Jon Corzine, one of those very smart Wall Street guys, the former head of Goldman Sachs, testified before Congress today to answer questions as to what happened to his firm MF Global, which is now one of the largest bankruptcies in US history. There is over $1 billion unaccounted for. He simply doesn’t know where it went. This is the guy that Obama and Biden praised when they took office as the first guy they would turn to in the midst of the economic crisis. It explains a lot about where we are today.

http://www.youtube.com/watch?v=xm3VMrKqJSA

It seemed that as long as Corzine sat in the cat bird seat of crony capitalism, where if your big bets pay off you rake in the dough and if they go south, you hand the bill to the taxpayers in the form of bailouts because you are too big to fail. Take him out of that role and he acts the same way, but without the safety net you see the results.

What Corzine did, after driving New Jersey into a ditch that Chris Christie is digging out of, he bet heavily on the debt of foreign countries. Oops! It seems like he believed that governments never run out of money, but sadly they do. And we will face the same fate, but who is steering our economic ship? The two guys who think Jon Corzine is brilliant. Jon Corzine is the first guy that Joe Biden and Barack Obama called upon taking office. Is there any wonder that their plan has been a disaster? Is there any wonder that no one on Wall Street has been pursued by the Justice Department? Is there any wonder that they are trying to kill the free market economy by regulating out of existence the things that people actually want to buy and heavily subsidize things that they don’t? Every day we hear a new report of more billions going into green programs that we will never see a return on.

It’s time to drop the curtain and get the hook. These clowns are not the least bit funny.

That’s my opinion; I’d like to know yours. Please comment below.

Photo by cursedthing

We saw the beginnings with the Battle of Wisconsin. The one place were unions were growing robustly was in the public sector, surpassing the private sector for the first time in 2009. But then 2010 happened.

With states’ fiscal situations worsening and the runaway spending in Congress, voters across the country turned to Republicans, or should I say, the Tea Party. Promising to return to Constitutionally limited government and to go to Washington and state capitals, not to start a long new career but to fix the problem, the Tea Party backed candidates wasted no time getting to work.

From Chris Christie in New Jersey to Scott Walker in Wisconsin, they did not flinch from taking on the public sector unions. They knew that the current trajectory was unsustainable. In Wisconsin, the unions descended on Madison and threw everything they had into the fight. Democrat senators fled the state to prevent a quorum from voting on Governor Walkers measures, union thugs took over the state capital building, inflicting millions in damage to the people’s property, tried to defeat a conservative judge so that the law, if passed, could be struck down by the court, and if that didn’t work they tried to recall six Republican senators at the ballot box. All measures failed, Walker’s policies were implemented and job growth in Wisconsin started chugging along.

In other states like Ohio, Tennessee and Indiana similar setbacks for unions were proceeding more quietly. Meanwhile in the private sector, which has only about 7% union representation, the next major showdown is coming to a head.

The United Auto Workers’ contract with GM, Ford, and Chrysler expires on September 14th. It will be interesting to see how this plays out. As written in a previous post, the unions will be sitting on both sides of the bargaining table, as the Obama administration granted them large chunks of GM and Chrysler stock as part of the bailout package, while stiffing the bond holders, and now the unions as labor will be negotiating with the union as owners. And if they drive GM and Chrysler out of business again, who gets stuck with paying for the cleanup? That’s right, the American taxpayer. Why?

Because the Obama administration couldn’t keep their nose out of the automobile business, thinking if their didn’t bring their collective genius to the limited intellect possessed by the average business owners, how on earth could the auto companies ever function? They should have let the bankruptcy courts handle it, but they decided to drag the rest of us into the mess and now we own a stock that is worth about $31 per share that must climb to $52 for us to break even.

So will the unions commit suicide by making unreasonable demands, drive the auto companies out of business and at the same time kill their own investment in their stock? Or, will they quietly get rid of all of their stock before they trash the auto companies and then demand that the government step in again and bail them out?

Get ready to take it in the neck again, America. The most inexperienced president in US history with his most excellent panel of advisers who never worked in the private sector are about to tell the rest of us how it is supposed to all work. Brace for impact, my friends.

That’s my opinion; I’l like to know yours. Please comment below.

Photo by Dave Makes

Two news items yesterday, when put together, start to tell an interesting story. Warren Buffett invested $5 billion in Bank of America in a private sweetheart deal that will guarantee him a 6% return (that’s $300 million per year) and he is hosting a fund raiser for Barack Obama in New York where the tickets start at $10,000. What’s going on?

Barack Obama is the worst jobs president since Herbert Hoover (see previous post on this); the economy is flat lining; and yet Buffet thinks Obama is doing a great job. Think of some of Obama’s other supporters among the captains of industry: Jeffrey Immelt of GE and Howard Schultz of Starbucks.

Crony Capitalism

What is crony capitalism? Crony capitalism is where we have a capitalist economy but instead of truly free markets, some business leaders get cozy with government to tilt the playing field in their favor. Those on the left like to paint conservatives as the champions of big business and the wealthy, but if you look at the campaign contributions of many big business CEOs you will be surprised at who they support. Let’s look at two examples, Warren Buffett and Jeffrey Immelt.

Warren Buffet

In the financial meltdown triggered by the housing bubble bursting, the government stepped in to prevent large financial institutions from failing. This creates what is known as a moral hazard. A moral hazard is where the risks associated with a particular transaction are covered by someone else such as the government or insurance, so the investor is willing to take overly large gambles. Why? Generally, the bigger the risk, the bigger the payoff if you are right and if the downside is protected by government or other parties you have less to lose. Big upside, small downside, let’s play!

Warren Buffett invested in Goldman Sachs in the midst of the financial crisis in 2008, as a result of his $5 billion investment he reaped “$10 billion in interest, fees, and dividends,” according to Mark DeCambre at the New York Post. If you know that the government won’t let the bank fail, what is your downside risk? The upside turned out pretty sweet. Warren Buffett was an adviser to candidate Barack Obama and you can be sure the topic of how to handle the fiscal crisis was discussed. Buffett is now investing in Bank of America where his company, Berkshire Hathaway stands to make another killing. Would the government stand by and let Bank of America go under? What do you think?

Warren Buffett has also been making the rounds calling for more taxes on the rich. This writer and others have suggested that if Warren Buffett thinks the government deserves more of his money, go ahead and write the check, but he balks at that suggestion. Why? Depending on when you measure it, Warren Buffett is one of the three richest people in America. No matter how high to raise the tax rates, he will be able to afford it. Other entrepreneurs and small businesses may not be able to afford the higher taxes and thus find their companies financially squeezed. Buffett’s company Berkshire Hathaway has made a lot of money buying up good companies. Could his high tax advocacy be a way for the government to create some new investment opportunities for him?

Buffett has also invested in a Chinese company to build electric cars. Why didn’t he invest in GM to help sell the Chevy Volt? In the midst of this lousy economy President Obama announces new CAFE standards that would require car companies to build cars that would get over 52 miles per gallon by 2025. That will probably drive GM and Chrysler out of business with their heavily unionized companies already at a severe cost disadvantage of around $2,000 per car. What a great opportunity this would create for a company with an electric car! Slap a GM or Chrysler nameplate on it and voila, problem solved.

Jeffrey Immelt

For all the talk about higher taxes, General Electric paid no taxes in 2010. During the fiscal crisis GE got large sums of money from the government.

During the wild Congressional spending spree of the last couple of years, GE miraculously became the largest beneficiary of the government’s Troubled Asset Recovery Program (TARP) bank bailout. Although GE did not initially qualify for TARP, the company’s $18 million annual investment in battalions of Washington DC lobbyists convinced Administration regulators to push that “reset” button and extend TARP guarantees and subsidies to GE. Public records demonstrate GE Capital, the company’s massive financing arm, pocketed $120 Billion in loans from the Federal Deposit Insurance Corporation at interest rates of less than 1% and snatched 25% of the entire $340 billion in subsidies from “Temporary Liquidity Guarantee Program” (TLGP) rescue fund. — Chriss W. Street

Immelt has also been appointed as the head of President Obama’s job council. At the same time Immelt is entering into an agreement with China to build airplanes to compete against Boeing. Meanwhile do you recall Boeing and the government being in the news lately? Well the National Labor Relations Board has told Boeing that it cannot open another factory that will hire 5,000 employes in South Carolina. In the midst of 9% unemployment, Obama said that the NLRB was an independent agency and his hands were tied. How convenient?

What’s that Smell?

While the engines of job creation, small businesses, are stuck wondering what will hit them next, the crony capitalists are cozying up to President Obama and getting fat while stymieing their competition. I don’t know if this is illegal or not, but how much different from insider trading, at least from appearances, is this? The heads of major corporations give advice to President Obama, go out and make spectacular deals, and the economy continues to languish while they get rich. They get rich not because they have a better idea, or are more nimble, but because taxpayers are absorbing much of the risks while they make the dough. Perhaps Congressman Issa can use his Government Oversight committee to ask a few key questions.

That’s my opinion; I’d like to know yours. Please comment below.

There’s good news and bad news coming out of the Tim Bishop campaign.  The good news is that he has a new ad out so we don’t have to keep watching the same ad he has been running incessantly for the past five weeks.  The bad news it’s about the one subject that Tim Bishop wants to talk about, outsourcing.  It’s the same old stuff, wrapped in a new package.  Why can’t Tim Bishop talk about his record?  Is he embarrassed by it or afraid of it.

Okay, if outsourcing is the subject, let’s talk outsourcing.  In Mr. Bishop’s ads he accuses his opponent, businessman Randy Altschuler, of outsouring jobs.  While it is true Mr. Altschuler created a company that created jobs overseas that provided business services to U.S. companies, he never closes the sale by actually linking jobs lost here as a direct result of the jobs created overseas.  He just leaves it to the viewer to draw the conclusion.  Very clever.  From some of the blogs and newspaper comments I have read there are a number of people who have jumped to that conclusion.  Liberty’s Lifeline looked into it and reported on the flaws in making that connection.

But what about Tim Bishop and jobs that he is responsible for outsourcing?  Tim Bishop voted for the bailout of GM and Chrysler.  At the time Liberty’s Lifeline advocated letting the companies file for bankruptcy on their own and not bail them out with taxpayer money.  But the bailout went forward.  Shortly thereafter GM announced that it was increasing the percentage of cars that it was building overseas.  The Detroit News said this:

“GM’s plan to import more vehicles from low-wage countries raises questions about whether it should beef up its foreign operations as it is relying on federal money to stay afloat.”

Tim Bishop has one reason that he consistently gives for sending him back to Congress and that is that his opponent, Randy Altschuler, started a company and Bishop claims it outsourced jobs overseas. 

In a New York Post article yesterday, Raymond J. Keating informs us  that the Small Business & Entrepreneurship Council, where he serves as chief economist, just released their Small Business Scorecard for the 111^thCongress.  The scorecard rates members of Congress on a wide range of votes (27 in the Senate and 22 in the House) that cover such things as workplace regulation, ObamaCare, government spending, tax policies, energy legislation, and bailouts.  Overall, he tells us the New York delegation scored just 11 percent on the scorecard, the sixth worst of the fifty states.  The two members of the delegation that scored well are Peter King, and John Lee.  On the other hand Tim Bishop failed to vote even once with small business on big issues.  A big fat zero.

But isn’t Tim Bishop an expert on jobs?  It appears to be the only issue he is running on.  He doesn’t mention the rest of his record, at least not on any ads that I have seen or heard.  He seems to be very confident proclaiming on who, what, where, when, and how to create jobs.

In another article in 27east news, the difference between Bishop and Altshuler is contrasted.  Mr. Bishop says of his opponent, “He was a very successful businessman, and every single thing he did was legal. But given the way he made his money, there are certain things you don’t get to do, and one of them is be a member of the United States Congress.”  Really?  Wow, where is that in the Constitution?  According to my copy of that venerable document, the requirements for Congressman are as follows:

1. Twenty-five years old. Check (Mr. Altshuler is 39)
2. Seven years a citizen of the United States. Check (Mr. Altschuler was born here)
3. When elected, be a resident of the state in which chosen. Check (Mr. Altschuler lives a couple of blocks from here, on Long Island)

What hubris Mr. Bishop demonstrates that he requires a higher standard than the Constitution to serve in Congress.

Mr. Altschuler denies that Office Tiger, the company he and a classmate founded, resulted in American Workers losing their jobs.  He says that Office Tiger bolstered other companies by providing mostly new services, not by replacing existing operations.  But Mr. Bishop says that is “impossible to believe”.  Perhaps Mr. Bishop can believe an opinion piece in the Wall Street Journal, on Tuesday, “Obama and the Politics of Outsourcing.’  In it, William Cohen points to a 2007 study by Matthew Slaughter, an economist at Dartmouth’s Amos Tuck School of Business.  The comprehensive study looked at the hiring practices of 2,500 U.S. based multinational companies. 

“He found that when U.S. firms hired lower-cost labor at foreign subsidiaries overseas, their parent companies hired even more people in the U.S. to support expanded overseas operations.  Between 1991 and 2001, employment at foreign subsidiaries of U.S. multinationals rose by 2.8 million jobs; during that same period, employment at their parent firms in the U.S. rose by 5.5 million jobs.  For every job “outsourced” to India and other foreign countries, nearly two new jobs were generated here in the U.S.”

He also found that the jobs in the U.S. were higher-skilled and better paying.  So it would seem that Mr. Altschuler was probably helping create two new jobs at his client’s companies in the U.S. for every person he hired overseas.

Mr. Bishop on the other hand voted for TARP and the stimulus bill.  Unemployment, we were told would rise to 9% unless we did something, but held to 8% if we acted quickly.  Mr. Bishop acted quickly and now the unemployment rate is 9.6%; sounds like doing nothing was the better option.  Mr. Bishop also voted to bail out GM.  In a Washington Post article entitled, “Under Restructuring, GM To Build More Cars Overseas” we learn that the percentage of cars that will be built in low-wage countries will increase from 15% to 23% over the following five years.  So doesn’t that make Mr. Bishop a pretty big outsourcer?

Mr. Bishop goes on to tout that his district is the recipient of $433 million in stimulus funds. That created 315 jobs (according to Recovery.gov)  at about $1.4 million per job.  What a bargain!   But he doesn’t like to talk about the debt that is linked to the stimulus.  By my calculation Mr. Bishop’s district pays about 0.37% of the personal income taxes in the U.S. If you take 0.37% of $825 billion it comes out to about $3 billion of the stimulus debt that the taxpayers of his district will have to repay.  That’s about $10 of debt to pay back for every $1 of stimulus received.  Anyone who likes that deal, I have a bridge I’d like to talk to you about.

Mr. Bishop’s entire career has been in academia and in Congress.  He sounds a bit like the sex therapist who has never had sex.  Sure he’s read the books and knows the theory, but he’s never done “it”.  Do you really feel confident he knows what he is talking about?  It seems as if whatever Mr. Bishop says you should do (borrow and spend on stimulus, TARP, GM bailouts) and what you shouldn’t do (start companies, hire people, create products and services and make profits) you’ll be fine if you do exactly the opposite.

So when you next hear Mr. Bishop’s tired commercial about Randy Altschuler outsourcing jobs, stand up and cheer.  If Mr. Bishop says it’s wrong, it’s probably the right way to go.

Bailouts

I’ve seen Tim Bishop’s new ad to help re-elect him to Congress.  He glares into the camera and says “no more bailouts.”  Having voted with the Democratic leadership (Nancy Pelosi) more than 97% of the time, who is Tim Bishop running against, himself?  Is this another “I voted for the bill before I voted against it?”

• Tim Bishop voted for TARP. 
• Tim Bishop voted against repealing the rest of TARP and returning the money to taxpayers. (HR 4173 [Roll Call 967]. The House defeated an attempt to repeal the Troubled Asset Relief Program and lower the national debt limit)
• Tim Bishop voted for the bailout of GM and Chrysler rather than letting them go through bankruptcy. 
• He voted yes on a bill to modify bankruptcy rules to avoid mortgage foreclosures.  A fellow Democrat who also voted in favor of the bankruptcy bill said, “Rep. PETER WELCH (D, VT-0): Citigroup supports this bill. Why? They’re a huge lender.”  Wow, Tim Bishop is really tough on those Wall Street banks. 
• Tim Bishop voted for the stimulus package that cost more in one year than the entire War in Iraq and has failed.  Unemployment is almost 10% when we were told the stimulus would cap it at 8%.  The administration keeps telling us about “jobs saved,” something that no one can measure, but they don’t tell us how many jobs were actually created which is a statistic that can be measured.  Why?  (Hint: 3 million jobs have been lost since stimulus signed)

So the guy who helped give us all these bailouts is now talking tough that he is protecting us from bailouts.

Credit Cards

His ad then goes on to say how he is protecting consumers and their credit cards.  One of the features he voted for is to cap the interest rate on credit cards at 16%.  Well that sounds good, but what is so magical about 16%?  Why not 17%, why not 12%?  Wait a minute, New York State used to have a cap on credit card interest rates of 12%, but then we got the Jimmy Carter economy where interest rates skyrocketed.  What happened then?  Major banks with credit card operations in New York state moved to other states that had no limit.  I worked at Citibank shortly thereafter, and they picked up their operations and moved them to South Dakota and Nevada.  New York lost thousands of jobs.  So what Mr. Bishop wants to do is place a limit at the federal level so those tricky people in South Dakota and Nevada can’t steal jobs from New York.  So instead, if we get another Carter economy, those jobs will go overseas.  But wait, doesn’t his commercial say he will create jobs here, not overseas?  What it proves is that Tim Bishop doesn’t understand economics and free markets, which he opposes.

Does Tim Bishop know what he’s talking about, or just waiting for the next instructions from Nancy Pelosi?

President Obama has demonstrated, as much as he would like to deny it, a strong anti-business sentiment.  He has acted in ways that remind one of a Castro or Chavez in that he is doing it in the name of the people against the greedy profiteers.

General Motors and Chrysler were bled dry by union contracts.  Management is culpable for agreeing to those contracts so they don’t get a pass in my view.  But government also piled on with CAFÉ mileage requirements that forced the auto companies to build cars at a loss (because of the union contracts) to meet this standard.  In the midst of the financial crisis the auto companies were running out of cash.  The Obama administration, rather than let them go into bankruptcy, muscles in and turns over major ownership stakes in GM and Chrysler to the unions who are loyal supporters of the Democrat Party, rather than pay bondholders who were entitled to be paid first.

The housing bubble was driven by government policies going back years.  The stated goals of the Clinton administration was to increase home ownership to as many people as possible.  When the bubble burst, the Obama administration forced TARP money on healthy banks who neither needed it nor wanted it.  The reason was to avoid showing who the real basket case banks were.  But these banks were forced by their government to take the money and then the Obama administration created a pay czar to make sure any company that took TARP money, voluntarily or not, could not pay their executives more than Team Obama said they could.

Lax regulation on the Deepwater Horizon platform in the Gulf of Mexico permitted BP to take short cuts that led to disaster.  President Obama is put in an embarrassing position, so he cranks up the Public Relations machine to throw maximum ire upon BP.  He then tries to be a hero by shaking down BP for $20 billion.  BP has never said they would not pay.  BP waived the limit on damages that was set by, you guessed it, the government and has steadfastly said they would make things right.  But President Obama wanted to look like he was actually doing something and by taking $20 billion and putting it under his control it might look like he was.  I agree with many that President Obama did not cause the leak in the Gulf any more than Bush created Hurricane Katrina, but if, as Obama likes to say, the buck stops here, then he is responsible for the lax enforcement by his administration that could have prevented it.

To create jobs this administration created a $787 billion bailout package that did next to nothing to create real jobs.  It was pork to be paid to union members such as teachers, contractors, and not to grow the economy and create sustainable jobs.

If a business that is solidly behind the Obama agenda, like General Electric who owns the NBC and MSNBC cheerleaders, and wants to be a key player in the cap and trade exchanges, this President will treat them kindly.  But if you are an independent business trying to grow, you will be taxed to your eye sockets.

We pride ourselves on being a nation of laws not a nation of men, but since this President has taken office he has a view that he is above the law and can do whatever he feels he needs to do.  It was somewhat surreal to have Congressman Joe Barton, apologize to BP for the shakedown.  No one owes BP an apology but I understand Congressman Barton’s distaste for the administrations boorish behavior.  No one has the right to demand another’s property without due process of law, and that’s what happened.  Perhaps Tony Heywood should be fired for going along with it.

Let’s keep this in mind.  We need BP to continue to be a viable profitable company, so that every last claim can be paid.  If this administration succeeds in driving BP into the ground, guess who will be next in line to pick up the tab?  That’s right, gentle readers, you and me;  the American taxpayers.

It was like the movie Rocky the Democrats (Rocky) were getting pounded left and right over their heavy handed tactics.  They crammed through a health care bill that an overwhelming majority of the country opposed.  They moved on to financial reform and they still couldn’t get any traction.  Their poll numbers continued to drop and it was looking like a dismal election coming up in the fall. 

 And then, just like in the movie Rocky swings from his heels and connects knocking the champ to the canvas.  In this case it was the SEC charging Goldman Sachs with fraud.  Now they could fire a full fusillade of class warfare at the Republicans and either get Republicans to help pass the financial reform bill or be tarred as the party of the evil bankers and greedy Wall Street robber barons.  But unlike the movie, right after knocking the opponent down, when the referee sends Rocky back to a neutral corner he slips in his own sweat, flips on his back and knocks himself out.  By that I mean the news came out that employees of the SEC spent an inordinate amount of their time watching porn instead of the financial markets.  How do you expand the role of government on the heels of that disclosure?

 Trying to Make Up for Bernie Madoff?

When Bernie Madoff’s ponzi scheme was in full swing, Harry Markopolos brought the scam to the SEC practically tied in a bow.  The SEC did not respond.  Perhaps they were too busy…, well never mind.

With the Democrats trusty weapon, class warfare, holstered it’s time to delve more deeply into this financial reform legislation.

In a letter to Senate majority leader Harry Reid and minority leader Mitch McConnell, luminaries including former SEC Chief Accountant Lynn Turner, former Labor Secretary Robert Reich, hedge fund owner Jim Chanos, former Lehman Brothers Vice Chair Peter Solomon, former S&L investigator Bill Black, former Senate Banking Committee Chief Economist Rob Johnson, economists Dean Baker, Barry Eichengreen and others pointed out that Dodd’s proposed financial reform legislation wouldn’t have prevented the current crisis … and won’t prevent the next crisis.

So tell me again why we are doing this?  It’s all about more government control and more power in Washington, not about fixing any real problem.  Where are Fannie Mae and Freddie Mac in this bill?  They were at the very core of the financial meltdown.  In other words it’s all politics and it’s all straight out of the Saul Alinsky tome Rules for Radicals:

 Rule No. 13. Pick the target, freeze it, personalize it, and polarize it.  In conflict tactics there are certain rules that [should be regarded] as universalities. One is that the opposition must be singled out as the target and ‘frozen.’…

     “…any target can always say, ‘Why do you center on me when there are others to blame as well?’ When your ‘freeze the target,’ you disregard these [rational but distracting] arguments…. Then, as you zero in and freeze your target and carry out your attack, all the ‘others’ come out of the woodwork very soon. They become visible by their support of the target…’

     “One acts decisively only in the conviction that all the angels are on one side and all the devils on the other.” (pps.127-134)

The target in this case, is Wall Street and the Banks.  Demonize them.  When the “others”, meaning the Republicans, come out to challenge the ineffectiveness of the bill, then they can be attacked as being for the fat cats and against the little guys; class warfare at its ugliest.

 Follow the Money

But who is really in bed with the fat cats?  The Political Action Committees (PACs), employees, families of employees and other associates of Goldman Sachs gave almost $1 million in campaign contributions to Obama.  In this legislation, the concept of too big to fail remains untouched.  There will be a $50 billion fund created with money from the top banks to standby if needed for a bailout, but this also gives the impression that the largest banks are now safer because of this fund and therefore can get a lower interest rate on their borrowings compared to smaller banks.

 Democratic Congressman Brad Sherman said:

 “The Dodd bill has unlimited executive bailout authority. That’s something Wall Street desperately wants but doesn’t dare ask for. The bill contains permanent, unlimited bailout authority.”

 Why ask for it when the Obama administration will give it to you.  All you have to do is let them smack you around a bit to prime the class warfare pump, and you’re all set.

If you are backstopped by unlimited executive bailout, go ahead, take bigger and bigger risks.  The government will step in if you fail.  So here we have yet another fat cat (Wall Street/Big Banks) wolf dressed in sheep’s clothing (the little guy; Main Street). 

 If you want real financial reform, then in the name of capitalism, the big banks and Wall Street have to learn to play with their own money. If they hit a home run, good for them.  If they strikeout, they should lose their own money and if they don’t have enough to cover their losses, goodbye.   They should not be allowed to take huge risks and if they pay off, everybody there gets a new mansion in the Hamptons, but if they go bust, hand the bill to us.  Fannie Mae and Freddie Mac, we were told were private entities, not part of the government, but wink, wink, nudge, nudge, everyone knew the federal government was standing behind them and would not let them go bust.  So they too, got the kind of interest rates, half a point lower than their competitors, based on this implied backing not based on the strength of their balance sheet.

We have to fight this one too.  This is just more smoke and mirrors from the Obama administration.  Another power grab without any substantive benefit to the American people.

Our once proud automobile industry

The government institutes regulations such as CAFE that force the automobile companies to build many cars they can’t sell at a profit for each car they can.  The unions negotiate contracts that pay people who have been let go 90% of their salary and give retirees extremely generous packages.  The automobile companies stagger under this load to the brink of bankruptcy and what happens?  The CEO of GM gets booted out and the government and the unions end up owning the car companies.  In the case of Chrysler the UAW will end up owning 55% of the company if the government’s plan is approved.

Had the automobile companies gone into bankruptcy before the bailout, as this author advocated, the union contracts could have been voided and a new workable deal struck.  But the government said bankruptcy was bad. The government said we had to give the car companies billions of our tax dollars.  The government said, if you automobiles companies don’t accept our deal, you will be forced into bankruptcy.  Huh?

So tell us again, Mr. Obama, how this is not socialism.

The vaunted stimulus package is heading for a vote in the House. It’s time for Republicans to lay it on the line and by that I mean they should all vote against it. Sure, if they do the media will come at them, guns blazing:

• “It’s the same old partisan politics”
• “They’re listening to Rush Limbaugh”
• “They are not giving the new president a chance”
• “They are going against the historic moment by trying to deny our first African American president his right to govern”
• “They’re just a bunch of racists”

But here’s how it should play out.  If this bundle of Democratic handouts will really fix the economy, then let the Democrats carry the ball.  They have the President, the House of Representatives, and the Senate.  They do not need any Republican votes to carry it, and the Republicans should not filibuster it.  If it doesn’t provide the promised stimulus, it will be entirely their responsibility and they will have to face the voters with that record in 2010.

If the Republicans sign on, in the “spirit of bipartisanship”, and it succeeds, Obama and the Democrats will take all the credit, because they control Congress and the Presidency.  If it fails, they will say that Republicans also voted for it, so re-elect me because we tried and we will keep on trying.  It’s heads the Democrats win, tails the Republicans lose.  This is not a stimulus package, it a package to consolidate Democratic power.

This package rewards those groups that helped elect Obama and the Democrats.  There’s money for:

• Hollywood
• Education (read teachers unions)
• National Endowment for the Arts
• Bicycle paths
• Birth control

Does anyone know how these things will stimulate the economy?  The purpose of this plan is to reward those who helped elect the Democrats to make sure they stay on board for 2010.  Find more groups to give handouts to so they will also vote Democratic.  Once they have a lock on power, they can wait forever for the economy to finally correct itself.  If the Republicans question that, the Democrats can point to the Roosevelt administration and how long it took to end the Great Depression.

If, however, the Republicans stand firm then the Democrats will soon realize they are standing naked with this blatant goody bag for their supporters.  The do not want to have all the responsibility for this if it fails, and based on what’s in there it will.  So they will retreat to the drawing board and work with the Republicans to craft something that will actually work.

If this is the administration of hope and change, why do they have to reach back 85 years for ideas on how to deal with the economy?  Many of the things they are pushing are the very things that did not work then.  The way out of this morass is to cut taxes, increase the money supply, and shrink the government, maybe not immediately, but as soon as the economy starts moving.