Americanly Yours

People were asking me questions about where I heard that the bailout could end up costing $4 trillion.  Here is an article from CNN.com which was a source of mine.

We have thrown unprecidented amounts of money at this problem which would have eventually worked itself out without government meddling.  If that wasnt bad enough, now even our government is admitting that they “may never know whether the government’s $700 billion bailout of the financial industry worked.”  Ironically, the report was issued by the General Accountability Office… wow

Americanly Yours,

Phred Barnet

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There has been a lot going on lately and Ive been too busy to write, but Im gonna try to catch up today.

I want to begin by talking about the “stimulus” that Obama is pushing and has passed both the House and the Senate in different versions.

Less than a week after President Obama declared an end to partisan bickering, he failed to get even a single Republican vote on his “stimulus” bill.  Even 11 Democrats voted against the hyper-expensive $819 BILLION bill.  To put that in perspective, $819 billion is more than the total amount of US currency in circulation!  The $819 billion also exceeds the cost of the Iraq War by over $200 billion dollars.

Apparently, Democrats and Republicans are negotiating a compromise that will cost around $900 billion dollars (thats a cost of $3000 for every single American man, woman, and child).

On top of this, Obama has requested $350 billion from the second half of the TARP program.

And Obama’s administration is considering requesting an additional $1-2 Trillion for a similar bank and mortgage bailout program.  Meanwhile, New York Senator Charles Schumer who is vice chairman of the Joint Economic Committee says that the government may need $3-4 Trillion for this program.

Lets add up the “worst case scenarios.”  $900 billion for this new “stimulus,” $350 billion in additional TARP funding, and $4 trillion for this new program being proposed and we have a total of $5.25 trillion!  This would increase the size of the national debt by 50% and cost $17,500 per person.

And of course none of this has any guarantee of working.

Americanly Yours,

Phred Barnet

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I worked all day long on this blog yesterday, stopping only to watch President Obama’s inauguration, and to eat some Chicken Wings. Thank you to Chris Cassimus for helping me with all of my WordPress problems.

I thought the speech was pretty good—say what you want about President Obama, but he is a great speaker. I thought that he had some nice, positive things to say about our Nation, and I especially liked the point he made about how great it is that a man whose father would not have been allowed to eat at a local restaurant 60 years ago has now become President. The American Dream is not dead!

I did, however, have problems with some of the things that Mr. Obama said. I have copied parts of the text of his speech and placed the in italics with my criticism of them below.

“On this day, we gather because we have chosen hope over fear, unity of purpose over conflict and discord. On this day, we come to proclaim an end to the petty grievances and false promises, the recriminations and worn out dogmas, that for far too long have strangled our politics.”

I thought these sentences were completely inappropriate. For one, the way Mr. Obama described putting “hope over fear” makes his sound like a sore winner. I voted for Senator McCain, but I did not vote for “fear.” That was a ridiculous statement by President Obama which serves no purpose other then to reopen old wounds. I didnt vote for fear, I voted for free trade, free markets, economic freedom, experience, strength, and leadership. Obama did not need to say that.

On a side note, I have a friend (who will remain nameless here) who has an awful habit of changing his views to agree with whatever the candidate he supports says, even going so far as to copy the rhetoric of those who he supports. I have seen him do so for years and he did this quite a bit during the election. Well, he has already reminded me (in all seriousness on his part) that I “voted for candidates who preach fear.”

The final sentence of the above paragraph is troubling to me. Does Mr. Obama really believe that his election has put an end to politics? Does he think that there will be no political resistance to his lofty, overly expensive, and intrusive plans? He had better think again.

As far as false promises go, you can track these for yourself throughout Mr. Obama’s presidency. Here is a link to an Excel spreadsheet of the nearly 900 promises that Mr. Obama made during his campaign. Here is a webpage that tracks statements made by elected officials—kind of like Snopes.com for politics. They have created a user friendly table of nearly 500 of Obama’s campaign promises and his progress towards achieving them.  He is off to a great start so far.

“Our journey has never been one of short-cuts or settling for less. It has not been the path for the faint-hearted — for those who prefer leisure over work, or seek only the pleasures of riches and fame. Rather, it has been the risk-takers, the doers, the makers of things — some celebrated but more often men and women obscure in their labor, who have carried us up the long, rugged path towards prosperity and freedom.”

The above statement is mostly true, but to me it provides another example of President Obama talking out of both sides of his mouth. He derides those who prefer leisure over work, yet he is calling for an extension of unemployment benefits so that unemployed workers can receive taxpayer money for doing nothing—probably the worst way to encourage hard work and employment. Bush already made a mistake by signing a bill extending unemployment benefits from 26 weeks to 39 weeks, but Mr. Obama wants even this to be extended. If you disagree with my assertion that this is bad policy, think about Europe’s extended unemployment benefits and their constant double digit unemployment rates. President Obama celebrates “the risk-takers, the doers, the makers of things,” yet he has plans to raise taxes on those very people. Raising taxes on risk takers (entrapreneurs) will not help our society create new innovations, and will surely not lead to the creation of the 4 plus million jobs that Mr. Obama has promised to create.

“What the cynics fail to understand is that the ground has shifted beneath them — that the stale political arguments that have consumed us for so long no longer apply. The question we ask today is not whether our government is too big or too small, but whether it works.”

Again, how can Mr. Obama believe that the day of political arguments and disagreements have ended. This is just not how things work in a Democracy. Sure, President Obama will enjoy a large majority for at least 2 years, this does not mean that we have reached the end of political arguments.

Our government is too big. This is clear, as is the fact that it is not working correctly. The proper role of the government is to protect its citizens from foreign invaders, to protect its citizens from violence brought on by other citizens, and to protect the citizens from fraud and abuse through the creation of an objective and fair legal system. These are the only duties and responsibilities of government. The government should not be providing, owning banks, making cars, placing priority on any one type of scientific innovation over another, “creating jobs,” or deciding what children should learn.

“Those of us who manage the public’s dollars will be held to account — to spend wisely, reform bad habits, and do our business in the light of day — because only then can we restore the vital trust between a people and their government.”

Did those words really come from the mouth of a man whose inauguration cost 4 times more than what was previously the most expensive inauguration in the history of this Nation and who has promised trillions of dollars in new spending and programs when the Nation is broke?  My trust will be restored when the budget is balanced.

Americanly Yours,

Phred Barnet

Here is an excerpt from a piece I wrote back on September 26th, before Congress passed the $700 billion TARP program.  A lot of things have changed since then, but I still think this is a good and relevant piece.  I did not change this from the way that I wrote it back in September, except to correct a spelling mistake in the last paragraph.

We should, however, worry about our economy now.  The national debt is rapidly marching towards ten trillion dollars ($10,000,000,000,000).  Our unfunded liabilities in Social Security and Medicare now total an additional sixty-seven trillion dollars ($67,000,000,000,000).  By 2012 the Medicare fund will be going into a deficit and we will be forced to spend tax dollars to keep up with Medicare payments.  By 2017, the same thing happens with Social Security.  American families now owe over $15 trillion in household debt.  We have nothing left.  We are witnessing the slow, painful fall of the American Empire.  It hurts me to watch because I love this Nation so much.

For years we threw money at problems without ever trying to really solve them (poverty, drugs, education, health care).  Now we have no money and things are getting worse in all of these areas.

Iconic American companies are being swallowed up by foreign firms at an unprecedented rate.  Budweiser is being bought out by a Dutch firm, Miller is now owned by South Africans, and Coors is owned by Canadians.  Ford, Chrysler, and General Motors are now on the brink of extinction and are closing down American plants to move to other nations.

Sovereign wealth funds (companies owned by foreign governments) have been buying up large stakes in American companies—these sovereign wealth funds now own about 10% of Citigroup, 20% of the NASDAQ stock exchange, 9% of UBS, 10% of Morgan Stanley.  They own 7.5% of the Carlyle Group (which owns major defense contractors, telecommunications and technology companies, CSX railroads’’ domestic container lines, and consumer companies like Baskin-Robbins and Dunkin’ Donuts).  China owns 10% of the Blackstone Group (which owns Hilton Hotels, American textbook publisher Houghton-Mifflin, Universal Studios Parks, and is in the process of purchasing a large stake in The Weather Channel).  These wealth funds also own well over 10% of Merril Lynch (RIP), 2% of Barclays (which controls large portions of the stock of many large companies—go here and put in any symbol and you will see that Barclay’s owns a large stake), 7.5% in Diamler, AG, and several hundred million dollars worth of Visa.

The German government owns 35.5% of DHL, 20.3% of Volkswagen, and 32% of T-Mobile.  Through its stake in Renault, the French government owns 6.9% of Nissan.  Any time that you buy a product or a service from one of those companies, you are essentially paying a tax to a foreign government.  For example, if you stay at a Hilton hotel, 10% of the profit made from your visit goes to the Chinese government.  If you buy a new Mercedes, 7.5% of the profits made subsidize the Dubai government.  Do you think that American text books will continue to criticize the policies of Mao, now that China owns 10% of the company that makes our history books?

This is socialism, but at least in traditional socialism, Americans would see some benefit from their dollars going to state-owned enterprises.  In this case however, American dollars are going directly into the hands of foreign governments.  Would foreign nations tolerate the American government coming in and buying up stakes in their countries?  think not.

Do you remember mercantilism from history class?  That is what is happening in this country.  We export food, chemicals, plastic, cigarettes, cotton, and many other raw materials, only to import these goods back into the country later as finished goods: the cotton comes back as clothing, the plastic comes back in the form of goods made in China, and so on.   We produce nothing here.   We consume foreign goods like the world is ending tomorrow.  We now have the import/export profile of a 3rd world nation.

Rome is burning while Congress is playing the fiddle.  Be scared.  You should be.  Your children will know a different America.

Americanly Yours,

Phred Barnet