Winners and Losers Who Chooses

It's taken me a couple of days to completely absorb the fact that a sitting president just reached into the board room of a major corporation and fired the CEO. Notice I didn't say that the Board of Directors asked for the government’s assistance ...they didn't...

The news has been all over the place on this one, some say he needed to go. Others say the government shouldn't have this kind of power. Even others justify the action 'this one time' because of all the money given to the company to keep it afloat.

As is usual with me, I have a completely different take on the situation and it is one that hasn't dawned on many people yet. My question is not whether government should be in the business of firing CEO's of private companies.

My questions is have we crossing some precipice? Some invisible line that takes into a dark abyss where government decides which companies succeed and which should fail.

I know many will argue that this has gone on for years visa vie tax policy and regulations and I would agree. However, when this economic mess started in earnest and we allowed the Treasury and the Feds to save some investment banks while allowing others (Lehman Bros., Bear Stearns, etc.) to fail, we started down a slippery slope.

Now we are in full slide! It’s not just which banks should be saved and which should be allowed to fail, now it’s giving one company 30 days to fix a problem and allowing another 60 days. It’s firing a CEO and putting in another by dictation rather than a vote by the Board.

When the Obama administration announced that the government would stand behind the warranty of GM’s cars, they took an even greater step towards choosing winners and losers in this economy.

I ask one simple question, how is Ford to compete with GM (Government Motors) when Government Motors has billions of our Tax dollars funding it?

I admire Ford for recognizing its problems many years ago and setting out on a goal to fix them. I admire Ford for eschewing government hand outs and showing the rugged individualism and toughness that is genuinely American.

I am genuinely worried that we are on a destructive path here. When ‘BIG’ Government gets to choose the businesses that will be winners and the ones that will be losers, the people are bound to suffer.

I need only point to one example. Take a look at the history of England. You will see that at one time the government controlled all the car companies. You will also find out that there were waiting lists months and months long to get a new car.

So get ready, if government gets to choose the winners in this economy, you could be standing in a long line for your new GM, your new ‘free’ health care and maybe even your block of government cheese very soon!

Watch the Birdy

Recently in the news there was a lot of furor over AIG giving out millions in bonuses to some of it's top executives. I don't want to get into the argument of whether that was correct or not, I'm sure there are many opinions on both sides.

What I want to point out today is something that many of us missed. While the left hand was waving for our attention the right hand was doing something else that the dolts in the media didn't see.

While the spectacle of Chris Dodd stuttering uncontrollably as he tried to explain his way out of allowing the AIG bonuses without throwing the Obama administration and Timothy Geihtner under the bus was amusing. It served to dupe the one-sided media types.

What didn't get reported this weekend and last week was the fact that the Feds decided to throw and additional $1 Trillion dollars at the market and made an additional $6 billion dollar commitment to keep buying MBS (mortgage backed securities).

Sounds good right? What's so bad about that. Well I'll tell you. They don't have the money ...or should I say WE don't have the money to do this with. So the printing presses were pushed into full gear and just to top the bad news off with more bad news... ready...

We used the freshly printed money to buy our own debt. Now in the real world this is essentially like 'kiting' a check. You know, you go down to the bank and you deposit a check from your own account back into that account.

You don't really have an extra grand in the bank but for a brief while the books show that you do. The government just did that. I dare you to try it! They would nail you for fraud and throw you in the slammer for sure!

But the hypocrisy of all this nonsense is not the worst part. The worst part of all this is that we know, everyone with any common since and historical economic knowledge knows that printing money devalues the currency and leads to inflation.

Our only saving grace is that monetary policy with regard to printing new dollars has been relatively tight over the years and we are in a recessionary time, so maybe, just maybe we make it without getting dinged to hard this time.

It's scary out there. While things should start to improve, we won't see real improvement and wealth generation until the bureaucrats and blow-hards in Washington quit with their Tax & Spend ways.

America, this is our wake up call! We can't spend our way out of the mess this time. We need to save and our government needs to save along with us. It's time to STOP spending money we don't have.

That's my opinion, I welcome yours.

Economics 101 - Raising Taxes Helps Nobody!

When I have conversations with close friends who may not agree with my fiscal conservative political view, I am always struck by one fact. Many of their views are formulated by an understanding of economics as described by the media.

And when I watch the major news networks and see their talking heads, I’m dumbfounded that these guys don’t have any clue about economics or the things they are reporting on.

It’s understandable that a majority of our citizens don’t understand economics but it is unfathomable to me that reporters who are supposed to investigate the stories they report on don’t have a clue.

I am going to attempt to strip the politics out of my statement but some will never see the truth of what I am about to say. For those people who are so partisan that you can’t get your head out the sand and see the truth then you deserve the totalitarian government that will one day befall us all.

There once was a Republican President that was followed by a Democratic President and they both ruined our economy. The commonality between their presidencies was a progressive tax rate with a mid range tax above 38% and the top rate above 50%.

Both these presidents believed in price controls and caused a calamity on commodities prices and production. Both presidents policies caused high unemployment, high interest rates and out of control inflation. Who were they? Richard Nixon and Jimmy Carter.

Further stripping away the politics from the economics of our country, there were two presidents, one Democrat and one Republican that lowered taxes, stripped away regulations and allowed the markets to work freely and the economy boomed. They were John F. Kennedy and Ronald Regan.

When we analyze the histories here we see that tax increases “on the wealthy’ or tax decreases “for the wealthy” has no sound economic strategy, it’s just pandering and populism to garner votes and power. The real story is that the way our progressive tax system works is not beholden to how we “feel” about the rich.

To read the rest of this post please visit my blog at http://brainsnotincluded.com/

(BTW - Who defines who the rich are anyway? That’s a scary thought…huh?)

Here are the real facts of the matter. We don’t just live in the vacuum of a capitalist economy. Our capitalist economy is part of the world’s greater Capitalist economy.

The truth is that we can’t detach our economy from the world economy no more than we can tax the rich into oblivion and expect to be able to lift up the poor to a higher status. Ever since we took our economy off the gold standard we stopped employing a Static scoring methodology and moved to a dynamic scoring system.

So what does all this gibberish mean? It simply means that we can’t punish the rich without punishing everyone. Two presidents, one Democrat and one Republican, proved that raising taxes and imposing heavy regulations on a capitalist economy will kill the incentive and motivation to work and produce.

They proved that less money comes into the treasury because every thing just stops. They proved what Thomas Jefferson said about government. Government cannot create wealth, it can only redistribute other peoples wealth thereby destroying it.

These same two presidents also proved what Margaret Thatcher said; The problem with Socialism is that you eventually run out of other people’s money. And a progressive tax system with a heavy handed government is very close to socialism.

Now on the other side of the equation we’ve had two presidents that employed a very different approach. One was a Democrat and the other a Republican and both lowered the tax rate to an optimum point to encourage, incentivize and motivate the populus.

These presidents created a robust economy and even with lower tax rates on ‘the wealthy’, they still managed to increase revenue to the treasury. This issue of whether to raise taxes or not has nothing to do with economics. If it did, we’d always keep taxes low.

No, the real issue is about feelings. Well, I for one am tired of feeling good about bleeding the rich for every red penny they have. I would much rather be happy because my own coffers are full and the economy is solid.

Let’s take the politics out of our discussion about taxation and let’s use real facts about how to get an economy moving and keep it growing. Higher taxes is not the answer!

Obama Lied; The Economy Died

Obama Lied; The Economy Died

The title of this article is one powerful statement and I was in shock when I read it. It’s the title of an article written by a conservative author, Tony Blankley.

Before you cry foul! Remember that liberal Democrats used the saying Bush Lied; People Died as the center piece of an entire campaign, not just an article in a newspaper …much more incendiary rhetoric I’d say.

Blankly, playing on this same theme makes some very good points in his op-ed piece in the Washington Post. He posits that Obama ran as one ‘thing’ but is really another.

Take the Preisdents message of ‘change’ as example #1. Obama ran on the promise of change in Washington. His stated goal was a more civil tone and more bipartisanship.

However, what we see happening is Obama and his Democratic cohorts ramming legislation down the throats of the Republican minority. His side is using tricks like only issuing legislation in printed format (not electronic) and expecting thousands of pages to be digested and voted on in just days of review.

When legislation is opposed, the President says; ‘We were elected, it’s our turn.’ And when the Republicans decide not to vote for legislation they haven’t had time to review the Obama team calls them obstructionist.

What change? Sounds like the same ole Washington to me!

There’s more, Obama professed to be for fiscal responsibility and no ear marks. Here again he has lied. We have only to look at the huge stimulus package which was one giant earmark made into law and had nothing to do with stimulating anything!

Other examples of Obama’s lies exist as well. The omnibus spending package with over 8,000 earmarks in the billions of dollars is being pushed for passage. The President says its last year’s business, BUT, if that’s true then why wasn’t it passed last year.

This is another example of the big lie. Obama claims to have inherited the Deficit and he did inherent some of the deficit but in the two months since he’s been in office, he’s tripled the size of the deficit.

The constant, persistent and now accelerated growth in spending and government regulations is killing the markets and slaying our economy. Obama ran to the center as a fiscally conservative Democrat in order to get elected, what he’s become is a Harry Reid and Nancy Pelosi tax and spend style liberal!

Obama Lied; The Economy Died; how very apropos.