Wednesday, October 28, 2009

Obama Joins Hoover's "Success"

Let’s see, if you follow government suggestions, you get paid for it. Buy a home and get $8,000. Trade in a clunker and get $6,500. Just how many people weren’t going to buy without the stimulus? I is kind of hard to say. But the suggestion is there: “Do what the government tells you, and be rewarded.”

The question arises, did this action bring new people into the market or make those wishing to buy a little less hesitant? Probably all that happened is that sales for later in the year were accelerated into now.

Where did the money come from to pay these people who bought a car and a home $12,500? Don’t feel bad, I don’t know either. Let’s face it, crashing an airliner into the world trade center for 90 virgins in the afterlife has the same sort of ring to it, the only drawback to this analogy, is the religious zealot after the fact, is not going to be whining about non delivery of the 90 virgins. You can manipulate people to get a desired reaction, but the expected results don’t necessarily follow.

I remember reading somewhere that: “The government cannot give to anybody anything that the government does not first take from somebody else.” Common sense just doesn’t go far now days. I think we need to go back to the days where you had to be a land holder in order to vote, these people have always had a vested interest in the United States.

There comes a point to where thing start to get absurd and I think we are there. The question is out in front of us: "Where are these funds coming from?" Most people in the country could care less, their answer, the funds are coming from the same place they always came from.

This closing picture is not a political statement, but rather a reflection of the times, Herbert Hoover back in history was a success story without a rival in today's world. The trouble is, he was in the wrong place at the right time, and that could be Obama's plight.

Obama may end up taking the blame just like Hoover did.

Sunday, October 18, 2009

"Let Me Be Perfectly Clear"

In a Democracy, who provides better service, private enterprise or government? It sure as hell isn’t government. They are the biggest bureaucratic waste of time and taxpayers money. The government cannot do anything efficiently or cost effectively.

Obama accuses the health insurance industry of being deceptive and dishonest. I think it is the other way around. If this field was so lucrative in profits, there would be far more insurance companies offering services. The suggestion of government insurance pretty much puts these private companies out of business.

This health care plan won’t cover people who don’t work ( I didn’t say unemployed, there is a difference). Obama talks about the 43 million people not covered, well, they feel they don’t need it and spend the money on other things. If the worm turns, forget the other things, you will now spend it on health insurance, it will be taken out of you pay check. Then there are the 40 million people in this country illegally, they don’t need to qualify, the hospital emergency rooms will still take them.

Health insurance is relatively cheap if you are young and it gets progressively more expensive as you age. At age 65 it could be unfordable if you have retired, but that’s where the government plan kicks in. At this point, you are talking about insurance that even the insurance companies will not write without extremely large premiums. They know what their costs are, and they know what profits are. If you can keep costs and profits in reasonable perspective, you will succeed and survive. These health insurance companies seem to be doing OK.

The only real hang up we have is people don’t want the insurance until they need it. And when they need it, it is too late; the insurance companies don’t want them. Notice if you are in good health, an insurance company will offer you insurance at reasonable rates. At about the age of 55, rates start to rise and could be considered unfordable by low income workers. The individual has the option: is the 200 dollar premium per month worth it or do I skip health insurance? On a statistical basis, 8 out of 10 people without insurance, don’t get nailed and have a free ride, the other two pay the piper.

What Obama’s plan does, is get rid of the free ride. Everyone pays for health care. All of the people that didn’t pay into health care and never filed a claim now have to pay into the program.

It sounds great when government touts that the employer pays half of the Social Security tax and the employee pays the rest. If you are self employed, you get to experience the full reality of that, you pay both parts. The government wants to tax us another 20% of our earnings for health care and the employer gets to pay half. An educated guess is that 80 percent of what is paid out from premium payments, will be paid to those over the age of 65. And they already have Medicare. This health insurance program will be used TO FUND A PROGRAM ALREADY IN PLACE.

With private health insurance, your age and health determine your rates. With the government plan everyone will probably pay the same rate (keep it simple stupid). An insurance company knows down to the dime how much its needs to charge to make a profit, otherwise they face financial ruin. Does this sound like a government approach to problem solving? I doubt it.

Can the government allow private insurance to exist if everyone under the government plan pays the same rate? If they did, the insurance companies would cherry pick the young with a very good rate and the government would be stuck with the dogs. If I can’t short Bank of America or Citi Bank stock, without government changing the rules, you can see the hand writing on the wall – those thieving insurance companies need to go.

The thing that irritates me, is that it appears to be against the law to make a profit in this country (if you sell health insurance). Our Fuhrer has stated that the insurance companies are overcharging us.

I think that this guy we call president is too arrogant. This is a Democracy. It’s not his playground for solving social problems that we cannot realistically pay for.

Addendum added 10/19/09:

A government health care plan is an ambitious idea. I have no problem with the concept. The problem I have is with the excess reserves collected. Our government and its present finances are like a cocaine addict asking for $2,000 for “doctor bills.” It is obvious where it will be spent, just like our Social Security taxes were.

Social Security contributions currently are being paid out as fast as they come in. There are no excess unspent funds like there were in the past, to use in the budget. If this health care plan gets passed, figure that 10% of the funds will go towards health care and the other 90% will go towards” your account.” This means, Congress will write an IOU and spend it on the budget. It’s a little like promising your son a Corvette when he graduates from college and when the day arrives it turns out to be a Ford pickup.

The health care issue is not quite what it appears to be. Just use Social Security reserves as a measure. Congress has spent the reserves, they are gone. Your benefits come out of tomorrow's tax collections.

Monday, October 12, 2009

We're Broke, Let's Write a Check

Congress is out trying to save “The American Dream,” of home ownership. The suggestion that everyone should own their own home is probably left over boilerplate from some old real estate ad. The American Dream has turned ugly. Long ago banks demanded 20 percent down payments and it worked splendidly. Today’s younger generation has had no real reason to save money. It was sign here, and move in or drive it away. Everyone that wanted a home, got one (or two). Housing right now is kind of like a hot potato toss. Uncle Sam gets to catch the hot ones. So it is pretty obvious, the no money down home loan is still available. Our government doesn’t care about the quality of the new loans. They are more interested in having these loans serviced (by someone with a pulse) for the next 20 years.

Here is where the dream turned into a nightmare. Our government didn’t squirrel away any money to cover this big mess; it was assumed that it could never happen. For the last 35 years our country has spent more than it collected in taxes, by dipping into the Social Security tax fund. The money has been spent and we have the IOUs to prove it!

Our retirement funds are doing exceptionally well. Most people I know, can’t afford to retire, so withdrawals are not a real problem yet. On the other hand, there are banks that are too big to fail and ones not so big, 98 so far this year have failed. The FDIC is almost out of insurance funds. On top of that, Freddie and Fannie are about to go nuclear and ballistic at the same time.

Then we have these two white knights (Nothing racial here, the black knight was generally the bad dude) coming to our rescue. Ben Bernanke and Tim Geithner show up with a check book and pen. This is an absurd con game. And to give it some credibility, you hear a "Car Salesman Close" from Congressman saying, “We are robbing from future generations.” You can’t steal from people that haven’t been born yet, it is impossible. The funds are bogus. Ink and paper are no substitute for real tax dollars. It kind of reminds me of a Herman cartoon where the little kid is up at the blackboard adding the numbers 2 and 3 together. His answer is about 10 digits long and he turns to the teacher and asks her “Where do you want me to put the decimal point?”

Where did this two trillion dollars in bailout money come from? It didn't come from taxes. It has to be some sort of a magic show. Look for it, coming soon ----to a theater near you ---“Inflation Nation.”

Monday, October 05, 2009

The Depression Has Been Delayed

The first installment of this blog came out in May of 2006. There were no real perceived problems, just suspicions. Now we have progressed three years into this morass. Each step forward seems a little more encumbered.

With the bank failures, our government claims many banks are too big to fail (a bank with an office in every state seems to fit this profile). FDIC insurance has covered all bank losses so far. For some odd reason the FDIC now wants to collect 3 years of premiums from the banks in advance. The bookkeeping instructions for carrying this on the bank books, is what could be politely labeled “creative financing.”

With unemployment, those no longer looking for work or those working part time are not counted. And unemployment insurance has just been extended to 92 weeks. If you are lucky/ unlucky enough to have joined the unemployed, you have just won a two year vacation from Uncle Sam. Ski the winter in Colorado giving ski lessons and relax in the summer in Malibu busing tables at night (On the unemployment forms never check working out of state or mail the form back with an out of state postmark). I do recommend the season pass at Vail--great skiing, and the ski bunnies are cute.

The Federal Reserve is keeping home loan rates low by buying all T-bills presented for redemption by the market. Congress is curious how much money the Federal Reserve has on the books dealing with securities it is holding as collateral. Freddie and Fannie figure into this mess. Just how is the paper carried and on whose books? At what point does a home foreclosure become bank owned real estate? And at that point who’s books carry the asset? Hint, it’s probably not the bank.

None of these actions appear to be any sort of real solution, but rather a method to keep the game going. Each in their own way is becoming a larger problem. And then someone chimes in “Bernanke was slow to act, but his actions saved us from having a Great Depression.” That is a professional car salesman close if I ever heard one.

What we need to realize, we still haven’t arrived to our unplanned and unscheduled destination, “The Great Depression.” Government intervention has slowed down the process. It could take four years to get there not three as I had anticipated. Nobody is throwing in the towel yet, and we need millions of people doing so, not just one or two of me.

It is very easy to point to state budgets and look how much they are short this year alone. They can’t run on deficits like the Federal Government. How can state tax collections for next year exceed this year’s? When you think about it, common sense doesn’t cost anything, how come Congress can’t see the light of day?

Just ask yourself one question. If the government's crystal ball didn't see this coming, how come it has all of the answers now? I'm pretty well fed up with this government snow job.

On another note, Google has cut me off from posting pictures unless I agree to terms written back in 12/13/06. I haven't clicked to agree on it, only because it is back dated 3 years. I did have three visuals for this article, but I modified it to leave them out. I think that Google is becoming a hard ass, there is no option to deny, only the yes button if you want to upload pictures. Not sure what this means. Bear with me for now.