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Archive for June, 2010

Is he tanking the economy on purpose?

DJH: My liberal friends accuse me of rooting for Obama to fail. Let me say that is not the case. As a man who makes a living from investing primarily in the United States, I have a very personal interest in the success of the US economy.

Unfortunately, as an investor, former CEO, and a man with the burden of multiple college degrees, everything I know tells me that everything Obama does is making things worse and I really fear that his reckless tax and spend addiction is bringing about a double-dip recession (dare I say, second DEPRESSION).

ADP reports a pitiful 13,000 Private Sector Jobs Created in June

A few minutes ago, labor giant ADP released it’s June report on new jobs in the United States. It came in at a pitiful 13,000 new private sector jobs.

Brace for a Shock Tomorrow

Experts are now forecasting a 110,000 net job loss for tomorrow’s White House Job’s report.

My friends, this is only the beginning. The Census is almost over, no more cash for clunkers, first time home-buyers tax credit, Bush tax cuts expiring, $2 trillion in new Obamacare taxes kicking in, the closing of all offshore oil rigs in the gulf and Summer coming on; in case you didn’t know, no one hires during the Summer. The only good news is that economists of the future now have PROOF POSITIVE that the Obamanomics tax and spend policy aggravates a recessionary economy and deepens a recession.

Based on my 9 years of education and 30 years of private sector business experience, the man (Obama) couldn’t sabotage the recovery more if he tried. Which raises the question –– is Obama trying to destroy the private sector economy?

Given that this month’s employment report is even less than last months very depressing 41,000, and given that this number needs to be over 200,000 for 8 years to get back to the level of employment we enjoyed under most of the Clinton and Bush years — I think it’s time for a change.

Dave

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DJH: When Bush was president, one of the arguments liberals loved to use against his policies was “our allies in Europe disagree with him,” so he must be wrong. Well, now their chosen one — Barrack Obama — finds himself in the same position.

The Last Keynesian?

Believe it of not, the progressive socialists in Europe are telling Obama the same thing we’ve been preaching on Who Stole My Career? for months – You don’t recover from a debt crisis with more debt!

That’s the title of a story in the Canadian Mail and Post highlighting just how far out of the global economic mainstream our president has drifted; take a look at the shameful details:

“The U.S. administration is playing an extremely high-risk game that could see Mr. Obama go down as the most damaging president in history.

You don’t recover from alcoholism by taking another drink, and you don’t recover from a debt crisis with more debt.

It’s past time that John Maynard Keynes’s long-discredited deficit spending theories be tucked back in his grave. Even if they are, it will take decades to repair the damage already done.”

Mr. Obama’s expensive health-care reforms, along with rising Social Security costs, are certain to increase program spending, while interest payments on the national debt will grow substantially.

American states face a combined budget shortfall of some $300-billion and some are in even more financial trouble than the euro zone’s so-called PIGS (Portugal, Italy, Greece and Spain). But in the U.S. case, the member of the union in the most trouble is also the biggest, and its deficit position is worse than that of Greece.

Global Leaders Chastise Obama’s Reckless Economic Policies

  • European Union leaders, fresh from grappling with a credit and currency crisis that threatens the very survival of the euro zone, declared that the bigger risk is failure to control runaway deficits.
  • Responding to Mr. Obama’s call for “unity of purpose to provide the policy [spending] support necessary to keep economic growth strong,” German Chancellor Angela Merkel stated, “It’s not about growth at any price, it’s about sustainable growth,” and unleashed two of her ministers to expand on her government’s position.
  • German Finance Minister Wolfgang Schaeuble told reporters “Nobody can seriously dispute that excessive public debts, not only in Europe, are one of the main causes of the crisis.”
  • Economy Minister Rainer Bruederle said the U.S. must join Europe in “urgently” cutting spending. EU President Herman Van Rompuy said, “Failure to correct unsustainable deficits would ultimately lead to fatal loss of credibility and confidence with lasting economic damage.”
  • British Prime Minister David Cameron noted that “for some countries, such as our own, there is a need to get on and tackle the deficit more quickly.”
  • Summit host Prime Minister Stephen Harper sent a letter to G20 leaders calling for a wind down in stimulus spending and a focus on deficit reduction.

Read Full Story: You don’t recover from a debt crisis with more debt

Chronic Deficit Spending: The End of Life as We Know it?

America, it’s time to wake up. Obama has squandered over a trillion dollars — we don’t have, paying back his union cronies for funding his presidential campaign. The private sector economy is decimated and now even European socialist leaders are pleading with him to stop the chronic deficit spending. If you haven’t read my eBook — Chronic Deficit Spending: The End of Life as We Know it? — now is a great time to do so — it will scare the living daylights out of you.

Dave

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DJH: New jobless claims move sideways, home starts fall to historically low levels, and the stock market goes into the tank (again) as experts whisper about “the double dip recession.”

What’s going on with the June 2010 economy and what can Obama do to turn things around before it’s too late?

Shawn Tully at Fortune just tackled that question in a great piece called: The best stimulus? Spend less, borrow less; take a look:

  • “If Obama announced a strategy to deal with the long-term debt and stopped doing things to increase the uncertainty that businesses face, it would do a great deal to stimulate the economy”…
  • Obama's stimulus formula isn't even what Keynes recommended!

    President Obama frequently advocates shrinking deficits in future years. The problem is that he wants to keep spending heavily today, in what’s supposedly a classic Keynesian formula for charging a weak recovery and lowering unemployment.

  • [Obama’s] formula isn’t what Keynes recommended. “Keynes championed temporary deficits to stimulate consumption during recessions,” says Steve Hanke, an economist at Johns Hopkins. “But he also insisted that deficits disappear during recoveries, so that budgets would be balanced or in surplus during most of the business cycle.”
  • Today, the administration is pursuing a totally different policy. It’s sharply raising expenditures when the U.S. already faces gigantic, chronic deficits that barely shrink even in a recovery, and burgeoning debt. “Keynes specifically warned against structural deficits when both U.S. and British economists were pushing for them at the end of World War II,” says Meltzer. “He never said that more spending on top of chronic deficits was a stimulus. Just the opposite, in fact.”
  • Excessive spending threatens to shrink, rather than expand, America’s workforce by driving up taxes. The top income tax rate is already scheduled to rise from 35% to 39.6% in 2011.
  • Especially troubling are the perverse incentives built into the health-care reform bill. Middle class Americans who aren’t insured through their companies can buy heavily subsidized policies under the plan. The problem is that as their incomes rise, the subsidies decline, giving them far less incentive to work more hours or stretch for raises. For example, if the income for a family of four rises from $55,000 to $66,000, their contribution to their premium jumps from $4,400 to $6,600, erasing 22% of the $10,000 increase.
  • Government borrowing is reaching such stratospheric levels that it’s almost bound to pressure rates. In the past, deficits in the 4% to 6% range proved relatively harmless, with the debt seldom reaching more than 40% of GDP. But by 2020, the burden will reach almost 100% of GDP, or around $20 trillion. The U.S. will need to constantly refinance that debt, and borrow still more.
  • “Recoveries are led by investment,” says John Cochrane, economist at the Booth School of Business at the University of Chicago. “You need a big surge in investment to lead you out of recession.”
  • In the short term, both consumption and investment spending lift GDP. But over longer periods, it’s investment that raises productivity by adding software systems, mainframes and ultra-efficient factories that produce more products at fewer working hours.
  • The administration has chiefly succeeded in supporting consumption through its $800 per family rebates and grants to the states to maintain public jobs. Amazingly, since 2008, consumer spending has actually grown by almost 1% after inflation, and rose to a lofty 72% of GDP for 2009. By contrast, private investment dropped 18% in real terms in the same period.
  • Employers with more than 50 workers that don’t currently provide health care will soon need to pay for it, or face stiff penalties. The health-care bill is part of the spending agenda that’s scaring business. Reducing its burdens is crucial to getting companies to make the investments that are essential to spurring growth.
  • If investors are convinced that Washington has a plan to restore fiscal balance, they’ll be content with lower returns on their stocks, bonds and buildings for a simple reason: those returns will prove more stable and predictable. That comfort level, in turn, lowers risk premiums and raises the prices of equities, corporate bonds, houses, and office towers.
  • Right now, many investors and managers are simply terrified by the absence of a roadmap to avoid ruinous debt. “We need to know that Washington can make tough choices, that our leaders are willing to do things that are unpopular,” says Paul Willen, an economics professor at MIT. “More than anything, people need to feel that this is not out of control.”
  • Doomed to Repeat The Mistakes of the Past?

    The real problem with Obama’s reckless so-called stimulus program is that it’s been tried before and never succeeded in growing the economy. In fact, in every case it’s been tried, the target economy has actually deteriorated.

    The good news is Obama’s spend happy democrat majority congress only has a few weeks left before they hit the road to run for reelection and everyone knows that a congress that is out of session cannot raise taxes or spend money.

    If things continue to look strong for a fiscal conservative victory in November, optimism may return to the economy; if not, the result will surely be an FDR styled double-dip recession (AKA: depression.)

    Dave

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    DJH: The next time someone tells you that bloated government spending cannot be cut tell them about Maywood California. They contracted 100% of their city services to the county and private sector firms to cut their city budget from $164,375/mo to $50,833/mo or 69%!

    More proof that the government is the least efficient way to do anything!

    Dave

    Maywood to lay off all city employees, dismantle Police Department

    LA Times

    June 22, 2010 | 10:13 am

    The city of Maywood will lay off all city employees and begin contracting police services with the Los Angeles County Sheriff’s Department effective July 1, officials said.

    In addition to contracting with the Sheriff’s Department, the Maywood City Council voted unanimously Monday night to lay off an estimated 100 employees and contract with neighboring Bell, which will handle other city services such as finance, records management, parks and recreation, street maintenance and others. Maywood will be billed about $50,833 monthly, which officials said will save $164,375 annually.

    “We will become 100% a contracted city,” said Angela Spaccia, Maywood’s interim city manager.

    Deputies from the East Los Angeles Sheriff’s Station will begin patrolling the 1.2-square-mile city by the end of the month, said Capt. Bruce Fogarty of the Sheriff’s Contract Law Enforcement Bureau. The annual cost of providing those services for the small city is estimated at $3.6 million, Fogarty said.

    At a council meeting Monday night, city leaders said they were forced to dismantle the Police Department and lay off city workers because they lost insurance coverage as a result of excessive police claims filed against the department. They also blamed years of financial abuse and corruption from the previous council.

    “We’re limited on our choices and limited on what we can do,” Councilman Felipe Aguirre told the standing- room-only crowd.

    Frustrated and enraged residents blame the council for the city’s predicament, and for not following an insurance agency’s recommendations, which council members had agreed to last August. The recommendations included hiring a permanent city manager.

    Some suggested that city leaders should step down.

    “You guys had the power to change it and you didn’t,” said City Treasurer Lizeth Sandoval, 28, who addressed the council as a resident. “You single-handedly destroyed the city.”

    Sandoval, a city employee, will be laid off as part of the cuts.

    Local activists, who refer to themselves as “A Group for a Better Maywood,” announced their intention to recall four of the council members: Felipe Aguirre, Edward Varela, Vice Mayor Veronica Guardado and Mayor Ana Rosa Rizo. The same group sought a similar recall in 2008 and failed.

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    DJH: Obama is stilling taking heat from both the left and the right for his lackluster speech on Tuesday night. Virtually everyone who watched witnessed a man who was doing is best “to not waste a crisis” and use the tragedy in the Gulf to push his radical new energy tax scheme.

    That said, the bulk of legitimate criticism leveled at Obama was due to his lack of specifics about what the Feds are doing to contain the spill and subsequent damage.

    Obama’s nebulous leadership for the primary task as hand gets highlighted everyday, as we read more stories about how the administration has snubbed foreign aid to protect union jobs (Jones Act: Does Gulf oil spill cleanup need more foreign boats?) or dragged their feet deploying government resources to construct sand berms that could deter the oil from hitting delicate marshlands (Slippery Start: U.S. Response to Spill Falters).

    To pour gas on the fire (no pun intended), I read this story from ABC News this morning in shock and awe. Let’s face it, ABC is far from a right wing mouthpiece and the charges they make this story truly boggle the mind.

    If the left wing media continue to “pile on” Obama over his weak leadership in this crisis, this whole thing will end up doing more damage to Obama’s faltering presidency that Katrina did to Bush’s.

    Dave

    BP Oil Spill: Against Gov. Jindal’s Wishes, Crude-Sucking Barges Stopped by Coast Guard

    59 Days Into Oil Crisis, Gulf Coast Governors Say Feds Are Failing Them

    By DAVID MUIR and BRADLEY BLACKBURN

    June 17, 2010—

    Eight days ago, Louisiana Gov. Bobby Jindal ordered barges to begin vacuuming crude oil out of his state’s oil-soaked waters. Today, against the governor’s wishes, those barges sat idle, even as more oil flowed toward the Louisiana shore.

    “It’s the most frustrating thing,” the Republican governor said today in Buras, La. “Literally, yesterday morning we found out that they were halting all of these barges.”

    Sixteen barges sat stationary today, although they were sucking up thousands of gallons of BP’s oil as recently as Tuesday. Workers in hazmat suits and gas masks pumped the oil out of the Louisiana waters and into steel tanks. It was a homegrown idea that seemed to be effective at collecting the thick gunk.

    “These barges work. You’ve seen them work. You’ve seen them suck oil out of the water,” said Jindal.

    Coast Guard Orders Barges to Stop

    So why stop now?

    “The Coast Guard came and shut them down,” Jindal said. “You got men on the barges in the oil, and they have been told by the Coast Guard, ‘Cease and desist. Stop sucking up that oil.'”

    A Coast Guard representative told ABC News today that it shares the same goal as the governor.

    “We are all in this together. The enemy is the oil,” said Coast Guard Lt. Cmdr. Dan Lauer.

    But the Coast Guard ordered the stoppage because of reasons that Jindal found frustrating. The Coast Guard needed to confirm that there were fire extinguishers and life vests on board, and then it had trouble contacting the people who built the barges.

    Louisiana Governor Couldn’t Overrule Coast Guard

    The governor said he didn’t have the authority to overrule the Coast Guard’s decision, though he said he tried to reach the White House to raise his concerns.

    “They promised us they were going to get it done as quickly as possible,” he said. But “every time you talk to someone different at the Coast Guard, you get a different answer.”

    After Jindal strenuously made his case, the barges finally got the go-ahead today to return to the Gulf and get back to work, after more than 24 hours of sitting idle.

    Along Gulf Coast, Governors Ask, ‘Who’s In Charge?’

    Fifty-nine days into the crisis, it still can be tough to figure out who is in charge in Louisiana, and the problem appears to be the same in other Gulf Coast states.

    In Alabama today, Gov. Bob Riley said that he’s had problems with the Coast Guard, too.

    Riley, R-Ala., asked the Coast Guard to find ocean boom tall enough to handle strong waves and protect his shoreline.

    The Coast Guard went all the way to Bahrain to find it, but when it came time to deploy it?

    “It was picked up and moved to Louisiana,” Riley said today.

    The governor said the problem is there’s still no single person giving a “yes” or “no.” While the Gulf Coast governors have developed plans with the Coast Guard’s command center in the Gulf, things begin to shift when other agencies start weighing in, like the Environmental Protection Agency and the U.S. Fish and Wildlife Service.

    “It’s like this huge committee down there,” Riley said, “and every decision that we try to implement, any one person on that committee has absolute veto power.

    Source: ABC News

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    DJH: I have long thought that my winter home state — California — would end up being the proving ground for breaking government union contracts to maintain fiscal solvency.  Yesterday it began. Kudo’s to Schwarzeneggar and the four unions that have engaged in these negoitations — keep up the good work!

    Dave

    Schwarzenegger, some unions cut pension deal

    June 16, 2010 — By John Howard L.A. Times

    Getting Tough

    Gov. Arnold Schwarzenegger cut a deal with four public employee unions Wednesday on new labor contracts that will reduce state contributions to employee pensions and scale back worker pay, Capitol Weekly reports.

    “The proposed agreements include increasing the retirement age for new hires, boosting the workers’ contribution to [the Public Employees’ Retirement System) and using three-year top-pay formula instead of one year to calculate pension levels.

    “They contain roughly a 5% pay cut and approximately a 5% increase in the worker’s contribution to the state pension program, said Terry McHale, a lobbyist who represents the firefighters and the Highway Patrol officers.

    “The four bargaining units are CDF Firefighters Local 2881, the California Association of Highway Patrolmen (CAHP); the American Federation of State, County and Municipal Employees (AFSCME) Bargaining Unit 19 representing the health and social services professionals; and the California Association of Psychiatric Technicians (CAPT).”

    Source: L.A. Times

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    DJH: The latest sham “jobs bill” is floating around congress. The president says the country really needs it, but despite the bleak employment situation in this country, it looks like a slew of democrats and virtually all republicans will oppose it.

    The Man Loves Bailouts!

    Like all Obama jobs bill, it has nothing in it to boast private sector employment. And, like all Obama stimulus spending, it does have billions of dollars to bailout underwater state worker pension programs.

    The Obama-Democrat-Union Ring of Corruption

    Political greed is the worst greed of all. First of all, it robs from people who have no power to fight back — the tax payers. Second, it violates the holy trust people place in their elected officials. Three, it’s never a single act of crime. When corrupt politicians hand out sweetheart deals in exchange of campaign funds or voter blocks, the price we pay for that corruption lingers for decades, even forever.

    To me, one of the most serious threats to the future of the United States in the ring of corruption that occurs when union organizers fund and support the campaigns of democrats who return the favor my agreeing to grant outrageous labor contracts to government workers. This is textbook corruption.

    The good news is that even the left wing media is catching on to this legal form of racketeering and starting to report on it. Take a look at a few excerpts from the recent story in the New York Times titled: The Teachers’ Unions’ Last Stand:

    • If unions are the Democratic Party’s base, then teachers’ unions are the base of the base.
    • The two national teachers’ unions — the American Federation of Teachers and the larger National Education Association — together have more than 4.6 million members.
    • That is roughly a quarter of all the union members in the country. Teachers are the best field troops in local elections.
    • Ten percent of the delegates to the 2008 Democratic National Convention were teachers’ union members.
    • In the last 30 years, the teachers’ unions have contributed nearly $57.4 million to federal campaigns, an amount that is about 30 percent higher than any single corporation or other union.
    • And they have typically contributed many times more to state and local candidates. About 95 percent of it has gone to Democrats.

    The Billion Dollar Union Pension Scam in Obama’s Home State

    For 12 years, Barrack Obama served as a State Senator in Illinois. The state legislature is a miniature version of the US Congress. They pass laws and fund all government projects and contracts. Thats what makes this story so frightening.

    Just when you thought you’d heard the most egregious story of government union worker pension excess, along come one that’s worse and in this case, it comes from Obama’s home state, Illinois and our president was a member of the corrupt democrat legislature that made it happen.

    Below is a list of the pension obligations to the top 100 teacher union members in the state of Illinois. These 100 pensions are beyond fat, they are morbidly obese! In fact the cost to the people of Illinois for these outrageous pay-backs in nearly $1 billion! That averages almost $10 million per union worker.

    Top 100 Illinois School Union Worker Pensions

    Source — The New American

    Bailout Anyone?

    Is there anyone on earth that thinks America should borrow money from China to fund a $27 million dollar pension for some teacher’s union Hack?

    I’d say “probably not,” except I know of at least one person who thinks this is a good idea.

    Our president — Barrack Hussein Obama!

    Excuse me, I think I’m going to be ill.

    Dave

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