Shift to European model a disaster

Raise taxes, don't raise taxes. Hit those making more than $250K, 400K, a million, or not. Extend unemployment or not. Extend the AMT fix or not.

NONE OF THIS MATTERS.

What matters is a federal government than has historically burned through 18 percent of GDP and is headed toward 25 percent of GDP. Yes, with that social services spending will go up. But there's no free lunch.

Take that money out of the economy and you no longer have it in the pockets of businesses and individuals that will expand operations to create jobs. We will have a statist, social welfare system.

That may be what liberals want. But consider: Europe (emulated by many on the left) granted huge increases in the "social safety" net. After WWII when Europe got back on its feet it grew at an average GDP rate of 3 percent.

As France and Germany particularly, but also Great Britain, expanded government spending, that growth in GDP fell to 1 percent. The U.S. is on the same track.

So, short term we are all "protected" by the government more. In the long term we will need that protection because so many of us will not have jobs to protect ourselves. So, take the money out of people's hands, put into government coffers, but don't whine when the economy stalls and jobs are not to be had.

Governments kill growth; they do not expand it.

The possibilities of theocracy

Many Facebookers post that god and prayer have been removed from the schools. They lament this and cite that removal as the reason for the decline of "civility" in U.S. society.

I wonder if they have really given this thought. Having taught and administered for nearly 40 years in schools ranging from high school to graduate school and having worked in six states, I asked myself if religion has really been removed. The answer I came to is that it has not.

Some months ago I posted a challenge for anyone to provide evidence of a state or local law or ordinance that forbids a student from praying in any school. No one took my offer. But, the cries of "god is out of the schools" continues.

I ask again: What school forbids a student's prayers? Or, do the posters mean that organized school religious activities, performed in tax supported institutions  are regulated? I suspect the latter. If the theists' goal is to talk to their particular god then I can find no evidence of any restriction. If their goal is to proclaim to the world their own sanctimonious religiosity, they should be restricted.

Many say that the U.S. is a "Christian" nation. I wonder how many really want to live in a theocracy. Or, would these theists rather live in a caring, loving, tolerant nation made up of Jews, Muslims, Christians, agnostics and atheists? Some theists stone women, cut off people's hands, murder children, all in the name of their "god." A good many of them also hear the voice of bearded old men who live in the clouds.

If a Muslim teacher required all students to bring a prayer rug to pray to the west five times a day, these "prayer in school" people would come unhinged. Yet, they would force their religion on the Jew, Hindu, Muslim, Sikh, atheist or agnostic.

I, for one, would go to the barricades to protect anyone's religion. But, I would go to the barricades more quickly to protect anyone from a religion.

Why housing [really] collapsed

For the last several years, I have blamed banks for the debacle in the housing market. Yes, I have cited the ill-advised Community Reinvestment Act (enacted by Congress in 1977 (12 U.S.C. 2901)) and the Federal Bank of Boston for "encouraging" banks to lend below FICO 660 and later 620. But if you read Conard, a whole new picture emerges of government leading us directly to the collapse. More government intervention leading to disaster. We are on course for more of that with green fuels, health care and a host of other government interventions.

 
*********************************
In 1995, the Clinton administration released its National Home ownership Strategy13 with its objective to “lift America’s home ownership rate to an all-time high by the end of the century.” It recommended that “lending institutions, secondary market investors [principally Fannie Mae and Freddie Mac, the dominant lenders in the secondary market], and [others]  .  .  . should work collaboratively to reduce home buyer down payment requirements.” It also called for the increased use of “flexible underwriting criteria,” which could be achieved with “liberalized affordable housing underwriting criteria established by  .  .  . Fannie Mae and Freddie Mac,” using “financing strategies, fueled by the creativity and resources of the private and public sectors to help.”


Treasury Emil Henry, “This hands-off approach represented an abdication of Treasury’s essential oversight powers  .  .  . and [the] strategic drift of the GSEs (Government sponsored enterprise, created by Congress) began soon thereafter.” 15 The GSEs used their newfound authority to ramp up borrowing, which they used to fund a $ 1.6 trillion investment in mortgages for their own accounts (see Figure 6-3). The primary purpose for this investment was to earn profits from the difference in the GSEs’ low-cost government-guaranteed financing and the higher rate earned on mortgages. Make no mistake; this was government-financed intervention into mortgage markets on a massive scale.


This data shows that between 2001 and 2007,* Fannie and Freddie bought about two-thirds of the non-conforming loans* and almost half of all the low-quality loans with FICO credit scores less than 660 and identified down payments of less than 20 percent* in these pools. They bought close to 60 percent of the toxic loans with FICO scores less than 620 and down payments of less than 10 percent. The data also shows that the GSEs used unconventional definitions of subprime and Alt-A loans to disguise the extent of their purchase from regulators and the markets, and that the GSEs were steady buyers of subprime from beginning to end. In 2006, for example, at the peak of the market, they bought two-thirds of all the loans with down payments of less than 10 percent, a third of all the loans with FICO scores less than 620, and 45 percent of all the loans with FICO scores less than 620 and down payments of less than 10 percent. Even if you halve these shares by assuming all loans held by banks were subprime (despite the fact that critics contend banks held the most creditworthy loans and sold or syndicated the rest), this still represents government intervention on a massive scale.

Emphasis added

Conard, Edward (2012-05-07). Unintended Consequences: Why Everything You've Been Told About the Economy Is Wrong (Kindle Locations 2706-2712). Penguin Group. Kindle Edition.

Tax hike liberals will love

CNN just reported that people earning $40,000 or less get only a $91 benefit from the mortgage deduction and those earning up to $250,000 get on average $5,460. So, in order to help the poor and have a "balanced" approach, let's eliminate the mortgage deduction and give the several hundred billion dollars saved to the poor.

You see, those liberal folks who want to raise taxes want to soak anyone NOT in their tax bracket. Propose hiking their taxes and they scream you are hurting the middle class. It's exactly like dumps. We want to create the waste, but we don't want the landfill in our backyard.

Mortgage deductions are one of the biggest "losses" in revenue to the federal government. So, let's follow the president's urging and "close the loopholes." And before my liberal friends go ballistic--also eliminate agricultural subsidies, oil depletion allowance and other "corporate" giveaways. Defense needs to return to a peacetime level of GDP.

Tax conundrum

Well, the president says that if we don't avoid the fiscal cliff we will have $600 billion taken out of taxpayers' pockets as the Bush tax cuts expire. He also asserts this will likely drive us into recession.

Sounds right to me. Take $600 billion out of the economy and GDP is affected. Further, we all know that if the government takes in an extra $600 billion it will put it under the mattress so it never goes into the economy, right?

Of course not. In fact, government will spend the $600 billion and BORROW another $400 billion and STILL run a deficit. Welcome to government accounting.

But, since government does nothing (or very little) to increase GDP, even spending more than taxpayers will with that $600 billion in their pockets, we will slide into recession. (Reminder: recession defined as two consecutive quarters of negative GDP).

So, what do we see here? Simple. Leave the money in taxpayers' hands and out of government's hands. You get a $600 billion pop (70 percent of the economy is consumer spending) and the government does not borrow the extra 42 cents for every dollar it takes in.

Thank you, Mr. President, for proving conservatives precisely right. Now, sir, compromise with Boehner. You said you wanted more revenue; he offered it--just not in the package you want. What part of "yes" do you not understand?

Republican comeupance

I must say: The Republicans got exactly what they deserved. 

When the Dems put forward radicals in the 60s and 70s, they lost. Repubs have put forward witches, wrestlers, scientific rape idiots and lost. 

Duh? 

Now, maybe fiscal conservatives will begin to understand that the right wing party must move to the center on social issues and remain on the right in fiscal issues. If that happens, I must just return to the party. Until then, I'm on the sideline.

National Healthcare

Hooray. 1.7 percent raise in Social Security. Unfortunately, there's a 30 percent hike in Medicare. Effect? $30 cut in monthly SS check. THAT'S government accounting!

When will this country learn we need to pay off the deficit and have a national health care system a la Canada or France? Not, this abomination called Obamacare. 

Many of the uninformed actually believe health insurance will be free under Obamacare. It's a bone thrown to the insurance companies and people don't realize that.

Why are we 17th and Shanghai First?

Let me confess as I begin to write this: Before I went to China in 1997, I said communism in China was the only thing that saved pax Americana. Then I went to Shenyang and saw street vendors plying their trade a 1 a.m. in temperatures that would frostbitte an Eskimo. Capitalism was alive and well in Mao's heartland. Capitalism that knew how to work hard and be disciplined--two things many of us have lost. We are seeing the fruits (for the Chinese) of hard work and sacrifice.

Now, 13 years later the Tiger Mother strikes fear in the hearts of (American) mothers. Yes, I am reading the reaction to Battle Hymn of the Tiger Mother before I have read the book. Chau probably exaggerates some for the sake of poetic license, but I would guess not all that much. The question is: Is she on the right track. Or are the folks in California (who would have guessed it) who don't keep score at the soccer matches so the little darlings won't have their self concepts hurt?

I have always argued that U.S. schools are weak until college. Why, just look at the number of patents to U.S. interests and the number of Ph.D.'s awarded here. Students from all over the world want to study here. Besides, look how many Nobel prizes go to Americans, more than anyone. We must be on top right?

Well, China is slated to surpass us this year in the number of patents awarded (UNESCO, quoted in Time, see the UNESCO link cited here). Given our paranoia about visas, more and more students are electing Britain, Canada and Australia for higher education. And Nobel prizes? Ever noted how many of those "American" awardees are foreign born?

UNESCO recently released its Program for International Student Assessment. Guess what Ameriphiles? The U.S. now ranks 17th overall. That's right, 17th in reading, 23rd in science, 31st in math. How many books have you read this year? Can you cogently explain the human genome or black holes? Have you ever joked that you are "math illiterate"? (Would you joke that you can't read?)

We owe the Chinese $900,000,000,000. That's right--almost a trillion. Total debt is nearly $14 trillion. We don't graduate many engineers (see The World is Flat, Thomas Friedman). We are hocked to our eyeballs, our economy is number one (but for how long--re-read de Tocqueville--greatness is built on population and natural resources) and we steadfastly refuse to demand the very best of our children. We will protect their self concepts right into slavery and servitude. Worst of all is the political system we aid, abet and support. It is a political system that perpetuates itself rather than reduce expenditure and debt. Keep spending and buying votes legislatures.

The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money. 
Alexis de Tocqueville 

Workers of the World Unite

Workers of the World Unite. 

All 98 percenters take note. In order to shed the impact of the evil corporate bloodsuckers, rapacious banks, evil business people, you need to band together. 

Take you capital, your energy, your creativity and start your own business, so you no longer have to deal with evil corporations.

Do not borrow money, banks are bad. But, one small caveat: Look at the chart below. No corporations from 1884 when the DJ began tracking exists today. You will be free from corporations and free from banks.

But, you will not be free from risk, the same risk that over time kills nearly every corporation. But, hey, have at it, folks. Feel free to lose your money too. Nearly all businesses go out of business over time.

Welcome to the club of evil capitalists.

Quit Taking, Get Moving

I have finally found why I disagree with liberal thinking on fiscal issues so strongly. And the epiphany came from an epigraph to Nicholas Eberstadt's book "A Nation of Takers: America's Entitlement Epidemic." And the epigraph was written by none other than that old liberal lion Daniel Patrick Moynihan.