Tag Archives: Wall Street

Obama’s State of the Union Address: Economic Plans Only Problem Causers Believe In

Last Tuesday, Obama presented his “let’s get the party agenda done” speech. Like his campaign rhetoric, it was long on feel good sales hype and short real substance.

While blaming all of the nation’s economic woes on Wall Street, he proclaimed our economic salvation is to be found in spending more money. The core of his spending plan was focused on three areas: The first is developing clean energy because it will save us from the impending catastrophe of climate change. The second is spending more money on health care because it will supposedly save us all money. The third is spending more money on education so that the next generation will be able to afford more loans in the global economy. Before Obama can increase spending on those three areas, money must be spent on getting banks to lend more money because credit (meaning more debt) is the lifeblood of the American [corporate] economy.

Ramussen recently published the results of its national survey of American opinions about government spending and the economy. The results make it clear that Obama and congressional Democrats are out of touch with the nation, which is to say Obama only hears the cheering choir of the elite liberal and socialist Left.

About 53 percent of Americans told Ramussen reduced government spending would help the economy. Sixty-one percent (61%) said cutting taxes is a better way of helping the economy than increased spending. One of Obama’s save the nation initiatives, heath care reform, is opposed by 61 percent of the nation. Americans want it dropped. Apparently, American fail to believe the presidential sales hype that health care reform will save money or do much to create good paying jobs.

Will Obama’s federal spending freeze help the economy? If temporarily halting the rate of spending 17 percent after increasing it by 20 percent in a single year, then yes it will help. Financial advisors like John Mauldin also say such a gesture is laughable. It’s laughable because the freeze covers only a small part of the federal budget and consequently maintains the 20 percent increase in discretionary, social security, military, stimulus, health care spending, according to the Independent Institute.

Obama’s statement that he is not for big government is as laughable as the spending freeze, but his placing the sole blame for the economic crisis on Wall Street and banks is not.

Remember, the economic crisis began with the collapse of the housing market. The mortgage industry bubble burst because Washington lawmakers made it possible for cheap loans to unqualified buyers continued unabated. Big banks held very large portfolios in those types of loans. We should not forget that the SEC is the federal regulator of Wall Street as Ben Bernanke’s Federal Reserve is of the banking system. The Bush administration appealed to the various oversight committee of Congress to correct the mortgage problems evident at Sallie Mae and Freddie Mac, but the Democrats refused, and it gets even better. The legal counsel of ACORN who was the main player in forcing banks to lend to the unqualified home buyers was none other than Barak Obama, whose Treasury Secretary Tim Geithner is a federal reserve insider, a previous Fannie Mae executive, and a reputed bailout king of Wall Street. It is Obama who selected Geithner and fought for Bernanke’s return the Fed to continue wrecking our national economy. As the old saying goes, point one finger and three are pointing back at you, Mr. Obama.

In a May 2009 article, Independent Institute Senior Fellow Ivan Eland points out the practices of the Federal Reserve that produced the housing bubble and financial industry meltdown. To soothe Wall Street jitters after 9/11, the Federal Reserve lowered the federal fund rate, printed huge sums of new money, flooded the credit market making easy loans the norm, which led to overly inflated housing values, inflated costs of consumer goods, and decreased spending.

Those are a few likely reasons why 72 percent of Americans surveyed by Ramussen expect Obama and congressional Democrats to increase spending and the national debt. In other words, most Americans realize elected and unelected bureaucrats are expected to continue the same policies of spending our way out of debt. Those who have suffered bankruptcy know it will not work.

Okay, but, what about energy and education? Surely, spending more on developing new forms of energy and related technologies as well as improving education will surely create more jobs. According to the Ramussen survey, about 60 percent of Americans believe government spending less will result in the creation of more jobs.

The issue is who should pay for the development and marketing of new energy and related technologies? Loaning taxpayer money to businesses developing new types of energy or new related technologies would benefit society. However, investors and banks exist for that purpose–not government. Increasing taxes or taxpayer debt to spur profitable businesses is a misuse of taxpayer money. Let the private sector invest in and profit from new forms of energy and related technologies. That is how capitalism works. Government’s job is to ensure it benefits all citizens, consumers, groups, industries, businesses, and employees.

Obama’s rhetoric about spending more taxpayer dollars to make all of America’s children globally competitive is the same old sales baloney regurgitated since the passage of the Elementary and Secondary Education Act (ESEA). The poor still are dropping out of school in alarming numbers, students still to not do as well as others in the world, the gaps between poor and non-poor student still (and is not actually expected to cease to) exist, and more money is being spent to solve the problem they do not solve. Why spend more on failed policy and practice? In her book Dependent on DC, Economic professor and lawyer Charolette Twight explains how ESEA spending was never meant to solve the problems of education. The purpose of ESEA (now, NCLB) is to expand federal power over state and local education. Federal spending on education means more dependency of local school for funding on unaccountable elites in Washington D.C.

Don’t Bail Out My State: South Carolina’s Governor Says More Debt Isn’t The Answer

The Wall Street Journal published an article by the above title today. Its author was South Carolina Governor Mark Sanford. Gov. Stanford presents an informed argument against the Congress’ bailout of Wall Street and cash strapped states. He asks and answers a number of questions that are worth considering.

One of his questions is: Who bails out the “bail-outor”? What he means is who will bailout the federal government. His answer is what we already know. The federal government does really have any money. All of the money it plans on using to “stabilize” banks, Wall Street firms, automakers, and states will all be borrowed against every Americans future income. The answer, therefore, is either no one because foreigners and their governments are also experiencing the same deepening economic recession.

Gov. Sanford makes a point all taxpayers must seriously consider. He wrote, “Already, our nation’s unfunded liabilities total $52 trillion — about $450,000 per household. There’s something very strange about issuing debt to solve a problem caused by too much debt.” (Emphasis added.)

All of the talk about balancing the federal budget is nothing but hot elite air. Not only will the feds not be able to balance their budget, but their huge bailout borrowing extravaganza will hurt fiscally responsible community banks and fiscally prudent states, according to Gov. Sanford. As he indicates, the bailout will only benefit the bad boys.

Democrats want to increase the national debt even more by expanding health care costs. Gov. Sanford informs us that Medicaid expenses have been increasing 9.5% a year for the past 10 years, which is unsustainable. Add universal health care costs to the bill and what is already unsustainable becomes a catastrophic economic problem. Who will pay for it? The largest group of taxpayers in America is the middle-income group.

President-elect Obama is being billed as the next FDR. That should cause great concern to all because FDR began the big borrowing-big government programs. FDR helped to prolong the economic crisis of the 1930s. FDR jumped into World War II in order to borrow…borrow…borrow America out of the great depression. WWII was legitimated borrowing huge sums of money to put Americans to work. Does did really work? Only temporarily. What I have been hearing from various economists and money market experts is that each economic crisis has been getting worse since FDR’s big borrowing bailout.

Another important question Gov. Sanford asks is: Isn’t government intervention supposed to be the last resort and come only when it can make a difference? As he notes, Congress committed $2.3 trillion as a first resort solution to improving our economy. Adding another $150 billion is like adding a twinkie to truckloads of sugar already dumped to sweeten a lake. It won’t make much difference except to the taxpayers who will have to repay the insane amount of debt.

Maybe that is why millions of Americans have little savings, no retirement, inadequate health care, and little economic future.

Looking at the issue as a head of state, Gov. Sanford counsels against states accepting a federal bailout of states. Instead of is his solution to states effects by the economic crisis:

[T]here is something Congress can do: free states from federal mandates. South Carolina will spend about $425 million next year meeting federal unfunded mandates. The increase in the minimum wage alone will cost the state $2.6 million and meeting Homeland Security’s REAL ID requirements will cost $8.9 million.

Here is the age-old wisdom of Constitutional government: Limited not only as to its powers but also to its spending, borrowing, and taxing.

Gov. Sanford apparently believes it is not too late for Americans to stop Congress from mortgaging our economic future with unsustainable debt to bailout Wall Street and states. Ohioans also may be able to stop Gov. Strickland and the Ohio legislators from the same.

You can contact Gov. Strickland by E-Mail, by fax at (614) 466-9354, by phone at (614) 466-3555, or by us mail at Governor’s Office, Riffe Center, 30th Floor, 77 South High Street, Columbus, OH 43215-6108.

To contact your elected Ohio legislators, go to the House of Representatives directory and to the Senate directory.

To contact your Congressional representatives, go to the House of Representatives directory and to the Senate directory or call the Capitol switchboard at (202) 224-3121 for Representatives and Senators.