Category: Economy

That’s right, President Obama is the furthest thing from being a leader. He has shown the American people that he is not leading us out of this recession as he’s been telling us for the last two years when his administration made claims of the recession ending June 2009. To make matters worse, Obama is even down-playing the whole entire Standard and Poors downgrade.

Last Friday, August 5, 2011, Standard and Poors downgraded the United States credit rating to a “AA+” with a negative outlook. The reason for the outlook assumption is the fact that Washington along with Obama have lead this country into a complete and total spending frenzy and when it came time to handle the debt ceiling issue, Congress and the president acted like a bunch of school kids fighting over issues that really didn’t do anything for the deficit. This wording by politicians for planning “cuts” is a joke. In essence what they want to do is to cut spending on future projects, which is fiscally wrong since it does nothing for the spending that is already going on.

Obama finally gave a press speech today (two days after the S&P report), in regards to the downgrade by S&P. His entire speech was nothing but another campaign style speech where he was vague and not direct with a response to the situation. He first wants to make a foolish comment about Warren Buffet and how America will always be a “AAA” rated country. His approach to the issue seems to be more relaxed and carefree to what needs to be done. He didn’t mention anything about his failed policies or the fact that his plans have been nothing but a way to spend tax payer’s money.

Standard and Poors stated it clearly that if the United States doesn’t get a grip on the spending habits and reduce the deficit by a considerable amount, they see themselves (S&P) downgrading the U.S. again within the next two years.
So what does Obama say in his first speech since the downgrade? He talks about future cuts and tax reform and Medicare reform. His comment alone about raising taxes on those who should “pay their fair share”, shows this man has no clue on how to run a lemonade stand, let alone the leading country in the free world. His next comment spoke about reducing taxes for “those that need it” to help stimulate the economy. Real economic stimulation comes from the free market and job growth. Without it, we will slowing diminish into a second rate country.

This country will never get back it’s AAA rating as long as we have politicians in Washington that clearly don’t know how to make a business run efficiently and profitably. As it is, Obama was asked to remove Timothy Geithner as the Secretary of the Treasury and instead, Obama begged Geithner to stay on his administration. How can you be so blind to see that the Treasury Secretary doesn’t have a clue as to what’s happening. He used to be on the board of the New York Federal Reserve and supposedly knows all about ratings and how Wall Street works. In April, Geithner stated that a downgrade is not in America’s future and that the country will retain it’s AAA rating from all three rating agencies. So where is the man’s knowledge and talent when this country needs the right man in the Treasury? Obama doesn’t know what to do, Geithner doesn’t know what to do and the people that Obama has put in his administration don’t have a clue either. If I didn’t know any better, I would think that this is the objective of president Obama to destroy the United States as this world has known it and transform it into something of his own choice. Oh wait, isn’t that what he said he was going to do when he was on the campaign trail? Then again, from listening to his speeches, I don’t think he ever got off the campaign trail in the first place.

Over the past hundred years, the federal government has been more involved with the free market and it’s hard to even know where the line is drawn between the two. The general philosophy behind the free market is the old rule of supply and demand. As long as there is a demand for a product or service, someone will find a way to supply either of the two.

The issue that has been going on is that the federal government has been getting involved to “help” a particular industry and/or company for so long that we no longer know what is an artificial or organic supply and demand product or service.

During W.W.II, the wool industry was busy supplying the material to make our military’s uniforms. To make sure the industry would always be there to keep our troops clothe, the federal government gave subsidies to them to the tune of millions of dollars. Years later as synthetic materials were being used for the military, Washington continued to pay the wool farmers.

The agricultural subsidies assist farmers and agribusinesses to supplement their revenue, manage the supply of the different commodities and to influence the cost and supply of such commodities (ie corn, wheat, rice, milk, sugar). So the government is dictating the price as well as the supply of these commodities. In this situation, the laws were passed during the Great Depression and have remain in place to this day. We have farmers being paid not to grow corn on their land. Many farmers receive some sort of government (tax payer) financial assitance.

A Canadian report claimed that for every dollar U.S. farmers earn, 62 cents comes from some form of government, with total aid in 2009 from all levels of government adding up to $180.8 billion.

These are just two incidents where government has manipulated the free market for decades. The free market hasn’t been free for just as long. As long as the federal government is involved, no industry or company will go bankrupt. The whole idea of competition is that the strongest one wins. Well in this case, whoever pays more money to the politician campaign funds, wins.

Let’s take a look at the recent bailout of General Motors. They received billions of dollars from Washington to keep them from filing bankruptcy. If GM was left to file bankruptcy, the union contracts would have been history at that point. The company would have restructured to survive or close their doors forever. Is that a bad thing. On the surface, yes. When you go ahead and let the free market work it out, it would become a good thing.

How? Simple, it’s obvious that GM wasn’t making the product(s) that the customers wanted. If they continued doing the same thing, they would have had to close their business forever. An entrepreneur, with the financial backing, would step in and buy the assets of GM to build his own vehicle. They would hire the former GM workers and a new car manufacturer would be born to make it or break it. He either builds want the customers want or he goes out of business too.

The unions are a powerful force with plenty of money to persuade politicians to help the their industry/company. The government makes it impossible for new car companies to start in the industry since there are so many regulations that only the “big” dogs can work within them.

The federal government has made it so hard for the free market to run like it should that it’s questionable to say that we can ever separate the two. The first step is having Congress cut programs that support industries that wouldn’t survive without it.

What those ideas are, we don’t know yet. According to the White House officials, Obama will unveil new plans to help the ailing housing market and to reduce foreclosures. He will outline the plans next week in his speech on “job creation”.

Unfortunately, the Administration suffers from short term memory since only a little more than two years ago, he tried to slow down the foreclosure rate and was totally unsuccessful. His last plan was to help between 4-5 million homeowner keep their homes from foreclosure, but the plan (as of May of this year) only help 810,000 refinance into loans with a lower rate. The refinancing initiative will allow certain borrowers to refinance loans that are backed by the improperly operated Fannie Mae and Freddie Mac. As a side note, both Fannie and Freddie have borrowed over $170 million over the last three years because of poorly run plans.

The Obama Administration is looking to make changes to existing programs aimed to allow borrowers to take advantage of lower mortgage rates, which will also include allowing them to refinance the loan even if they owe much more than the current property’s value. While the idea is expecting to help the borrower to free up cash for other spending to drum up overall business activity, it’s most like not going to do so since many don’t have enough money as it is to do more than they already are.

Either way you look at it, Obama and his cronies are grasping at straws to figure out a way to “fix” the economy. The only true way for the housing market to correct itself is to get the government out of the way and let the market correct on it’s own. While Fannie Mae and Freddie Mac account for nearly 90% of all residential mortgages, their time has come for them to be dissolved. It will take years to work out all the paper work to get all the assets of their books, but it needs to be done. The federal government was never intended to be in the housing market wither as a seller, buyer, loan manager or a landlord.

It’s too bad that Barney Frank is too close to the issue of Fannie and Freddie to make any clear decisions on what the right thing is that needs to be done. His life mate is on the board of directors and he doesn’t know how to run a business either.No matter what the government does, it’s going to affect the housing market in a negative way. As long as they are involved it will continue to be dragged out instead of a some-what quick recovery.

Let’s face it, the federal government is doing what they can to help the financial sector from taking another dive into the abyss and asking for more money from the tax payers.
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Last night president Obama made his speech to the congressional audience. All I can really say about his speech is that it was nothing we haven’t heard already many times over. Once again it lacked the “how exactly is it going to get done” information. Asking Congress to pass a bill that will have the federal government spend nearly $500 billion.

On the last day of session last month, Congress passed raising the debt ceiling by $1.2 Trillion. Five weeks later Obama is now telling them to pass a bill that is one third the cost of the entire increase. When is this going to stop? It won’t as long as Obama is in office. More than ever we need to remove him next year.

As Obama started to talk about the latest bill, The American Jobs Act, he was trying to inspire the crowd. “These men and women grew up with faith in America that hard work and responsibility paid off.”, Obama stated. Unfortunately nearly 50% of Americans don’t feel that way any longer. Forty years of entitlement programs has changed that mentality. He continued, “Our economy will be driven not by Washington, but by our businesses and our workers… but we can help. We can make a difference.”

I can see from the last twenty years how well the free market works when Washington helps. With help like that, please don’t help. According to what Obama said, construction jobs for bridges, roads as well as public schools were pretty much all the ones that would be created from this bill. The last time I checked, construction jobs only count for roughly 20% of the entire work force in this country.
I’m not sure if anyone notice that when Obama was talking about the different jobs and for who it “will” help, the president of the union board, ??? was being shown on the screen. So that pretty much gives me an idea on the kinds of jobs that this bill will help. The union jobs will be the ones to benefit and of course the unions themselves.

With this bill he said that it will help “rebuild America”. Repair decaying roads and bridges. What I would like to know is, isn’t that what he said about the $800 billion stimulus bill? We been rebuilding America’s roads for the last fifty years according to out past presidents and Congress members. When are we going to be finished? He mentioned a bridge that connects Kentucky and Ohio, which is a major trucking route, is in such dispair, it must be done. Why wasn’t it done two years ago with the stimulus bill?

The line that gave me a good chuckles was, “…everything in this bill will be paid for.” Really? How about this, get the money together before starting any projects and pay for it first. Then I’ll believe that everything in the bill is paid for. After all, the word “paid” means that some gave the money for the service/product.