Category — The US Economy

The Whitehouse is now occupied by an eco-idiot. An eco-idiot is twice cursed. An eco-idiot knows nothing about ecology nor anything about the economy.

As part of his effort to “create manufacturing jobs for folks who are making cars,” President Obama announced yesterday that he will be accelerating plans to use $285 million from the stimulus bill to buy 17,600 new cars for government workers.

The news was welcomed on a number of fronts:

First, the impact this will have on the domestic automobile industry and the hard working families who depend on it cannot be overstated as it can take, at current sales levels, more than half a day to sell 17,600 cars.

But that’s not all! Just think how much these 17,600 cars will help with global warming. Many of them will be hybrids. Hybrids are very helpful. When the batteries wear out, they make excellent toxic material to place in our landfills.

Just think! You will have helped keep automakers in business for an extra day. After all, it’s your money–or is it your grandkids money? They may be the ones paying for this.

Where will the money come from? Just another digital entry on a FED computer. It’s not real. The dollar will have been devalued by another $285 billion, but that’s peanuts compared with the $70 trillion or so that can never be repaid–even by your great, great, great, great grandchildren.

If you live in NYC, you really should think about getting out. Your dear home town is doing something really dumb. What I’m talking about is stupidity that could only come from politicians.

New York City has long been the world’s financial capital, but don’t mention that to London, they think they still are–but the may soon re-take the title.

U.S. leaders are working hard to erase that label of world’s financial capital. In a desperate attempt to keep the bloated diseased hog of big government alive, the state is actually increasing income taxes.

The WSJ reports: “In New York, Assembly Speaker (and de facto Governor) Sheldon Silver and other Democrats will impose a two percentage point ‘millionaire tax’ on New Yorkers who earn more than $200,000 a year ($300,000 for couples). This will lift the top state tax rate to 8.97% and the New York City rate to 12.62%. Since capital gains and dividends are taxed as ordinary income, New York will impose the nation’s highest taxes on investment income — at a time when Wall Street is in jeopardy of losing its status as the world’s financial capital.”

As this piece details, New Yorkers are also set to pay higher government fees for cell phone usage, health care, electricity, and booze. What a great way to wreck a city that is already struggling.

There is a way to save New York. It’s a way to save the rest of the country as well: Immediately institute a flat national income tax of 20%. Eliminate the capital gains tax. Eliminate the dividend tax. Slash the corporate tax by 75%. You’d have the greatest economic boom in history. Try telling that to Obama and the shadow government who guides his every step.

You are about to buy fuel-efficient cars. That’s right!

The president on March 30 directed the administration to speed up planned purchases of vehicles for the U.S. government’s fleet of cars.

The announcement Thursday includes the purchase of 2,500 hybrid sedans that will be ordered by April 15, the largest one-time purchase of hybrid vehicles for the government fleet in history, the White House said.

Swapping older federal cars for hybrids and fuel-efficient vehicles will reduce gasoline consumption by 1.3 million gallons per year and cut carbon dioxide emissions by 26 million pounds, the White House said.

Sounds pretty good doesn’t it? But let me tell you from first-hand experience, a few years from now when 2,500 hybrid batteries need replacement, we (the govt.) will have to shell out $4,000 apiece for them.

When I bought my Honda Hybrid, I was told that when the battery that drives the electrical part of the hybrid system wore out, I would be able to replace it for $600. Well, it wore out, and the replacement is now $4,000. So, where’s the savings?

Allow me to tell you how to solve the mortgage crisis. Oh no! The government already figured it out. I guess I’m just a Johnny-come-lately!

The way to solve the mortgage problem is by printing money, what else?. The Fed has promised to buy several hundred billion dollars of Fannie- and Freddie-backed mortgage securities, increasing the size of its balance sheet to over $3 trillion – about 20% of GDP.

In anticipation of the Fed’s buying, the 10 largest banks increased their holdings of Fannie- and Freddie-backed mortgages by $128 billion, or 30% in the fourth quarter of 2008. The Fed’s buying has caused the price of this paper to increase substantially, resulting in “profits” for the big banks, whose CEOs were recently boasting of their return to profitability. Now we know how they have become profitable.

See if you can follow the risks inherent in this wonderful solution. The Treasury (U.S. taxpayers), hey! Tha’s us! guarantees Fannie-and Freddie-backed mortgages – many of which are in default. Then, the Fed backed by nothing more than a modern printing press promises to buy them. Insolvent banks buy them first, mark them up considerably, and sell them, at a profit, to the Fed. Isn’t that wonderul? Really! Now you can go back to work, if you can find a job. What? You don’t have a job? Oh well, that’s not our problem. We fix banks.

One big problem for anyone trying to “solve” the mortgage crisis: Most of the deadbeat borrowers have more than one mortgage. That’s how they got into trouble in the first place. About half of the seriously delinquent mortgages – loans were to speculators, who deserve to lose. Howver. OBAMA would like to mandate that those loans be “crammed down,” i.e., have second liens attached to the property.

Even if the government erases the first mortgages, the folks in these homes still can’t afford them. The problem isn’t the mortgages: The problem is the borrowers. They’re not creditworthy. And there’s nothing you can do to make them creditworthy. Auctioning the houses would at least make them affordable to anyone who has been careful with his savings and didn’t borrow more than he could afford during the bubble.

Of course, telling people they’re going to get what they deserve isn’t going to win an election. Not ever. So, no matter who is President, or who is in the dumbed-down Congress, you and I are going to end up paying for it. Remember, most Americans voted to do away with the balance of power when they voted a leftist, liberal Democrat backed by a leftist, liberal Democrat majority in Congress.

Every American MUST view this video!

“We have to recognize that education, a change in energy policy and healthcare reform are what will turn the economy around, bring money to the Treasury, make us competitive internationally and put the economy on a much more stable footing as we go into the future,” Nancy Pelosi said.

Sounds really great, doesn’t it. But let’s look at what she is truly saying. She wants to bring money into the Treasury, not into your pocket or mine. She wants to spend, which is not the way to revive the economy. What we need are jobs–jobs in private industry, jobs that will last. How do infrastructure projects, energy policy and healthcare reform make the U.S. more competitive? How do they create permanent, lasting jobs?

Taking 90% of all bonuses isn’t enough for Barney Frank. He’s now trying to push a measure that will halt all bonuses for all employees at firms that have received government funds until they pay back the money.

The measure would prohibit “any compensation arrangements that are unreasonable or excessive for these companies,” which is scarily vague… and would allow the government to pay bankers whatever it deems fit.

Of course, it will be difficult for these firms to repay the government loans when the employees all quit.

How about giving the entire Congress a 90% cut. After all, they are the ones who got us into this mess along with Alan Greenspan, who ought to be tarred and featherd. There is basically only one honest man in all of the House of Representatives, Ron Paul. I would let him keep his salary, but he’s probably the only one who would agree to a pay cut.

Get readt for more trouble and stress in the U.S. housing market, Moody’s Investors Service on Thursday said it may downgrade $240.7 billion of securities backed by prime-quality “jumbo” U.S. residential mortgages because defaults will be higher than they expected.

What are these jumbo securities? Jumbo mortgages are typically larger than $417,000, and go to borrowers with good credit. But Moody’s said in the last six months, there have been “substantial increases in serious delinquencies and decreases in prepayment rates, levels that are unprecedented in this asset class.”

Moody’s put on review for downgrade 4,988 tranches of jumbo residential mortgage-backed securities with a current outstanding balance of $173.3 billion, and an original balance of $240.7 billion. The securities are backed by mortgages issued between 2005 and 2008.

Moody’s said it now expects losses of 1.7 percent for 2005 securitizations, 3.55 percent for 2006, 5.05 percent for 2007 and 6.20 percent for 2008.

Moody’s said 70 percent of the 2005 senior securities will likely remain investment-grade, with the rest falling to “junk.” Securities issued later may suffer deeper downgrades. Moody’s also said subordinated securities from 2006, 2007 and 2008 transactions “will likely be completely written down.”

The credit rating agency said its forecast takes into account falling home prices, rising unemployment and “limited” refinancing options.

Moody’s said home prices have already fallen 25 percent from their peaks and could drop another 11 percent by year end, when prices in many parts of the United States may bottom out.

I once did quite well holding shares of Thornburg Mortgage Inc. However, times have changed. Thornburg, a large U.S. jumbo mortgage specialist, on Tuesday said it might file for Chapter 11 bankruptcy protection, and was in talks with its lenders to renegotiate various agreements.

Warren Buffett’s huge stock losses are the big news of the past week… and Berkshire Hathaway shares are near their 2003 levels.

But the big, actionable idea from Buffett’s latest shareholder letter is his take on the Treasury bond bubble. The value legend believes the government’s boondoggle stimulus efforts will stoke inflation and pop the giant bond bubble. He puts the current bubble on par with the Nasdaq crash and the housing crash.

As Reuters featured: “When the financial history of this decade is written, it will surely speak of the Internet bubble of the late 1990s and the housing bubble of the early 2000s,” he went on. “But the U.S. Treasury bond bubble of late 2008 may be regarded as almost equally extraordinary.”

Check this out!

http://www.cnbc.com/id/15840232?video=1039849853&play=1