent a letter to Federal Reserve Chairman Ben Bernanke encouraging the Fed to stop printing money. They wrote: “Creating dollars to cover debts gives markets a short term boost at the expense of debasing the dollar and triggering inflation. To date, the Federal Reserve has already created over $130 billion to cover $35 billion of long-term debt and over $100 billion of short-term securities.”
The Capitol Hill geniuses also wrote:
“Lenders to the U.S. government are expressing growing reluctance to buy more U.S. debt. Key policymakers among U.S. creditors, especially in China and Japan, increasingly doubt the wisdom of this new policy," they wrote. "Most investors now see that the United States has embarked on a policy of dollar inflation in a short-sided attempt to replay old debts with newly-created dollars."
Well, better late than never, I suppose. Sound familiar?
On January 27, 2009 in ‘Economic Armies’, I wrote:
“The Fed and treasury total supply of money has nearly tripled since 2005 and jumped by 60% in 2008 alone. The massive amount of liquidity being injected into the system has taken a back seat to curing the deep recession upon us, but this will inevitably result in high inflation and a continuing debasing of the U.S. dollar.”
The appetite (especially from foreign governments) for U.S. treasury debt has waned because of the massive amount of treasuries they already hold, low rates of return, and the devalued dollar; which leaves only one option for generating the huge amounts of money needed to 'stimulate' spending - printing it.
And from ‘Short Term Gain, Long Term Pain’ March 25, 2009:
“The Fed has displayed a willingness to continue printing money to grow the money supply and now to buy treasuries. Although this policy may succeed in halting the slide of assets like real estate and stocks, this feat comes with a huge price. Every dollar printed to buy bonds or increase the money supply results in more inflation and a continued debasing of the dollar.”
I still believe that we could take 535 people randomly from the phone book and they couldn’t bollix things up any worse than the charlatans and donkeys on Capitol Hill. I should point out that we have sent emails and letters to various Senators and members of Congress to which there has been no reply in many cases. Senator Kennedy’s office, on the other hand, consistently replies - albeit with some boilerplate, mass-produced response written by an intern, no doubt. Perhaps if I were to send along a bottle of single-malt...
I’ve read much positive news about the markets lately; The Bull Market is here, we’ve turned the corner; job losses have slowed down, business sentiment is better, that sort of stuff. The term ‘green shoots’ has been thrown about.
Is it true? Anyone who says they know is lying to you or trying to take your money, or both. Call me a realist. Along with the green shoots, there are always ugly yellow weeds. Even with the huge surge in the stock market since early March, we’re still about even (that is to say – no gain) year-to-date. Business capex spending is still down, and companies are still cutting inventories to bring supplies in line with falling sales. We have 9.4% unemployment, and it is expected to rise into double-digits, probably 11% before it levels off. Long-term market technicals point to a correction. A couple of months ago, the Fed announced its intention to buy billions in U.S Treasury bonds in order to, among other things, push rates down. Now, the government is trying to sell billions of dollars in debt to finance the economic recovery, and this has caused rates to climb. If this keeps up, any housing rebound will be squashed. They’re trying to strike a balance; if they go too far one way, there is huge inflation; too far the other way and it’s bye-bye recovery.
In an interview with CNN Money about the financial crisis, Tim Geithner said “You're going to see a slower recovery than what you normally see." What a visionary. This is the same guy who, when Speaking at Peking University, said: "Chinese assets are very safe." Loud laughter followed from the audience of students.
In a more direct illustration of China’s lack of confidence in U.S. fiscal policy, the Chinese have now begun reducing their holdings of U.S. government bonds. Also, for the first time since June 2008, the Chinese did not purchase more treasury bills. This is the waning appetite mentioned earlier. "China is implying to the US, more or less, that it should adopt a more pragmatic and responsible attitude to maintain the stability of the dollar," said He Maochun, a political scientist at Tsinghua University.
The following is an excerpt from a symposium on the economic crisis on 4/30/09, where one of the participants was George Soros. The moderator asked “What is the actual state of the economy, and do we need a serious mid-course correction on the part of the Obama administration?” The reply is very interesting.
This was one of Soros’ comments, and is really all I need to know:
“You have actually to inject a lot more leverage and money into the economy; you have to print money as fast as you can, expand the balance sheet of the Federal Reserve, increase the national debt. And that is, in fact, what has been done, which is the right thing to do.”
Print money as fast as you can and increase the national debt, Mr. Soros says. For whose benefit? The uber-liberal Mr. Soros has made billions during the economic collapse, shorting the stock market and betting against the U.S. Dollar.
‘The Australian’ reported on March 19:
“George Soros is having a very good crisis. Other investors are wilting, political power structures are being upended and market economists are scrambling to fashion new theories, but the world's most famous speculator is having a belated heyday.”
"It is, in a way, the culminating point of my life’s work," the 78-year-old said.
How touching. Soros is also one of the founders of Moveon.org - the group who financed the “General Betray-us” ad in the New York Times, thinks that the Bush Administration was responsible for 9/11, and counts as profound the likes of Rosie O'Donnell and Sean Penn. Anyone who believes that people like Soros have the best interest of our country at heart should be held for psychiatric evaluation. If he says we need to print money as fast as we can and increase the national debt, we should be very suspicious - and the presses should be confiscated and shut down.
It’s important to know that the liberal assault on Constitutional values began in Roosevelt’s America generations ago and has been gaining strength ever since. It will not be eradicated overnight. Ironically, having staunch far-left supporters like Soros and others will ultimately serve as the greatest indictment of the Obama Administration and its over-reaching policies as liberals begin to realize that in their U.S.S.A, they too would need to pay ever-increasing taxes, fight for rationed health care, press 2 for English, and live in a nation for the government, not for the people. Their penance would come if they were forced to explain to their children how they drove the whole process of destroying the very principles on which our country was founded. I hope to God we don’t get to that point, but it’s clear that liberal citizen-of-the-world types are making one hell of a push to ruin our country under the guise of righteousness and ‘tolerance’ and under the leadership of the Celebrity-In-Chief. These are the pompous class masquerading as if to possess an abundance of dignity and knowledge. Thankfully, they are transparent; and they are ill-prepared for the relentless onslaught being brought forth by every-day Patriots who understand the difference between life, liberty, and the pursuit of happiness; and absolutism, tyranny, and the pursuit of hopelessness.
After Pearl Harbor was attacked, Japanese Admiral Yamamoto said: “I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve”. Now, Conservative and Constitutional principles are under attack by new enemies of the state. We, the now un-silent majority are that sleeping giant. We are now fully engaged. We are single-minded, and make no mistake; we have the fight of our lives on our hands. We will ultimately prevail because our resolve is limitless; because we respect and value the sacrifices that were made generations ago to turn back tyranny, and because our children deserve no less than the country that has provided hope and dreams to us and to our parents - through hard work and perseverance, not through entitlements and apathy. We will ultimately prevail because we must.
“Let us be sure that those who come after will say of us in our time, that in our time we did everything that could be done. We finished the race; we kept them free; we kept the faith.”
- Ronald Reagan
The Capitol Hill geniuses also wrote:
“Lenders to the U.S. government are expressing growing reluctance to buy more U.S. debt. Key policymakers among U.S. creditors, especially in China and Japan, increasingly doubt the wisdom of this new policy," they wrote. "Most investors now see that the United States has embarked on a policy of dollar inflation in a short-sided attempt to replay old debts with newly-created dollars."
Well, better late than never, I suppose. Sound familiar?
On January 27, 2009 in ‘Economic Armies’, I wrote:
“The Fed and treasury total supply of money has nearly tripled since 2005 and jumped by 60% in 2008 alone. The massive amount of liquidity being injected into the system has taken a back seat to curing the deep recession upon us, but this will inevitably result in high inflation and a continuing debasing of the U.S. dollar.”
The appetite (especially from foreign governments) for U.S. treasury debt has waned because of the massive amount of treasuries they already hold, low rates of return, and the devalued dollar; which leaves only one option for generating the huge amounts of money needed to 'stimulate' spending - printing it.
And from ‘Short Term Gain, Long Term Pain’ March 25, 2009:
“The Fed has displayed a willingness to continue printing money to grow the money supply and now to buy treasuries. Although this policy may succeed in halting the slide of assets like real estate and stocks, this feat comes with a huge price. Every dollar printed to buy bonds or increase the money supply results in more inflation and a continued debasing of the dollar.”
I still believe that we could take 535 people randomly from the phone book and they couldn’t bollix things up any worse than the charlatans and donkeys on Capitol Hill. I should point out that we have sent emails and letters to various Senators and members of Congress to which there has been no reply in many cases. Senator Kennedy’s office, on the other hand, consistently replies - albeit with some boilerplate, mass-produced response written by an intern, no doubt. Perhaps if I were to send along a bottle of single-malt...
I’ve read much positive news about the markets lately; The Bull Market is here, we’ve turned the corner; job losses have slowed down, business sentiment is better, that sort of stuff. The term ‘green shoots’ has been thrown about.
Is it true? Anyone who says they know is lying to you or trying to take your money, or both. Call me a realist. Along with the green shoots, there are always ugly yellow weeds. Even with the huge surge in the stock market since early March, we’re still about even (that is to say – no gain) year-to-date. Business capex spending is still down, and companies are still cutting inventories to bring supplies in line with falling sales. We have 9.4% unemployment, and it is expected to rise into double-digits, probably 11% before it levels off. Long-term market technicals point to a correction. A couple of months ago, the Fed announced its intention to buy billions in U.S Treasury bonds in order to, among other things, push rates down. Now, the government is trying to sell billions of dollars in debt to finance the economic recovery, and this has caused rates to climb. If this keeps up, any housing rebound will be squashed. They’re trying to strike a balance; if they go too far one way, there is huge inflation; too far the other way and it’s bye-bye recovery.
In an interview with CNN Money about the financial crisis, Tim Geithner said “You're going to see a slower recovery than what you normally see." What a visionary. This is the same guy who, when Speaking at Peking University, said: "Chinese assets are very safe." Loud laughter followed from the audience of students.
In a more direct illustration of China’s lack of confidence in U.S. fiscal policy, the Chinese have now begun reducing their holdings of U.S. government bonds. Also, for the first time since June 2008, the Chinese did not purchase more treasury bills. This is the waning appetite mentioned earlier. "China is implying to the US, more or less, that it should adopt a more pragmatic and responsible attitude to maintain the stability of the dollar," said He Maochun, a political scientist at Tsinghua University.
The following is an excerpt from a symposium on the economic crisis on 4/30/09, where one of the participants was George Soros. The moderator asked “What is the actual state of the economy, and do we need a serious mid-course correction on the part of the Obama administration?” The reply is very interesting.
This was one of Soros’ comments, and is really all I need to know:
“You have actually to inject a lot more leverage and money into the economy; you have to print money as fast as you can, expand the balance sheet of the Federal Reserve, increase the national debt. And that is, in fact, what has been done, which is the right thing to do.”
Print money as fast as you can and increase the national debt, Mr. Soros says. For whose benefit? The uber-liberal Mr. Soros has made billions during the economic collapse, shorting the stock market and betting against the U.S. Dollar.
‘The Australian’ reported on March 19:
“George Soros is having a very good crisis. Other investors are wilting, political power structures are being upended and market economists are scrambling to fashion new theories, but the world's most famous speculator is having a belated heyday.”
"It is, in a way, the culminating point of my life’s work," the 78-year-old said.
How touching. Soros is also one of the founders of Moveon.org - the group who financed the “General Betray-us” ad in the New York Times, thinks that the Bush Administration was responsible for 9/11, and counts as profound the likes of Rosie O'Donnell and Sean Penn. Anyone who believes that people like Soros have the best interest of our country at heart should be held for psychiatric evaluation. If he says we need to print money as fast as we can and increase the national debt, we should be very suspicious - and the presses should be confiscated and shut down.
It’s important to know that the liberal assault on Constitutional values began in Roosevelt’s America generations ago and has been gaining strength ever since. It will not be eradicated overnight. Ironically, having staunch far-left supporters like Soros and others will ultimately serve as the greatest indictment of the Obama Administration and its over-reaching policies as liberals begin to realize that in their U.S.S.A, they too would need to pay ever-increasing taxes, fight for rationed health care, press 2 for English, and live in a nation for the government, not for the people. Their penance would come if they were forced to explain to their children how they drove the whole process of destroying the very principles on which our country was founded. I hope to God we don’t get to that point, but it’s clear that liberal citizen-of-the-world types are making one hell of a push to ruin our country under the guise of righteousness and ‘tolerance’ and under the leadership of the Celebrity-In-Chief. These are the pompous class masquerading as if to possess an abundance of dignity and knowledge. Thankfully, they are transparent; and they are ill-prepared for the relentless onslaught being brought forth by every-day Patriots who understand the difference between life, liberty, and the pursuit of happiness; and absolutism, tyranny, and the pursuit of hopelessness.
After Pearl Harbor was attacked, Japanese Admiral Yamamoto said: “I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve”. Now, Conservative and Constitutional principles are under attack by new enemies of the state. We, the now un-silent majority are that sleeping giant. We are now fully engaged. We are single-minded, and make no mistake; we have the fight of our lives on our hands. We will ultimately prevail because our resolve is limitless; because we respect and value the sacrifices that were made generations ago to turn back tyranny, and because our children deserve no less than the country that has provided hope and dreams to us and to our parents - through hard work and perseverance, not through entitlements and apathy. We will ultimately prevail because we must.
“Let us be sure that those who come after will say of us in our time, that in our time we did everything that could be done. We finished the race; we kept them free; we kept the faith.”
- Ronald Reagan
Wednesday, April 22, 2009
A New Era of Susceptibility - Depleting America’s Prominence
After listening to various arguments about President Obama’s Budget, I decided to spend some time and actually read it. If you take it at face value, it’s actually quite an impressive document. However, if you use a modicum of thought and skepticism, it becomes apparent that all is not as it appears, to put it kindly. The budget document is available at http://www.whitehouse.gov/omb/ and is entitled “A New Era of Responsibility - Renewing America’s Promise.”
Below are excerpts from the budget, followed by my comments.
Budget:
“For decades, too many on Wall Street threw caution to the wind, chased profits with blind optimism and little regard for serious risks—and with even less regard for the public good.”
Comment:
This is true. However, what is absent is Congress’ apparent lack of regard for the public good. Congress writes the laws under which Wall Street operates. Congress rewarded over $300 billion in lobbying by repealing Glass-Steagall during the Clinton Administration, allowing behemoth insurance companies like AIG to cross over into other industries and take risks that ultimately led to its collapse. It is Congress who also urged Freddie Mac and Fannie Mae to make loans to individuals with questionable credit. Congress is quick to (and rightfully so) demonize certain Wall Street CEOs, but to date I have not seen one elected official accept any blame for the financial collapse. This is one reason why less than 20% of U.S. voters think Congress is doing a good Job.
Budget:
“Over the past eight years, policy was made behind closed doors. In many cases, unprecedented levels of secrecy have been invoked to block public scrutiny. In such an environment, the well connected and those who are able to hire high-priced lobbyists were able to carve out huge loopholes in our tax code”
Comment:
Absolutely right. However, it has been a bi-partisan fleecing. The comment above appears to imply (the past 8 years = Bush administration), that the problem is rooted in practices belonging and limited to the prior administration, which is simply a subtle way to bash George W. Bush and deflect attention away from the real issue. The main goal of much of the money that flows through Washington is influence. Companies and other organizations spend billions of dollars every year to gain access to lawmakers on both sides of the aisle in Congress in an attempt to influence their thinking. In 2008, $3.24 Billion was spent lobbying Congress.
50 industries accounted for over $1 billion of this amount. In fact, as Senator, Barack Obama received the most money of any member of Congress from these industries in 2008. His receipts were more than the next 5 highest-collecting members of Congress combined. He also received more Fannie Mae and Freddie Mac Campaign contributions while he was in Congress with the exception of Christopher Dodd. You will not find this in the Budget or President’s message. These figures are available at OpenSecrets.org - Center for Responsive Politics.
Budget:
“The Budget also begins to restore a basic sense of fairness to the tax code, eliminating incentives for companies that ship jobs overseas and giving a generous package of tax cuts to 95 percent of working families.”
Comment:
Fairness in the tax code? Tax cuts to 95 percent of working families? Last year, 32% of all tax returns filed were from people who paid no federal income tax at all. Another 8% were considered non-filers because their income was below that required to file a return. That’s 40% who pay NOTHING (source - the Tax Foundation) – these people would not be getting a tax cut, they would be getting a welfare payment funded by those who have earned the money. This number will only go up under the Obama tax plan. Let’s call it what it is, and thank the producers for their generosity. On the issue of corporate incentives, companies ship jobs overseas because corporate taxes in the U.S. are among the highest in the industrialized world at 35%, second only to Japan.
Budget:
“According to the Internal Revenue Service, the Nation’s top 400 taxpayers made more than $263 million on average in 2006, but paid income taxes at the lowest rate in the 15 years in which these data have been reported. In constant dollars, the average income of the top 400 taxpayers nearly quadrupled since 1992.”
Comment:
This needs to be put into context. First of all, they have hand selected the top 400 taxpayers out of approximately 140 million individual income tax returns. These are the business elite who are leaders in their fields, run profitable companies, create and provide millions of high-paying jobs, and drive the economy. Without these individuals creating jobs and paying taxes in the U.S., we would have a vastly different country. Also, since the super-rich do not need to rely on salary and wages, the majority of their income is in the form of long-term capital gains, which is taxed at 15%. This is why their effective tax rate is so low. You will not find these facts in the Budget or President’s message.
Budget:
“In fact, the top 1 percent took home more than 22 percent of total national income, up from 10 percent in 1980”
Comment:
True, but what has been omitted is the fact that the same top 1 percent earners also pay 40% of all taxes collected. 1 of every 100 taxpayers pays $40 out of every $100 in taxes. How is this fair? You will not find this fact in the Budget or President’s message.
This section of the budget also includes a chart (on page 11) entitled ‘Top One Percent of Earners Have Been Increasing Their Share’ by well known French economists Thomas Piketty and Emmanuel Saez. Was Piketty and Saez’ data chosen because we do not have enough qualified economists in the U.S. capable of producing a chart? No, perhaps there’s a much more powerful reason. The Wall Street Journal reported: “Thomas Piketty and Emmanuel Saez, French economists, are rock stars of the intellectual left. Their specialty is ‘earnings inequality’ and ‘wealth concentration’. Piketty-Saez is a moral argument for raising taxes on the rich.”
Budget:
"There's nothing wrong with making money, but there is something wrong when we allow the playing field to be tilted so far in the favor of so few”
“It's a legacy of irresponsibility, and it is our duty to change it."
Comment:
What is meant by “change?” Does this mean re-distribute? This type of language is divisive and irresponsible. Top producers have earned what they have, contribute the most to charity, the most to community, and pay most of the taxes collected. Demonizing these people will not help anyone. What it will accomplish is to drive high wage earners into re-locating out of the country along with their tax dollars; or otherwise incent them to work less since more of their income will be taxable.
Budget:
“Give the public five days to review all nonemergency bills before they are signed into law.”
Comment:
Obama signed the Lily Ledbetter Fair Pay Act, the SCHIP/cigarette tax hike, and the spending bill all with less than the five-day waiting period promised.
Budget:
“The Administration will continue to work with the Congress to provide greater transparency and accountability of earmarks, and to ensure that the American people are made well aware of how and where Federal money is spent.”
Comment:
Greater transparency? Even lawmakers in Congress do not know how taxpayer money is being spent. Not one member of Congress read the spending bill before they voted on it.
Budget:
“Over the past eight years, fiscal recklessness replaced fiscal responsibility.”
“In light of this inheritance of irresponsibility, the Administration in its first weeks has taken the initial steps to restore fiscal discipline by requesting and signing into law an economic recovery bill that is free of all earmarks.”
Comment:
This is the height of hypocrisy. Here are the facts. Bush expanded the federal budget by $700 billion through 2008, for which he was chastised. Obama would add another $1 trillion to this.
Bush became the first President to spend 3 percent of GDP on federal anti-poverty programs. Obama has already increased this spending by 20 percent.
Under Bush, there was a $2.5 trillion increase in the public debt through 2008.
Obama’s budget would add $4.9 trillion in public debt from the beginning of 2010 through 2016.
Overall, President Obama’s budget would add twice as much debt as President Bush over the same number of years. Yet it was Bush who was chastised and ridiculed by the left; the same people who are now defending unprecedented spending by Obama.
In fact, our 44th president has proposed running up a greater deficit than the previous 43 presidents combined.
And, there are over 9,000 earmarks in the 2009 $410 billion omnibus spending bill.
Budget:
“One of the other big drains on family budgets and on the performance of the economy as a whole has been the increasing costs of health care. Yet the evidence suggests that substantial reductions in costs could be achieved without sacrificing the quality of health care delivered.”
Comment:
True. What Congress and the President should, but will very likely not do, is implement the Texas model of tort reform which has been an overwhelming success. There, medical malpractice awards have been capped and frivolous lawsuits against doctors greatly decreased. The result? Over 7,000 new doctors have moved to Texas in 3 years. Doctors and hospitals have been able to cut costs and care for patients. Charity care has increased. Money previously spent defending bogus lawsuits and paying huge insurance premiums is now helping to care for the poor.
This would not cost the taxpayers a dime. Who would suffer? The 535 members of Congress and the Lawyer lobby. This has not taken place at the Federal level because Congress has no incentive to implement reform or to change anything. From 1998 - 2008, total contributions to Congress from Lawyers and Law Firms exceeded $800 Million. (Source OpenSecrets.org - Center for Responsive Politics). This was the most of any industry during this time.
Budget:
“Aim for Universality. The plan must put the United States on a clear path to cover all Americans.”
Comment:
The problem is Obama wants to nationalize healthcare by creating an enormous healthcare bureaucracy by socializing medicine with taxpayer money. This has been tried in the U.K and Canada and these systems are far inferior to the system of care we have in the U.S., even with our high costs. When has the government improved the efficiency of anything?
Budget:
“Every time an uninsured person walks into an emergency room because there is nowhere else to turn, a hidden tax is imposed on other citizens as premiums go up.”
Comment:
True, but what is not explained is the fact that of the estimated 47 million uninsured, a large percentage of these are illegal aliens living in the United States. This places a huge burden on the entire healthcare system, on all taxpayers, and ultimately raises everyone’s insurance rates. Yet, these are the very people to which liberal lawmakers want to grant citizenship status, since they would represent a huge base of registered voters.
Budget:
“In the Budget, the United States will continue to build on its commitment to save lives through increasing investments in global health programs, including in areas such as maternal and child health, family planning and other core health programs”
Comment:
Commitment to save lives? Obama announced that he was reviewing the regulation protecting medical workers who choose not to perform certain procedures like abortion, if they morally object to it. Repealing the regulation would essentially force doctors to perform abortions.
In addition, Obama signed an executive order reversing the Mexico City Policy. This prevented the U.S. government from providing funding for family planning services or groups that offered abortion-related services in other countries. It prohibited those who receive U.S. foreign aid from promoting abortion. Reversing this rule allows U.S. taxpayer dollars to be used by groups offering abortion-related services abroad, and does not restrict recipients of U.S. foreign aid from promoting abortion.
Budget:
“Put the united States on a Path to double foreign Assistance.”
Comment:
This President is proposing unprecedented spending and deficits. We still have no adequate plan to fund the retirement of 75 million baby boomers. The U.S. owes over 5 trillion to foreign governments. We’re helping other countries (who don’t like us very much) to get rich by buying hundreds of billions of dollars per year worth of foreign oil because lawmakers refuse to pass legislation allowing us to drill for and sell our own oil and natural gas. We have a $70 billion per month trade deficit. People have been operating under the assumption the U.S. is a wealthy nation. What we are is analogous to an organization which must continue to generate massive and ever-increasing revenue to fund its massive and ever-increasing debt load. What’s the end game? How can we even consider aiding foreign countries when we’re in need of assistance?
Those who stand to lose the most in this spending free-for-all are those not yet old enough to vote. Obama plans to add an additional $48,000 per household to their debt. Is this the type of "change" America voted for?
Budget:
“Our problems are rooted in past mistakes, not our capacity for future greatness.”
Comment:
Mr. President, our greatness is rooted in solving future problems, not in our capacity to find past mistakes.
If you’re an American citizen and well informed, you have cause for concern.
If you’re an American citizen and not concerned, you’re not well informed.
Below are excerpts from the budget, followed by my comments.
Budget:
“For decades, too many on Wall Street threw caution to the wind, chased profits with blind optimism and little regard for serious risks—and with even less regard for the public good.”
Comment:
This is true. However, what is absent is Congress’ apparent lack of regard for the public good. Congress writes the laws under which Wall Street operates. Congress rewarded over $300 billion in lobbying by repealing Glass-Steagall during the Clinton Administration, allowing behemoth insurance companies like AIG to cross over into other industries and take risks that ultimately led to its collapse. It is Congress who also urged Freddie Mac and Fannie Mae to make loans to individuals with questionable credit. Congress is quick to (and rightfully so) demonize certain Wall Street CEOs, but to date I have not seen one elected official accept any blame for the financial collapse. This is one reason why less than 20% of U.S. voters think Congress is doing a good Job.
Budget:
“Over the past eight years, policy was made behind closed doors. In many cases, unprecedented levels of secrecy have been invoked to block public scrutiny. In such an environment, the well connected and those who are able to hire high-priced lobbyists were able to carve out huge loopholes in our tax code”
Comment:
Absolutely right. However, it has been a bi-partisan fleecing. The comment above appears to imply (the past 8 years = Bush administration), that the problem is rooted in practices belonging and limited to the prior administration, which is simply a subtle way to bash George W. Bush and deflect attention away from the real issue. The main goal of much of the money that flows through Washington is influence. Companies and other organizations spend billions of dollars every year to gain access to lawmakers on both sides of the aisle in Congress in an attempt to influence their thinking. In 2008, $3.24 Billion was spent lobbying Congress.
50 industries accounted for over $1 billion of this amount. In fact, as Senator, Barack Obama received the most money of any member of Congress from these industries in 2008. His receipts were more than the next 5 highest-collecting members of Congress combined. He also received more Fannie Mae and Freddie Mac Campaign contributions while he was in Congress with the exception of Christopher Dodd. You will not find this in the Budget or President’s message. These figures are available at OpenSecrets.org - Center for Responsive Politics.
Budget:
“The Budget also begins to restore a basic sense of fairness to the tax code, eliminating incentives for companies that ship jobs overseas and giving a generous package of tax cuts to 95 percent of working families.”
Comment:
Fairness in the tax code? Tax cuts to 95 percent of working families? Last year, 32% of all tax returns filed were from people who paid no federal income tax at all. Another 8% were considered non-filers because their income was below that required to file a return. That’s 40% who pay NOTHING (source - the Tax Foundation) – these people would not be getting a tax cut, they would be getting a welfare payment funded by those who have earned the money. This number will only go up under the Obama tax plan. Let’s call it what it is, and thank the producers for their generosity. On the issue of corporate incentives, companies ship jobs overseas because corporate taxes in the U.S. are among the highest in the industrialized world at 35%, second only to Japan.
Budget:
“According to the Internal Revenue Service, the Nation’s top 400 taxpayers made more than $263 million on average in 2006, but paid income taxes at the lowest rate in the 15 years in which these data have been reported. In constant dollars, the average income of the top 400 taxpayers nearly quadrupled since 1992.”
Comment:
This needs to be put into context. First of all, they have hand selected the top 400 taxpayers out of approximately 140 million individual income tax returns. These are the business elite who are leaders in their fields, run profitable companies, create and provide millions of high-paying jobs, and drive the economy. Without these individuals creating jobs and paying taxes in the U.S., we would have a vastly different country. Also, since the super-rich do not need to rely on salary and wages, the majority of their income is in the form of long-term capital gains, which is taxed at 15%. This is why their effective tax rate is so low. You will not find these facts in the Budget or President’s message.
Budget:
“In fact, the top 1 percent took home more than 22 percent of total national income, up from 10 percent in 1980”
Comment:
True, but what has been omitted is the fact that the same top 1 percent earners also pay 40% of all taxes collected. 1 of every 100 taxpayers pays $40 out of every $100 in taxes. How is this fair? You will not find this fact in the Budget or President’s message.
This section of the budget also includes a chart (on page 11) entitled ‘Top One Percent of Earners Have Been Increasing Their Share’ by well known French economists Thomas Piketty and Emmanuel Saez. Was Piketty and Saez’ data chosen because we do not have enough qualified economists in the U.S. capable of producing a chart? No, perhaps there’s a much more powerful reason. The Wall Street Journal reported: “Thomas Piketty and Emmanuel Saez, French economists, are rock stars of the intellectual left. Their specialty is ‘earnings inequality’ and ‘wealth concentration’. Piketty-Saez is a moral argument for raising taxes on the rich.”
Budget:
"There's nothing wrong with making money, but there is something wrong when we allow the playing field to be tilted so far in the favor of so few”
“It's a legacy of irresponsibility, and it is our duty to change it."
Comment:
What is meant by “change?” Does this mean re-distribute? This type of language is divisive and irresponsible. Top producers have earned what they have, contribute the most to charity, the most to community, and pay most of the taxes collected. Demonizing these people will not help anyone. What it will accomplish is to drive high wage earners into re-locating out of the country along with their tax dollars; or otherwise incent them to work less since more of their income will be taxable.
Budget:
“Give the public five days to review all nonemergency bills before they are signed into law.”
Comment:
Obama signed the Lily Ledbetter Fair Pay Act, the SCHIP/cigarette tax hike, and the spending bill all with less than the five-day waiting period promised.
Budget:
“The Administration will continue to work with the Congress to provide greater transparency and accountability of earmarks, and to ensure that the American people are made well aware of how and where Federal money is spent.”
Comment:
Greater transparency? Even lawmakers in Congress do not know how taxpayer money is being spent. Not one member of Congress read the spending bill before they voted on it.
Budget:
“Over the past eight years, fiscal recklessness replaced fiscal responsibility.”
“In light of this inheritance of irresponsibility, the Administration in its first weeks has taken the initial steps to restore fiscal discipline by requesting and signing into law an economic recovery bill that is free of all earmarks.”
Comment:
This is the height of hypocrisy. Here are the facts. Bush expanded the federal budget by $700 billion through 2008, for which he was chastised. Obama would add another $1 trillion to this.
Bush became the first President to spend 3 percent of GDP on federal anti-poverty programs. Obama has already increased this spending by 20 percent.
Under Bush, there was a $2.5 trillion increase in the public debt through 2008.
Obama’s budget would add $4.9 trillion in public debt from the beginning of 2010 through 2016.
Overall, President Obama’s budget would add twice as much debt as President Bush over the same number of years. Yet it was Bush who was chastised and ridiculed by the left; the same people who are now defending unprecedented spending by Obama.
In fact, our 44th president has proposed running up a greater deficit than the previous 43 presidents combined.
And, there are over 9,000 earmarks in the 2009 $410 billion omnibus spending bill.
Budget:
“One of the other big drains on family budgets and on the performance of the economy as a whole has been the increasing costs of health care. Yet the evidence suggests that substantial reductions in costs could be achieved without sacrificing the quality of health care delivered.”
Comment:
True. What Congress and the President should, but will very likely not do, is implement the Texas model of tort reform which has been an overwhelming success. There, medical malpractice awards have been capped and frivolous lawsuits against doctors greatly decreased. The result? Over 7,000 new doctors have moved to Texas in 3 years. Doctors and hospitals have been able to cut costs and care for patients. Charity care has increased. Money previously spent defending bogus lawsuits and paying huge insurance premiums is now helping to care for the poor.
This would not cost the taxpayers a dime. Who would suffer? The 535 members of Congress and the Lawyer lobby. This has not taken place at the Federal level because Congress has no incentive to implement reform or to change anything. From 1998 - 2008, total contributions to Congress from Lawyers and Law Firms exceeded $800 Million. (Source OpenSecrets.org - Center for Responsive Politics). This was the most of any industry during this time.
Budget:
“Aim for Universality. The plan must put the United States on a clear path to cover all Americans.”
Comment:
The problem is Obama wants to nationalize healthcare by creating an enormous healthcare bureaucracy by socializing medicine with taxpayer money. This has been tried in the U.K and Canada and these systems are far inferior to the system of care we have in the U.S., even with our high costs. When has the government improved the efficiency of anything?
Budget:
“Every time an uninsured person walks into an emergency room because there is nowhere else to turn, a hidden tax is imposed on other citizens as premiums go up.”
Comment:
True, but what is not explained is the fact that of the estimated 47 million uninsured, a large percentage of these are illegal aliens living in the United States. This places a huge burden on the entire healthcare system, on all taxpayers, and ultimately raises everyone’s insurance rates. Yet, these are the very people to which liberal lawmakers want to grant citizenship status, since they would represent a huge base of registered voters.
Budget:
“In the Budget, the United States will continue to build on its commitment to save lives through increasing investments in global health programs, including in areas such as maternal and child health, family planning and other core health programs”
Comment:
Commitment to save lives? Obama announced that he was reviewing the regulation protecting medical workers who choose not to perform certain procedures like abortion, if they morally object to it. Repealing the regulation would essentially force doctors to perform abortions.
In addition, Obama signed an executive order reversing the Mexico City Policy. This prevented the U.S. government from providing funding for family planning services or groups that offered abortion-related services in other countries. It prohibited those who receive U.S. foreign aid from promoting abortion. Reversing this rule allows U.S. taxpayer dollars to be used by groups offering abortion-related services abroad, and does not restrict recipients of U.S. foreign aid from promoting abortion.
Budget:
“Put the united States on a Path to double foreign Assistance.”
Comment:
This President is proposing unprecedented spending and deficits. We still have no adequate plan to fund the retirement of 75 million baby boomers. The U.S. owes over 5 trillion to foreign governments. We’re helping other countries (who don’t like us very much) to get rich by buying hundreds of billions of dollars per year worth of foreign oil because lawmakers refuse to pass legislation allowing us to drill for and sell our own oil and natural gas. We have a $70 billion per month trade deficit. People have been operating under the assumption the U.S. is a wealthy nation. What we are is analogous to an organization which must continue to generate massive and ever-increasing revenue to fund its massive and ever-increasing debt load. What’s the end game? How can we even consider aiding foreign countries when we’re in need of assistance?
Those who stand to lose the most in this spending free-for-all are those not yet old enough to vote. Obama plans to add an additional $48,000 per household to their debt. Is this the type of "change" America voted for?
Budget:
“Our problems are rooted in past mistakes, not our capacity for future greatness.”
Comment:
Mr. President, our greatness is rooted in solving future problems, not in our capacity to find past mistakes.
If you’re an American citizen and well informed, you have cause for concern.
If you’re an American citizen and not concerned, you’re not well informed.
Wednesday, March 25, 2009
Short Term Gain, Long Term Pain
The Federal Reserve announced last week its intention to purchase $300 Billion in U.S Treasury bonds. On the surface, this may seem to be positive, a vote of confidence of sorts. However, if you go below the surface you see that this is the Fed’s loudest and clearest statement to date about just how dire the economic outlook is. This was not a surprise move, the Fed had announced some time ago its intention to purchase treasuries. In the Fed’s eyes, being the buyer of last resort was inevitable and needed to underpin the economy. However, this move would not have been necessary if individual investors and governments were willing to continue buying and holding U.S. treasury bonds. Due to the U.S. economy, there has been a clear lack of interest to stay invested in low-yielding treasuries and the U.S. dollar. Recently, the main buyers of bonds have been speculators looking to unload when the Fed commenced buying. These are short-term traders, not long-term investors.
The Fed is in a tough spot. It has ballooned its balance sheet to encourage bank lending and consumer spending. But its efforts have not had a great affect on the economy. Since it cannot cut the Fed Funds Rate any further, it must now attack the problem from another angle. By purchasing bonds, it drives up demand, which in turn drives up the price of bonds. This in turn pushes bond interest rates down, taking mortgage rates with it. Mortgage rates will fall, and bond sellers will have an influx of cash to re-invest in the economy. Banks will lend again, and consumers will borrow at low rates. Sounds like a good plan, right? Not so Fast.
The Fed has displayed a willingness to continue printing money to grow the money supply and now to buy treasuries. Although this policy may succeed in halting the slide of assets like real estate and stocks, this feat comes with a huge price. Every dollar printed to buy bonds or increase the money supply results in more inflation and a continued debasing of the dollar, eventually sending our cost of living through the roof. In the future, this could be a more severe problem than the one we now face. Upon the Fed announcement, other currencies jumped against the dollar, as did gold. The Chinese Premier publicly expressed concern about China’s enormous investment in the U.S. China is the largest foreign creditor to the United States. Whether they will continue to buy low-yielding treasuries when they could earn better returns elsewhere is in question. Worse still, they could decide not to hold existing bonds to maturity, choosing instead to unload them.
To understand why Chairman Bernanke took these steps, consider this. He is well known as a student of the Great Depression. He knows that monetary policy on the part of the Federal Reserve in 1928-1929 played a great part in causing the stock market crash in October 1929, and subsequent depression. During those 2 years leading up to the crash, stocks shot up 90 percent. In recent years, from 2003-2007, the DJIA has had a similar rise. In both situations, the boom was largely artificial. Sensing the problem, in 1928 and 1929 the Fed started raising interest rates and selling government securities in an attempt to slow down spending. Those in the know then began selling stocks and buying gold. A similar pattern has been repeated in the last 2 years where gold is up nearly 50%. Bernanke, knowing very well what happened 80 years ago and seeing similar signs recently, is doing the exact opposite of what took place at the hands of the pre-Great Depression Fed in an attempt to avoid the same fate. Instead of raising interest rates, he has been aggressively lowering them. Instead of selling government securities, he has announced the largest purchase of long-term bonds since the 1960’s. Instead of constricting the money supply, he has been greatly expanding it.
At what point, however, does the cure become worse than the disease? While some great initiatives and important Acts came out of the Roosevelt’s New Deal, massive government intervention has never resulted in prosperity and growth. Even Roosevelt’s own Treasury Secretary six years into the New Deal, conceded that there was just as much unemployment as when that administration began, and in addition, enormous debt had been added. New Deal proponents argue that GDP increased 60% during those years, which is true. Omitted is the fact that the national debt nearly doubled in the same period. Unemployment remained in double digits throughout the New Deal and did not recede into single digits until we entered WWII. By the end of the war, it was 2%. The U.S. emerged from depression, but whether this was due to, or in spite of the New Deal is a matter that could be debated.
A recent Newsweek cover showed Uncle Sam with the words “I Want YOU to Start Spending!” Uncle, that’s how we got into this problem. We’ve become a nation of borrowers and over-consumers in an economy that has become largely service based. At some point we moved away from saving and producing in a manufacturing economy. Japan suffered through recession for years because they were unwilling to take the pain and correction, and instead prolonged an economic recovery. And Japan is a country with a high savings rate, trade surpluses, and a manufacturing based economy. The U.S. has none of the above.
I hope Chairman Bernanke is right. I hope the housing and stock markets find a bottom, unemployment peaks, and the credit markets start functioning again. Then, the real test will come. There is a tremendous amount of money on the sidelines, waiting. When individuals and businesses again have the confidence to open their wallets and start spending, Uncle Sam may get his wish, in spades. I hope then, that Chairman Bernanke has a great sense of timing regarding policy change. I also hope, for our sake, that he has the political gumption necessary to be as aggressive in stopping a runaway inflation train as he has been to throw everything he has at the recession. Otherwise, the cure may be worse than the disease.
The Fed is in a tough spot. It has ballooned its balance sheet to encourage bank lending and consumer spending. But its efforts have not had a great affect on the economy. Since it cannot cut the Fed Funds Rate any further, it must now attack the problem from another angle. By purchasing bonds, it drives up demand, which in turn drives up the price of bonds. This in turn pushes bond interest rates down, taking mortgage rates with it. Mortgage rates will fall, and bond sellers will have an influx of cash to re-invest in the economy. Banks will lend again, and consumers will borrow at low rates. Sounds like a good plan, right? Not so Fast.
The Fed has displayed a willingness to continue printing money to grow the money supply and now to buy treasuries. Although this policy may succeed in halting the slide of assets like real estate and stocks, this feat comes with a huge price. Every dollar printed to buy bonds or increase the money supply results in more inflation and a continued debasing of the dollar, eventually sending our cost of living through the roof. In the future, this could be a more severe problem than the one we now face. Upon the Fed announcement, other currencies jumped against the dollar, as did gold. The Chinese Premier publicly expressed concern about China’s enormous investment in the U.S. China is the largest foreign creditor to the United States. Whether they will continue to buy low-yielding treasuries when they could earn better returns elsewhere is in question. Worse still, they could decide not to hold existing bonds to maturity, choosing instead to unload them.
To understand why Chairman Bernanke took these steps, consider this. He is well known as a student of the Great Depression. He knows that monetary policy on the part of the Federal Reserve in 1928-1929 played a great part in causing the stock market crash in October 1929, and subsequent depression. During those 2 years leading up to the crash, stocks shot up 90 percent. In recent years, from 2003-2007, the DJIA has had a similar rise. In both situations, the boom was largely artificial. Sensing the problem, in 1928 and 1929 the Fed started raising interest rates and selling government securities in an attempt to slow down spending. Those in the know then began selling stocks and buying gold. A similar pattern has been repeated in the last 2 years where gold is up nearly 50%. Bernanke, knowing very well what happened 80 years ago and seeing similar signs recently, is doing the exact opposite of what took place at the hands of the pre-Great Depression Fed in an attempt to avoid the same fate. Instead of raising interest rates, he has been aggressively lowering them. Instead of selling government securities, he has announced the largest purchase of long-term bonds since the 1960’s. Instead of constricting the money supply, he has been greatly expanding it.
At what point, however, does the cure become worse than the disease? While some great initiatives and important Acts came out of the Roosevelt’s New Deal, massive government intervention has never resulted in prosperity and growth. Even Roosevelt’s own Treasury Secretary six years into the New Deal, conceded that there was just as much unemployment as when that administration began, and in addition, enormous debt had been added. New Deal proponents argue that GDP increased 60% during those years, which is true. Omitted is the fact that the national debt nearly doubled in the same period. Unemployment remained in double digits throughout the New Deal and did not recede into single digits until we entered WWII. By the end of the war, it was 2%. The U.S. emerged from depression, but whether this was due to, or in spite of the New Deal is a matter that could be debated.
A recent Newsweek cover showed Uncle Sam with the words “I Want YOU to Start Spending!” Uncle, that’s how we got into this problem. We’ve become a nation of borrowers and over-consumers in an economy that has become largely service based. At some point we moved away from saving and producing in a manufacturing economy. Japan suffered through recession for years because they were unwilling to take the pain and correction, and instead prolonged an economic recovery. And Japan is a country with a high savings rate, trade surpluses, and a manufacturing based economy. The U.S. has none of the above.
I hope Chairman Bernanke is right. I hope the housing and stock markets find a bottom, unemployment peaks, and the credit markets start functioning again. Then, the real test will come. There is a tremendous amount of money on the sidelines, waiting. When individuals and businesses again have the confidence to open their wallets and start spending, Uncle Sam may get his wish, in spades. I hope then, that Chairman Bernanke has a great sense of timing regarding policy change. I also hope, for our sake, that he has the political gumption necessary to be as aggressive in stopping a runaway inflation train as he has been to throw everything he has at the recession. Otherwise, the cure may be worse than the disease.
Wednesday, March 11, 2009
The Great Evaporation:
When Buy and Hold became Hold and Cry
It’s no secret that virtually every investor has felt the pain of plummeting 401K’s, IRA’s, college funds, and other investment accounts. Human nature dictated that “If I hold on a little longer, it will come back; I’ll be made whole again.” The idea of selling stocks and booking huge losses is in direct contradiction to long-term investment philosophy, in which bull and bear markets are customary and expected. However, this has not been a run-of-the-mill bear market. It became and still is the “Great Evaporation”, where vast amounts of American wealth disappeared. I remember hearing market ‘experts’ and analysts discuss the downturn around January 2008 when the DJIA was around 12,000 (at that point it was down more than 2,000 points off its high). Some speculated that the sub-prime mortgage crisis was nearly over and things were already getting better; some predicted a market rebound was imminent followed by ascension to levels never seen before. And why not? The Fed had been steadily growing the money supply and injecting liquidity into the credit markets, which was viewed as proactive and positive. There was widespread feeling that the downturn was a much needed market correction from an artificial high. Some said it was healthy. There was a sense of security. Unfortunately, it was a false sense of security.
Bear Stearns, the country's fifth-largest investment bank in 2008, was founded in 1923. It had reached a peak price of $171.52 in January 2007. In March of last year, it was sold for just $2 a share, down 93% from its closing price just 2 days earlier. This was just 2 months after experts predicted a new market high. Thousands of employees and investors lost everything.
After the Bear Stearns collapse, for some, the point of no return had been reached. The possibility of being made whole again became a dream. In the coming months, the stock market gave up more ground, with the DJIA fluctuating in the 10,000 – 11,000 range. Although this was a far cry from the highs of October 2007, to many, the market appeared to be stabilizing, and investors were hoping that the worst had passed. Few knew what lay ahead. The sub-prime debacle ballooned into a full-fledged housing crisis, and bank failures accelerated. Wall Street suffered huge losses, and unemployment began its climb. Once mighty companies who traded as blue chips were now beginning to look about as valuable as corn chips.
Things looked so bleak that in October 2008, before TARP was passed, there were dire warnings and predictions in Washington of catastrophe if Congress did not act. Congressman Brad Sherman of California told the House in a speech in early October: "Many of us were told in private conversations that if we voted against this bill on Monday that the sky would fall, the market would drop two or three thousand points the first day, another couple of thousand the second day, and a few members were even told that there would be martial law in America if we voted no."
According to Senator James Inhofe of Oklahoma, Henry Paulson painted a very dark picture.
“He said, ‘This is going to be far worse than the Great Depression in the ’30s,’” Inhofe said. “And all these things – he was very descriptive of exactly what would happen if we didn’t buy out these toxic assets which he abandoned the day after he got the money.”
A month and a half later, Paulson completely changed course on his bailout plan. Instead of buying up toxic assets as he originally put forth, he announced the Treasury would instead inject capital directly into banks. How was this change possible? Was Paulson lying when he terrified Congress, or merely incredibly incompetent? Which is worse? Either way, he should be held to account for being the protagonist in The Great Evaporation.
In early October 2008, the DJIA was still in the 10,000 range, and unemployment was about 6%. SINCE THEN there has been an ADDITIONAL 25% evaporation of people’s 401K’s, etc., and a 2% jump in unemployment from 6% to 8%, which translates into approximately 2.6 million MORE jobs lost, all in the past 22 weeks. Does anyone feel like we’re better off now than pre-TARP, or that we’ve turned some sort of corner?
Now we stand at market levels last seen in 1997. As we digest day to day news, the stock market will enjoy bear market rallies as it searches for a bottom. However, in order to break the back of the bear, the market must acquire and maintain a 30% increase over current levels. This is simply not realistic in the near term. But, Barack Obama says not to worry about the stock market, it’s just a tracking poll. Try explaining that to a 75 year old retiree on a fixed income who has lost 60% of his life savings, Barack.
There are too many negatives, especially in the U.S. Future indications of labor trends point to continuing job losses, perhaps into the double-digits. Capex spending (buildings, machinery) is down nearly 30%. Companies would be buying today if they expected prices to go up in the future; they’re putting off buying. What does that tell you? Credit markets are still largely stagnant. Housing is still searching for a bottom. Manufacturing production and demand are both down. Income is down. Taxes are being increased. At some point, money velocity will cause inflation pressure. I hate to be a doomsayer or even a pessimist; but I’m glad to be a realist. Please understand that I am proud to be one of many self-proclaimed non-experts; Lord knows we don’t deserve to be mentioned in the same sentence as pros like Henry Paulson or other Wall Street wizards, and Capitol Hill Intelligentsia.
People are celebrating over an announcement by Citi that they were cash-positive in the first 2 months of 2009, even though this was before write-downs. Citi stock skyrocketed 50%. If it keeps moving up, you may be even able to buy a cup of coffee with a Citi share soon. Have people forgotten that in November, we the taxpayers gave Citi $27 billion on top of $25 billion just weeks before? Citi also announced coming layoffs of 75,000 employees. Massive layoffs, huge taxpayer funded cash injections, penny-stock status, and we’re supposed to be impressed that, a few months later, Citi has more cash on hand than expected? Ah, but in return, Citi gave the government preferred equity with an 8 percent dividend. Will that dividend be re-paid to us, the taxpayers? Don’t hold your breath. Memo to the Citi CEO: Shutup and put together consecutive quarters of profitability, then announce how wonderful you are.
Oh, and Barney Frank will finally be holding a House Financial Services Committee meeting to discuss mark-to market rules. I know I feel invigorated.
Well, here are my layperson’s recommendations to the Charlatan, the Banking Queen; and Paulson the Great Evaporator. Note: These should have been implemented last year, but hey, better late than never. Also, none involve borrowing money we do not have, or increasing taxes.
1.
If you don’t want to repeal mark-to-market; (so called fair-value accounting) rules, please see your way clear to at least modify the rules so that banks are not forced to value assets at pennies on the dollar when they are clearly worth more; this will help all sorts of things like capital margins, credit ratings, lending, profits, and job growth.
2.
Reduce payroll tax so that everyone WHO EARNS income keeps more of it, rather than mailing out ‘stimulus checks’ which are no more than welfare payments to those who already pay no tax.
3.
Capital Gains
Reducing or eliminating capital gains tax will free up money to invest in economy-growing activities. Just look at Singapore and China.
4.
Corporate Tax
Reducing the Corporate Tax rate will also free up investment capital, and attract new businesses that would otherwise organize in other countries.
5.
Avoid buy American or other protectionist legislation. Anything gained in higher tariffs and in buying less from other countries will more than be wiped out when they do the same to us.
6.
Modify Sarbanes – Oxley legislation. It has not had its desired effect. It has not prevented any bankruptcies, and has placed a huge financial burden on the backs of companies, especially those who desire to go public. Even Senator Oxley who co-wrote the bill said "Frankly, I would have written it differently, and he would have written it differently," he added, referring to the bill. "But it was not normal times."
I think one of the greatest losses of Sarbanes – Oxley is, how do we know that the next drug and disease researcher or even the next Google was not regulated out of existence before it even had a chance because of additional costs imposed on them by overly constrictive legislation that, while however well intentioned, offered little to no benefit in return?
Bloated and intrusive government should never tread where competent private sector producers live and work. Where is Reagan when we need him? Healthy business is where economies get revived, and where the bleeding is stopped. Big government is where healthy businesses and strong economies get crippled.
Also, since Henry Paulson worked so hard and accomplished so much, I think he should take vacation. Hell, he’s earned it. A hunting trip with Dick Cheney would be nice, Mr. Paulson, don’t you think? Why don’t you ring him up?
Bear Stearns, the country's fifth-largest investment bank in 2008, was founded in 1923. It had reached a peak price of $171.52 in January 2007. In March of last year, it was sold for just $2 a share, down 93% from its closing price just 2 days earlier. This was just 2 months after experts predicted a new market high. Thousands of employees and investors lost everything.
After the Bear Stearns collapse, for some, the point of no return had been reached. The possibility of being made whole again became a dream. In the coming months, the stock market gave up more ground, with the DJIA fluctuating in the 10,000 – 11,000 range. Although this was a far cry from the highs of October 2007, to many, the market appeared to be stabilizing, and investors were hoping that the worst had passed. Few knew what lay ahead. The sub-prime debacle ballooned into a full-fledged housing crisis, and bank failures accelerated. Wall Street suffered huge losses, and unemployment began its climb. Once mighty companies who traded as blue chips were now beginning to look about as valuable as corn chips.
Things looked so bleak that in October 2008, before TARP was passed, there were dire warnings and predictions in Washington of catastrophe if Congress did not act. Congressman Brad Sherman of California told the House in a speech in early October: "Many of us were told in private conversations that if we voted against this bill on Monday that the sky would fall, the market would drop two or three thousand points the first day, another couple of thousand the second day, and a few members were even told that there would be martial law in America if we voted no."
According to Senator James Inhofe of Oklahoma, Henry Paulson painted a very dark picture.
“He said, ‘This is going to be far worse than the Great Depression in the ’30s,’” Inhofe said. “And all these things – he was very descriptive of exactly what would happen if we didn’t buy out these toxic assets which he abandoned the day after he got the money.”
A month and a half later, Paulson completely changed course on his bailout plan. Instead of buying up toxic assets as he originally put forth, he announced the Treasury would instead inject capital directly into banks. How was this change possible? Was Paulson lying when he terrified Congress, or merely incredibly incompetent? Which is worse? Either way, he should be held to account for being the protagonist in The Great Evaporation.
In early October 2008, the DJIA was still in the 10,000 range, and unemployment was about 6%. SINCE THEN there has been an ADDITIONAL 25% evaporation of people’s 401K’s, etc., and a 2% jump in unemployment from 6% to 8%, which translates into approximately 2.6 million MORE jobs lost, all in the past 22 weeks. Does anyone feel like we’re better off now than pre-TARP, or that we’ve turned some sort of corner?
Now we stand at market levels last seen in 1997. As we digest day to day news, the stock market will enjoy bear market rallies as it searches for a bottom. However, in order to break the back of the bear, the market must acquire and maintain a 30% increase over current levels. This is simply not realistic in the near term. But, Barack Obama says not to worry about the stock market, it’s just a tracking poll. Try explaining that to a 75 year old retiree on a fixed income who has lost 60% of his life savings, Barack.
There are too many negatives, especially in the U.S. Future indications of labor trends point to continuing job losses, perhaps into the double-digits. Capex spending (buildings, machinery) is down nearly 30%. Companies would be buying today if they expected prices to go up in the future; they’re putting off buying. What does that tell you? Credit markets are still largely stagnant. Housing is still searching for a bottom. Manufacturing production and demand are both down. Income is down. Taxes are being increased. At some point, money velocity will cause inflation pressure. I hate to be a doomsayer or even a pessimist; but I’m glad to be a realist. Please understand that I am proud to be one of many self-proclaimed non-experts; Lord knows we don’t deserve to be mentioned in the same sentence as pros like Henry Paulson or other Wall Street wizards, and Capitol Hill Intelligentsia.
People are celebrating over an announcement by Citi that they were cash-positive in the first 2 months of 2009, even though this was before write-downs. Citi stock skyrocketed 50%. If it keeps moving up, you may be even able to buy a cup of coffee with a Citi share soon. Have people forgotten that in November, we the taxpayers gave Citi $27 billion on top of $25 billion just weeks before? Citi also announced coming layoffs of 75,000 employees. Massive layoffs, huge taxpayer funded cash injections, penny-stock status, and we’re supposed to be impressed that, a few months later, Citi has more cash on hand than expected? Ah, but in return, Citi gave the government preferred equity with an 8 percent dividend. Will that dividend be re-paid to us, the taxpayers? Don’t hold your breath. Memo to the Citi CEO: Shutup and put together consecutive quarters of profitability, then announce how wonderful you are.
Oh, and Barney Frank will finally be holding a House Financial Services Committee meeting to discuss mark-to market rules. I know I feel invigorated.
Well, here are my layperson’s recommendations to the Charlatan, the Banking Queen; and Paulson the Great Evaporator. Note: These should have been implemented last year, but hey, better late than never. Also, none involve borrowing money we do not have, or increasing taxes.
1.
If you don’t want to repeal mark-to-market; (so called fair-value accounting) rules, please see your way clear to at least modify the rules so that banks are not forced to value assets at pennies on the dollar when they are clearly worth more; this will help all sorts of things like capital margins, credit ratings, lending, profits, and job growth.
2.
Reduce payroll tax so that everyone WHO EARNS income keeps more of it, rather than mailing out ‘stimulus checks’ which are no more than welfare payments to those who already pay no tax.
3.
Capital Gains
Reducing or eliminating capital gains tax will free up money to invest in economy-growing activities. Just look at Singapore and China.
4.
Corporate Tax
Reducing the Corporate Tax rate will also free up investment capital, and attract new businesses that would otherwise organize in other countries.
5.
Avoid buy American or other protectionist legislation. Anything gained in higher tariffs and in buying less from other countries will more than be wiped out when they do the same to us.
6.
Modify Sarbanes – Oxley legislation. It has not had its desired effect. It has not prevented any bankruptcies, and has placed a huge financial burden on the backs of companies, especially those who desire to go public. Even Senator Oxley who co-wrote the bill said "Frankly, I would have written it differently, and he would have written it differently," he added, referring to the bill. "But it was not normal times."
I think one of the greatest losses of Sarbanes – Oxley is, how do we know that the next drug and disease researcher or even the next Google was not regulated out of existence before it even had a chance because of additional costs imposed on them by overly constrictive legislation that, while however well intentioned, offered little to no benefit in return?
Bloated and intrusive government should never tread where competent private sector producers live and work. Where is Reagan when we need him? Healthy business is where economies get revived, and where the bleeding is stopped. Big government is where healthy businesses and strong economies get crippled.
Also, since Henry Paulson worked so hard and accomplished so much, I think he should take vacation. Hell, he’s earned it. A hunting trip with Dick Cheney would be nice, Mr. Paulson, don’t you think? Why don’t you ring him up?
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