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Archive for the ‘Economics Made Easy’ Category

We live in a world built on fantasies promoted by vile politicians who seek power and the subjugation of the citizens who elected them.

One of the most dangerous of such fantasies is that there is no such thing as borrowing too much money, especially when whole nations do it (see Liberal fake-economist Paul Krugman’s writings on the subject if you want a good laugh, but the consequences of such propaganda are no laughing matter).

Would you believe that a website called CommonDreams.org, with the tag line “Breaking News & Views for the Progressive Community”, just ran a piece about the irresponsible debt buildup?

CommonDreams

Well they did, with the intention of blaming “Capitalism”, and they even led with a scary-sounding headline…

“Global Capitalism’s Terrifying New Math”

But their motive matters little because in chasing their bette-noire they merely come running in our fiscal conservative / anti-Obama direction.

The author, Kate Aronoff, starts with the fact that leading consulting firm McKinsey & Co. has just weighed in on the topic.

McKinsey, one of the world’s preeminent business consultants, released a sobering new report this week detailing that, worldwide, total debt has risen by 40.1 percent — or $57 trillion — since the financial crisis of 2008. <CommonDreams.org, link>

Big numbers like “$57 trillion” are hard to comprehend until they are put in some perspective, which almost always means comparing it to the size of a nation’s economy, which is easy to measure and makes sense.

Kingston University economist Steve Keen, who predicted the financial crisis back before the bubble burst in 2008, has created a metric to understand when a global financial system needs some, for lack of a better word, updating. He’s written that when private debt reaches 150 percent of a country’s GDP, that that country should take some serious measures to get its financial house in order. Replicated on a global scale, a critical mass of countries all clocking in above the 150 number spells a highly fragile economic landscape. In the UK, private debt currently stands at 350 percent of GDP. In Japan? 400 percent. China? 217 percent. In the United States, that figure stands at a reasonable if-still-ominous 233 percent of GDP. Overall, private debt now stands at the greatest levels in human history.

Yes, exactly — we have a big problem that is only getting worse every day: mr. Obama’s latest budget proposal adds another $6 trillion to our nation’s debt over the next ten years.

From the New York Times (emphasis added):

WASHINGTON — President Obama will propose a 10-year budget on Monday that stabilizes the federal deficit but does not seek balance, instead focusing on policies to address income inequality as he adds nearly $6 trillion to the debt. <link>

But here’s where Ms. Aronoff commits the same Liberal contortionist maneuver that poor Graydon Carter did last year in Vanity Fair when he wrote about the NDA spying scandal: she writes about an important topic (crushing debt levels) while neglecting to mention the man who has been President of the United States for the last SIX YEARS.

Carter wrote about the NSA spying on American citizens…and mentioned Barack Obama ZERO times…but Bush and Cheney multiple times...

Carter wrote in May 2014 about Obama’s NSA spying on American citizens…and yet mentioned Barack Obama ZERO times…while mentioning Bush three times and Cheney two times…

Here is Aronoff pulling out her big rhetorical guns on capitalist excess, yet notice who is absent, and the legerdemain she employs to keep the real culprit hidden (emphasis added):

In the absence of significant popular pressure, global elites (politicians, bankers, etc.) are likely to respond to the coming financial crisis like they did the last one: the wrong way. Rather than putting money into the “real economy,” where we live, spend, love and work, politicians in 2008 chose to prop up the bankers and speculators who got us into the mess in the first place. Consequently, the only industry that’s grown significantly since 2008 is the financial sector. In other words, they bailed out the wrong people and are likely to do so again and again. 

Do you see it, the sleight-of-hand?

  • She conveniently places the lack of Wall Street accountability in the year 2008, which is to say before mr. Obama took office in January 2009, despite the fact that the bailouts were done under Obama and Geithner, his Treasury Secretary, and passed by a Democrat-party-controlled Congress;
  • She uses the pronoun “they” to describe the politicians who failed to hold Wall Street accountable — the mysterious “they” who “propped up bankers and speculators”

So who might “THEY” be? I’ll say what Ms. Aronoff could not bring herself to say: Barack Hussein Obama (D), and the Democratic-party controlled House of Representatives under Nancy Pelosi (D) in 2009 and 2010, and Democratic-party controlled Senate under Harry Reid (D) in 2009 and 2010.

It was Barack Obama in 2009 who allowed Wall Street executives to pay themselves 100% of their bonuses;

It was Barack Obama in 2010 who allowed Wall Street executives to pay themselves 100% of their bonuses;

It was Barack Obama in 2011 who allowed Wall Street executives to pay themselves 100% of their bonuses;

It was Barack Obama in 2012 who allowed Wall Street executives to pay themselves 100% of their bonuses;

It was Barack Obama in 2013 who allowed Wall Street executives to pay themselves 100% of their bonuses;

It was Barack Obama in 2014 who allowed Wall Street executives to pay themselves 100% of their bonuses.

And it was Barack Obama, Nancy Pelosi, and Harry Reid who failed to curb Wall Street abuses in the Dodd (D) / Frank (D) sham-reform law of 2010.

To this day, banks are still “too big to fail”, and the fault for that rests solely in Barack Obama and his cronies.

And so in conclusion, I agree with Ms. Aronoff on the dangers of excessive financial debt, whether personal, corporate, or sovereign.

Barack Obama has run deficits these last six years that have plunged America into a $17 trillion federal debt position, up from $10 trillion when George Bush left office.

He is destroying our nation in many ways, and this reckless borrowing ranks near the top.

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Friends of mine actually argue with me about the inefficiency of government as they cling to their fantasies of an all-loving provider in Washington DC, as if the real world of actual fact doesn’t exist.

This whopper was released a few days ago:

WASHINGTON (AP) — By its own estimate, the government made about $100 billion in payments last year to people who may not have been entitled to receive them — tax credits to families that didn’t qualify, unemployment benefits to people who had jobs and medical payments for treatments that might not have been necessary. <Yahoo Finance, link>

Now folks, that number, in case you read it too quickly, is $100 BILLION, with a B, not million, and it was only for one year of waste…

Looks like Representative John Mica (R-Fla) did some simple math, and he had to use the T word:

Nobody knows exactly how much taxpayer money is wasted through improper payments, but the federal government’s own astounding estimate is more than half a trillion dollars over the past five years.

Do I need to elaborate on why this is bad, and why programs like Obamacare are doomed to fail?

No I don’t.

Will Liberals ever give up their infantile fantasies?

No they won’t.

 

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Here we go again with misleading headlines about the federal deficit and federal debt (two distinctly different things).

The federal budget deficit has fallen sharply over the past few years and is on track to decline even further, according to a new report from the Congressional Budget Office. <source>

Gee that sounds great, doesn’t it?

Except for…

The deficit this year is expected to be $514 billion <source>

Hey, isn’t that HALF A TRILLION DOLLARS?

Sure it is, but let’s all drink the Liberal koolaid that Barack Obama is doing a great job on deficit reduction.

And how about this misleading statement:

The most important thing is that you’re getting your debt down as a percentage of the economy, and that it’s on a downward path,
said Jason Furman, chairman of the Council of Economic Advisers. <source>

A “downward path”, eh?

Here is the truth, revealed almost as an afterthought in media stories:

…the national debt — the cumulative effect of those annual budget deficits — is still a problem, the CBO said. The debt will be $17.6 trillion this year, growing to a projected $27.2 trillion by 2024. <source>

Wait, what happened to the “declining deficits”?

We are going from $17 trillion owed, to $17.6 trillion, to $27.2 trillion by 2024.

DECLINING?

Apparently not.

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I saw this story about skyrocketing rental rates and wondered how the average American is going to be able to afford the cost of the roof over his or her head on top of the Obamacare rape of personal finances happening across the country and set to accelerate in 2014 – 2018.

There are now 43 million renter households, or 35 percent of all U.S. households, the highest rate in more than a decade for all age groups, according to Harvard’s Joint Center for Housing Studies. That’s 4 million more renters today than there were in 2007. For those aged 25 to 54, rental rates are the highest since the center began record keeping in the early 1970s. <source>

Let me understand this: the economy is STILL not in recovery FIVE YEARS into Obama’s two terms in office, and yet rents are “…the highest since the early 1970s…”.

We are in the midst of the worst rental affordability crisis that this country has known, said Shaun Donovan, U.S. Secretary of Housing and Urban Development.

Wow, someone from Obama’s own administration has dared to speak the truth; I wonder if Obama will fire him for it?

Now here’s where Barack Obama is choking the life out of the middle class:

Half of all U.S. renters today pay more than 30 percent of their incomes on rent. That’s up from 18 percent a decade ago, according to the Harvard center. 

So when you combine the fact that 30% of your income is for rent, and then health care insurance costs are also skyrocketing, you have a recipe for personal financial collapse, which is a recipe for the collapse of the American economy.

How are Americans going to afford to live, and spend?

They are not going to be able to.

They will have to cut back on non-essentials as the United States increasingly resembles a failed South American state.

And this is exactly what Barack Obama wants.

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A 10-year mortgage time-bomb is set to go off beginning in 2014 (next year, folks).

(Reuters) – U.S. borrowers are increasingly missing payments on home equity lines of credit they took out during the housing bubble, a trend that could deal another blow to the country’s biggest banks.

The loans are a problem now because an increasing number are hitting their 10-year anniversary, at which point borrowers usually must start paying down the principal on the loans as well as the interest they had been paying all along.

More than $221 billion of these loans at the largest banks will hit this mark over the next four years, about 40 percent of the home equity lines of credit now outstanding. <source>

About ten years ago, 4 – 5 years before the global financial crash in 2008, mortgage bankers were pushing homeowners into home equity lines of credit (HELOCs) at very attractive, floating, rates. Millions of homeowners took advantage of this cheap credit and leveraged the equity in their homes, in effect, spending their savings.

Banks marketed home equity lines of credit aggressively before the housing bubble burst, and consumers were all too happy to use these loans like a cheaper version of credit card debt, paying for vacations and cars.

These lines were structured with low payments for ten years, to be followed by higher payments…

…after 10 years, a consumer with a $30,000 home equity line of credit and an initial interest rate of 3.25 percent would see their required payment jumping to $293.16 from $81.25, analysts from Fitch Ratings calculate.

At a conference last month in Washington, DC, Amy Crews Cutts, the chief economist at consumer credit agency Equifax, told mortgage bankers that an increase in tens of thousands of homeowners’ monthly payments on these home equity lines is a pending “wave of disaster.”

A wave of disaster.

Not mentioned in articles about this impending crisis is the devastating effect this will have on American families in the wake of health insurance costs RISING by thousands of dollars per year to pay for Obamacare (remember the 56-year old woman whose $54 per month health insurance policy was cancelled by Obamacare and replaced with a policy that cost $591 per month?).

In California, Kaiser Permanente terminated policies for 160,000 people. In Florida, at least 300,000 people are losing coverage. That includes 56-year-old Dianne Barrette. Last month, she received a letter from Blue Cross Blue Shield informing her as of January 2014, she would lose her current plan. Barrette pays $54 a month. The new plan she’s being offered would run $591 a month — 10 times more than what she currently pays. <source>

So the average American family’s financial position is going to take a double-hit, from Obamacare and mortgage resets, both happening in 2014. Consumer confidence, and spending, will plummet, plunging the economy into an even worse recession.

On top of these two trends, the big banks are facing a wave of defaults on these HELOCs, and what do banks do when their loan portfolios are blowing up?

They stop lending to businesses, because their safety capital is under assault from non-performing loans. This will also kill any chances of economic recovery.

What is Barack Obama’s plan for this?

To make it worse.

He won’t back down on Obamacare, and his fiscal policy is distinguished principally by vindictively raising taxes on the middle class, which will crush consumer confidence and spending even more.

He wants our nation to fall further down the stairs into an Eastern style despotic state, with him and his cronies holding the levers of power.

What’s another mortgage crisis to him?

Victory.

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No, the headline today was not that Obama plans to celebrate the Lehman collapse (and his inadequate response to it), it was this:

Obama to tout economy while marking Lehman fall <link>

But it may as well have been “celebrate” because the Lehman collapse occurred in September 2008, just as McCain and Palin were surging in the polls, and arguably contributed to Obama’s improbable election as a mysterious Manchurian candidate who “at least was not from George Bush’s party” (such a great reason to elect a man whose formative years were in Indonesia surrounded by anti-colonialist and anti-capitalist family friends!!).

Anyway, part of Obama’s Orwellian oratory this week will include the following:

“We came in, stabilized the situation,” Obama told ABC’s “This Week” in an interview broadcast Sunday. He cited 42 months in a row of growth, 7½ million jobs created and a revitalized auto industry.

“The banking system works. It is giving loans to companies who can get credit. And so we have seen, I think undoubtedly, progress across the board,” he said.

The truth, of course, is very much the opposite of what this man proclaims.

First of all, he didn’t “stabilize the economy” when he began occupying the White House — no, what he stabilized was Wall Street bonuses.

Yes, banker bonuses were paid, in full with tax-payer money, in 2008, and in 2009, and in 2010, and in 2011, and in 2012, and in 2013.

Very stable indeed, thanks to Barack Obama, so-called hero of the 99%. Whose side is he on? The Politburo and its wealthy patrons.

Second of all, any lift in the economy has occurred via a Federal Reserve who has manufactured dollars to the point of horror, keeping interest rates at near-zero for years while simultaneously buying trillions of dollars of treasury bonds to suppress long term rates (“quantitative easing”). Rampant inflation, which would be the normal outcome of such pump-priming, has not (yet) occurred, presumably because the money found its way into banks and financial institutions who in fact have not lent it, and a higher stock market instead of in another consumer spending spree.

Third of all,

Despite job growth, the unemployment rate remains high at 7.3 percent. Though the rate has fallen, one of the reasons is because some people have dropped out of the labor force and no longer are counted as job seekers. The share of unemployed workers who have been unemployed for more than six months is more than double what it was in 2007 before the recession began. 

That last sentence should be front-page news across the country, but the Liberal media actively buries it on a daily basis.

Are Americans fooled by mr. Obama regarding his torture-treatment of the economy?

Apparently not:

But the public is not convinced that the economy is on the mend. Only one-third say the economic system is more secure now than in 2008, and 52 percent say they disapprove of Obama’s handling of the economy, according to a Pew Research Center poll.

This is good news: America’s heart is still beating despite the Obama heart-worm being coiled around it.

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Every day we are finding more and more evidence in the Obama proposed budget of his hatred for a citizen’s ability to care for himself instead of relying on a central planning government regime.

Yesterday’s focus was his destruction of the mortgage interest deduction.

Today’s focus is on his abuse of tax-deferred retirement savings accounts — you know, the accounts that were created by federal legislation in 1986 under Ronald Reagan for the purpose of alleviating the burden of retirement on future generations by getting people to more easily help themselves.

What does Barack Hussein Obama think of people helping themselves?

Tucked deep inside President Obama’s budget proposal to Congress is an innocuous-sounding provision that would cap the amount of money you can accumulate in IRAs and other tax-deferred retirement savings plans at $3 million. <source>

Notice the classic Communist mind at work: set the limit at a high-sounding number so that the average citizen will imagine that it won’t affect him, all the while knowing that the law of unintended consequences will wreck more of the capitalist system that has made the United States the most free and wealthy nation on earth.

Here is one such result:

But VanDerhei points out that the cap would also be an “administrative nightmare” for small-business owners and could discourage them from offering retirement savings plans to their workers. Small-business owners can contribute much higher amounts to their tax-deferred retirement accounts than their employees—up to $56,500 in 2013. If their contributions are capped, they may have little incentive to set up a plan for their employees, the American Society of Pension Professionals and Actuaries says.

What an appropriate phrase for just about anything Obama touches: administrative nightmare for small-business owners. He must smile when he reads reviews like this.

The man hates small business owners and their allegedly filthy stinking rich income levels, and he is not going to stop until he squeezes every last breath out of them.

Barack Hussein Ebola is on the loose, and we had all better run for our lives.

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