I came across an interesting analysis of the recent Obama Budget
http://austrianeconomists.typepad.com/weblog/2009/02/herbert-clark-obama-raises-taxes-to-cure-a-recession.html
which purports to show that politicians (both Republicans and Democrats for that matter), aside from being ignorant about economics, also tend to forget and repeat history. I am glad I increased my holdings in Gold the past two years!
Friday, April 24, 2009
Sunday, April 19, 2009
The Obamanation of US Foreign Policy
In the last few weeks President Obama has embarked on a series of foreign state visits which included the country of Mexico. There seems to be some concensus among both the Mexican government (who cannot seem to understand the concept of personal responsibility for its own internal security) and the Obama administration (a.k.a Attorney General Erick Holder, Homeland Security Chief Janet Nepolitano, et. al.) that the transfer of guns from the U.S. to Mexican drug cartels and America's demand for drugs is causing all of the problems on our border to the South.
Now, if we look at this from a 'Drug Problem' perspective it may be worth noting that we had similar issues during the 1920s with Prohibition. An interesting note on this was recently published by Sharon Harris of the Advocates.org website (a well known Libertarian organization) where she states:
http://www.theadvocates.org/library/casualties-of-war.html
Now as for the gun running issue, I find it amazing that the U.S. government is attempting to complain about the shipments of AK-47s south of our border, when there is no firm in the U.S. which even produces these weapons in mass. Additionally, these same cartels can easily get these weapons for much cheaper from South American arms dealers than going through the terrible bureaucracy that a federal gun purchase check would entail at say your local neighborhood monthly gun show at the city auditorium. Sometimes those ATF federal gun purchase checks can take days on end to complete with all of the backlog. Not very efficient on the part of Mexican cartels to use that channel for acquiring guns. Sharon Harris also has some interesting perspectives on the gun issue which is worth reading:
http://www.theadvocates.org/library/guns.html
I was deeply disappointed in President Obama not standing his ground on his promises to prevent wasteful spending when he failed to veto the latest spending bills coming out of the Democratic Congress. Now with all of the bailouts (a.k.a. politcal pay-backs) budgeted and additional pork-barrel spending added in, we can all rest easy I suppose? Forbes has some reassurance for those who think otherwise:
http://www.forbes.com/forbes/2008/1110/042.html
Maybe we do not really have 'change we can believe in' but those same ole Democrats we had back in the Jimmy Carter days?!
Now, if we look at this from a 'Drug Problem' perspective it may be worth noting that we had similar issues during the 1920s with Prohibition. An interesting note on this was recently published by Sharon Harris of the Advocates.org website (a well known Libertarian organization) where she states:
http://www.theadvocates.org/library/casualties-of-war.html
Now as for the gun running issue, I find it amazing that the U.S. government is attempting to complain about the shipments of AK-47s south of our border, when there is no firm in the U.S. which even produces these weapons in mass. Additionally, these same cartels can easily get these weapons for much cheaper from South American arms dealers than going through the terrible bureaucracy that a federal gun purchase check would entail at say your local neighborhood monthly gun show at the city auditorium. Sometimes those ATF federal gun purchase checks can take days on end to complete with all of the backlog. Not very efficient on the part of Mexican cartels to use that channel for acquiring guns. Sharon Harris also has some interesting perspectives on the gun issue which is worth reading:
http://www.theadvocates.org/library/guns.html
I was deeply disappointed in President Obama not standing his ground on his promises to prevent wasteful spending when he failed to veto the latest spending bills coming out of the Democratic Congress. Now with all of the bailouts (a.k.a. politcal pay-backs) budgeted and additional pork-barrel spending added in, we can all rest easy I suppose? Forbes has some reassurance for those who think otherwise:
http://www.forbes.com/forbes/2008/1110/042.html
Maybe we do not really have 'change we can believe in' but those same ole Democrats we had back in the Jimmy Carter days?!
Wednesday, November 26, 2008
Who's To Blame for the Sub-Prime Meltdown?
The Community Reinvestment Act, which was heavily revised and strengthened in 1995, compels federally insured depository institutions “to help meet the credit needs of the communities in which they operate." http://www.ffiec.gov/cra/ These lenders are prohibited from engaging in mergers and acquisitions unless they receive a satisfactory rating from federal regulators which rate each lender based on their proportion of loans to low-income neighborhoods.
Although the magnitude of this explanation is not entirely clear, the CRA clearly seems to have contributed to the sub-prime crisis. When legislation compels market forces to provide more of something then otherwise would be provided, there are going to be unintended consequences. For example, Countrywide’s loans to low-income neighborhoods grew by $600 billion by 2003 http://www.investors.com/editorial/editorialcontent.asp?secid=1502&status=article&id=291507506135021
The law was originally intended to stop the practice of “redlining” in especially high credit risk neighborhoods. Now banks are being accused of “predatory lending” practices instead, with more regulation sure to follow. Despite what the regulators claim http://www.federalreserve.gov/dcca/cra/ lenders were given an incentive to increase the default risk of their loans so that they could obtain a satisfactory rating and engage in critical mergers and acquisitions. Even our new President-Elect, Barack Obama, oversight chairman of the banks, Rep. Barney Frank (D-NY) and others on both sides of the isle are equally to blame for this debacle http://obama2.com/archives/tag/community-reinvestment-act/ It seems to me that any free market analysis of the sub-prime crisis should consider the consequences of legislation perverting the incentives of depository institutions. Obama even sued Citibank over its refusal to change, what should have been prudent loan application risk analysis, its criteria for lending to sub-prime borrowers which have caused the recent bailout (at taxpayer...and future generations'.... expense) http://www.mediacircus.com/2008/10/obama-sued-citibank-under-cra-to-force-it-to-make-bad-loans/
A poor example of leadership.
Monday, November 24, 2008
The Citi Never Sleeps....next GM, Ford, Chrysler?
We are finally watching Chapter Two of the 'bail out' of failed businesses (a.k.a. corporate welfare) with the recent decision to inject $20B into the failed operations of CitiBank. Now please do not misunderstand my position. I once worked for CitiBank as a VP and I only have the greatest respect for the organization's talented and hard working staff. My complaint is with government policy as it relates to the key tenets of a free market capitalist system. To allow a financial system to favor businesses by allowing them to privatize profits, while at the same time, socialize loses does not strengthen the backbone of a free market economy. CitiBank made it through a similar crisis back in the late 1980s/early 1990s. At that time, CitiBank was saddled with the default of large baskets of loans in South America. It might interest you to know that, while dealing with the South American Loan defaults, numerous savings & loan banks were bought by the bank at 'fire sale' prices and absorbed into CitiBank's infrastructure after they were taken over by the FDIC & the Resolution Trust Corporation. It appears that CitiBank got through that crisis, without government welfare, just fine! Why the change in policy? Perhaps they were able to hire more influential lobbyists? This is setting a very bad precedent. Where does this all end? What is the "endgame"? It is chilling to consider the ramifications over the long-term!
Now what about the big three auto makers? Appearing on almost every major news channel, including NBC, CBS and CNN, Daniel J. Ikenson, of the CATO Institute, explains why the auto companies should not receive a federal government bailout. Ikenson writes that there's nothing wrong with letting one of the "Big Three" go down:
The "Big Three" auto producers - Ford, Daimler-Chrysler and General Motors - want the public to believe their industry faces an existential threat. It doesn't. They want the public to believe they are innocent victims of circumstances beyond their control. They're not. They want the treasury secretary to authorize a fresh $25 billion bailout for the industry and the President-elect to pledge support for their parochial cause.
After appearing on TV against the bailout, Ikenson received a letter from a viewer who disagreed with him. Here is his reply.
The fact is that much of the Big Three's problem is self-made. The credit crunch and the contraction of demand is just the latest dark cloud, and a problem that affects all industries, not just autos. Thus, if there is a bailout for Detroit, where, how, and why do we draw the line to exclude other manufacturers, home builders, coal miners, and masseuses, who are all suffering from the same contraction in demand caused in part by the credit crunch? Don't tell me we should bail everyone out. For starters, we can't afford that.
Meanwhile, Daniel J. Mitchell debates in opposition to an auto industry bailout on NPR.org:
Consumers, acting in the marketplace, should determine which companies succeed or fail. Business success should not depend on which companies can hire the slickest lobbyists.
Now what about the big three auto makers? Appearing on almost every major news channel, including NBC, CBS and CNN, Daniel J. Ikenson, of the CATO Institute, explains why the auto companies should not receive a federal government bailout. Ikenson writes that there's nothing wrong with letting one of the "Big Three" go down:
The "Big Three" auto producers - Ford, Daimler-Chrysler and General Motors - want the public to believe their industry faces an existential threat. It doesn't. They want the public to believe they are innocent victims of circumstances beyond their control. They're not. They want the treasury secretary to authorize a fresh $25 billion bailout for the industry and the President-elect to pledge support for their parochial cause.
After appearing on TV against the bailout, Ikenson received a letter from a viewer who disagreed with him. Here is his reply.
The fact is that much of the Big Three's problem is self-made. The credit crunch and the contraction of demand is just the latest dark cloud, and a problem that affects all industries, not just autos. Thus, if there is a bailout for Detroit, where, how, and why do we draw the line to exclude other manufacturers, home builders, coal miners, and masseuses, who are all suffering from the same contraction in demand caused in part by the credit crunch? Don't tell me we should bail everyone out. For starters, we can't afford that.
Meanwhile, Daniel J. Mitchell debates in opposition to an auto industry bailout on NPR.org:
Consumers, acting in the marketplace, should determine which companies succeed or fail. Business success should not depend on which companies can hire the slickest lobbyists.
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