No Faith in the Great Healer

As I started eating my healthy, home-cooked lunch today at my desk (Hooray, Mrs Citizen Zane!), I took a look at Yahoo and came upon this article where President Obama is starting to claim some credit for the economy looking like its finally hit rock bottom and headed toward recovery.

http://news.yahoo.com/s/nm/20090528/us_nm/us_obama_economy_6

Whew, the Great Man has pulled us back from the brink! Good for Him. Actually, I think that the President is in an enviable position right now. If anything happens to go right in the world, he can grab all of the credit. Anything that turns out poorly...well, that was a President Bush mistake. Imagine having that situation at your job? If you were an investment banker, you could lose a billion dollars on sub-prime mortgage backed securities and still get an 8 figure bonus while pointing to the guy who held your position the year before. Hmmm, I've heard that story actually.... I imagine about 25 years from now, some Democrat president of the future will still be blaming Bush for not reforming a bankrupt Social Security system or something along those lines. Hopefully, Dick Cheney is still ticking so we can get some comedy relief out of his inevitable response.

Anyway, forgive my skepticism about the economy being "rescued" by the government, but I just don't see how all of this out of control spending is going to lead to a lasting economic recovery. I am a regular reader of Bill Fleckenstein on MSN.com, who I have found to be remarkably insightful about the markets and macroeconomic environment. Recently, he posted some material from Jeremy Grantham, where the author predicts a VL shaped recovery, "in which the stimulus causes a fairly quick but superficial recovery, followed by a second decline, followed in turn by a long, drawn-out period of sub-normal growth."

http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/a-trio-of-views-to-guide-investors.aspx

Why subnormal growth? Because government stimulus doesn't magically appear out of nowhere and enrich us all. It comes from taking wealth from citizens and companies and using it to pay for government projects and programs. Maybe I should take that back...the current plan seems to be to print more money...but I regress. Anyway, what happens is that the real producers and innovators are pushed aside by the government, which picks its champions based on political agenda, not on merit. When the government takes a bigger bite out of my boss's earnings, he has less opportunity to hire another worker to generate even larger income. He may go to the bank for a loan, but the government needs to borrow and is sucking up money that would otherwise be available to lend. Is this making sense? I stumbled across this article that articulates much better than I...

http://www.lewrockwell.com/orig9/shostak9.html

The bottom line is that all of this government stimulus does not produce steady economic growth because it is not sustainable. Creating a bunch of new government jobs will juice things for as long as the stimulus keeps those jobs going - and then it will be gone. I like the idea of the government stimulating the economy with long-term investment projects in PRODUCTIVE activities that will generate benefits later, such as the power grid, bridges, roads, etc (sounds like somebody's campaign promises). The current administrations plan to invest in energy is also excellent in principle, but I fear that we will get carried away in the search for green alternatives that have dubious prospects and ignore nuclear and fossil fuels which we know work. Let's be honest here and not liberal dreamers, we still need those fuels to carry us for the foreseeable future.

If I thought that the stimulus money was actually going toward legitimate investment projects to be filled by open bids from private firms, this blog would not exist. Unfortunately, I am pretty dang sure that only a small percentage of our money will be well spent. The vast majority will be slop for the hogs who keep the Democrats in power. The resulting debt of course will be shouldered by you, me, our children, their children, and anyone with the audacity of hope for self-made success - Citizen Zane

Money Trouble? Its Your Own Fault

I saw this headline for an article by Liz Pulliam Weston, a writer for MSN Money and just had to read it.

http://articles.moneycentral.msn.com/SavingandDebt/LearnToBudget/MoneyTroubleItsYourOwnFault.aspx?page=2

In the article, the author pretty much comes out and tells people to quit whining about this or that causing your financial problems and to take responsibility for them. She notes that on the MSN message board that she often sees people writing "I should be living better than this," as they complain that the high cost of living is at fault for their woes. Finally, she provides a list of decisions that people make that directly affect their financial situation. Ask yourself - did you:

- Spend more than you made?
- Fail to have a rainy day fund?
- Try to get by with too little insurance?
- Fail to pay attention to the terms of the loan you were getting?
- Figure "something will work out" rather than having a plan?
- Procrastinate dealing with an issue until it became a big problem?

I would just love to shove this list up the a** of every person in Congress and every stinking state legislator in every state that is having financial problems, because I know the answer to every one of those questions. "Figure something will work out rather than having a plan" ought be the name of that ridiculous stimulus bill if it was an honest attempt by Congress to get the economy on track rather than a payoff to those who vote Democrat. And "Procrastinate dealing with an issue until it became a big problem" is the hallmark of government greatness in action.

Here we have the national debt piling up to absurd numbers, states begging for bailouts, and the dollar ready to become worth less than the paper that its printed on, but is government making sound financial decisions? Nope, they hear every lazy-assed person out there whining that "I should be living better than this!" and they feel like they have to right all of the wrongs that these poor saps have been forced to endure at the hands of the evil rich. THAT IS WHY WE ARE BANKRUPT!! And guess what? All of those nincompoops who borrowed more money than they could pay back - THIS FINANCIAL DISASTER THAT WE ARE FACING IS YOUR FAULT TOO!! Yep, all those mortgaged-back securities that are dragging down our banks...those were people borrowing more than they could pay back. Hey everybody - Quit your F***ing whining and get to work. Earn your own keep, live within your means, and stop asking me for a handout.

Speaking of living within your means. I keep reading about the government is going to protect us all from the evil clutches of the credit card companies and is calling the new law "credit card reform". Whenever I hear the word "reform", I immediately know that the government is playing musical chairs with winners and losers in whatever is being reformed. The new winners? People who can't live within their means or are too irresponsible to pay their bills on time. The losers? The financial services industry and the people who pay their cards off in full every month who are going to be charged more fees or get less rewards.

Now I agree that some of the practices in the industry were a bit harsh on consumers, but nobody held a gun to cardholders' heads and asked them to borrow money on the terms of their lending agreements (see "fail to pay attention to terms of the loan you were getting") and then forced them to carry a balance. I need some government "reform" that doesn't cost me more money. I also apologize to all of those who have balances on their credit cards for reasons of job losses or health problems that truly are not their faults - and not for overspending. To everybody else and their Santa Clause impersonating Representatives - get your house in order through hard work, sacrifice, and smart decision making. I've left you a list courtesy of Ms. Weston - Citizen Zane

Throw it On the Pile

Yep, the mountain of debt caused by government idiocy just keeps getting bigger. This time its the Pension Benefit Guaranty Corp (PBGC).

http://news.yahoo.com/s/ap/20090520/ap_on_go_ot/us_pension_woes

I like how they named this agency "Corp." so it looks like its being run by responsible folks rather than by the government. The PBGC was set up to guarantee pensions for retired employees of companies who have promised to take care of retirees, but somehow fell out of business and are unable to pay. I don't know the mechanics of the whole thing, but I suppose the pension plans pay some sort of insurance premium to help cover the ones in the group that go belly up. Leave it to the government actuaries and oversight committees to have miscalculated the premiums needed - the fund is swelling up to some $22 Billion in shortfalls. The article mentions that the "Company's" acting director, a certain Vince Snowbarger, reassures people receiving cash currently that the fund has plenty of money for current payments. Wooooo, thank goodness for that! We can leave the unfunded portion to our spoiled children and grandchildren. Way to go Vince!

Hard Medicine from Citizen Zane:
I hate to say this, but we have one of two choices: 1) We take a piece out of everyone whose pensions are guaranteed under the PBGC to fund this problem and current pension holders get by on less; or 2) The rest of us who are funding our own pensions have to pay the difference. Neither of these prospects is going to make many people happy, but it is a hard decision that has to be made (hence, Congress is pushing it off to the future when they don't have to take the heat for it). I propose that the people getting the pensions take the hit. But Citizen Zane, those people don't deserve to lose their pensions, many will say. I say tough - I don't deserve to pay for their retirement since I am paying for my own and funding someone else's Social Security payments too.

And this leads us to crux of the problem. Defined benefit pension plans (the kind where you are promised certain payouts and health care for life) have become obsolete. Think I'm wrong? Here are the following examples: The airlines, the auto makers, and the employees of every state in the Union. Pension costs are dragging these venerable institutions into the pit of no return. Back in the days when we manufactured our own goods and actually exported a lot of them, and lots more people smoked and died earlier, maybe we could afford these outdated plans. Now, we have to save and invest as we go. Its time for government to realize that their modus operendi is bankrupting all of us and adjust with the times. The problem is, it would take real courage and commitment for somebody to step forward and tell the truth and take the heat for it all. Who in Congress has shown any courage since Davy Crockett climbed the walls of the Alamo? Somebody let me know - I'm sure that its happened somewhere.

Anyway, back to the PBGC. Well fair reader...who do you think is going to end up picking up the tab for this nonsense? Hmmmm.....let's see......could it be......might it be.....YOU??? Damn straight! That's right folks - while your own personal 401(k) shrinks 30% and your social security goes up in smoke. Those lucky folks already collecting social security are getting pensions paid by this very fund that YOU will have to pay for too!

I suppose that Congress is jumping all over this injustice. Some right-minded Representative has got to be standing up and pulling the fire alarm. Right? Do ya think????? Remember that part about courage and commitment? I'd settle for some plain, old-fashioned representation - Citizen Zane

Could Walking on Water be Far Behind?

I started to read the attached article on President Obama's plan to implement new fuel and emission standards for automobiles - which I don't necessarily think is a bad idea, having lived in Los Angeles and been party to the smog that accumulates in the inland valleys. The thing that made my jaw drop were the words "Carol Browner, the White House energy and climate director"

http://news.yahoo.com/s/ap/20090519/ap_on_go_pr_wh/us_obama_autos

Holy Smokes - we have a climate director???? Guys, I hate to break this to you, but you can't control an economy and you sure as heck can't control the climate. The crazy thing about the current administration - and it could be that they are actually believing all of their press clippings - is that they honestly think that they can. Just as we are flushing a good trillion down the toilet to "save" the economy, I fear that we are going start flushing billions into the hole in the name of preventing global warming. Global warming? Obviously those knuckleheads didn't spend the last winter in New York. Hell, it was 45 degrees yesterday morning when I left for work and its almost Memorial Day! I WANT warmer temperatures!!!!

But Dear Citizen Zane, what about the polar ice caps that are melting? Our green house gasses are ruining the planet! Yeah, and we used to have an ice age when the polar ice cap extended down half of North America. Was that because prehistoric man all turned their air conditioners up too high? Then drove their Flintsone-mobiles around too much and melted the damn thing back down? Come on people, climate changes because climate changes. Any one who thinks that they can control the climate is even more delusional than someone who thinks that they can control an economy the size and scope of ours.

So when I hear the words "cap and trade", I think of a bunch of well-meaning folks who are going to put the clamps down on what's left of our manufacturing base and squeeze the life out that too. Not only is this going to be horrible policy from a pure waste of time and money, but its going to be a real job killer. You can invent a bunch of government jobs that push paper to move Federal money from one pocket to the next, but when you lose your manufacturing base completely, then you are really not producing anything. Those are real job losses! And here is the problem with having a bunch of well-intentioned liberals running amok with our money and setting policy. They crowd out the real producers and innovators who would bring the economy back and choke them with red tape and regulation so that the government, those brilliant elite among us who know much better than we do how to spend our money and live our lives, can really be in charge! I suppose as soon as they gum the economy up, they can always throw out another stimulus package to prolong the agony through the second term of the Great One. Holy S***! I just proved myself wrong - you can control the economy!

Citizen Zane's solution: We should skip cap and trade - in fact, we should lower our emission standards, cut the red tape, and kiss the collective a** of anyone who manufactures in our great land. Think about it liberals...for every factory that produces here, that's one or more less factories in the third world where there are NO EMISSION STANDARDS really polluting and inefficiently using the world's resources. Want to cut green house gasses? Build it in the US and not in China. Wow, that may actually lead to some real weath-creating jobs too! Some of them may even be union and people will pay more taxes for you to waste - a liberal dream come true. Set your Fantasy-Land policies to make it easier to make it here than import it. Which country do you think will waste less energy and spew the least amount of crap into the environment in the manufacturing process?

Oh, I kind of flew off topic there. I like the idea with the cars though - Citizen Zane

Health Care Reform or Musical Chairs?

A regular reader (making him or her one of the more intelligent people on the Internet) passed on this link which is remarkably balanced considering its source.

http://www.foxnews.com/politics/2009/05/13/obama-announce-deal-health-care-reform/

It seems that our grand elected officials are going to go out and reform health care to provide universal coverage for all. It's a truly noble idea - which means that it has to be coming from the liberal leaning side of the isle. And, as with all noble ideas from the left, its going to cost a fortune and we aren't going to worry about paying for it.

I, for one, would actually really like to see universal coverage. A couple of years ago, I had the opportunity to do some consulting work in an area where I thought that I could maybe carve out a nice little niche for myself and start my own thing. Realizing that if I left my company at the time, that my family would be without health coverage, I asked a friend who is a building contractor about what he was doing for health care. "Paying out of my a**!" he grumbled back. I got the lowdown on the coverage and its cost and that pretty much put an end to my attempt to go solo. Maybe if there were universal coverage....well, I'd probably be in the soup line, but that is another story.

I listened to President Obama give a speech today on the issue, while my co-workers debated back and forth about what we could do to fix the system, and just about all of us had different ideas, but the person who made the most sense said, "If we could just take the politicians out of it and get a team of industry stakeholders together to hammer out a workable plan...." No, that makes too much sense. One Kool-aid drinking liberal came up with, "The rich should have to pay for all of us," which is simply brilliant except that the rich are already the ones funding the health insurance that most of us have along with $4 trillion worth of other government spending. Rich as they are, they only have so much money.

The problem with the government getting mixed up in this mess is: 1) Its the government and we are facing another Social Security/Medicare disaster; and 2) The private sector - the people who actually profit by improving the system will be crowded out of the market and things will get worse. Its going to be like a giant game of musical chairs. The music will start and all of the stakeholders in the industry, including the insurance companies, drug makers, the doctors, the patients, the tax payers, employers, the illegal aliens, the lawyers who sue everyone else, etc. will walk around in a big circle and then the music will stop and only some of those people will get a chair and life will be rosy and everyone else will get seriously hosed. Here's guessing that Nancy and Harry will save a seat for everyone who votes for the Democrats. Great, you say, if you are a Democrat. Well, not exactly. Cause anyone who understands rudimentary economics knows that when the government picks winners and losers, we get these little things called 'externalities', or the negative side effects that pop up as a result.

Do we hose the drug companies and make them slash their prices? Well, who is going to pay for the research, development, and clinical trials needed to bring a drug to market. Do we slash the doctors' incomes? Well, who is going to go $250K in debt for education and training for 10 years to make as much as a school teacher? Do we burden all employers with mandatory coverage? Well, how many small businesses do we drive out of the marketplace. Make any sense? Personally, I'd like to kick the lawyers out, but we do need defenders for malpractice, and well, the trial lawyers support the Demos to the hilt, so they ain't going nowhere. Hmmmmm....who can we stick it to? Guess what, my friends, when the music stops, the only sure bets in the bunch are the currently insured and the taxpayers. If you fall into one of those two groups, look down at the little red laser dot jiggling around on your chest. That's Congress taking aim at you. Take it to the bank - Citizen Zane

Insolvency Just Around the Corner

If this article doesn't scare the pants off of you, then you are either beyond apathy, have no prospects for ever accumulating a nickel in wealth, are just plain Stupid - with a capital S, or weren't wearing any pants to start with. Note: you may qualify for more than one above.

http://articles.moneycentral.msn.com/RetirementandWills/InvestForRetirement/is-america-about-to-go-broke.aspx

This folks, is government gone horribly amok for too long. Read this line from the article to get an idea of just what kind of trouble we are in:

"According to the Federal Reserve flow-of-funds figures for year-end 2007, our collective net worth as consumers was $62.7 trillion. By the end of 2008, the same figure had fallen to $51.5 trillion. Another year of growth for Social Security and Medicare liabilities would bring total unfunded government promises to about $46 trillion. That's nearly 90% of our net worth."

To the truly stupid out there, that means that the government is going to need to take 90% of everything that everybody has in the nation to keep its promises on those two programs alone. So do you think that you are going to enjoy these retirement benefits when you are an old codger? Let's just say that dog food consumption is going to go through the roof in the next 25 or so years and not because there will be more dogs.

I remember when President Bush tried to do something to reform Social Security back a few years ago and the public and congressional outcry was overwhelming to the point that old Alfred E. had to back off. Oddly, the outcry against the Iraqi war didn't seem to be so forceful, even after it turned into a disaster. Instead, we kept hearing the same old rhetoric from our elected officials that Social Security was "safe". Yeah, like they care. If I remember correctly, they have their own retirement plan and are exempt from Social Security. This is the same government that is putting Bernie Madoff away for running a similar ponzi scam, but on a much more limited basis. He is small fry. The fact is, Congress does not have the political will to make the hard choices that we need to make because they fear that the short-sighted stupid among us will throw them out of office. Instead, they hand out more goodies and take in more money and get re-elected because people are too stupid to throw them out of office. It is time that we demand those self-serving fools represent us or get the hell out of Washington. VOTE THEM ALL OUT!

Right now, as Citizen Zane types away, your government is making plans to expand their programs to "benefit" us all. They are even BORROWING more money to get those plans rolling? Based on their track record with Social Security and Medicare, how can so many people actually think that all of this spending is a good idea? - Citizen Zane

Wow, This is a Revelation!

Don't look now, but the White House is forecasting higher budget deficits than first calculated:

http://finance.yahoo.com/news/White-House-forecasts-higher-rb-15199396.html?sec=topStories&pos=6&asset=&ccode

Well no s**t Sherlock! Jeez, does this come as a surprise to anyone? I could have told you that the deficit was going higher than first forecast, and I am going to make a bold prediction here that it is going to go up from here. All right, I understand that the economy is slowing and there are going to be lower tax revenues and some higher social costs - that I get. What doesn't make sense to me is that the President and Congress are choosing NOW to try to institute a bunch of dips**t liberal policies that are going to cost us a fortune! Hey guys, how about getting things back on track to where we are generating some revenue and reducing some costs somewhere BEFORE you attempt your expensive social (socialist) experiments that are going to put us in an even deeper hole - and have about a one in 7,600 chance of actually working without creating an even bigger social/financial disaster? Hmmm, if I lose my job and have to take a 50% pay cut, should I contemplate buying a new house and asking my fellow unemployed neighbors to eat at my kitchen table every night too? Should I stand at a fuel pump and fill up every tank that rolls through if the person tells me that they can't afford to fill their SUV on their own?

I may be disgusted with the government right now, but here is what really gets my goat. Whenever some stupid, politically motivated, outsized spending bill comes up now, the excuse that I hear from the President and Congress is that its to help the economy or because the prior administration spent a lot of money and left a mess, blah, blah, blah. At least come clean - you are pushing some stupid left wing social movement to entrench yourselves deeper in power. The other thing that is irking me is that people all over are piling up on the rich and capitalists as being these evil guys who deserve to be taxed into oblivion. Citizen Zane is far from rich, and I do think that the prior administration gave the wealthy a few too many breaks, but without the people who take risks and generate large amounts of income that we all enjoy as employees and fellow taxpayers, we are going to choke the goose who lays the golden eggs. Hey lazy rich-hating moron, go out and make your own money. You are not entitled to your neighbor's wealth because he/she is successful. Stop embarrassing yourself - Citizen Zane.