Over-regulation isn’t necessary

Barack Obama likes to take aim at “fat cat” bankers and Wall Street. Many members of Obama’s proletariat love it and thrive on any attempt to blame corporations for the current economic problems. Yet, there are two things that could have prevented the housing bubble and the current recession.

1. Not everyone should own a home.

Many will find this statement appalling. After all, isn’t home ownership the American Dream? The problem is that the federal government encouraged home ownership and encouraged relaxed lending standards, which allowed unqualified buyers to receive mortgages. Many of these loans had adjustable rates, didn’t require documentation, or required no money down. Is it any wonder that banks were overwhelmed with bad loans? » read more

Arnold Schwarzenegger looks for a bail-out

California is facing a deficit of $18.9 billion, but its residents need not worry because Arnold Schwarzenegger has a plan: He’s asking the federal government for more money. Maybe I’m old fashioned, but I believe that when you get yourself into trouble, you should work to get yourself out. After years of mismanagement of California’s budget, he’s hoping he can spread the pain to tax payers in other states. If you think that’s despicable, I don’t blame you.

Schwarzenegger’s supporters would likely point to the Governor’s other ideas, such as overhauling the pension system and privatizing prisons. Both of these are great ideas, but the fact remains that California is spending more than it earns in revenue. Opposing tax increases is commendable, since the state doesn’t have a revenue problem, it has a spending problem. Unfortunately, the Governor wants to hold down the taxes of Californians by begging the Obama Administration for money to help plug holes in his sinking ship. » read more

GM and Chrysler could learn from Ford

Ford recently announced that its Sync system will soon allow customers to plug in a modem, so that passengers will be able to access broadband internet. Basically, many of Ford’s cars will become rolling hot spots. This is in addition to Sync, which allows you to control many of the car’s features with your voice.

Ford’s recent innovations seem to be far ahead of both Chrysler and GM. Is it merely a coincidence that the most innovative American car company is also the only one that is profitable and wasn’t bailed out by the federal government? Perhaps GM and Chrysler should take notes.

Another day, another $3.8 billion

The U.S. Treasury just gave another $3.8 billion to GMAC, which hopes to one day make a profit again. For those of you following at home, this latest infusion is on top of $12.5 billion distributed previously, for a grand total of $16.3 billion.

I know there are a lot of people who would defend this latest expenditure as being “necessary”. Here’s a question for those people: What about small businesses and medium-sized companies that have had to close their doors? Where’s their bailout? » read more

Socialism, climate change, and hypocrisy

Hugo Chavez spoke at the climate summit in Copenhagen and was greeted by loud applause. Here is an excerpt from his speech, which sums up his over all message:

We could say that there is a ghost lurking. To paraphrase Karl Marx there is a ghost running through the streets of Copenhagen. And I think that ghost is silent, somewhere in this room, amongst us. Coming through the corridors and underneath. And that ghost is a terrible ghost and nobody wants to name him or her. It’s capitalism. Capitalism is that ghost. Nobody I don’t think wants to name it. Capitalism. I’ve also been struck by some of the signs outside this conference. One sign in particular that reads, “Don’t change the climate … change the system!” I particularly liked that one and would add to that by saying that by changing the system, we could save the planet. The destructive model of capitalism is eradicating life.

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“Jobs for Main Street Act” contains welfare payments

The House narrowly approved a “jobs” bill by a narrow vote margin of 217 to 212. The “Jobs for Main Street Act” will provide $50 billion for local governments, and another $50 billion for infrastructure projects. There’s little doubt that most of this money will find its way into the pockets of the unions that support the Democratic party, but that’s another story.

The most sickening item in the bill is a $1,000-per-child tax credit for people with little or no income. Ladies and gentlemen, this is nothing more than using the tax code to provide more welfare payments. Does it really make sense that someone who pays just $800 in taxes could see a $5,000 “tax refund”? The Earned Income Credit is bad enough, but then it is exacerbated by this additional payment. » read more

Barack Obama thinks the federal government will go bankrupt without health care reform

Yes, you read the title of the post correctly. Barack Obama believes that without health care reform, the federal government will go bankrupt. Here is an excerpt:

The president said that the costs of Medicare and Medicaid are on an “unsustainable” trajectory and if there is no action taken to bring them down, “the federal government will go bankrupt.”

I’m not an economist, but that seems like a bit of an exagerration to me. The President’s comments about Medicare and Medicaid also make me wonder why we would want to expand Medicare enrollment to those ages 55 to 64. If we already have a massive federal program facing serious financial challenges, then why would we want to expand it? Wouldn’t we just be making a bigger problem for ourselves? » read more

Barack Obama gets tough with “fat cat bankers”

Barack Obama met with 12 “fat cat bankers,” who he largely blames for the recession. After criticizing them for risky behavior which contributed to the nation’s economic problems, he said,

“And so I urged these institutions here today to go back and take a third and fourth look about how they are operating when it comes to small business and medium-sized business lending,”

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Barack Obama’s idea to weaken banks

Barack Obama will be having a meeting with CEO’s from the banking industry. One of the topics he will address is their need to lend more. Yes, you heard correctly! If you think this is a little odd, you’re not alone”

“The White House’s political people like [senior adviser David] Axelrod tell us to lend more,” said one banking official. “But the regulators are saying the exact opposite. They’re saying, ramp up your capital ratios, and if you see default risk on the horizon, cut back on lending.”

The recession has been serious, and it was was caused by a myriad of problems. Some of those problems were related to banks extending credit to people who shouldn’t have received a loan, and irresponsible borrowers who took on too much debt. Let’s also remember that many of these financial institutions were under-capitalized. Now that things are slowly starting to improve, what does the administration want to do? Lend more! » read more

Another day, another stimulus package

The White House has continued to claim that the $787 billion stimulus bill is a success so far. Plus, only about a third of the money has been spent, and the rate of spending is expected to pick up during the winter. If that’s the case, why do we need another stimulus bill?

The next stimulus would include tax breaks for small businesses, more money spent on transportation and infrastructure, and a “Cash for Caulkers” program which would stress weatherization and energy efficiency projects for homeowners. So, how much would this cost, and how would he pay for it? » read more

Be cautious when investing in gold

Have you seen commercials on television lately talking about gold as the perfect investment vehicle? I’ve seen several of them lately, and I’m a bit mystified. Before I go into details about why I find this strange, check out this article about conservative talk show hosts and their links to gold advertisers. There’s a lot of gloom and doom out there, and the economy is far from strong, but do your best to ignore these commercials.

The economy is in lousy shape, but from what I’ve seen, read, and experienced, the worst is behind us. Stocks and real estate have plummeted in value over the past year or so, and in the case of stocks, a substantial portion of their value has recovered. Many pundits (but not this one) seem set on convincing us that the financial apocalypse is upon us. From what I can tell, they’re wrong. The financial system is weak, but it certainly isn’t dead. » read more

Not surprisingly, Nancy Pelosi favors a tax on financial transactions

Surprisingly, House Speaker Nancy Pelosi opposes a “war tax,” which is supported by some House members. But of course, the good news stops there. Pelosi has shown support for a financial transactions tax, which would be applied to the sale of stocks, bonds, and other investments.

Nancy Pelosi believes the idea has “merit,” and would have a “really minimal impact on the transaction, but a tremendous impact on helping us meet our needs.” It appears that one of those “needs” is increased spending on construction projects they hope will increase the nation’s 10.2 percent unemployment rate. » read more

Can a bill to cap interest rates result in higher interest rates?

Congress has a new idea: Pass a law that would force credit card companies to cap their rates at 16%. I have little doubt this will will get lots of attention, and will probably pass. On one side you have the big, evil, bail-out accepting banks, and on the other, the hard-working American who is struggling to make ends meet in this tough economy. That’s the way it will be presented, but it’s far from the truth.

Interest rates are determined by several factors, which equate to the borrowers risk profile. Those with excellent credit pay less than those with poor credit. It’s a fair system, since those with poor credit are more likely to default. For example, someone with excellent credit might pay 12%, while someone with poor credit would pay 20%. The difference might not seem fair at first, but let’s not forget that based on their payment histories, each deserves the rate they received. » read more

Tax credits, the free market, and government contradictions

Congress approved an extension of the $8,000 credit for first-time home buyers. The credit was supposed to end this month, but it has been extended until April, 2010. In addition to the extension, it has been expanded to many buyers, not just those looking for their first home. Some see this tax credit as a savior for the housing market, but I see it as yet another mistake.

The housing bubble existed for many reasons. Some were the fault of lenders, some borrowers, and others were caused by the government. For years, the government has encouraged home ownership by loosening credit and extending loans to questionable borrowers. This influx of people into the housing market, who wouldn’t other wise had access to credit, was a contributor to the bubble. There were many stilts propping up the housing market, and these easy-to-get loans were one of the things that kept prices artificially high. » read more