Random thoughts

Third party advocates are misguided. A third party will weaken the republic. It is ironic that many of those same people grouse that Obama wants to turn us into Europe. Well nothing will transform us into Europe faster than a third party. The parties would have to mix, match and compromise. One time the link would be between the dems and the 3rd party and then they would fall out and the link would be between the republicans and the 3rd party - just like what just happened in Germany. No what is needed is for the tea party activists to take over both the democrats and the republican parties. Although tea party folks are thought to be right wing republicans, quite a few are democrats who are afraid of all the spending and growth in government power.

Obama is now attacking the bankers. It is bogey man of the month. First it was the doctors accused of treating patients with concern to payment schedules rather than what was best for the patient. Then it was to attack the insurance companies because of their "obscene" profits - even though their earnings per share and profitability put them in the bottom tier of corporations. Next, it was the bankers. All this is just a smokescreen to divert attention from an administration that has failed miserably in its first year. So the president says "we want our money back". He wants to tax the banks who have already paid back their TARP money - except for Citibank.The losses he cites are from the auto companies not the banks. Yet he has not railed against the auto companies and demanded our money back. Speaking of which, we the people should demand the TARP money paid back back. That is we should demand that all the TARP money be returned to reduce the federal debt. Obama is using what was repaid to be new spending. So Mr. President: we want our money back.

I just saw a poll about the president's dropping poll numbers. It seems that 88 percent of democrats and 22 percent of republicans still favor his policies, It used to be that the republican numbers have fallen but the big fall is in the independents. Who are these people that think the president is doing a good job? First, I don't understand why the republican numbers are positive. For all their differences, I do know know of a single republican who favors the takeover of the American economy by the government. So who are these 22 percent? The 88 percent democrat support confirms that there are virtually no moderate or conservative democrats. How else can one explain this number?

True health care reform

As I have written before, Obamacare is not about health care but all about expanding the scope and power of government. The reason why most Americans rejected Obamacare is not because they don't favor reform. They do. They are just smart enough to realize that the government mismanages all its enterprises. They all lose money. Why turn one's health care over to the folks who lose $7 b a year on the post office, who lose on Amtrack, Medicaid and have bankrupted social security. No Americans realize that the government will turn what some think is a bad system to one that is worse and costs more. Americans did not oppose adding 30 million more people to the insured rolls. However, they were opposed to having to pay for the insurance of those 30 million people. So what can be done to improve the system? There is a role for the Federal government. The first is to do something akin to the Reigel-Neal interstate banking act, which removed the barriers erected by the states on interstate bank branching and acquisitions. Removing the barriers erected by the states to prevent competition in health care insurance would mean that policies could be transported across state lines when a person moves, It would mean that a person in one state could buy a policy offered in another state. States should remove all mandates from health insurance policies. That would allow persons and families to craft a policy suitable for them rather than being forced into higher cost one size fits all policies. There should be a nationwide tort reform law. Texas has shown that when there is tort reform, then doctors move in to provide services and costs are lowered. There should be a nationwide pool for those with pre-existing conditions. Those in the pool sould be able to purchase insurance and the pool policies should be subsidized by the federal government. Lastly, one item that is the elephant in the room is that no one address the problem of emergency room use and nonpayment. Lets be blunt. Health care is a good and going to the emergency room and not paying is nothing more than stealing. One would not be allowed to walk away with a TV without paying for it. The same should be true with health care. Since the Feds will go after you like a junk yard dog if you don't pay your income taxes, it should go after health care scofflaws with the same vigor. Just like with delinquent taxes, the terms of repayment would be worked out. Do all of this and costs will come down. Since this makes so much sense there is no hope that any of it will take place.

Why 60?

Isn't it curious that the media reports that if Bernanke is not re-confirmed in the senate that he "will lose his job"? This gives the impression that Bernanke will have to leave the Fed. Not so fast my friends. If not confirmed, he could just go back to being a Fed governor. The governors are appointed to a 14 year term and then the president picks one to serve a four year term as chairman. This is just another indication that the media knows very little about what they report. I was also puzzled as to why Ben Bernanke needed 60 votes to be re-confirmed in the Senate rather than 51. It is because the Senate will debate his confirmation and 60 votes are needed to end the debate. However, when the vote is taken for confirmation it will only require 51 votes to re-confirm. Should he be confirmed? Yes. Why? He has been a sycophant for the Obama administration surrendering Fed independence. Bernanke started campaigning for re-nomination the second Obama got elected. He has given the administration all the liquidity it has needed to expand its spending into the feckless territory. The Fed has loaned money where it has never lent before through establishing all of it lending facilities buying asset-backed securities. It sent billions of dollars to AIG so they could pay off all their big bank creditors rather than have them eat some of the losses. So why re-confirm? Its because the next chairman will be worse. It will be some administration lackey like Larry Summers who will be an extension of the administration and turn the Fed into a branch of the Treasury. However, since if he is confirmed, Bernanke will be in the chairman's seat for four more years. He - and his six Fed governors and 12 reserve bank presidents - can then become more independent and conduct monetary policy for the benefit of the nation rather than the benefit of the president. Why? Because unless this administration starts to slow down spending by attacking entitlements, removing the disincentives embedded in Obama's cap and trade, health care and financial reform agenda, this president won't be in office when Bernanke's next term comes around.

1934

1934?

Who said you can't be in two places at the same time?

I have an old dear friend who was a major operative in the Carter White House. He was a Clinton supporter and said that he feared that Obama would be dominated by the Congress due to his lack of political experience. Well he was correct. Every single major legislative initiative has come from the Congress. Cap-and-trade and health care reform were both written in the Congress and Obama embraced them as his own. Members of congress have complained that they were getting little leadership on these issues from the president and no direction. When health care ran into trouble in both houses, there is little evidence that the president asserted a leadership role in resolving them. Rather it appears that he has agreed to whatever was put before him. It is hard to imagine such a hands off approach to what has been called his signature event. People have said that the domestic policy is confused and in a shambles. There has also been major grousing over the administration's foreign policy. In several key areas, the administration has continued the same policies of the previous administration that it had criticized. In others, the president has met with embarrassment and ridicule (Venezuela, China, Iran). The president has appeared to abandoned our allies in Eastern Europe - namely the Poles and the Israelis view him suspiciously. Thus, foreign policy is also confused and in a shambles. So to quote Vince Lombardi "What the hell is going on out there?" I think what we are seeing is a lack of leadership. It is obvious that the president has not laid out his agenda either domestically or internationally. What is the plan? What are the objectives? Where is the leadership? Well I have concluded that he hasn't had the time. CBS News has reported than in his first year, Obama has made 411 speeches, held 42 news conferences, granted 158 interviews, attended 23 town hall meetings, made 42 domestic trips, 10 foreign trips, attended 28 fund raisers, 7 campaign rallies, had 74 meetings with foreign leaders and vacationed 26 days. It is apparent that the toughest job in the administration is being the president's appointment secretary. Instead of leading, the president has remained in campaign mode and abdicated governing to others.

Whew! That was close

Who would have every thought that Massachusetts of all places would rescue the nation from the folly of nationalized health care? As I have written before, the major initiatives of the Obama administration have nothing to do with the problems they purport to address. Cap-and-trade has nothing to do with global warming. It has to do with increasing the power of the government. I have not seen one scientific report that finds that the CO2 emissions that will be reduced under cap-and-trade will have any significant effect on the earth's temperature. Moreover, even if it did, there is considerable debate over whether CO2 is even related to changes in global temperatures. What cap-and-trade does, however, is that it allows the government to pick winners and losers, dramatically increases the tax burden, raises costs to businesses and creates a gigantic slush fund for the government to reward its supporters. Thus, cap-and-trade, under the guise of saving the planet, is simply a way to increase government's power. As bad as health care "reform" is, cap-and-trade is actually worse. The financial "reform" package has nothing to do with the problems that got the nation into financial crisis. There is not a word on reforming Fannie Mae and Freddie Mac. There is not a word on asset bubbles. Rather it gives the government a chance to regulate hedge funds which had nothing to do with the crisis. It gives the government more power to regulate banks by limiting their size and creating an anti-bank consumer "protection" agency. Again this legislation just increases the power of the government. As to health care - the second worse piece of legislation in my lifetime (cap and trade is first), it does not reform health care. It does nothing to address costs - with medicare and medicaid spiraling into financial crisis what sane person thinks that the government can control costs? Rather it again simply increases the power of the government. At least for now this folly is dead thanks to 52 percent of the voters in Massachusetts. But the republic is not out of danger. The administration may attempt to backdoor many of the provisions of health care under a different guise. It will try to impose cap and trade via the EPA and it has decided to declare war on the investment bankers and commercial bankers in an effort to divert attention from its agenda to take over all aspects of what was once the freest economy on the planet.

Happy New Year

Yesterday I was interviewed by one of the local TV stations which wanted to know my new year's predictions. Here is what I said about my 2010 outlook. First, the employment picture will not either improve noticeably or get worse. Granted the recession may be over technically but there is no private sector recovery. GDP is made up of government spending, private consumption and investment expenditures. When you look at the composition of GDP growth, it is mainly in the government sector. Since government spending is financed either through borrowing or taxation, in either event it decreases private expenditures. Government borrowing raises the cost of private funds (crowding out) while taxation decreases the amount the private sector can spend. Consequently, until we see a recovery in private expenditures and investment, we will continue to have little real growth. Moreover, employment will stay stagnant until the uncertainty surrounding this administration is removed. As long as health care is unresolved and cap and trade sits out there, then businesses will not know their costs making it impossible to plan for the future. As a result, even though we have come out of every post-war recession like gangbusters with economic growth of around 6 percent, no one expects growth much over 2 percent for 2010. Second, one result of the recession is to make all of us re-evaluated our choices. My parents were products of the Great Depression. They hated debt. One reason I went to the University of Georgia is because they did not have enough money to send me to Purdue where my big brother was a junior. Since they did not borrow money, I had to go to a place where they could afford the tuition. Well one of the adjustments made during a recession is that households and businesses pay down debt. This is called deleveraging. As households get out of debt they will be reluctant to jump right back in and borrow more. What we will see is less consumer borrowing which translates to slower growth. Third, we have looming out there all of the trillions of dollars that the government has borrowed, printed and spent over the past two years. That has got to result in higher rates of inflation that will further debase our already weak currency. Our government is doing the opposite of deleveraging. Rather it is getting deeper in debt. This started with George Bush who demonstrated the fallacy of compassionate conservatism. We got tax cuts, but a new prescription drug entitlement, war expenditures, two "stimulus" bills and TARP. I wrote after the election that if you liked Bush you will love Obama. Most people thought I was on drugs. Yet one year later it has come to past with more reckless spending, zero fiscal responsibility and zero monetary control. We now have a government without adult supervision and are on the path to financial ruin. Yet I remain optimistic and will detail that optimism in the coming year.