Bailout Bounce

Make no mistake about it - Government can induce economic activity. What we must not do is link bailouts to economic recovery. An analogy to spending taxpayer's money to save taxpayers from themselves is inserting your fist into a pail of water. Whenever the fist is withdrawn, the water returns to its original level.

Another way of looking at it is the way we leverage our income with our credit cards. As long as we have an income to leverage, we make a lot of merchants happy. They, in turn, are able to leverage their receipts into more economic activity. The main reason that this works so well is because there are so many sources from the private sector, that should one fail, then activities from other sources compensate for the loss. But when there is only one source (such as the Government), and the funding from that source ends, everything upstream of the source fails. And, just like you and your credit card, the bill will come due. After all, when you leverage your paycheck, you are in actuality borrowing money.

Our banks found themselves over-leveraged using collateralized mortgage debt securities as an income stream. And when the value of the securities plummeted along with that income stream, the aftermath was a bag which contained debt out the whazoo with nothing to cover it. Those securities were real estate loans bundled into a device called a Collateralized Mortgage Obligation. Those CMO's lost their value because of bad lending practices to people without good credit standing. The same thing would happen to you if you lost your job and had to default on your debt. Bad loans meant defaults on payment for whatever reason by the borrowers.

Not wanting to digress into the cause of this financial mess, just wanting to illustrate what happens when the foundation of an economic system is lost. The same holds true for Government sponsored jobs and projects. Except for some relief in the short term, there has been no improvement to the situation. Remember the fist in the water. The Congress votes to spend a certain amount of money as a stimulus to the economy. Once they spend that money, then without more money, whatever depends on that money will cease. That includes the upstream economic activity developed supporting the project/work relief effort.

The temporary bounce received from the stimulus may not be beneficial in the longer run because of inflation. Inflation occurs when we dilute our money supply. Inflation is perhaps the cruelest tax of all. Think of the money supply as a bowl of soup. If you keep adding water to the soup without the other ingredients, you will find that the soup is so weak that nobody wants to eat/drink it. The Government is not collecting that stimulus money from the taxpayer (yet); there are only two sources available. It is either printed or borrowed from other countries. Either way creates a debt that will have to be paid -- just like your credit card debt when you lose your job. The money supply must stay in balance with goods and services to prevent inflation/deflation.

Be of good cheer though, Obama will straighten out everything.

Cheers,
Robert

Robert@robfg.com

Changes for America 4

The Liberal 'Wants' list:

1. Green Energy

2. Stimulus package

3. Small, high mileage cars

4. Jobs

5. Get out of Iraq

6. Get Ben Laden

7. Close Gitmo

8. Impeach Blagojevich

9. Gay Marriages

10. Unfettered abortions

11. Higher taxes for the rich

12. Open borders

13. Amnesty for the undocumented in this country

14. Degrade the values of morality (right and wrong)

15. Socialized medicine

16. More money for a broken school system

This is the fourth in this series. This fourth article includes items 8,9 and 10. These 3 topics represent my opinion only. Feel free to disagree and to send your comments.

My Comments on the 'List' Article 4

Impeach Blagojevich: As stated above, this is only my opinion of the problems concerning the Governor from Illinois. To begin with, I think Blago made a deal with Jessie Jackson's son for the Senate seat. But then here comes Obama who wanted somebody else to take his old Senate seat. So now, Blago has to either give up the money from Jackson and appoint Obama's choice or try to shake down Obama to replace the money he would lose if he appointed Obama's choice for the job.

Blago took the second choice. But Blagojevich is not smart. Jackson feels jilted over the deal and informs Patrick Fitzgerald the Federal Prosecutor. Subsequent wiretaps of Blago catches him making incriminating statements and the rest as they say is history.

But there is a fly in the soup. Fitzgerald stopped his investigation before a crime was committed. Why? To begin with, Blagojevich knows where all the bodies are hidden. Putting him on trial with witnesses under oath has the possibility of opening more of Pandora's box than the Democrats care to have exposed. Forcing the resignation of Blagojevich would have been the cleanest path for the Dems to take, but Blago would not play that game. The Illinois Senate will start an impeachment trial to have Blago removed from office. Sounds like a reasonable solution, but if enough of those State Senators do not want their own dealings exposed, they may reach an agreement with Blago --privately of course. An agreement with Blago not to spill the beans could be privately negotiated before the trial begins.

Then the question arises, what will happen if Blago does not get removed from office? The ball would get bounced back into Fitzgerald's lap. Fitzgerald would have to make the decision to indict or not. It will be his decision to open Pandora's box or not.

Now that Blago has filled the Senate seat, some of the problems go with it. The seat is no longer a bone of contention between the interested parties.

Gay Marriages: My view on gay marriages is a tainted one. Or maybe I should say I feel as though we are experiencing tyranny by the minority.

With the exception of very few homosexuals who are born with mixed up hormones, the vast majority of gays choose that lifestyle. Most begin their gay life as either lonely people needing friendship, people who have had a rough time establishing satisfactory relationships with the opposite sex, or those just seeking the thrill of a different experience. The more mainstream the gay lifestyle becomes, the easier it is for those disaffected and lonely people to adopt the gay lifestyle. Usually, when one of these vulnerable people befriend a gay, more than likely that person winds up being seduced instead of helped.

There are dedicated gay couples, but again the vast majority of gays drift in and out of relationships. Why they even want to legally tie themselves to each other is a mystery to me. The idea of gays getting married is insulting to me. Having judges rule on such issues without the consent of the governed is also insulting. I view the subject as just one more step that is disintegrating the fabric of our society.

Unfettered Abortions: First, my view is against abortion on demand. I soften my view when such a procedure is medically necessary. In this day and time with a myriad ways to prevent pregnancy, there should be no problem. Without a lot of fanfare, maybe all of our young should automatically be put on birth control. In today's system of sex education, students are given tacit approval for having sex. Schools willingly hand out condoms and birth control to those who seek them. Some schools will even direct students to abortion clinics without informing the student's parents of a pregnancy. And some states do not require parental notification of an abortion.

Then there is the issue of morality. An abortion certainly takes the life of a child, but we have managed to cloak the meaning with such phrases as 'tissue-mass' 'a woman's right to choose' and other such terminology. The abortion pill is an acceptable alternative to me. Since it takes approximately 72 hours for the sperm to fertilize an egg, the abortion pill can prevent the pregnancy if taken the morning after an encounter and solves the moral question of killing a child. I understand that some religions do not support any form of birth control, but I feel that such a view is detrimental to the well being of a society.

Look for volume 5,

Cheers,

-Robert-

CO2 Hoax

The evidence is pouring in discrediting anthropogenic global warming. Throughout recorded history, global temperatures and Sunspot activity form a positive link to each other. As you can see by the following chart, for the last two years, Sunspot activity has been very low. Recent data indicates that the Sunspot activity is remaining low instead of resuming the normal activity that is normally observed. -continued below--










Compliments of http://www.solen.info/solar/

2001 Sunspot chart.

Compliments of http://www.solen.info/solar/ You can find historical data on Solar Cycles at this website.
Compare the above chart from 2001 to the chart below from the present.

2008-2009 Sunspot chart.


Sunspots are magnetic storms that heavily influence the weather on Earth. One theory claims that Sunspots inhibit cloud formation by interfering with cosmic radiation. Since clouds act as the world's umbrellas and reflect a lot of the Suns energy back into space, clouds act as a moderator for the world's temperatures. Fewer clouds mean warmer temperatures.

Cooling the Earth is as much a task as warming it because the Earth contains a buffer that resists the attempts to rapidly change the climate here on Earth; our oceans. Before temperatures can rise drastically on Earth, Ocean temperatures must rise. Conversely, to cool the Earth, the Oceans have to cool. The oceans are so vast that temperature changes are not rapid.

Recently, the warm oceans were able to reduce the Arctic ice to levels not seen since records have been kept. But in the last months of solar cycle 23, an event took place that changed the Sunspot activity. This event is called the 'Solar Jerk'. The recent 'Solar Jerk' in 2005 caused by the alignment of the planets reassigned the center of mass of the Sun known as the Baryscenter of the Solar System. The importance of this realignment cannot be understated. The 'Solar Jerk' affected the magnetic activity of the Sun decreasing the Sunspots which influence the Earth's climate.

The temperature of the world's oceans had been increasing with temperature reaching their maximum in 2007. However, recently, ocean temperatures have been decreasing. As the Oceans slowly surrender their heat, the process prevents us from abrupt changes in global temperature. But if the magnetic activity stays low on the Sun, we may be looking at severe winters as the world's oceans cool.
The following graph will show the gradual effect of the cooling oceans on the Arctic ice cap.


The dotted line represents the 2007 Arctic ice as measured in millions of square kilometers. Notice the blue line for 2008-2009. There has been a recovery in the icecap and if the current trend continues, it will surpass the average for the period between 1979-2000.

You can readily see that the icecap for 2008-2009 did not melt as much as it did in 2007. As the oceans cool, the icecap will continue to increase -- as long as the Sunspot activity stays low. Subsequent years will mean harsher winters as the oceans cool. This winter will be bad but consider it mild in comparison of what is to come if this trend continues.

The idea that man is causing the planet to warm is patently ridiculous. There are numerous reasons why CO2 is not causing the planet to warm. Blaming CO2 for global climate change is a political exercise. Fossil fuels do pollute and need cleaning. But fossil fuels are getting a bum rap with global warming.

Cheers,

-Robert-

Changes for America 3

The Liberal 'Wants' list:

1. Green Energy
2. Stimulus package
3. Small, high mileage cars
4. Jobs
5. Get out of Iraq
6. Get Ben Laden
7. Close Gitmo
8. Impeach Blagojevich
9. Gay Marriages
10. Unfettered abortions
11. Higher taxes for the rich
12. Open borders
13. Amnesty for the undocumented in this country
14. Degrade the values of morality (right and wrong)
15. Socialized medicine
16. More money for a broken school system

This is the third in this series. This third article includes items 5,6, and 7. These 3 topics represent an area that I agree with more than I oppose.
My Comments on the 'List' Article 3

Get out of Iraq: Believe me; I am four-square in favor of leaving Iraq. The only hurdle that I see is the making sure that the fledgling government can survive. Should that Government fail, then we have poured both our blood and treasure down a sinkhole. This latest agreement struck between our two Governments is supposed to address that concern.

It took longer than what should have been necessary to get to this point, but in the long run, I think it is safe to say that it is a good thing to have another ally in the Middle East other than Israel. I have documented my opposition to the way Bush has handled the occupation of Iraq, but with a favorable outcome that leaves Iraq as an ally in the Middle East, the U.S. has improved is position over there. -- Jordan, Saudi Arabia, and Egypt are not enemies, but I would not go so far as to call them allies. Ever since Jimmy Carter sold the Shah of Iran down the river, Iran has not been a friendly nation. Our military presence in Iraq serves to blunt at least some of their ambitions. But Iran is feeling froggy, and will probably try their muscular military out on Israel in the near future. Iran has a theocratic system and they rule with a strong hand. They would not worry about any consequences from pouncing on Israel. It is hard to gauge people who think that dying is good because it serves Allah, and makes them martyrs, -- a dangerous combination.

Get Ben Laden: Osama Ben Laden has been a thorn in our sides for years now. Ever since the 80's we have recognized his potential for stirring up trouble. But he has eluded three Presidents. Now, with Obama's presidency, comes yet another President promising to get Ben Laden. Personally, my thought is that he is not alive, but time will tell. It may take war with Pakistan to get to the bottom of the mystery. Ben Laden's story is only a part of the picture. We still haven't captured Mullah Omar, the titular head of the Taliban, nor Ayman al-Zawahiri, the assumed top Al Qaeda leader. Dealing justice to those who have so far escaped will help the psyche of Americans as well as land a blow against the terrorists. But, are they worth a war with Pakistan?

Close Gitmo: Personally, I don't see the relevance of closing Gitmo to anything. The terrorists that are kept there are doing well and gaining weight. We don't need them running loose in America stirring up trouble, and their countries of origin don't want them either. Other than a handful of lawyers who see the potential for a lot of money in their trials, who else is really interested or even benefits from their release or imprisonment? Do we spend more of our treasure just to get a conviction and sentence for these foreign combatants? Where do we send them even with a conviction? They have the skills to corrupt the prisoners already held in our prisons. Do we really need the potential problems that these dedicated Jihadists can stir up? My vote is to leave them in Gitmo until they croak. (With a little help, that could be sooner rather than later.)

Look for volume 4,

Cheers,

-Robert-

Changes for America #2

The Liberal 'Wants' list:

1. Green Energy

2. Stimulus package

3. Small, high mileage cars

4. Jobs

5. Get out of Iraq

6. Get Ben Laden

7. Close Gitmo

8. Impeach Blagojevich

9. Gay Marriages

10. Unfettered abortions

11. Higher taxes for the rich

12. Open borders

13. Amnesty for the undocumented in this country

14. Degrade the values of morality (right and wrong)

15. Socialized medicine

16. More money for a broken school system

This is a sequel to the article about the first three items. This second article will cover item four. Because of its length, no other topic will be covered today.

My Comments on the 'List' Article 2

Jobs: this is an honorable goal. Work eligible Americans need jobs for both their own livelihood and for perpetuating the economy. But there needs to be some perspective about how we create jobs.

Our Government receives money from the taxpayers. The total take comes from various and sundry taxes. -- Import taxes, export taxes, income taxes, license fees, and road and fuel taxes do not make up the complete list, but you get the idea. Some of the taxes are a little incestuous because they are all dependent upon working Americans. For instance, the import taxes are only possible because of Americans wanting to buy and use foreign products. In the end, the American consumer generates the revenue for the Government. One could argue that the foreign governments pay import taxes from where the products originate. But the real payer is the user of these products. Any taxes collected at the entry port just add to the cost of the product and thus returned to the originator. The originator of the product reimburses itself with the increased price of the product. Usually, import and export taxes are political tools and not intended to be a revenue stream. These tools are a way to reward those countries that are friendly to us with unfettered access to our markets. Countries that we find objectionable are less competitive in our markets because of the higher prices, thanks to the tariffs, on their products.

The point is that most of the money, by far, collected by the government comes from working Americans one-way or the other. Government jobs and Government projects are only a redistribution of the wealth collected from the private sector. That is why a government created job is so objectionable. Growing the Government beyond a certain point can only have one outcome. For instance, government workers do not pay taxes. Every dime they receive is from the private sector via taxation. Their checks may have a deduction labeled as taxes, but in reality, that deduction is not new money for the treasury. It only amounts to a little less money paid to the employee from the treasury. It is important to note that only new money collected from the private sector can add to the take at the treasury.

Continuing to grow Government whether it is by directly hiring people or Government projects can only have one outcome, the takeover of our private sector. Growing Government means more Government employees, and the administration of more Federal projects. As the Government grows, the private sector comes under increased pressure to provide the funding. Continued growth will reach a point where the shrunken private sector can no longer support the needs of Government. It is at that time that the Government will complete the takeover of the private sector and end the free enterprise system. The free enterprise collapse also ends the hopes and dreams of those who strive to succeed to the limits of their abilities. The American dream will have perished into the maws of complete centralization.

So, I do not look forward to the Government takeover of the economy. Government created jobs do not add one dime to the treasury. Spending our way to prosperity is not possible. The brief jump in economic activity is on borrowed money and time. Who is going to repay that money? Every person hired by the Government, or works on a Government project robs the private sector of a real contributor. The more people Government hires, the fewer taxpayers there are contributing to the treasury. Fewer payers mean a larger burden on the dwindling private sector workforce. Private sector growth is the real solution to a bad economy.

Look for volume 3,

Cheers,

-Robert-

Changes for America 1

The Liberal 'Wants' list:


1. Green Energy

2. Stimulus package

3. Small, high mileage cars

4. Jobs

5. Get out of Iraq

6. Get Ben Laden

7. Close Gitmo

8. Impeach Blagojevich

9. Gay Marriages

10. Unfettered abortions

11. Higher taxes for the rich

12. Open borders

13. Amnesty for the undocumented in this country

14. Degrade the values of morality (right and wrong)

15. Socialized medicine

16. More money for a broken school system

I am sure there are more like putting Bush and Cheney on trial for something, but the 16 I have listed will do. This article will only address three of the items with the others in successive writings.

My Comments on the 'List' Article 1

Green Energy: Okay, let's have green energy, but not unless it is has been thoroughly thought out. The ethanol from corn was an unmitigated disaster that almost caused worldwide hunger because the staples that depended on corn got so expensive that many could not afford them. I only want those who plan for our green energy to be mindful that our energy cost can rise so high that we can no longer compete. Countries with cheaper petroleum based economies would be in a stronger position to compete in the global economy, effectively blunting our competitive edge.

The loss of a strong economic backbone could propel us into becoming a third world economy. Nothing would kill this country faster than sitting arrogantly on our clean expensive energy with nothing to trade because we can no longer afford to manufacture products competitively. Just because we stop using oil for energy, oil will not disappear. Oil will only become cheaper because we stopped using it, which will open the door for that cheap energy for other countries to use.

Stimulus Package: Experts say that World War 2 is what ended the 'Great Depression'. That is probably true. The war economy (excluding the war itself) was one gigantic government stimulus. However, there was a big difference how the government spent money then, and what is proposed and happening today. During the war, the government did not just start throwing money to bail out failing institutions. The economy was stimulated because the government bought the products of our industries. It killed several birds with one stone. Buying the industrial products also created jobs. Manufacturers retooled for production and updated their facilities to meet the customer demand. (Tanks, Ships, Ammunitions, etc.) The government did not have to take over the auto industry to force a product to the market. As a customer, the government was able to get the specific products that they wanted without resorting to taking over our industries. If the government wants the auto-industry to make a bunch of putt putts, all they have to do is order them. Then they can show us all how to sell them. Maybe they know something that the marketing people at GM and Chrysler don't know. I would rather see a stimulus package that purchases the products of our industries instead of taking them over. One more thing on this subject, after the War was over the government destroyed most of the surplus equipment to prevent it from flooding and destroying our domestic markets.

Small High Mileage Cars: I believe that the markets will sort out this one. Demand for smaller cars is the key to getting them on the streets. My only concern is allowing Liberal elitists to plan for such undertakings. Poor planning usually lands us in the messes that we find ourselves. Those electric cars touted today only have enough energy to go to work and back. But what if you want to be cool and comfortable during the daily commute on hot days? Do you think that air-conditioning is included? Or, is being comfortable while commuting just another one of those sacrifices we are going to have to make? At my home, we are already making small sacrifices in the way we live. For example, we are already losing a part of our way of life because of this countries failure to find and develop our domestic energy. My electric bill is so expensive, my wife and I can no longer afford to cool our house in the summer. Instead, we bought small window units to cool just the rooms we use the most -- the rest of the house stays hot. And, we are not alone. Expensive energy puts our way of life at risk. When fuel prices went to $4.00/gallon, people drastically cut back on car travel. The motel/hotel industries, the airline industry and the trucking industry suffered. Again, we have had to lower our standard of living because of our failure to find and develop our domestic energy supplies. Now, small cars will further erode our standard of living. A family outing where one SUV used to be sufficient will give way to the new smaller autos. The smaller vehicles will mandate that a family exceeding four persons take two vehicles. And good luck on finding convenient parking for both autos.

But there is more to the leftist's plan. They actually plan on making it illegal to drive into the metropolitan areas and force everybody to ride 'light-rail' instead. (Another costly boondoggle) I am not totally against the proposal if the people have a say so in the matter. And by a say-so, I mean deciding on the whole plan, and not sneaking their grand plan in piecemeal proposals of building one route at a time. Because after building enough of the light rail lines, then we will get the abolition of traffic to the downtown areas. The liberals are not being honest about their enthusiasm for the light rail concept. I would much prefer abandoning the monuments to egos, namely those high-rise buildings that cause so many people to have to travel to the downtown area. Instead, I would prefer the 'donut' approach to city planning. Turn the city centers into large areas for hospitals, zoos, and city/county government. By eliminating the need for the large crush of people to commute to the downtown area, it would spread out the commuter traffic and be much more manageable. It is unfortunate that city skylines have become iconic and ingrained into our psyche of what a city should look like as well as a projection of a city's success. Those tall buildings, if scattered about the circumference of a city would create much less of a traffic snarl. (And still give us the freedom to commute as we see fit.)

The type of cars we will develop is also in play for the planners of our future. Hydrogen powered cars seem to hold a promise of good clean energy. However, the byproduct of hydrogen power is water. Just use your imagination and you can see all of our vehicles dribbling water out of their exhaust. Will the roads become permanently wet? Water vapor is more of a greenhouse gas than CO2. I can visualize on a cold morning what the morning commute will look like with everybody exhausting steam from their cars. Of course, none of the problems associated with hydrogen power is insurmountable, but I would prefer that we deal with potential problems before we rush headlong into a scheme that is supposed to solve all of our problems. The 'gotchas' of poor planning just causes more pain for everybody.

Look for volume 2,

Cheers,

-Robert-