Archive for February 2009

Obama’s Speech to Congress – Government Cheese

February 25, 2009

My immediate reaction to Obama’s speech tonight was to remember this old song by The Rainmakers. YouTube has a couple of video versions available –

Audio only (live performance):

 

Fan-created video:

Text of the speech here: http://www.cnn.com/2009/POLITICS/02/24/sotn.obama.transcript/

Of Rick Santelli and Tea Parties

February 23, 2009

You’ve seen Rick Santelli and the “Rant of the Year” by now, surely. Just in case you haven’t, here it is:

You have probably also seen or heard how White House press secretary Robert Gibbs (a political hack since collegecriticised Santelli. And perhaps you’ve seen Santelli’s response on Kudlow’s show. But one of my favorite videos in all of this is the following – financial expert Karl Denninger delivers an epic smackdown to Gibbs:

When I first heard about Santelli’s original rant I wanted to know when the Chicago Tea Party would be held so I could be there. Well, plans are in the works for a “Nationwide Chicago Tea Party“, sponsored by the #DONTGO movement, Smart Girl Politics, Americans for Tax Reform, Heartland Institute, Top Conservatives on Twitter (#TCOT), and the American Spectator to be held Friday, Feb 27 at Noon EST. Get more info and join the party here.

All this talk of tea party protests reminded me of December 16, 2007, when Ron Paul supporters held tea party protests all across the country (as well as Strasbourg, France and New Zealand) and raised over $6 million in a single day for Ron Paul’s presidential campaign, breaking all single day fundraising records. What a great day that was.

 

 

 

 

 

 

 

 

I hope the Chicago Tea Party will be even more successful. It’s good to have new allies in the fight for freedom and liberty.

Stock Decline Hits Depression Levels

February 22, 2009

From BusinessWeek:

During the darkest 10 years of the Great Depression, from September 1929 to September 1939, the stock market dropped roughly 50%, adjusted for inflation. With today’s drop in the stock market, the U.S. has now matched that unfortunate milestone. The Standard & Poor’s 500-stock index, adjusted for inflation, is now down about 50% over the past 10 years from Feb. 17, 1999 to Feb. 17, 2009.

Other assets have done much better over the same period. For example, a nice safe investment in six-month certificates of deposit would have yielded a real total return of roughly 12% over the past 10 years. And despite the recent real estate bust, residential home values in the largest cities, adjusted for inflation, actually increased by about 30% over the past decade.

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Obamessiah?

February 22, 2009

borders-messiah1

Read about it here…

Obama’s Housing Bailout

February 22, 2009

President Obama’s $275 billion housing bailout is an exercise in futility at best. It’s wolf in sheep’s clothing at worst.

The Mortgage Bankers Association did a study in 2008 that found 70 percent of foreclosures were on properties either not occupied by owners, involved borrowers who could not be found or did not respond or involved borrowers who had already had a modification and were defaulting again. Of the 30 percent not in those categories must surely be quite a few of the repeat defaulters of tomorrow.

The housing rescue plan is, in part, an attempt to rescue banks, whose balance sheets will be further undermined by drops in house prices and defaults causing many more failures.

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One of the worst things about this housing bailout is that, for some, it would just reset the “exploding A.R.M.” that got them into trouble in the first place.

One brand of these innovative mortgages that have come under special criticism has been so-called “exploding A.R.M.’s” that lured borrowers with unusually low teaser rates that then reset skyward a few years later. These have often been derided as predatory, and lenders who offered them accused of luring homeowners into buying homes they couldn’t afford for the long-term.

Critics of these might want to check out the Homeowner Stabilization Plan put forward by the Obama administration today. The plan would reduce mortgage payments and interest rates for homeowners who have seen their payments rise to more than 38% of their monthly income. But those reductions last just five years, after which they begin to reset to higher rates. In short, Obama is just drawing out the teaser rates a bit longer.

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Another problem that it doesn’t even begin to address is that many homeowners in foreclosure or on the edge of foreclosure are in that situation because of job loss.

Having borrowers continue to pay into a bad loan, even with reduced payments, takes away money they could be using to start over. Redefault rates from existing government-backed loan modification programs indicate that they are often ineffective. And in the case of borrowers facing job losses, staying in one’s home while being saddled with a mortgage can delay the necessary step of moving to an area with more job opportunities.

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 The New York Times last week explained some of the problems with the plan in these terms:

  • Mortgage mod doesn’t work unless the homeowner’s payments and principal are cut significantly…and then, unless the bank gets a property appreciation right, it’s just a giveaway
  • They’re a bureaucratic nightmare
  • People who are deeply underwater will walk away anyway
  • Renters, responsible homeowners, and folks who are underwater but CAN make payments get the shaft.

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It also seems to me that the qualifications are rather narrowly defined. I can’t help but wonder how many people who have been barely avoiding foreclosure while waiting on Obama to “help” them are going to very disappointed to learn they do not qualify for said “help”. How many of them will give up the fight and walk away from a house they couldn’t afford in the first place?

That, Mr. President, is what some of us call “blowback”. Get ready for your share of it. Especially if your friends at ACORN keep teaching people to break into homes they no longer own.

I also have to wonder how long the government is going to keep trying to reinflate this economic bubble. Have you ever tried to blow up a balloon that has a hole in it? That’s what the government is doing now with the economy and I wish they’d either stop or pass out from trying pretty soon.

There will be no housing recovery until home prices decline further. They have been far too high for far too long to think we can avoid the inevitable decline.

Link for a larger version of the above chart and the article it was published in.

T-Shirt Idea

February 22, 2009

I’m thinking of having a t-shirt made with this design:

 

bailout-11

What do you think?

Obama Plans to Slash the Federal Deficit in Half

February 22, 2009

Hey America, watch me pull a rabbit out of my hat!

obama_hat_trick1

Tuesday night, February 24th, President Obama will address a joint session of Congress and is expected to lay out his plan to cut the federal deficit in half by the end of his first term.

This ought to be good. I’ll be parked in front of C-Span with my popcorn because this speech is guaranteed to be good for some laughs. I really want to know how the man who spent nearly a trillion dollars we don’t have earlier in the week thinks he can cut the deficit in half along with “plans to broaden health care coverage to eventually insure everyone. Moving the country toward greener energy sources. Expanding education opportunities. Overhauling financial industry regulation“.

I want to know how a man who a few short months ago said deficits don’t matter can now say “We can’t generate sustained growth without getting our deficits under control,” with a straight face.

It will all be just a lot of hot air, I’m sure since the plan rests “on the assumption that the economy recovers from the current slump” and does not consider “additional spending on economic stimulus or bailouts of the financial or other sectors“.

Where will the money come from? “Winding down the war” in Iraq, eliminating Bush’s tax cuts on families earning more than $250,000 a year (raising their tax rate from 35% to 39.6%), increasing the capital gains tax by 5%, closing corporate tax “loopholes” and taxing the earnings of hedge fund managers as normal income rather than as capital gains. 

Not mentioned, of course, is that while “winding down” in Iraq, Obama is “winding up” in Afghanistan and Pakistan. Obama authorized 17,500 additional troops to Afghanistan just a few days ago and The Raw Story reported yesterday that Obama is expanding miliary operations in Pakistan.

There is also no mention of how businesses – especially small businesses – might be able to create jobs when suddenly faced with a much higher tax bill. Common sense says higher taxes will lead to more layoffs and more businesses closing down completely.

Obamanomics. It will make you laugh till you cry.