I think people are very confused with the terms million… billion… and trillion. We just cannot put are arms around the concept of billions and trillions.

Most people relate large sums of money to their income. If you earn $50k per year you can understand that double that is $100k. So you can see that ten times that is 1 million dollars. These are numbers we can all manage.

The problem is when we look at a billion or a trillion. The numbers just don’t have meaning. I would suggest that we stop using the terms billion and trillion and stick with millions. If we can understand what a million is than why muddle it with more incomprehensible terms.

This is much easier.

• A billion is one thousand million.
  So, if the US budget is $3 billion dollars, it really is “three thousand million” dollars. It keeps all the numbers in perspective that way.
• A trillion one hundred thousand million. Yipes.

So, if we need to spend a trillion dollars to get the economy going, we are spending one hundred thousand million dollars.

The democrats have been asking who’s running the Republican party. My vote would be British Minister Daniel Hannan. Listen to his March 26 Speech to Parliament.

Note: At one point he mentions that Britains budget debt is 10% of their GDP. The US budget has been running about 20% more than our GDP, and President Obama is looking to increase it to 22-23% of GDP. Ouch.

Do you hate the AIG bonuses? Sure, join the crowd.

But, there are two sides to every story and this one is a must read if you want to get the full perspective on the AIG bonuses.

“Dear AIG, I Quit”

An op-ed to the New York Times on March 23, 2009. Written by Jake DeSantis, Exec VP of AIG’s financial products unit. Please read the entire article here:

AIG I QUIT. New York Times 3/23/09

Excerpts:

After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials.

I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid.

None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.

This guy worked the last year for one dollar, and was promised the bonus. The President, Secretary of the Treasury and many Congressional leaders all knew these bonuses were going to be paid in March.

This country was built on laws, not mob rule. Until now.

Inflation.

The only thing worse than the Government raising taxes so you have less money in your paycheck is bringing your paycheck home and it buys less food and other staples.

And, what is the major cause of inflation?

Wikipedia says:

Economists generally agree that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply.

This is exactly what we are doing right now. Printing billions of dollars to bail out everybody and his brother. Spending billions we don’t have will not help the economy over time. This policy is critically bad and the administration knows it.

So, why are they doing this?

• Is it possible that they know exactly what will happen in a couple years. People won’t be able to afford living, so it will be necessary to expand government programs?

I don’t know. I’m not really big on conspiracy theories, but I can think of no other reason why smart people would do this. They know what the results of their policies will do.

Seems like we all need demons.

• The Clinton administration demonized Newt Gingrich and HMOs
• The Bush administration demonized Saddam Hussain
• The Obama administration is demonizing Rush Limbaugh and AIG

This is stupid. It’s like the shell game at the carnival. You watch and watch intently and never figure out where the pea is. When, all the time the problem is the shell.

All the hoopla about the $165 million paid to AIG employees is not the issue. The $680 BILLION we paid them is the issue. We sent them this money with no strings attached. The budget Congress passed included the “Dodd Amendment” that said bonuses that were scheduled prior to Feb 2009 could be paid. These bonuses were scheduled prior to that date, they just were not paid.  The Treasury Secretary and the President knew prior to the Saturday March 21st AIG announcement about the bonuses. This was not a secret plan hatched by AIG

Why then did the administration send it’s people to all the Sunday morning talk shows expressing their outrage? They knew about the bonuses, but they made it look like they were surprised. Complete BS.

Now for the remedy…

Isn’t there something in the Constitution called the “Bill of Attainder”?

The Constitution of the United States, Article I, Section 9, paragraph 3 provides that: “No Bill of Attainder or ex post facto Law will be passed.”

Wikipedia says:

A bill of attainder (also known as an act or writ of attainder) is an act of legislature declaring a person or group of persons guilty of some crime and punishing them without benefit of a trial. Bills of attainder are forbidden by Article I, section 9, clause 3 of the United States Constitution.

I’m not a lawyer like most of the Senators and Congressmen and women, but doesn’t this mean that you cannot single out a single person or a group and pass a law to punish them?

I’m just saying, it doesn’t sound right. I don’t like the idea of paying people either, but it was up to Congress to write this into the rules before they gave away our money.

I’ve been quiet on the current economic crises. Mainly because I wasn’t sure who was to blame. But, after some time looking into the issue and listening to everyone pointing fingures at one side or the other I have come to a couple conclusions.

1. There is no single person or party you can blame for the crisis.
2. The typical fixes will not get us out of the problem.

A Little History is Needed

There was an article in the New York Times by Steven Holmes on September 30, 1999 titled Fannie Mae Eases Credit To Aid Mortgage Lending. I suggest you read it word for word. Then read it again.

Here are some pertinent exerpts:

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

”Fannie Mae has expanded home ownership for millions of families in the 1990’s by reducing down payment requirements,” said Franklin D. Raines

18 percent of the loans in the sub-prime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market

‘If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry

Home ownership has, in fact, exploded among minorities during the economic boom of the 1990’s.

In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low and moderate-income borrowers.

Now take a look at what this did to home prices.

The following chart is US House Prices from 1890-2007. The bottom line is actual prices, but more importantly the top (red) line is adjusted for inflation. Look what happened when the Fanny/Freddie policies really kicked in back in 1999…

What’s wrong with this picture?

It appears that supply and demand works and the unintended results of this policy is the real price of homes skyrocketed as a result of more and more people buying homes.

The New York Times said (10/27/2007):

The ownership rate reached a record 69.3 percent of households in 2004, up from 64 percent a decade earlier.

This number contrasts to the 50’s through the 80’s where home ownership ranged from 55% to 60% (see http://www.census.gov/hhes/www/housing/census/historic/owner.html )

What does all this mean?

• It means that artificially inflating the number of people who own homes by subsidising their mortgages hurts the entire home industry.
• It means that if you give mortgages to people who cannot afford them, eventually they will not pay the mortgage.
• It means that if you take the risk out of mortgage lending, lenders will give mortgages to anyone even if they cannot pay the mortgage back. In other words, if Fanny and Freedie will buy junk mortgages from banks, the bank will wright them. This takes all the risk out of mortgage lending. All reward, no risk… a real problem.

So what is the solution?

Well, I’m not really sure. But if over spending (by subsidising the mortgage industry) got us into this mess, how will more spending get us out of it?

More to come….

Have you heard this? No. I’m not surprised. The main stream (liberal) media has never mentioned it. Obama said this to an editorial board in January 2008. You are seriously going to vote for this guy? The more we know about him the more scary he becomes. He guarantees we’ll pay more for energy and he promisis to force the coal industry out of business.

Listen to Obama, in his own words:

The only way for John McCain to win this election is to propose an economic recovery plan that will bring us out of this economic tsunami we are currently in. We are told the current economic situation is due to a squeeze in the credit markets, but that does not “register” with most people. They see the stock market falling, they hear about unemployment increasing, gas prices (although they have come down a little lately) are still way too high, they are just getting bombarded with one bad economic story after another.

In the debate last night, McCain unveiled a “new” program to stop the slide in home prices. The problem is, nobody listening to the debate heard or understood that this was a new program and that it may fix a serious problem.

Come on John, get with the program. If you are going to announce something, announce it. Don’t just mention it in passing.

The only way McCain can win:

1. Tie the economic recovery and the oil/gas crisis together. Announce a major X billion dollar program to fix the economy and get energy independence all in one, long term plan.
2. Announce that the moratorium for off shore drilling off both the east and west coasts is permanent. He will appoint an energy “Czar” that will have the power to fast track all the drilling permits so the oil companies don’t get locked up in the courts with law suits filed by the environmental kooks.
3. Nationalize all the off shore drilling past the 10 or 20 mile limit. In other words, once you are 10 miles off shore, the states have no jurisdiction. All environment suits must be filed in one federal court. State courts will not have the right to hold up drilling permits any longer.
4. Give the states an economic incentive to drill for oil off their shores. Make it financially lucrative for them. In California, they are currently having a major budget shortfall. The Governor just came to Washington begging for a bailout. McCain should announce that California’s budget shortfall could easily be overcome with his offshore drilling plan.
5. Announce that shale oil recovery programs will start again and give companies incentives to extract the oil out of the shale. There have been some new advances in the techniques over the past few years, but because you cannot mine this in most states anymore, large scale testing has not been done. Remove all the restrictions.
6. Announce that Sarah Palen will head a new “Energy to Jobs” program. With her experience with this in Alaska, she is well qualified in this area to do so… one of the things she is actually qualified to do. All this new oil drilling will need thousands (maybe a million) new jobs. They will be needed off shore, but also on shore support jobs. Not to mention the economic stimulation in the areas where drilling will happen. Homes, restaurants, hotels… This will bring new jobs to new areas.
7. Use the T Boon Pickens concept to develop wind power over as an alternative to oil to generate electricity throughout the midwest. Put some teeth into the idea. It will take 8-10 years to develop and build, but this will also create jobs and get us off the oil fix.
8. Propose that the US becomes an oil exporter  within 10 years. Over that time we will wean our country off the dependency of oil, but other less developed countries will still have a tremendous need for oil. Once we no longer need so much oil, we can be the largest oil exporter in the world and compete one on one with the mid east exporters.
9. To get to this point we must bridge the next 10-20 years with alternative energy sources, until we develop the “green” sources like wind, geo-thermal, tide, solar, etc. To do that  he should announce:
   • Clean coal plants to generate electricity in the areas of the country that have the bulk of the coal, mostly the eastern half. We have a hundred years worth of coal underground. There is no reason to import oil to make electricity when we have all this coal.
   • Build nuclear plants throughout the country. The rest of the world uses nuclear, we are in the dark ages by refusing to use it. Outline the cost benefits along with the ecological benefits.
10. Announce that ANWAR is no longer off limits. Explain to the people just how little land is involved in ANWAR. Have Sara Palen take the credit for changing your mind on why we should drill in this area and how it will not hurt the environment.
11. Announce that you will have incentives for people to buy and convert automobiles that run on natural gas. Explain just how much natural gas we have and that it is available to drill. Explain how many other countries are using natural gas to power it’s vehicles and the conversion would not be a major event.

I have no idea what the above will cost, or if every idea is viable, but that doesn’t matter. It’s an election season, politicians promise the world and very seldom deliver. John McCain must sell  a plan like this to the people if he wants to be President. He cannot compete with Obama on most issues unless he gets specific.

T Boon Pickens is gaining real headway with the public with his plan and his ads every day about one aspect of his plan or another. I think McCain should do exactly the same thing. Every day outline his 10 (or 12 or15) point plan on how to fix the economy and the energy crisis  all at the same time.

Visionary… John. Do it.

Up to one trillion dollars!
That’s what it’s going to cost us to get out of this economic mess??? Why is there to outrage from the tax payers, from congress, from everyone?

Someone needs to ask “WHY?”

• Why did we get to this point?
• Why was there no Congressional oversight?
• Why were the mortgage companies and lenders giving so many bad loans?
• Why don’t they really know how much real estate is at risk?
• Why did the former heads of Fanny Mae and Freddie Mac get removed with million dollar golden handshakes?
• Why are Chris Dodd and Barack Obama the two highest recipients of political donations from Fanny and Freddy?
• Why is Fanny and Freddy even giving political donations to the same people who oversee them? (In the business world, that is called bribery)
• Why are the same oversight committees in Congress planning to oversee the new plan? Haven’t they proven they are not up to the job?
• Why is the Justice Dept not looking into the whole mess?
• Why was President Bush ignored when he tried twelve times to put more controls and oversight on Fanny and Freddy?
• Why was Senator McCain ignored when he proposed a revamp of Fanny and Freddy back in 2005?

The fact is, if this was a Republican controlled congress, the Democrats would be screaming for hearings and calling for heads when it comes to the oversight of this industry. But, because they were in charge and did not heed any callings from the President and Senator McCain, the last thing they want are hearings.

We should not let them get off the hook this easy. They will be in controll of Congress for the forseeable future. We just can’t re-arrange the deck chairs on this sinking ship.

Really? He just said, after watching the Olympics he has realized that China’s infrastructure is better than ours (or anywhere else) so businesses are going to be looking into moving their business to China.

Did I miss something? Did he take a day trip to China like he did to Bagdag and get the scoop? Nope. Just saw it on TV. Great resource. The fact is NBC has done their best to make the Beijing Olympics look their best. We never see poor people, rundown buildings, even the smog is not mentioned that often.

But let’s get back to Obama. The infrastructure in China is better? Was he paying attention about a month ago when they got hit by an earthquake? Thousands of children were killed while they were in school. In this country, don’t we use schools as shelters from hurricanes and earthquakes. You will never convince me that if we got hit by an earthquake of equal strength that we would be hurt so bad.

But, he thinks business should move there. Why? Because they don’t have any environmental laws, no labor laws, the use slave and child labor, people make about twelve cents a day.

Get real Obama. The only reason China’s economy is booming is we are buying their products. If our economy hits the toilet (which it will no) then their economy will be in worse shape.  What we are seeing in Beijing is “eye candy” built to impress the world during the Olympics.

Is he really clueless?