Someting to think about as you listen to Obama tonight.

In a few hours President Obama is going to address the nation. It will no doubt be filled with some eloquent soaring rhetoric that he has become famous for. A lot of standard lines too that all Presidents say like our best days are ahead of us, the country must pull together etc. That's all well and good. What's not well and good is what he's going to tell us will fix the problem. The Obama fix is all about consumer confidence. We currently sit at the lowest level since they began measuring consumer confidence in 1967. It has dropped from last February at 76.4 to our new low of 21.2. The Obama plan says these numbers are a self fulfilling prophesy, brought on by the banks freezing credit, which popped the housing bubble, which scared homeowners who slowed their regular consumer behavior, which slowed the economy, which lead to layoffs, and the cycle continues downward. If we can just get Americans to spend like normal, and banks to lend again, that will allow businesses to hire back employees, who will spend more money, which means housing prices return, and we're back to the good ol days! Yea! But that's not how we got in to the mess, nor how we'll get out of it.
We got in to this mess because Americans have been spending like crazy. The saving rate of American citizens starting in 2005 was -1%. That's right America as a whole spent more money than we made. We did this because the federal government drove up the value of our homes starting in 1999. They did that by taking an active roll in getting low income people to share in the American dream of home ownership.

The community reinvestment act was part of the problem, as was the fed keeping interest rates low. Their intention was good. Help poor people own a home which will help save them money on taxes and allow them to save for the future. The fact that there were now more buyers than ever meant home prices started soaring, which lead to a soaring construction industry. The side effect was people started refinancing their houses at lower interest rates and pulling out equity on these artificially inflated prices and used that money for more consumption. Which drove the economy to incredible heights. But the ride can't last. All the poor people got their houses, which meant the prices had to start dropping. Then the poor people started defaulting which threw banks in to a death roll. That's how we got in to this mess.
To get out of it is simple, but quite painful. All those jobs that were created by the consumption, that was made possible by the inflated equity, that was created by poor people buying houses.... those jobs have to go away. Millions of people need to become unemployed. The poor people need to go back to apartments. We need to return the country to the way it was before the government started tampering with the housing markets. Only when we reset, can we start to build again. How long till then? It totally depends on how much President Obama wants to inject his solutions. With no government "stimulus" this trend would have accelerated to the bottom in 2010 by my guess. But if we "create some jobs", those jobs can't last, as American tax payers are already at the tipping point. If we stall foreclosures, we are doing a disservice to ourselves. The houses need to be foreclosed on so we can drop everyones housing value back to a real number.

It's not all doom and gloom however. In the last report issued Americans saving rate is way up to 3.6%. That's a long way from China's 50% saving rate but a big step in the right direction. That 3.6% is also the money President Obama is going to tell you spend tonight to return this country to our past greatness. But as you just learned the past decade was just a mirage, and only a fool would return to a mirage after finding it out.

This isn't just some pie in the sky theory I pulled out of nowhere or someplace even less savory. Listen to one of the worlds top economists being interviewed on European Television. This is Peter Schiff

Jesus would have been a Democrat

It seems lately a lot of my liberal friends have been hitting me with that. Seeing that Jesus is part of the holy trinity making Him the all powerful, all knowing creator of the universe, any person who would attempt to answer His political affiliation on His behalf is a fool. So let's look at some God principals from the bible, and see if we can apply them to our lives in politics. God wants his people to feed the hungry and care for the poor as you read in Matthew and those who don't, will wish they had.
But Jesus was also clear that Government doesn't do Gods work in Mark 12:13-17 where he famously tells the people give Caesar what is his, and God what is His.
Politics is not the place to play the religion card. A Christan who studies their bible also knows, that God raises up all leaders, both good and bad for a number of reasons, but ultimately to bring glory to himself. For those who may have forgotten I direct you to Psalms 75:5-7 , Daniel 2:20-21 And yes that includes women leaders as you read about Deborah in Judges 4 So if you didn't like Bush, or don't like Obama, or don't like your boss at work, still know God put them over you for a reason.
This can be confusing. God wants us to care for the less fortunate, but separates government, from His work, while at the same time putting leaders in their positions. But maybe it's not as confusing as some would make it. What I take away from this is if you're a Christian you should be taking care of the poor. You can't expect government to do the work of Gods people. I challenge the religious right to have such an impact on your community that government officials would be ridiculed for proposing more socialist programs, because the needs of the people are already being met. The people who cry out for equality, justice and change this is where you can effect America. Right in your town. I applaud President Obama and his fellow community organizers as doing a good thing. If they're organizing people to change the community themselves, through hands on 1 on 1 relationships with people who need help. We need a lot more of that! I believe that's the spirit of Christ. However if you're a community organizer doing God's work you aren't to spend your days organizing votes to change some laws so that people are forced to give money to an organization whose leaders line their pockets before distributing the leftovers however they see fit. That organization in question by the way is our federal government. I know there are some good leaders there, but for the most part the men and women who run all nations do so for self centered reasons. Why does God allow that? Maybe so people will learn only He can fix our problems and we'll return our attention, trust and devotion to Him.

Stop teasing me Mark Sanford!

I've applauded you South Carolina Governor Mark Sanford the past few weeks, as you've been saying that even if the stimulus bill was passed, you may refuse the money. House Majority Whip Jim Clyburn was so worried that all his hard work on the bill may not be felt in his home state that he inserted a "punish Mark Sanford" clause at the last minute. The legality of that clause is currently being debated. It says in effect that if you turn down the money the state legislature could go around you to the feds and get the money anyways. I assumed Governor, that clause would make you throw up your hands and say "you guys win".

But last night, there you were on Fox news, and then again this morning on CBS news saying you may still not accept the money.

Is it real? Could you Mark Sanford have the gubernatorial gonads to tell Obama "we will not be forced to follow your bad plan"? The Democrats are saying you're just grandstanding in the hopes of building support for a run at the White House. Republicans in SC are now wilting under the pressure and saying "even though we're against the plan, we're 'paying' for the money anyways so let's spend it". But you're still standing strong. And suddenly I hear John Lennon in my ear...."you say you want a revolution"

What would the revolution cost us? Well the bill that was voted on and passed was never read by anyone individual including the President. But now that it's here, you and the Sanford team are going line by line to see what happens if we do accept the money. You've already told us it would grow unemployment by more than double because now part timers are included in the federal money. Who knows what else you'll find. And no one seems certain what happens to the money if we reject it. Do they spend it anyways?

I'm going to worst case it. We turn down the 8 billion dollars coming to South Carolina. The federal government, like old King George, says we're going to charge you for it anyways. So the 5 million residents of SC are on the hook for 8 billion. Most of the 5 million people aren't tax payers though, so let's say 1 million residents are responsible for 8 billion. That's $8000 per tax payer. I would love to get a loan, from one of the propped up banks of bailout, to stroke a check to the porkapotomus government saying it's over. You can't force us to behave the way you see fit. You can't force us to build electric cars, and educate 3rd graders on sex. You are not the boss of us, rather we are the boss of you! Federal money is our money. You have no money of your own. The only way you can get money is to tax us, or print it, and we've had enough of both. The people who voted for change were sick of the excess deficit spending of the past. Their idea of change was not to increase the rate at which we go in to debt, but rather reverse it.

Mark Sanford, I'm telling you if you take a stand and say "I have the will of the people on my side". Only 37% of Americans wanted this plan. I have the annals of history on my side, showing no society has ever deficit spent it's way out of a recession. The people know that what the federal government is doing, is wrong. And I will not be a participant in growing government, which always hurts individuals". If you say that and refuse the money you may inspire a revolution. There's at least 3 other Governors who might jump on that bandwagon of righteousness immediately. Then TX, RI, GA, IN, AZ, and a few others who have been voicing their complaints would have ability to refuse as well. Mark Sanford you can become a voice for the people. A voice that has been crying out for change, and mistakenly accepted a change for the worse. They've seen their mistake, and now depression has set in as the realization that trillions of dollars of debt is about to be placed on their heads. Mark Sanford you can be the zoloft for taxpayers. Government is so out of control that our current obligations over the next 30 years puts a tax burden of 1.25 million dollars on a family of four according to the CEO of Federal Reserve Bank of Dallas. Government must shrink or it will kill us all like a giant blood sucking tic that never gets it's fill till it kills both itself and the thing it's sucking off of.

And I can still hear John Lennon..."we all want to change the world".

A sad day for all Americans

I haven't blogged in a while, because I think I'm becoming depressed. Depressed over how our country is saddling itself with a debt that will take decades to payoff. We've been told "we have to do something", and "spending is stimulus". This is the equivalent of an individual about to lose their home in foreclosure buying the best alarm system in the world because he had to protect it.

Their are two ways to attack most problems. Using a sports analogy, you can play to win or play not to lose. Democrats are play not to lose kind of people. Their stimulus package, now renamed The American Recovery and Reinvestment Act, shows their thought patterns. You can read the entire thing here or here. Here's the difference in thought patterns. Republicans suggested that to create jobs we could lower the corporate tax rate from the highest in the world at around 40% down to European levels of 25%. Allowing companies to keep more of their money, which would allow them to hire people. Also a lower tax rate would encouraging companies to stay here. That's playing to win. Playing not to lose is the Democrats suggestion of increasing the amount of money we pay in unemployment benefits. One has to ask how is that stimulus? How is that recovery or reinvestment?

In 1996 Bill Clinton and a Republican House played to win by passing the Welfare Reform Act. President Clinton correctly predicted it would "end welfare as we know it". The number of people in 1997 on welfare was 12 million. Today it's 5 million. The first time in the history of the program that it dropped. Today the signing of the Recovery and Reinvestment Act ended welfare reform. Growing welfare is not playing to win.

The AP points out a few billion in pork in this plan. They over looked another 20 billion in pork going back to the Chicago airport, that would build a western terminal that all airlines have already assured airport officials they will not rent or use. Literaly the terminal to nowhere, but 45 times more expensive than the bridge to nowhere, that at least some people would have benefited from. And the bridge was correctly protested n both sides of the isle and stopped. No one blinked at this 20 billion. But who had the time to blink. This bill was thrown together and rammed down our throats all in the name of urgency to save jobs. However most of this money won't be in the system for a year or more. The President himself set a goal of 18 months to spend 3/4 of it. Why are we looking a year to 2 years down the road when the economy is tanking right now?

The answer is playing not to lose. Winners however play to win. Instead of bravely taking on the challenge and stimulating the economy by encouraging new companies to launch, we're bailing out failures so we won't lose jobs. Americans for the most part have been bred to be winners. That's why when they learned of what this bill was really about support dropped like the Hindenburg disaster that it is, and now only 37% think it's a good idea.

So it's a sad day for Americans because in spite of their objections, our government went ahead and did what they thought was best for our economy. By the way 200 of our nations top Economists took out a full page ad in the NY Times to let our government know this bill was a bad idea. This bill will cost over a trillion with interest and will negatively effect every living American the rest of our lives. It's a sad day. We'll overcome this like we do every challange, but it's a national day of mourning for lost jobs, and the further diminishing of freedom, by government extending it's roll in to all of our lives.

Maximum wage is the new minum wage

President Obama announced today that he had set a maximum wage for executives at companies who receive future bailouts. The maximum wage is a very generous $500,000! Obama commented; "This is America. We don't disparage wealth. We don't begrudge anybody for achieving success. But what gets people upset — and rightfully so — are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers." I can hear the chants of "right on" and "power to the people" rising all over this great land. What Obama and his supporters somehow are unable to grasp is that $500,000 a year is a lot more than these executives deserve. (There's probably at least a few libs who agree with that). What these executives deserve is to be fired. Obama is correct that it's an outrage that executives are being rewarded for failure. But the executives would have been fired if the Federal Government hadn't stuck it's nose in to the free market. Either these executives would have been fired and replaced by competent execs or the company would have folded and the competent companies would have grown. Either way failure is not rewarded in a free market.

But "we couldn't let the banks fail" is the cry of the lib. Why not? Unlike the depression, all Americans money is insured up to $250,000. So if Wachovia went under what happened to my money? The same thing that did happen when Wachovia was taken over by Wells Fargo. The money goes in to a different bank, and a bunch of sorry execs drop down a few rings at their next bank job and are reeducated on their job, making them better at their profession.
Now we have the same sorry lot, running things as they see fit, which obviously isn't good, and Obama trying to correct their mistakes. Is that really the job of future Presidents? To train executives on how to run their business? I know there's still a few people out there who think George Bush was a moron. What happens when the next moron gets elected?

The President and the government in general should not have the power to effect our economy outside of declaring war and raising/lowering interest rates or taxes. That's it! If GM fails are we all going to walk or only buy foreign cars? Or would a group of savvy business people see an opportunity to create a new car company? That new company would have a fresh start without trillions in debt weighing it down, and they could create a better car for a lot less. They would need people who know the car business and there would be a bunch who had recently become unemployed who could help guide this new venture. They would be the best of the best who learned from their mistakes.

I think what scares the pants off libs is that if they didn't jump in and rescue companies, thousands of people would lose their jobs, and it starts an avalanche where all companies start downsizing and once you lose your job, you're out, because no one is hiring. That is scary! In that scenario it can't be stopped without an outside force (IE; Government) stepping in to spend money and reignite the economy. But that's not how markets work.
When economies hit a down slide there are some people who become inspired to create, or people who have been waiting for cheap labor, or cheap commercial rent, or some change in the market to launch their venture. They are the fuel to reignite the economy. There's close to 9 TRILLION DOLLARS waiting to be invested. That's a lot more than the 825 Billion Obama and crew want to invest. But the people in charge of those 9 trillion bucks will sit on it, till conditions are right for them to make more money. Having a government tinkering around with banks, auto, airlines and just about every other industry is not what these people are looking for. How do I know? You don't see them investing do you?