Bubbles & Free-Markets

We have heard a lot about bubbles in the last couple
of years – the housing bubble, the stimulus bubble, the
auto/clunker bubble, the student loan bubble, the tuition
bubble, etc. The Federal government was responsible for
all of these. Congress blames greedy capitalists, but, if
the gold supply at Fort Knox is left unsecured and the
fact is publicized, the bad decision is primarily at fault,
and the greedy folks who take the gold are just opportunists
doing what comes naturally.
The Community Reinvestment Act was passed in 1977. Every
President since then has used it to increase the percent of
home ownership and then made it a campaign statement that
they were helping Americans to achieve the American dream.
The problem was that any loan which was denied was denied
due to “racism.” Banks were threatened with Federal lawsuits
under the Civil Rights Act. The banks complied and got the
bad loans off their balance sheets as quickly as possible –
condolidated debt obligations sold to taxpayers (Fannie &
Freddie). The “First-time home buyer” program hoped to
reduce the glut of foreclosed homes, but most buyers wanted
new homes in better neighborhoods.
The Congress passed the Troubled Assets Relief Program and
the stimulus plan. This rewarded banks which “lost” money
and also political supporters. Local “shovel-ready projects”
were funded all at once to stimulate the economy. Work
scheduled for years was completed in months. Hundreds of jobs
were created at the Savannah River Site for expedited cleanup.
That bubble has burst.
The “cash for clunkers” program got inefficient vehicles
off the roads while stimulating the automobile industry.
Since American taxpayers are part-owners with unions of
automobile manufacturers like General Motors, this sounded
like a good idea.
Alternative energy companies – wind, solar, wave,
geothermal – were heavily subsidized by taxpayers while
carbon-based energy was threatened with carbon taxes,
moritoriums on drilling, and stagnation in the permitting
process. Our national security is at risk because our
wealth has been and is being transferred to our enemies.
The EPA has deemed humans as polluters since the breath
that we exhale is carbon dioxide.
Subsidies to financial institutions selling student
loans were reduced, and the Federal government took over
the student loan business. This is like the “single payer”
system favored by Democrats under Obamacare. Drive out
private insurers and nationalize Medicare-for-everyone.
Lotteries have created bubbles by “free” tuition
increasing demand while supply grew more slowly. Colleges
increased tuition by 200% or more of the inflation tax,
and competition from other lotteries reduced the amounts
available for scholarships. Only 56% of graduates found
jobs versus 90% a decade before. The default rate on
student loans – particularly with for-profit online
universities and loans needed to pay the increased tuition –
will put taxpayers deeper in debt.
Welcome to the centrally-planned and centrally-controlled
economy! A Constitution and a free-market economy made
America great. Central planning is destroying it!

Bibi vs. 0bama

An old satrical cartoon pictured Obama attempting JFK's
1960s Berlin speech, but saying “Ich bin ein Beginner!”
He has demonstrated the concerns that he has little if any
foreign policy experience with his recent speech on Israel.
He then meets with Bibi Netanyahu, who is in the
“heavyweight” class in foreign policy, and tells him - and
the world - that Israel needs to return to the pre-1967-war
borders. The Israeli Prime Minister showed great restraint
in not responding as an ex-Philadelphia high school student
might have.
Obama may have a Harvard Law background and community
organizing experience, but he is a lightweight with Bibi
who was educated at MIT and Harvard and has elite special
forces experience with the Israeli Defense Force. Bibi
fought on the Golan Heights in the 1973 war. When he says
that the 1967 borders are indefensible, then he knows that
from personal experience.
Obama also shows a profound ignorance of God's covenant
with Abraham. The United Nations created the state of
Israel in 1948. God had previously created the nation of
Israel and had given them the land from the river of Egypt
to the great river, the Euphrates River. Israel needs to
reestablish the borders that it had under King Solomon in
950 B.C.!

God May Punish the U.S.

Obama made a speech demanding that Israel roll back its
borders to pre-1967 war borders. This has been an Arab
demand since they lost the territory by attacking Israel.
It is totally unreasonable for many reasons:
Isreal will lose much of its defensive capability
God gave Abraham/Isaac/Jacob the land from the river in
Egypt to the river Euphrates forever, so Israel has given
much land already.
The current situation is untenable. Israel needs to take
back Gaza and the West Bank. The demand for a security
corridor connecting the two controlled by Hamas is meant
to divide Israel in two. Both Gaza and the West Bank are
used to smuggle weapons to Hamas. Israel is regularly
attacked from Gaza.
Whenever the king ignored God's clear plan, the entire
nation suffered. This has also occurred when modern
leaders ignored God's clear plan.

Give Keynes a Break!

It is a shame that Keynes is not around to defend himself.
He knew about the business cycle. He could have meant that,
if government had to spend anyway and the timing was flexible,
spending should occur during troughs in the business cycle
whenever possible. Any good idea can be perverted. Putting
500 in a lifeboat designed for 50 is an example. The outcome
is probably bad.

More on Gas Prices

Gas prices are the top media topic. President Obama has
been against carbon-based energy and has used taxpayer money
to make alternative fuels cheaper. He has prohibited
drilling for oil and has delayed the permits for drilling.
The United States has coal, oil and natural gas supplies
which will last for centuries, yet we import about 9M
barrels/day at about $110/barrel. Much of that supply comes
from Canada and Mexico, but much comes from people who
consider us infidels worthy of death.
But geopolitical issues and supply interruptions and
global demand are only part of the “high” gas prices.
The dollar has been devalued more than 95% since 1913 when
the Federal Reserve was born. Gas at $4/gal is only 18
cents/gal in 1913 dollars. The Federal government talks
about keeping the dollar strong, but it is disadvantageous
for it to do so. A weaker dollar makes it easier to repay
debt and also makes U.S. exports cheaper. It is a tax which
hurts the poor and elderly the most.
What about price gouging and obscene profits by big oil
corporations? The profit margins* of Exxon and Chevron
are 8.89% and 10.03% respectively. The profit margins of
Microsoft and IBM are 30.84% and 14.85% respectively. The
profit margins of JP Morgan and Citi are 21.91% and 17.27%
respectively. The profit margins of AT&T and Pfizer are
15.98% and 12.18% respectively.
Also institutions (mutual and pension funds ) hold 49.3%
and 63.2% of Exxon and Chevron. The stocks are therefore
indirectly held by millions of Americans. Seizing their
profits for more redistribution schemes will be as popular
as delaying BP's dividends to U.K. pensioners after the
tragic accident in the Gulf of Mexico.
The subsidy that taxpayers give to big oil (depletion
allowance) is similar to the depreciation allowance given
to manufacturers, businesses and realtors/landlords.
The United States has 5% of the world's population but
25% of the world's energy use each day. If higher gas
prices discourage use and encourage efficiency, then the
result will be better for many reasons – particularly our
soaring debt and national security.

*Data source: Yahoo Finance, 31 Dec 2010

Inflation Tax

If I bought an item for $1 in 1913, the same item
would cost $22.35 in 2011.

An item costing $1 in 2011 would cost only $0.04
in 1913.

Gas prices are not "outrageous", the dollar has been
devalued 95.5%. A gallon of gas costing $3.60 in 2011
would cost only $0.16 in 1913.

http://www.usinflationcalculator.com/

And The Oscar Goes To...

The Oscar for the most treasonous performance in an elected
role goes jointly to the Congress and the POTUS.
Bill Clinton has a problem with the Truth, so what were we
thinking when he claimed “the era of big government is over?”
Corruption loves big government. It is easier to steal millions
when the total budget is in trillions!
How can conservatives shut down the government which does
such good things for us? Obama's reason for his historic
spending was “I won!” The reason for the House of
Representatives requiring historic spending cuts should be
“We won!”
One of the first things that the House of Representatives
did was read the Constitution on the House floor. HR 1 was
passed to fund the government for FY2011. The spending cuts
were small in comparison to the deficit. The Senate and the
POTUS have treated HR 1 as a joke. Many in government think
that the Constitution is only a suggestion which can be
ignored when they wish to. The enumerated powers are an
outdated list. They speak of America as a democracy rather
than a republic. Many Americans are clueless about the
difference.
The problem with the “nanny state” giving out government
suckers every time someone – legal or illegal – cries, is that
everyone is taught to work less and wait for their sucker.
America became great because of our Constitution and
free-market capitalism. We will fail as a nation when we forget
that.