Category Archives: Economy

Updated: The Guy Really Doesn’t Get Econ 101

Barack Obama, Business, Debt, Democrats, Economy, Government

State-enforced egalitarianism in borrowing and lending has been a key component in the economic meltdown. But Barry the Bolshevik is intent on preventing any market corrections from taking place.

Financial institutions are attempting to reverse lending socialism. That means charging clients commensurate with the risk they pose to their lenders. Or not lending to the risky. Increases in late fees and in interest rates on existing balances, as well as requiring greater disclosure—these are all necessary, and to be expected, if a correction is to occur, one that incentivizes savings and solvency.

But not if Obama can help it. At Obama’s behest,

Both the House and Senate are considering a credit card “bill of rights” to limit the ability of credit-card companies to raise interest rates on existing balances and to require greater disclosure.

“These practices need to be stopped. … They cannot continue to use and do practices that are unfair to people,” Rep. Carol Maloney, D-NY, told CBS News.

Readers discuss “Survival On the Road To Serfdom.”

Update (April 25): The federal Frankenstein’s latest folly caught Peter Schiff’s attention, and is the subject of his latest column (great minds…). Writes Schiff:

“The bottom line is that credit card lending is a very risky business. The debts are unsecured and the probability of default is high, meaning big losses should borrowers choose not to pay. In addition, should a borrower file for bankruptcy, credit card debt is often the first to be discharged. Given the risks, interest rates need to be very high to keep lenders in business.

One way to keep a lid on rates for those who do pay is for lenders to weed out those most likely to default. This can be accomplished through higher rates. Not only does this discourage riskier borrowers from taking on more debt, but it gives lenders a bigger cushion to absorb losses. However, by interfering with card issuers’ attempts to better price risk and limit losses, the government will reduce credit availability.”

Debt Means Taxes

Debt, Economy, Government, Media, Taxation

“But you’re getting a tax cut under Obama,” screeched the cerebrally and ethically challenged CNN attack dog, Susan Roesgen. She was shouting at an informed, ticked-off taxpayer at the nationwide tea parties. Which is why reporters, retarded ones especially, should never editorialize.

Writes former US accountant and comptroller general, David M. Walker:

Total federal debt almost doubled during President George W. Bush’s administration and, as much as we needed some stimulus spending to boost the economy, the nonpartisan Congressional Budget Office now estimates total debt levels could almost double again over the next eight years based on the budget recently outlined by President Obama.

Regardless of what politicians tell you, any additional accumulations of debt are, absent dramatic reductions in the size and role of government, basically deferred tax increases. Remember the old saw? “You can pay me now or you can pay me later, with interest.” …

the federal government accumulated $56.4 trillion in total liabilities and unfunded promises for Medicare and Social Security as of September 30, 2008. The numbers used to calculate this figure come directly from the audited financial statements of the U.S. government.

If $56.4 trillion in financial commitments is too big a number to digest, think of it as $483,000 per American household, or $184,000 for every man, woman and child in the country.

Even broken down, the numbers can be tough to swallow. Yes, you’ve paid your taxes, but you still bear a significant share of the government’s own financial burden. …

So as you file your tax returns this year, bear in mind that no matter how much you’re paying now, you’ll pay much more in the future because of Washington’s failure to get its finances in order…

Unorthodox Accounting

Business, Capitalism, Debt, Economy, Natural Law

Professional accountants will have a laugh at my expense, and that’s okay. But, in The Ilana Ledger, Wells Fargo owes big time, despite posting a profit for the first quarter. Take the much-touted $3 billion in first-quarter earnings the bank is expecting, and subtract it from the $25 in bailout billions it received as part of the government’s rescue scheme—and you get a financial measure of this institution. Wells Fargo is in the red to the tune of $22 billion. At least in my books.

(Unrelated: I’m off this weekend. The weekly column will return next week. I wish you all a restful, peaceful, contemplative Easter, and a good Passover.)

Updated: Will Europe Resist The Voodoo Child’s Magic?

Barack Obama, Debt, Economy, EU, Europe, Foreign Policy, Free Markets, Iraq, Israel, Regulation, War

I’m still coming to grips with the reality of Europe being more fiscally prudent than the US. An American (who else?) think-tank head has framed the European opposition to Obama’s obscene deficit/bankruptcy/inflationary spending, with reference to “a certain backlash against the American economic model,” hubris I find difficult to parse. Such “vulgar Keynesianism” is not a model; it’s a crime!

I worry that Obama will work his magic on Merkel and the rest and convince them to adopt his voodoo economics. Then there really will be no place to run. A pied piper will have enticed the world over a cliff … (And I have family in Europe.)

Chancellor Angela Merkel, to her great credit, has said “Nein” to stimulus and bailouts. Disparagingly, American diplomats put it down to combined “profound German instinct against debt – and its accompanying inflation – with a widely held sentiment here that the US and Wall Street are to blame for creating the global crisis.”

Can’t argue with the Chancellor, can you?!

Obama departed today for London, in advance of the Group of 20 Summit there. Reports The Christian Science Monitor:

“The White House recently signaled it has all but given up hope that the leaders Obama meets this week will make major commitments along the lines the US would like to see – either in terms of big spending packages for the economy or of additional troops or resources for Afghanistan.”

“Obama is expected to encounter an adoring public but a deep skepticism – even resistance – among heads of state.” …

“How well Mr. Obama can parlay his personal popularity into convincing leadership is a key question hanging over his global coming-out party. With many leaders blaming the United States for planting the seeds of the first global recession since World War II, America’s ability to continue as the world’s unrivaled power, whether in economic or other matters, is likely to be an undercurrent of meetings with the G-20 leaders, NATO, and in bilateral meetings with his counterparts.”

[SNIP]

As to “A War He Can Call His Own”; that’s old. Obama has always wanted to “maintain a meaty presence in Afghanistan, and “may even be conjuring up new monsters and new missions” we don’t know of yet. Europeans don’t like that; Demopublican globalists stateside do.

Update (April 1): Naturally, realize we must that, while Nicolas Sarkozy and Angela Merkel must be lauded for not wishing to take their respective countries down the road to ruin Obama has set us upon; the two European leaders are still only half as bad as Obama.

Both are working from the premise that unbridled capitalism, the system that has almost never been tried—the Unknown Ideal in Ayn Rand’s words—is the culprit in the meltdown.

The man who married a bimbo said he aims “to give capitalism a conscience, because capitalism has lost its conscience.” “This is a historic and unique opportunity to build a new world,” he added.

Brother Obama is down with that fallacy. So while Europeans will not heed him in as much as spending goes, they will find common grounds “on tax havens, hedge fund regulation, banking transparency and a worldwide cap on bankers’ pay.”

However crippling to capital markets and to financial freedom these and other draconian measure agreed upon in Europe will be—they do not rival the damage of bankruptcy.

Thanks to The Leader the American people elected, here in the US, we’ll be the beneficiaries of a double dose of poison: international regulation, with its attendant implications for national sovereignty, and bankruptcy.

Joy!

Note: Obama is hip to the fact that “United States was unlikely to return to its role as a ‘voracious consumer market.’” That much is true.