Feeds:
Posts
Comments

Archive for April, 2010

DJH: The Dow tanked today as the major rating services downgraded Greek debt 3 notches to junk bond status. As bad as this sounds, it will very likely get worse. You see, Greece does not have it’s own currency, they are members of the Euro-zone and thus their problems drag down the currency for all 20+Euro nations. Experts predict that the crisis of the Greek debt laden bloated government is effectively pouring gasoline on the current economic crisis crippling Europe.

“This is no longer a problem about Greece or Portugal, but about the euro system,” said Eric Fine, who manages Van’s Eck’s G- 175 Strategies emerging-market hedge fund.

Greek Unions Gone Wild

Government Union Protests

As Greece burns, government leaders are scrambling to cut government worker pay, pensions, and general entitlements to save their economy, but union opposition is significant.

The New York Times recently reported:

DIMITRIS DAMIANIDIS is a high school teacher and a strong supporter of Greece’s socialist government. But that won’t deter him from going on strike with hundreds of thousands of other public sector workers next week to fight for the 28,000-euro pension that he expects to receive annually after he turns 60 next year.

“Why should I as a worker pay for the errors in policies?” he asked, in response to reports that the embattled Greek state will cut his pay and, by extension, retirement benefits. “The worker can’t be the scapegoat. So we have to defend ourselves.”

As Mr. Damianidis and others on the state payroll prepare to stop work on Wednesday, fear is building that the country’s new government may lack the nerve to cut public wages and pension payments, which make up 51 percent of its budget.

Full Story

Who’s Next — Could it be the US?

Greece is a very small country, in fact, economically speaking it’s about the size of an average American state. While the US and Greece differ greatly in size, there are a few very significant similarities that should send shivers down your spine.

According to Niall Ferguson, Harvard professor and the author of — the author of “The Ascent of Money recently said:

“We very quickly could find ourselves in a similar situation to Greece.

I looked the other day at some International Monetary Fund data which startled me because I realize that, in fact, the United States is almost as bad fiscal position as Greece. There’s hardly any difference when you actually look at what the U.S. would have to do to bring its budget back into balance.

You know, if you look at the Congressional Budget Office data, the United States is never again going to run a balanced budget, never. I mean, beyond our lifetimes, every year, there’s going to be $1 trillion of new debt.

Now, that game can come to an end very quickly indeed when investors look at the math and they say, “Wait a second, a debt to GDP ratio of 100 percent in 2012? That can’t be right.” And we get the same treatment [countries like Greece] are getting now.”

Chronic Deficit Spending; The End of Life as We Know It?

A few months ago, I did a series called “Chronic Deficit Spending; The End of Life as We Know It?” In it, I detailed the very dangerous game that Barrack Obama is playing with his grossly bloated federal budget. I discussed the consequences of these reckless policies and then laid out 10 strategies for “getting well.”

I have published that series as short eBook and welcome you to click here and download it, read it, and email it to everyone you know.

Before the United States follows Greece into the abyss…

Dave

Read Full Post »

DJH: The bulk of Obama’s so-called stimulus debt fest has actually been handed over to state governments to enable them to avoid laying off government union workers.

Take Massachusetts, they’re celebrating a 2010 budget that looks “balanced,” but in reality, it’s barely held together with “paper clips and chewing gum;” take a look:

  • The budget cuts local aid to cities and towns by $234 million.
  • The budget includes a $300 million so-called saving derived from a debt restructuring proposal.
  • Yet with all of these cuts, Massachusetts still needed $1.5 billion from Obama’s federal stimulus funds to balance the budget.
    Source: Cape Ann Beacon.

Two Peas in a Pod

Without Obama’s $1.5 billion, Massachusetts goes deep into the red.

After this close brush with bankruptcy, you’d think that the Governor would pass an austere budget — but no! Who needs fiscal responsibility when uncle Barrack is shipping in billions to cover your butt. Deval Patrick (D) just increased spending in Massachusetts by 3.2%.

Okay, there are two problems with this boneheaded move. First, Obama’s $1.5 billion is a one time life raft, it will not be there next year. Second, next year will be much worst; spending will go up and tax collections will continue to go down. Deval Patrick (D) has been pushing for new taxes on candy and soda as well as a reduction in tax breaks enjoyed by the film industry, but the legislature said no.

You see, Massachusetts has reached the point where higher tax rates are actually resulting in lower tax revenue. Last year the Governor pushed through a major sales tax increase, but it ended up causing Massachusetts to lose business, and associated tax revenues, to New Hampshire retailers who saw record increases in customers from Massachusetts following the tax hike.

But wait, there’s more. Massachusetts is one of 10 old liberal states going through a population exodus; which simply means the US population is leaving these states and heading elsewhere.

That’s not bad enough, as I described in “The Truth About Raising Taxes and Tax Collections” the folks who are leaving are the wealthy who are sick and tired of getting demonized by greedy politicians while picking up the tab for everyone else. And in far too many cases, the only segment of the population that’s growing is illegal immigrants and other “wards of the state” — who consume services and pay no taxes.

As all of the major taxpayers leave these states, who will remain to pay off the big fat state worker pensions that the liberal leaders have been handing out in exchange for votes?

The bottom line is irrefutably; these states have no future unless they go bankrupt, break all of their labor agreements, and ratchet back their bloated entitlement programs.

By the way, you can’t have a state exodus in some states with a population surge in other states. The states that these wealthier Americans are choosing to move to are all small government, lower tax states like Texas, Idaho, Georgia, Utah, Arizona, and Nevada.

And in the meantime, old liberal states like Massachusetts are just Dead States Walking.

Dave

Read Full Post »

DJH: Barrack Obama has been president for 15 months and God willing, he will remain president for 33 more months. Despite his constant claims of success in light of the mess he inherited from George Bush, the truth is emerging that, well, the president has issues with the truth.

Just for starters, the list of people who agree with his self assessment of success is getting shorter and shorter every day. At this point, it’s pretty much his wife Michelle, senior members of his administration, left wing bloggers and a few MSNBC hosts.

At the same time, virtually every objective economist on earth says his budget and policies are flirting with fiscal Armageddon. And while the highly manipulated U-3 unemployment rate continues to flat line at 9.7%, the broader and more accurate U-6 rate continues to climb toward Great Depression levels, as Obama’s administration continues to shovel more and more out-of-work Americans into the “discouraged worker bucket.”

Today, the Washington Examiner did a piece called Obama’s credibility crisis, essentially cataloging the growing list of falsehood’s coming out the current administration, such as:

Blagojevich’s defense attorneys filed a federal court motion to subpoena Obama concerning charges that the former governor tried to sell the U.S. Senate seat formerly occupied by the chief executive. Improper formatting of the heavily redacted public version of the motion contained evidence that Obama spoke to Blagojevich about the Senate appointment a week before telling White House reporters that he had not done so. The document also revealed that federal prosecutors are withholding from Blagojevich’s attorneys documents describing what Obama told investigators about conversations with Rezko on the appointment or his financial ties to the Chicago developer who was one of his key fundraisers.

On Obamacare, the president and his appointees said repeatedly over the last year that it would reduce government health care spending. Yet now comes Kathleen Sebelius, Obama’s Department of Health and Human Services secretary, confessing that “We don’t know how much it’s going to cost.” Why is Sebelius only now saying this when her own department just made public a report obviously months in preparation that projected government health care costs overall will go up, not down? That same HHS report also said Obamacare’s Medicare cuts could put 15 percent of all hospitals out of business, making treatment harder to get and more expensive, especially for seniors.

Finally, General Motors claimed in national advertisements this week that it repaid its Troubled Asset Relief Program loans, plus interest, five years early. But the TARP inspector general said GM used other TARP funds to repay its original TARP loans, so the ads were fundamentally dishonest. Recall here that White House adviser Carol Browner told GM and other automakers to “write nothing down” about their dealings last year with administration officials on fuel economy standards. So it seems entirely appropriate to ask if GM’s repayment claims were “suggested” by somebody in the Obama White House. That would be the same White House that is also now suspected of improperly influencing the SEC to file fraud charges against Goldman Sachs just as Congress debates Obama’s financial reform proposal. As the Obama administration will learn, plummeting public trust eats away at the fundamental credibility of government and undermines its ability to carry out even its most basic duties.

Read more at the Washington Examiner.

Our Chronic Leadership Crisis

After a couple of substantial blunders in his second term, George W. Bush opened himself up to a level of unprecedented attacks from the left and the Mainstream Media. The unintended consequences of these highly effective attacks was a nation left with a severely wounded leader when the economic crisis hitt.  And now, the man who promised Hope and Change is emerging as nothing more than a good old fashioned political hack; willing to say whatever it takes for his own advantage.

So, with almost three years left on the Obama’s presidency, we are once again a nation without an effective leader.

The question we all have to ask is: can the country survive another leadership crisis?

I hope we can, but I fear we cannot; 33 months is a long time!

Dave

Read Full Post »

DJH: Remember the Obama speech that day after Obamacare passed. You know, the one where dopey Joe Biden dropped an F-Bomb on the Great One?

He said:

“This legislation [Obamacare] will also lower costs for families and for businesses and for the federal government, reducing our deficit by over $1 trillion in the next two decades. It is paid for. It is fiscally responsible. And it will help lift a decades-long drag on our economy.”

At the time, a few fiscal conservatives like myself said “not true.” In fact, I even wrote a piece breaking down the fiscal damage Obamacare represented to America (Obamacare is a Terminal Disease for the US Economy!)

Well, exactly one month after that speech, Obama’s own Health and Human Services Department reports that the president was not telling the truth that day (what a freaking surprise). Further, the mainstream media is actually covering the story:

USA Today

“President Obama’s health care overhaul law will increase the nation’s health care tab instead of bringing costs down, government economic forecasters concluded Thursday in a sobering assessment of the sweeping legislation.

“…the analysis also found that the law falls short of the president’s twin goal of controlling runaway costs. It also warned that Medicare cuts may be unrealistic and unsustainable, driving about 15% of hospitals into the red and “possibly jeopardizing access” to care for seniors.”

The New Yorker

“Well, this is some slightly unpleasant news for the Obama administration. A new report by a group of actuaries at the Department of Health and Human Services concludes that health-care reform will raise costs over the legislation’s first ten years.”

“Oh, and cuts to Medicare “could drive about 15 percent of hospitals and other institutional providers into the red, ‘possibly jeopardizing access’ to care for seniors.”

As the president sinks to new levels of dishonesty, one has to ask — has the man no shame?

Dave

Read Full Post »

DJH: Today is Earth Day. Not only was I around back in the 70’s when Earth Day was created, I was actually an activist of sorts.

Back in the day, I was studying Environmental Design and planned to get my Masters in Chemical Engineering to craft what I thought would be a perfect career. Imagine spending all day designing new ways to clean up pollution or avoid creating pollution in the first place!

Note my use of the word pollution. I remember when the Nashua river on Route 2 in Leominster would change color from green to blue based on the color dye the factories were using that day — everyone knew that was wrong and everyone knew that was pollution.

America Cleans Up It’s Act

For the next 30 years, the United States got serious about cleaning up pollution. Toxic waste pipes that drained into rivers were plugged and the companies that owned them were fined. Exhaust “scrubbers” were installed on factory smokestacks and gas stations with leaky gas tanks were shut down, the tanks were dug up and either replaced or filled with clean sand. Along the way Hollywood make billions on movies like Erin Brockovich, The China Syndrome, and Civil Action.

I know it’s fun to relive the 60’s and fight for the environment, but truth be told, America rose to the occasion and cleaned up it’s act.

That doesn’t mean we cleaned up the whole earth, in fact, pollution in developing countries like China and India is horrendous and should be addressed; but for some strange reason that’s not happening. The environmental movement was hijacked by politicians and other government sector bloodsuckers.

Along Comes the Grinch

Psychologically traumatized by the loss of the 2000 presidential election, Al Gore needed a clever way to rejuvenate his washed up career.

He needed to tie his wagon to a cause that was global, anti-business, anti-American, and something he could blame on George Bush. He needed a new career that would enable him to hang out with the hoi polloi like Bono and Madonna. Most importantly, he needed a cause that he could exploit to put millions of dollars in his own pockets.

The Grinch Who Stole Earth Day

Al Gore invented the Global Warming Myth and convinced a naive public that CO2 — one of the most abundant natural resources on Earth — was not only a serious pollutant, but actually worse than all those poisons being dumped by third world factories building cheap products for US consumption.

Earth Day 2010

Thanks to Al and his mind numbed disciples, we’re now spending billions trying to control something that man cannot control — the level of CO2 on Earth. In the process, we’re creating massive new global tax schemes that will do nothing about correcting this alleged problem.

Cap and Trade taxes will simply accelerate the current wealth redistribution wave from the private sector to the government sector. To make matters worse, it’s been proven in Spain (of all places) that all of this government “green economy” intervention results in the loss of 2.2 private sector jobs for every green job created.

So, for this Earth Day 2010, I urge everyone to celebrate by declaring global warming the myth that it is and categorically rejecting it’s economic nuclear bomb “Cap and Trade” by agreeing to vote against anyone peddling this Snake Oil. I also challenge our politicians to return Earth Day to it’s original cause and focus on wiping out real man-made pollution on Earth. And, let’s agree that CO2 was placed on earth by God as food for plants and therefore should never, ever be confused with true pollution.

Dave

Read Full Post »

DJH: Yesterday, I took a run up to my favorite tax haven — New Hampshire —  for some tax-free power shopping. I am happy to say that I avoided paying the Commonwealth about $200 in taxes; it was good day! One of my favorite things in life is talk radio in Massachusetts and yesterday’s shopping spree meant a few hours of great listening as I cruised up Route 93.

Truth be told, I’m not sure what I like better — dodging the taxman or listening to local talk radio.

There was a big story burning up the airways in Massachusetts yesterday. It seems that for 4 years, the city of Boston has been trying to implement drug testing for their firefighters.

Surprise, surprise — the union refused to comply unless everyone got their palm’s greased.  Finally after a lengthy arbitration hearing, the union prevailed (don’t they always) and the firefighters got a 19% raise for agreeing to prove that they’re not taking drugs on the job.

Talk about being tone deft! Everyone who thinks being stoned on the job is a God given right RAISE YOUR HAND! No takers; what a surprise. But, in the world of government worker union thuggery, anything you ask of labor — NO MATTER HOW REASONABLE, requires a fat payoff. Even if your union workers are already overpaid, even if the city they work for is bankrupt and closing schools; none of that matters, just give us more money.

To me this is the definition of GREED.

Back to Boston talk radio. The thing I love about these call-in shows is the way they move from the host’s original premise to where the callers want to go. In this case, it ended up being a fun-fest of cops and firefighters calling in to share how worthless urine based drug tests are. According to these callers,  the “brotherhood” doesn’t want a fellow cop or firefighter to get pinched for doping up and thus they have created a near perfect system of tip-off’s and test fraud to make sure no one ever tests positive for drugs on the job!

What a perfect ending to a perfect story. The city fights the unions, the unions win and end up with a 19% raise in exchange for a test that does absolutely nothing.

The Boston Globe ran a story with a few quotes that make my blood boil:

“I am required by law to support this award and to submit its finding to the City Council, who will decide whether or not to accept and fund the decision. I am not, however, bound to stay silent on the facts,’’ [Boston mayor] Menino said last night in a statement.

“This contract provides a 19 percent raise, which is 5 percent more expensive than the wages provided to other public safety agencies during successful negotiations.’’

According to the Globe,  the firefighters’ union endured heavy criticism for its resistance after autopsy reports showed that two members who died in a restaurant fire in August 2007 may have been impaired. One had traces of cocaine in his blood, and the other had a blood-alcohol content of 0.27, nearly three times the legal limit to drive in Massachusetts.

Edward Kelly, president of Local 718 of the International Association of Firefighters, said he had not seen the decision, so he could not discuss specifics, but he did say:

“The mayor chose to take us to arbitration,’’ Kelly said. “We are both bound by the arbitrator’s award. We look forward to getting this behind us and focusing on being the best fire department we can be.’’

“I think this is definitely a win for the firefighters and a loss for the city because of the impact it will have a future contract negotiations,’’ said Samuel R. Tyler, president of the Municipal Research Bureau, a fiscal watchdog funded by businesses and nonprofit groups.

“This is basically saying that arbitration is a way to get more than if you negotiate. . . It creates a whole new dynamic for the next round.’’

Tyler and others have urged the City Council to hold a hearing to explore the broader impact of the award on the finances of the city — which in recent weeks has proposed closing four libraries, pulling staff out of eight community centers, and laying off up to 250 employees — before voting on whether to fund the contract.

“The council is not going to gavel this through,’’ its president, Michael P. Ross, said last night. “The council will most certainly hold a hearing. We need the firefighters to understand that they are our partners in governance and that our current system of finances is unsustainable.’’

In particular, Ross said, he wanted to talk to the union about health care costs, which the Menino administration has estimated will rise by $20 million next year for all city workers.

Click HERE to read full story.

So there you go. No matter how broke the city is, no matter how many private sector workers are out of work or drowning under growing taxes, the union sticks to it’s greedy play book — PAY US MORE, PAY US MORE, PAY UNTIL YOU HAVE NO MORE.

And yesterday they discovered a new way to fleece the public.

Man, it’s great to be back in Massachusetts!

Dave

Read Full Post »

Patriots Day in Massachusetts

DJH: I am now back in Massachusetts for my obligatory 6 months and at least one day residency (believe or not, Massachusetts has a lower income tax rate at a 5.3% flat rate versus California’s top earner rate of 10.3%). Anyway, now that I’m back in the Bay Sate, I can see more clearly just how screwed up California really is.

Earlier this year, I did a piece called “The Death of California: Ghost’s of “Christmas’ Yet to Come!” In it, I spoke about the outrageous union worker pension obligations California’s democrat legislature has handed out over the years in exchange for bottomless campaign donations; like this one:

“If a firefighter started working at the age of 20, he could retire at 50 and earn 90% of his final salary, in perpetuity. One San Ramon Valley fire chief’s yearly pension amounted to $284,000—more than his $221,000 annual salary.”

Since that story first appeared, I’ve spoken to other state workers who have told me that for the typical retiring California middle managers, the $250,000+ a year pension benefits are the rule, not the exception!

The Smoking Gun

I have also spoken to a number of liberal leaning Californians who flat out say I’m lying. They deny that state worker union pensions are that high and they deny that there is any quid pro quo going on between the union thugs and the democrat stooges.

Well today I was reading a story in the Manhattan Institute’s City Journal called “The Beholden State” that led me to the smoking gun I’d been looking for; here it is:

Very scary stuff.

Can you imagine if a CEO from a big oil company said something like that to George Bush in reference to gas prices? All hell would have broken out.

The Beholden State

The Manhattan Institute story is one of the best case studies I’ve ever read on government/union corruption. I urge you to read it in it’s entirety; here are a few juicy tidbits:

The unions’ political triumphs have molded a California in which government workers thrive at the expense of a struggling private sector. The state’s public school teachers are the highest-paid in the nation. Its prison guards can easily earn six-figure salaries. State workers routinely retire at 55 with pensions higher than their base pay for most of their working life.

Meanwhile, what was once the most prosperous state now suffers from an unemployment rate far steeper than the nation’s and a flood of firms and jobs escaping high taxes and stifling regulations. This toxic combination—high public-sector employee costs and sagging economic fortunes—has produced recurring budget crises in Sacramento and in virtually every municipality in the state.

How public employees became members of the elite class in a declining California offers a cautionary tale to the rest of the country, where the same process is happening in slower motion. The story starts half a century ago, when California public workers won bargaining rights and quickly learned how to elect their own bosses—that is, sympathetic politicians who would grant them outsize pay and benefits in exchange for their support. Over time, the unions have turned the state’s politics completely in their favor.

The result: unaffordable benefits for civil servants; fiscal chaos in Sacramento and in cities and towns across the state; and angry taxpayers finally confronting the unionized masters of California’s unsustainable government.

By the way, if you haven’t figured it out yet, this is precisely the “change” Obama is feverishly working on implementing across all 50 states.  Click here to read the full story.

Bankruptcy: The Next Governor’s Only Option

Last Thursday night, I was a cocktail party outside of Palm Springs and I got into a great political discussion with an older republican woman. She said that she thought Meg Whitman would be a good governor and that she would know how to turn the state’s economy around. I agreed that she’d be a good governor, but I offered a different rationale.

I said: “The only way to save California is through bankruptcy court. The Governor will have to go to court and break all of the union contracts. The unions will then all go on strike and people in California will have to endure a Greece like multi-month statewide labor strike. The Governor will have to then call up the National Guard to protect the public, fight fires, and collect the trash. Parents will have to “home school” their children as the very fiber of society breaks down.

Any Governor that does this will be hated by all and recalled — never to serve another day in public office. I told my friend that Meg Whitman could pull it off because she’s a billionaire.”

I truly believe that this is the only way to get California out of the mess the democrat/unions have created.

Dave

Read Full Post »

Older Posts »