Political Class Insanity - December, 2011, Part 2

Yesterday we reviewed the latest insanity, idiocy and wastefulness recently perpetrated on us by the American political class. Unfortunately, so much of their antics have occurred recently that we could not complete the list yesterday. Thus, part 2 of December political class insanity:

- A recent USA Today article by Julie Schmit reported on the Federal government's failed attempt to help out American home owners who were facing the threat of foreclosure. The name of the program was called the Emergency Homeowner Loan Program and it was terminated in September after helping less than half of its projected number of households.

Also, according to the article, almost half of the taxpayer funds that were spend aside for the program went to just three states: Pennsylvania, Maryland, and Connecticut. This fact is another indication of failure and how inefficient this government program (and most others) was when you consider the state by state foreclosure rates (as reported by Realty Track for the Month of June, 2011):

• Nevada - one foreclosed home for every 114 homes in the state - rank = 1
• Arizona - one foreclosed home for every 205 homes in the state - rank =2
• California - one foreclosed home for every 244 homes in the state - rank = 3
• Maryland - one foreclosed home for every 1,358 homes in the state - rank = 31
• Pennsylvania - one foreclosed home for every 1,509 homes in the state - rank = 37
• Connecticut - one foreclosed home for every 1,525 homes in the state - rank = 1,525

How inefficient can you get. Half of the set aside  money went to homeowners in states that were in much less distress than the housing industries in Nevada, California, and Connecticut. Since I am assuming that one of the main objectives of the program was to help the local economies recover from the recession, the local economies in Pennsylvania, Maryland, and Connecticut were much better off from a housing perspective, orders of magnitude better off, than the top three home foreclosure states of Nevada, California, and Arizona.

Even worse, according to the article, only 12,000 applicants were approved for the program, at a cost of about half a billion dollars. This was 60% short of the objective and works out to about about $42,000 per applicant. Given that there are millions and millions of homes in the country that are in foreclosure or that are likely to shortly be in foreclosure, saving 12,000 homes will make nary a dent in the problem. And at $42,000 per successful applicant, even if the program reached millions of foreclosed homeowners, the country never would have been able to afford the cost.

Typical political class insanity. Pitiful results at a high cost of a program that never would have made a dent in the problem even it it reached its objective. So, just like Solyndra, another half a billion dollars worth of taxpayer wealth down the drain of waste.

- In 2007, the political class made it illegal for Americans to own regular, good old fashioned incandescent light bulbs. I remember being so disgusted with the politicians at that time, wasting time and resources on what should be a consumer choice issue, not a government issue, when so many other major issues needed to be addressed.

Now, that same political class, according to an article in the November 14, 2011 issue of Business Week, is hotly debating the same issue again and whether or not that 2007 ban should be lifted. Now, I thought the original legislation was ridiculous and unneeded but it is now being propagated again with politicians wanting to undo what they never should have done in 2007.

What a waste of time and energy when the same issues that went unaddressed in 2007, (failing schools, lack of a national energy policy, escalating national debt, etc.) are still not being addressed today, replaced by idiotic light bulb efforts. 

- According to an article by Matt Welch in the November, 2011 issue of Reason magazine, according to Environmental Protection Agency statistics cited in an article in the August, 2011 issue of Investor's Business Daily, the Obama's economic stimulus program set aside $7.2 billion to invest in green/clean technologies. These billions were set aside to create a broad new category of "green jobs," five million new jobs in the next ten years according to President Obama himself.

According to the EPA numbers, those billions of dollars have created or retained a grand total of 7,140 green jobs at a cost of about $1,000,000 per job. Not quite an efficient way to create jobs or expand the economy. Billions of taxpayer dollars wasted with no discernible and long term positive effect.

- The New York Times ran an article on August 2, 2011 that described the activities of artist Erika Nelson from Lucas, Kansas. For ten years, Ms. Nelson has made miniature models of giant pieces of Americana (e.g. models of the World's Largest Ball of Twine and the World's Largest Can of Fruit Cocktail) as part of her mobile miniature museum and has toured around the state with her pieces.

Nice hobby until you realize that this hobby has been subsidized by the Kansas taxpayers to the tune of $2,000 a year. Talk about non-essential government spending. Finally, however, budget constraints are forcing the state to get out this ridiculous subsidy this year, about ten years and $20,000 too late.

- According to an article the Miami Herald that was summarized in the November 25, 2011 issue of The Week magazine, taxpayers spend $800,000 a year to house each prisoner at Guantanamo Bay. This is 30 times more expensive what it costs to keep a prisoner on U.S. soil.

Thus, is you believe that about 172 prisoners are still at the prison camp, based on various news reports, then the Federal government could save about $130,000,000 a year if only Obama had executed his major campaign promise to shut down the facility if he was elected President. His failure to do so and the political class failure to make/allow him to fulfill that promise will unnecessarily cost the American taxpayer over $1 billion of the next ten years.

Waste, insanity, idiocy, and more, your American political class.





Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.
Please visit the following sites for freedom:
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment/

Shaky Economic Times Ahead, Lessons Learned From the Past

A bunch of economic news has occurred recently so I thought it might be a good idea to take a look ahead into 2011 and try to predict how well the year might shape up from an economic perspective. You might question my ability to do that since I have very little economic training. However, given that the best economic and political minds in the world did not foresee the coming of the Great Recession, the biggest economic downturn in about eighty years, I would humbly state that I cannot do any worse then the experts in predicting what will happen in 2011.

At the same time, we will try and take away some lessons from what is happening in the economy in order to not repeat the major missteps that the political class has done over the past few years. A person should always look at their own errors in order to not repeat those errors in the future, a life lesson that always seems to get lost on our politicians.

The basic prediction I would make for 2011 is that it is going to be a very rocky and difficult year for American households in 2011, worse than in 2010. Yes, the stock market has improved considerably over the past year or so. Yes, holiday spending was up considerably on a year over year basis. Ford said it would hire up to 7,000 more workers. Many in the political class are already trumpeting the coming good times. I would say not so fast, considering:

- Yesterday's unemployment report on initial unemployment claims was not good, rising 35,000 to 445,000 people compared to the previous week. Thus, for a very long time, we have seen almost half a million Americans a week file for first time unemployment benefits. The job market cannot be strong if that many Americans continue to seek relief from the loss of their jobs.

And although the unemployment rate recently dropped to 9.4%, that was due to the many Americans in despair who have actively stopped looking for work rather than growth in the available number of jobs. With many Americans losing their jobs every week and many others stopping their job searches out of frustration, tight consumer spending will result in low economic growth and continue to depress sales tax and income tax revenue streams for government operations, resulting in even more government budget tightening.

- The Associated Press reported on January 13, 2011 that 2011 will be the peak in home foreclosures for American families struggling with unemployment and plummeting housing prices coupled with weak housing demand. The foreclosure tracker Realty Trac Inc. predicts that 1.2 million American homes will be repossessed in 2011, up from one million homes in 2010. One out of every 45 homes in the country, more than 2%, received a foreclosure notice just in 2010. Thus, one of the previous drivers of economic growth, the housing industry, is unlikely to help the economy or homeowners that owe more to the bank than what their home is worth.

- An Associated Press article from January 14, 2011 reported that consumer prices rose in December by the largest amount since June, 2009. The primary cause for the jump was the continuing rise in gasoline prices. For some perverted twist of logic, many economists think this is a good thing since there was only one driver of the higher prices, gasoline. What I never understood is who cares what drove the higher prices, everyone needs to drive, that is the basis for much of our economy and country, so excluding the price of gasoline from the inflation measure and being happy never made any sense. In the real world, we cannot take gasoline out of the equation and look at "core inflation," we still have to drive and driving got more expensive.

- Unhappy about rising gas prices? Well, get ready for rising food prices also. According to a Wall Street Journal report from January 13, 2011, prices of all types of food are likely to continue going higher in 2011. After jumps in farm staple products this week, corn future contracts are up 94% from June, soybeans are up 51%, and wheat is up 80%. Three factors are driving the rising prices, according to the United States Agriculture Department:

1. Dry weather and floods in various countries around the world have suppressed world wide crop production.
2. There is basic rising demand for food around the world.
3. Corn and other crops are being diverted for ethanol production.

The situation has gotten so bad that many are starting to worry that food supplies might be a source of "social and political instability, geopolitical conflict and irreparable environment damage," according to the World Economic Forum.

 On expert cited in the article expects commodity food prices to rise between 3.5% and 4.5% in the United States this year compared to only 1.5% in 2010. Even worse, the same expert said that beef and pork could rise as much as 10% in 2011. All good news for America's farmers as China and other emerging markets buy up American farm output, bad news for American consumers who, in addition to higher gas prices, are likely to be paying more for higher food prices.

- More proof that the economy is in for a rough ride in 2011? The Associated Press reported yesterday that the price of gold surged above $1,400 an ounce this past Tuesday as a result of a weaker dollar. In times of economic stability, the price of gold usually goes down significantly as other investment options provide a better potential for investment returns. As long as gold stays high I always assume that some very smart people are out there with serious and probably accurate doubts about whether the world's economies are really that strong and growing.



The panel also concluded that while the company is on the path to stability, its future plans "raise concerns" due to a lackluster product array, a faltering restructuring in Europe and increased competition around the world. Looks like $53 a share is not going to arrive anytime soon.

- Remember all those dire bank failure stories and hysteria from just a couple of years ago? How the American taxpayer had to step in and prevent all of these banks from collapsing and taking the entire world economy with them? Well, according to an Associated Press report this week, it does not look like that fate awaits JP Morgan. They announced this week that their fourth quarter profit jumped a whopping 47% over the same quarter the year before. The bank earned $4.83 billion in one quarter.

So while many Americans struggle with long hours, no jobs, higher gas prices, and potentially higher food prices, JP Morgan, and I would bet most other banks, are getting along quite comfortably, in part due to the bank bailout debacle that cost the American taxpayer billions and billions of dollars for no reason whatsoever.

- Staying in the bank bailout arena, a report issued this week by the office of Neil Barofsky,who is the special inspector general for the entire bank bailout TARP fund, found that the decisions to save Citi Bank "wasn't made coherently, and seemed to be based on "gut instinct" and "fear of the unknown" rather than objective criteria.  In other realms of life, this kind of decision making is called Amateur Hour. How can a politician or government official give out tens of billions of taxpayer dollars based on nothing but gut and fear?

The fact that the Treasury Department claims to have made money on the Citi Bank bailout does not erase the fact that they got lucky. You cannot expect to do much in life as clueless as Mr. Barofsky claims the Treasury department and the government was and always be so plain lucky. Especially when billions and billions of dollars in taxpayer money are involved.

And the worst part of the whole deal, worse than the basic roulette bet that was made with billions of dollars? The article raises new concerns that despite all of the posturing of the political class, many U.S. banks are bigger than the were just a few years ago, making them still "too big to fail." Barofsky claims Treasury secretary Geithner stated that "while the government now has better tools to cope with future financial crises, in the future, we may have to do exceptional things again." This is basically code words for some of these banks, like Citi, are still too big to fail and we will have to bet huge amounts of taxpayer money again to save them from themselves. Thus, we have risked hundreds of billions of dollars of taxpayer money, for no reason, under no logical processes and we are likely right back where we started prior to the Great Recession.

Thus, from all of this current and somewhat pessimistic news what should we have learned:

• We should have learned that government does not create jobs, the private sector creates jobs. After hundreds of billions of dollars wasted in so-called stimulus programs, unemployment is still very strong and very vibrant, not a good thing. All of the failed government-centric economic policies, Cash For Clunkers, Cash For Appliances, etc. have been utter failures except for their success in spending taxpayer dollars. In the future, find ways to let the market cure itself, not the government and the political class. These last two entities have proven beyond a doubt that they are useless in this area.
• We should have learned that the economy is always stronger than any government incentive program, it has to work its way back to health, the best thing that the government can do is let nature take its course and get out of the way. All of the government programs to help the housing market, foreclosure relief, first time home buyer rebate program, low interest rates, etc., have been total failures and have just wasted more taxpayer dollars while delaying the eventual cleansing of the market of excess inventory and bad credit risks.
• We should have learned, something our politicians never learn, that just about everything in the world is connected to everything else. Thus, by trying to fix the energy problem with a poorly thought out and failing corn ethanol program we not only fail to fix that energy program but we also cause economic troubles in food market. To solve any problem in life, one must understand the root causes and the interconnections within each problem. Our politicians have a very difficult time with that concept.
• We should have learned that it is never a good idea to step into the private sector to protect stupid executives and failing companies from themselves. General Motors never should have received any bailout money. They could have gone through bankruptcy proceedings like most other companies without government help, they would have emerged from bankruptcy and still have been a viable business without taxpayer help. Now, the American taxpayer will never see a positive return on that money, the Chinese government now owns more than 10% of the company as a result of how well the American taxpayer backed the company, and the company itself is on the verge of making more cars outside of the United States than within the country so we do not even get the benefit of more U.S. jobs for out taxpayer dollars. No company should ever be too big to fail. Let them fail, its called the free enterprise system.
• We should have learned, based on the GM example and the bank bailouts, that government should end all corporate welfare practices. GM's focus will not be on the American taxpayer in the future, it will be on the Chinese consumer. The major banks focus will not be on customer service and making loans to grow the economy, it will be on how to leverage interest rates and other exotic financial arrangements to make profits. American farms are swimming in profit potential, given tight world food supplies, wouldn't this be a good time to cut government farm subsidies to the large farm conglomerates in the country? Cut the corporate welfare practice, it perverts the true marketplace while it perverts the election process via campaign fund donations from corporate welfare recipients.

Some steps from "Love My Country, Loathe My Government" would help to implement these lessons:

• Step 6 would allow only individual citizens to contribute to election campaigns, eliminating the incentive for corporate welfare since the ability to reward welfare with campaign donations goes away.
• Step 23 provides a process to finally solve our energy crisis without screwing up the environment or food prices in the process.
• Step 34 provides a process to replace members of Congressional committees when the fail to perform to satisfactory levels, hopefully replacing them with people that can solve the problems facing the committees.
• Step 36 would require all elected officials to take and pass a course on basic economic theory so that they can understand how to solve some basic economic problems without making them worse, hopefully preventing us from reliving the nightmares of Cash For Clunkers, First Time Home Buyer Rebates, etc. in the future.
• Step 47 would eliminate farm subsidies, just one form of corporate welfare.

In summary, I predict we will pay more for gas in 2011 (given current gas rends), we will pay more for food in 2011 (given the three factors listed above), we will not see much price appreciation of our homes in 2011 (with all of these foreclosed coming on the market, the glut will suppress prices), we will not see a burst of job growth (not at the current high level of initial unemployment claims every week), we will not see any more tax breaks in 2011 (given the poor financial conditions of the Federal government and the states), we will not see any reduction in our national debt in 2011 (given that Pelosi, Reid, and Obama have already torpedoed the Deficit Reduction Commission without debate), we will not see GM repay its debt to the American taxpayer while it focuses overseas, and the banks are still too big to fail, probably taking too many risks but confident their friends in Washington will bail them out. Have a nice day! 



Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.


Please visit the following sites for freedom:

http://www.cato.org/
http://www.robertringer.com
http://realpolichick.blogspot.com
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment