Month: July 2009

Demand–Now That Is What I Am Talking About!

Since the economic collapse I have been saying that demand needs to be created not liquidity–for without demand nothing will move in the economy. I even have a page on the subject. We have pumped billions into banks and still not much is happening in the demand arena. We have tried to pump dollars into the infrastructure and again not much demand has been created. Then what shall the admin do to create the demand that is needed to jump start the economy?

Well they had a good start….with the cash for clunkers program. The WaPo is reporting:

Passed by Congress in late June to help the flagging U.S. auto industry and launched just a week ago, the $1 billion program gives vouchers worth up to $4,500 to consumers who trade in gas-guzzling cars for more fuel-efficient models. The highly publicized effort was scheduled to run until Nov. 1, or until money ran out. It was not expected to run out of cash so quickly.

The effort, formally known as the Car Allowance Rebate System, or CARS, appeared headed for a temporary shutdown at midnight Thursday. Federal transportation officials became increasingly concerned that the program’s popularity with consumers could drain its budget by week’s end, according to sources familiar with the discussions who spoke on the condition of anonymity.

The government’s “cash for clunkers” program, aimed at boosting stagnant auto sales, is almost out of money, putting its future in question, according to sources familiar with the effort.

Gee, sounds like they created demand…..you think that this could be an answer to the economic crisis? Some of us have been harping on that for a long time and it looks like we were correct in our premise.

Now that is what I am talking about…..create demand and the economy will start working again.  Go figure!

Stop The Presses: A Health Deal

Associated Press is reporting as we speak”

Democrats on a key House committee said Friday they have patched up their differences on a health care overhaul, and went back to work confident they can advance the complex legislation.

“We have agreed we need to pull together,” said Energy and Commerce Committee Chairman Henry Waxman, D-Calif. Liberals, moderates, and conservatives negotiated late into the night Thursday to reach a deal that would restore some subsidies to help low-to-middle income people pay their health insurance premiums, would preserve a strong public insurance option, and would cut drug costs more deeply, lawmakers said.

“We have agreed to work together”…..gee imagine that…Dems working together.,…would someone please tell the morons that is what people in the same party do…they work together to pass needed legislation.

Beyond the obvious, this is just politics at work…….not a binding agreement. Please do not hold your breath that this is a positive sign.

Dems Have A Deal On Health

The Wall Street Journal is reporting that the Energy and Commerce Committee has struck a deal….

Mr. Waxman (D., Calif.) broke the impasse with the so-called Blue Dog Democrats when he agreed to changes designed to hold down costs, exempt additional businesses from requirements to provide health insurance and change the shape of a proposed government insurance option.

In the Senate, Finance Committee Chairman Max Baucus (D., Mont.) said his effort to build a bipartisan bill is advancing. He cited an estimate by the nonpartisan Congressional Budget Office that the bill in the Senate Finance Committee would cost less than $900 billion over a decade — less than other versions of the health legislation in the House and Senate — and ensure insurance coverage for 95% of Americans.

Among other things, the House deal, put together with heavy involvement by White House Chief of Staff Rahm Emanuel, would exempt more small businesses from a requirement to provide insurance to employees or pay a penalty. The deal would require that payments to health-care providers under a new public health plan not be pegged to Medicare, the health plan for the elderly. And it would also pare back the 10-year cost of the bill, estimated at roughly $1 trillion, by $100 billion. The cuts would be achieved in part by asking states to share in a planned expansion of Medicaid, which offers health insurance for the poor, and by requiring low-income people to pay higher premiums to purchase insurance.

When you hear that they are searching for a bi-partisan I ask , “when did a deal between Dems and Blue Dogs constitute a bi-partisan approach?”

Where is asking low income people to pay higher rates a good thing?  Just who in the hell do the Yellow, oh sorry blue dog dems really respresent?  Sounds to me like the health industry money was well spent on the coalition.

Hell even the Repubs doubt the Blue Dogs.

Republicans on Wednesday said even the revised bill would raise costs for small business and kill jobs. “It proves once again that the so-called Blue Dogs have no bite when they’re forced to choose between their constituents and the radical leadership of their party,” said Ohio Rep. John Boehner, the House minority leader.

Liberal House lawmakers complained the changes would weaken the bill, in part by raising costs for lower-income people and diluting the strength of the public plan. “It’s terrible and totally unacceptable,” said Jerrold Nadler (D., N.Y.). Reflecting the challenge for Democratic leaders in keeping the party united, Mrs. Pelosi met with a group of liberal lawmakers late Wednesday in an effort to calm tensions.

The deal cut by the Blue Dogs didn’t address rank-and-file Democratic concerns about a proposed surtax on wealthy households. The House legislation has included an extra tax on households making more than $350,000 a year, while Mr. Obama has suggested he would support a tax on those making more than $1 million to fund expanded health coverage.

Under the revised bill, companies with payrolls from $500,000 to $750,000 would face a penalty equivalent to 2% of payroll if they fail to offer insurance. Companies with payrolls above $750,000 would pay an 8% penalty.

After the changes, some 5.3 million employers would be exempt from the mandate, about 400,000 more than under the original House proposal, said the National Federation of Independent Business, a trade group representing small businesses. Even so, the federation said it believes the burden on small employers is too high.

The article reporting on the outcome of the deal was written by Greg Hitt and Janet Adamy.

If you have been paying attention to what I have been saying and posting about the health care debate, you will notice that I have said all along that the original health proposal would look nothing like the final product and so far I am looking pretty insightful.

We Have Economic Growth

This is a cross post from my entry on Progressive Independence ( visit sometimes a very good site).

Professor’s Classroom

Subject:  Economics

We hear daily that the markets are up, at least for now, and that economic growth is slowly returning.  That brings to mind a saying I heard from MSNBC’s Dylan Ratigan, “slowly down is the new UP”…Sorry I digress.

Have you heard the words economic growth?  Are you tired of it yet?  Do you even know what is truly meant by economic growth?

Economic growth means an increase in the production of goods and services…this is represented by the Gross Domestic Product (GDP).  A strong economy is likely to strengthen the revenue pool that the government has at its disposal.  This is likely to make the redistribution of wealth  (entitlements) more acceptable to the population because they are experiencing a rise in their own wealth.

That is a classical explanation of what is meant by economic growth…but there is a problem with this…..what you ask?….GREED…economic growth is NOW based on greed and with the rise of that the likelihood of any expansion of entitlements unlikely…the attitude now is ..”I have made mine…let everyone else do the same”.

Nowadays, at least to some, the expansion of economic growth hinges on tax cuts…tax?…is not that where the government gets its income?  Short answer..uh huh.  Then how does the government get more money and have economic growth if they are getting less money?

Damn good question!  The theory is that if the wealthy pay less taxes they will expanmd their monetary endeavors and that will put more people to work and that will mean more tax revenues.  But then, Congress passes an income tax cut…and less money comes in…it is all the old “trickle down” theory…that never gets to the taxpayer all the benefits stay with the wealthy.

The problem with economic growth fueled by greed, it eventually leads to an economic slowdown or a recession.  Let us look at the recent rise in the markets….employment is still low….prices still high….inflation rising….credit tight….foreclosures still running rampant…consumer confidence is still low….yet housing starts are up…markets are rising…..profits are starting to rise….a mised bag of indicators.  If so, then why the optimism about the economy?

Yet another good question and there is a one word answer….SPECULATION!

Speculation simply put is….buy low sell high…Speculation has been the leading causes of economic slowdowns in recent years…the current one, of course and then there were the recessions of the 80’s and the bust in the 90’s…all lead by speculators and the search for maximizing profits at all costs.  And the cost was the recessions that followed.

This is a very simple and easily understood explanation of the happenings, as written by economist Henry George:

Enterprises slow down their expanding. We have reached the inflection point. Even though enterprises are still expanding rapidly, the rate of expansion has slowed down due to the too-high price of real estate. Contributing to the slow-down are higher prices for labor and other inputs as well, but these have not increased nearly as much, because only with land does an increase in demand fall fully on an increase in price – because the supply of land in a given area cannot be expanded, unlike other inputs!

The slowdown in real-estate construction spreads to other industries, as, for example, less furniture is ordered and less steel and lumber is demanded. Industries producing such capital goods, which expanded rapidly, now contract. Workers laid off or working fewer hours spend less. The rate of increase in the economy slows even more, until the slope becomes horizontal – growth has halted. The economy is at its peak, but is now headed for a fall! Because the growth rate has been decreasing, and now turns negative.

When investors realize growth has stopped, many will want to unload stocks, and a crash in the stock market often heralds the coming depression. But that’s only the beginning, and only a symptom of the problem, not the originating cause, although the loss of stock value contributes to the decline, since those who have lost their financial wealth will no longer spend money on large items.

The recession feeds on itself, as lower output leads to lower income and to lower spending, which reduces output even more. Real estate prices have remained at a plateau even though vacancies have increased, because the owners don’t wish to sell below peak prices. This phenomenon repeats itself each cycle! But eventually, increasing bankruptcies result in lower rentals for landlords, and some of those with negative cash flows must sell. Prices now start tumbling down. Many landlords go broke, not being able to pay their mortgages. In many cases, the debts of real-estate owners are greater than the value of their properties. Loans are not being repaid, and banks are losing great amounts of money. Many banks fail.

Check today’s news….do you not see everything written by George coming true?  Re-read his explanation…..Damn!  He was spot on and over a century ago…..somethings never change.

There is little economic growth, there is however, a rise in speculation.  All the talk about economic growth in today’s news is just window dressing to help protect the markets and speculators.

And now you have it…if you learn these points you can keep from losing your ass in the next bust and make NO mistake there will be another one in due time.

Post Script:  I have been writing and lecturing on politics and economics for the last 40 years or so, when you get to be my age you lose track of the years, and I have tried to keep all the info I can find on a subject out there to educate the reader and the people…..I will now go out on a limb…..the sitcom playing out in Washington is doing nothing to solve the problems and eliminate the causes…for that reason we will see the same thing play out in the next couple of decades…in other words…we will be in same exact spot in the coming decades and a whole new group will be having the same conversation they are having today…..watch for it!

Finally! A GOP Health Plan

Before I attack this piece of work let me say that I have been really tough on the GOP for their lack of any leadership on health care….well my fears have been realized….but is it the same rhetoric as always?  You know the lame crap about tax credits, medical saving accounts, tort reform, etc…you the same crap they have embraced for years…the same crap that does little to nothing to help Americans get insurance….their same lame ass answers to all problems….tax cuts!

US House Of Representatives have drafted a new health care plan, at least the Repubs have, and as reported by the Associated Press it reads like this:

The GOP plan was drafted by Rep. Tom Price, R-Ga., a physician. It avoids expanding the federal role in overseeing the health insurance industry. Unlike Democratic proposals, it would not set up new federally regulated purchasing pools for individuals and small businesses. Instead, it would allow individuals to use the Internet to purchase lower-cost coverage available anywhere in the country. That idea won’t please insurance commissioners from states with strong consumer protections, who have argued it will set off a “race to the bottom” that undermines coverage for those in frail health.

The plan would offer tax deductions and tax credits to help make the purchase of health insurance more affordable for individuals. It would provide grants to states to help set up high-risk pools for people with medical problems who are denied coverage by commercial insurers. And it would allow employers to automatically sign workers up for the company’s coverage — similar to what’s done with 401(k) retirement plans.

The GOP bill would take on medical malpractice, limiting jury awards for pain and suffering and creating new health courts in which a specially trained judge would hear and decide cases involving medical negligence.

It would give doctors what amounts to veto power over recommendations from a new federal board that’s been assigned to compare the benefits of new treatments, tests and medications. Recommendations from the Council for Comparative Effectiveness Research could not be enacted without the approval of the medical specialty society that would be affected.

There it is sports fans…the GOP answer to health care problems……see anything familiar in it?  Their originality is sadly missing….but it does have a provision for tax cuts, savings accounts and tort reform…..you betcha…..In other words there is NOTHING new in their plan….I repeat…NOTHING NEW!

It is a good plan……whatchu mean, fool?…..It is a good plan to protect doctors, insurance companies and the Repubs contributor base…other than that it is the same worthless crap they spout about every issue.

Once again the American people lose, the corporate base wins…if this plan is even considered…I would say that it is money well spent about the industry…their lobbying efforts are just amazing.  Congrats!  You guys are crapping on the American taxpayer…yet again!

What Kind Of Society Produces This?

I have read a bunch of really sick and wierd articles in my time, but this one is just too bizarre for words.

This article was posted by the AP:

A woman charged with murdering her 3 1/2-week-old son used a knife and two swords to dismember the child and ate parts of his body, including his brain, before stabbing herself in the torso and slicing her own throat, police said Monday.Otty Sanchez, 33, is charged with capital murder in the death of her infant son, Scott Wesley Buchholtz-Sanchez. She was recovering from her wounds at a hospital, and was being held on $1 million bail.

San Antonio Police Chief William McManus said the early Sunday morning attack occurred a week after the child’s father moved out. The child’s aunt and two cousins, ages 5 and 7, were in the house, but none were harmed.

Officers called to Sanchez’s house at about 5 a.m. Sunday found her sitting on the couch “screaming that she killed her baby,” police spokesman Joe Rios said. They found the boy’s body in a bedroom.

Police said Sanchez said the devil told her to kill her son.

That was my first question when I started reading this, “did the devil make her do it?  That question has been answered.  What is it in society that would produce such a sick MFer?

After posting the above story I came across yet more sick people.

This is a story from the Boston Globe:

A Worcester woman’s body, wrapped in bedding, was discovered by her landlord earlier this week. But in a more grisly turn, police said the woman, Darlene Haynes, 23, had been eight months pregnant, and someone cut the fetus from her body.

Haynes’s body was so mangled and decomposed that police said they could not immediately identify her gender.

The body was taken to the medical examiner’s office in Boston, and an autopsy conducted yesterday confirmed that she had been killed and that the fetus had been cut from her womb. The cause of death was not yet known, but Worcester Detective Captain Edward J. McGinn Jr. told the Telegram & Gazette that Haynes had also sustained head trauma.

It seems that the sickos get more and more active as the years go by.  Just what triggers this types of cruelty…that is for the pros to figure out.

Tax Cuts?——Yet Again?

This is a Daily Agitation:

TAX CUTS?  Tax Cuts?  What the hell are they thinking?  The Repubs, that is.  They just cannot move past a tired old cry from the past.  I see that the Repub talking heads are at it again….that the US needs tax cuts to bring the economy out of its free fall.  Why?  Because France, Germany and Hungary are considering it.  What is the old saying about if others are doing it…….?

I guess I need to cover this territory yet again…..The government depends on its revenue to carry on business…its revenue is Corporate tax, Income tax, payroll tax, and excise tax along with a very few other sources.  By cutting taxes you would be limiting the amount odf income that the country brings in.  So if you cut corporate tax there wilkl be a shift to make up that difference from another source….another tax…..

France, Germany and Hungary are trying to lower taxes not because it will help the economy, but rather it will help a leader whose popularity is sinking.  It will be for political advantage, not a way to save the economy or the people of their countries.

All along the Repubs have said that the country should be run like the budget of a family…if that is so what happens to a family that loses income?  At this juncture in time, the US needs all the income it can muster…there are too many irtons in the economic fire to lose any revenue.  It is possible that in 5 years or so, depending on the economy, a tax cut could be a good idea, but that time is NOT now.

Today there are millions unemployed, that alo9ne puts a sizeable bit into the amount of income generated from payroll taxes.  Also revenue generated off of consumption is lagging.  Why would anyone consider cutting the limited amount of revenue that the government would have to work with?  When revenue is at a low end, it is not the time to lose more of it to some unrealistic BS like tax cuts.

The sad part is that Americans are starting to buy into the fantasy of tax cuts.  They do not see it for what it is…….. political posturing, misinformation and out right lies.

Comedian Ron White says it all, “you cannot fix stupid”!

More Bad News For Taxpayers

The markets are up, slightly….and the investors are happy…..if investors are happy then the markets remain happy and rising…but all that good news is overshadowed, at least in my opinion, but a few things happening behind the scenes…it will effect the taxpayer and not in a good way.

First good ol’ Ben of the Fed is saying, according to Wall Street Journal:

Bernanke acknowledged that “financial conditions remain stressed, and many households and businesses are finding credit difficult to obtain.” In response to a question about the prospects for a jobs recovery, he said, “We have a very long haul here. Unemployment is going to stay high for quite a while, and so it’s not going to feel really like a strong economy.”

However, he called a second economic stimulus package “premature” and proposed no measures either to provide immediate relief for the millions hit by plant closures, layoffs, and the collapse of home values and savings, or to allocate government funds to create new jobs. Nor did he propose any measures to compel the banks, which have received more than $200 billion in taxpayer cash and trillions more in low-interest loans, subsidies and government backing for their debt, to increase their lending and make credit available to working families.

At the same time, Bernanke made clear that the Fed would continue to allocate whatever funds were needed to prop up the banks. In response to the plea from Senate Banking Committee Chairman Christopher Dodd, Democrat from Connecticut, Bernanke said he was prepared to extend one bailout program, the Term Asset-Backed Securities Loan Facility (TALF), beyond its December 31 expiration date.

Okay, the possibility of more taxpayer money being thrown at the markets, the banks and the wealthy is there….what exactly ius the government doing for the taxpayer?  The answer is simple…they are doing the same thing that Repubs do for the working class….as little as possible and still keep some support for the next election.

There is more for the workers to consider….do you recall the name John Yoo?  Well, he is up to his butt in legal probs brought on while he served in the Bush Admin.

By pulling out of Yoo’s defense, the Justice Department has now spared itself from having to defend Yoo’s expansive and much-criticized views of executive power, which would have been an embarrassment to the Obama administration.  And as Carrie Johnson of The Washington Post notes, it also frees Yoo to point the finger at other former government officials he might say were giving him orders — notably Vice President Dick Cheney, President George W. Bush, adviser David Addington and then-White House counsel Alberto R. Gonzales. That would be a sticky, if not impossible, argument for government lawyers to have made.

Yoo hasn’t completely lost his government support, though. His choice of private counsel, who’s defended Yoo in such sticky controversies before, is Miguel Estrada, a former Bush nominee for the U.S. Court of Appeals for the D.C. Circuit whose appointment was quashed in 2003 by Senate Democrats — a point harped on by Republicans during the recent confirmation hearing of Supreme Court nominee Sonia Sotomayor. Estrada’s fees will be paid by U.S. taxpayers.

WE, as taxpayers are on the hook for all the monetary antics of the governement, I say let the fool pay his own legal fees……which he would not have accured if he had done nothing illegal.  Just a thought.

What Are The Chances That There Is More Bailouts?

We taxpayers have bailed out just about everybody….banks, insurance, Wall Street and auto makers and let us not forgot those darn pesky mortgage crooks.  But what is then left that could be in dire straights and need our help….by our I mean the taxpayer, since apparently we have unending funds?

A recent commentary in the Houston Chronicle written by Loren Steffy sates:

The second quarter is supposed to be the highlight of the airlines’ year, the period when planes are stuffed with leisure travelers and travel demand is at its peak. This year, though, the recession, the swine flu scare and rising fuel prices have hammered results.

Houston-based Continental Airlines, for example, posted a $213 million loss last week as revenue plunged 23 percent. The airline also said it planned to shed 1,700 jobs.

Where will the additional capital come from? Bond investors are showing little interest in pouring more money into the carriers. Rates for credit-default swaps — which shield investors from losses if the airlines are unable to repay their debt — have been rising steadily for the parent companies of American and United, Bloomberg News reported. Rising swap rates are a sign that bond investors are increasingly wary the two carriers will default.

Last week, Moody’s Investors Service cut the debt ratings for industry stalwart Southwest Airlines to the lowest grade above junk. Meanwhile, Standard & Poor’s placed the ratings for American and United, which already are below the junk threshold, on its watch list with negative implications, citing concerns about liquidity and declining revenue.

So if the courts can’t help, might we actually see one or two of these perpetually troubled airlines go out of business?

Don’t count on it. It’s unlikely that lawmakers and the administration, facing stubborn unemployment numbers, are going to allow tens of thousands of airline workers — many of whom are unionized — to lose their jobs. Expect, at the least, government-backed loan guarantees to help carriers shore up their balance sheets with fresh capital.

If Washington really wanted to help, it would do nothing. It would turn a deaf ear to the pleas of the beleaguered carriers, allowing the chance that maybe, just maybe, one or two of them will actually stop flying and enable the surviving airlines a shot at sustained profitability when the recession’s over.

So, will the taxpayer be tapped again?  Probably not……there is a bailout fatigue setting in on Main Street….that could have been a different story if only Main Street could have been the main concern and not the creeps on Wall Street……but as they say “hindsight is 20/20”.  It is a shame that the government cannot or will not see the errors of their ways.

Should We Tweak Or Reform?

My post was originally posted on Progressive Independence, which is a good sight and all should visit and get involved…..just go to blogroll and enjoy.

Health Care….this one subject is at the heart of the country right now…..72% of the American people want reform and about none of the politicians seem to want reform…now they are playing the cowards game of tweaking the system so that it will play well in Congress.

$3.66 trillion budget deficit…..or is it a $2 trillion….or $1.2 trillion…just what is the deficit and when does it get out of control?  Or do you really care?  I mean your elected officials are telling the country that you care….but do do you?

Our country is in serious straits noe…health care needs fining…..Wall Street needs to be bitch slapped…..the environment needs fixing….lots of problems need fixing…..why?…they ALL have been ignored for decades and now it is come calling.

If you are old enough…think back to the ’70’s there were a wealth of plans to help make the US energy independent….but they were not popular with the new administrations so the problem was tweaked, if anything was done at all.  The in the 90’s health care was important and instead of refom and fixing the problem…all settled for a tweaking and the problem got worse….which seems to be a common thread to ALL Washington’s past tweakings.

Politician’s always settle for a tweaking instead of a real solution to pressing problems.  Why?  A wealth of reasons….keeping contributors happy….looking to re-election…..there is a number of reasons….and NONE of them actually helps the people they represent.  And unfortunately, all the tweaking has cost more money in the “much mentioned” long run than it would have if they had had the guts to pass real reform.

Basically all the BS about the deficit is a smoke screen to cover the cowardice of the elected representatives.  Yes, I said cowardice!  Tweaking is a coward’s way out.

If the American people truly want reform then they need to find politicians with guts and brains….two qualities that are sadly missing in the flock of cowards we now have in Washington.