Funny Money: Feds to spend another trillion to buy our own debt

The Wall Street Journal: The Federal Reserve announced a bold plan today to try to invigorate the economy by buying $600 billion more in Treasury bonds.

The Fed said it would buy the long-term government bonds by the middle of 2011 to further drive down interest rates on mortgages and other debt. This is in addition to an expected $250 billion to $300 billion in Fed purchases over the same period from reinvesting proceeds from its mortgage portfolio. ...

One of the great challenges facing Republicans over the next two years will be to get America off the sinking ship QE2.  I am not talking about the Queen Elizabeth 2, I am talking about the foolish and dangerous fiscal policy called Quantitative Easing.  Quantitative Easing is just banker speak for devaluing the dollar by running the printing press. Printing money to pay off the debt is basically what Third World nations do before they go bankrupt.

The problem here is that each and every time the Fed prints up money they don’t really have, the actual money you and I really have decreases in value. The scheme the Feds are trying to pull off is to lower long term interest rates and get people to start borrowing money again.  To me this shows a basic lack of understanding as to why people are not borrowing.

I am a small business owner and I can tell you I won’t borrow a dime now because I have no idea what tomorrow is going to bring.  I have no idea how my business is going to fair over the next few months in this economy and I have no idea what my tax rate is going to be next year.  Without any certainty in these matters why on earth would I want a loan note hanging over my head?  If the Feds want people to start borrowing again, they have to create a climate where people feel safe doing so.  Currently it is just way too risky to extend yourself.

Via: Memeorandum

Via: The Wall Street Journal

Washington adds another $165 billion to deficit in July alone

Remember Obama’s big talk about Pay-Go?

Perhaps some ninny in the Lamestream Media will ask The Won how he can reconcile his previous words with this: 

Wall Street Journal: The U.S. government spent itself deeper into the red last month, paying nearly $20 billion in interest on debt and an additional $9.8 billion to help unemployed Americans.

Federal spending eclipsed revenue for the 22nd straight time, the Treasury Department said Wednesday. The $165.04 billion deficit, while a bit smaller than the $169.5 billion shortfall expected by economists polled by Dow Jones Newswires, was the second highest for the month on record. The highest was $180.68 billion in July 2009.

The government usually runs a deficit during July, which is the 10th month of the fiscal year. So far in fiscal 2010, the government spent $1.169 trillion more than it made. That figure is about $98 billion lower than during the comparable period a year earlier.

For all of fiscal 2009, the U.S. ran a record $1.42 trillion deficit. Fiscal 2010 might run a little higher—the Obama administration sees $1.47 trillion.

Gateway Pundit correctly points out that July’s $165 billion in new debt is greater that all the debt George Bush racked up in all of 2007. This is why I am completely floor when idiots ask, why wasn't anyone complaining when Bush was racking up deficits?  It's the magnitude, stupid!

Via: Memeorandum

Via: The Wall Street Journal

Via: Gateway Pundit

Hope and Change: It came in like a lion, but is going out like a scam

Yesterday FOUAD AJAMI had a blistering critique in the Wall Street Journal of the Obama Era. The Op-ed titled “The Obsolescence of Barack Obama” details why aura of Obama is forever shattered.

Not long ago Barack Obama, for those who were spellbound by him, had the stylishness of JFK and the historic mission of FDR riding to the nation's rescue. Now it is to Lyndon B. Johnson's unhappy presidency that Democratic strategist Robert Shrum compares the stewardship of Mr. Obama. Johnson, wrote Mr. Shrum in the Week magazine last month, never "sustained an emotional link with the American people" and chose to escalate a war that "forced his abdication as president."

A broken link with the public, and a war in Afghanistan he neither embraces and sells to his party nor abandons—this is a time of puzzlement for President Obama. His fall from political grace has been as swift as his rise a handful of years ago. He had been hot political property in 2006 and, of course, in 2008. But now he will campaign for his party's 2010 candidates from afar, holding fund raisers but not hitting the campaign trail in most of the contested races. Those mass rallies of Obama frenzy are surely of the past. [Read the whole thing]

Ajami’s observations come at a time when the latest polls confirm his observations.

• Rasmussen: Obama at his lowest approval index.
• Wall Street Journal/ NBC News Poll: Nearly two-thirds of Americans believe the economy has yet to hit bottom.
• Gallup: Obama has majority approval for only 1 out of 13 issues.

For those of us who did not vote for Obama none of this is coming as a surprise. A man, any man, with such a paper thin resume stood little chance of living up to the hype of Hope and Change.  Those who swallowed the hype are now coming to grips with the reality that Obama is no messiah.

As you read Ajami column, I caution you not to mistake this for the end of Obama presidency or that his fate is sealed for 2012.  Obama has two years on the clock and in politics two years might as well be two millennia, anything can happen.  Instead, understand that the carefully crafted persona of Obama as lightbringer, messiah, or Superman is now officially dead for almost all Americans. The great Hope and Change that came in like a lion has now gone out like a scam.

UPDATE: 10 key reasons why the Obama presidency is in meltdown

Nile Gardnier from the UK Telegraph has a column up today that pretty much sums up the Obama presidency thus far. 

There are an array of reasons behind the stunning decline and political fall of President Obama, chief among them fears over the current state of the US economy, with widespread concern over high levels of unemployment, the unstable housing market, and above all the towering budget deficit. Americans are increasingly rejecting President Obama’s big government solutions to America’s economic woes, which many fear will lead to the United States sharing the same fate as Greece.

Growing disillusionment with the Obama administration’s handling of the economy as well as health care and immigration has gone hand in hand with mounting unhappiness with the President’s aloof and imperial style of leadership, and a growing perception that he is out of touch with ordinary Americans, especially at a time of significant economic pain. Barack Obama’s striking absence of natural leadership ability (and blatant lack of experience) has played a big part in undermining his credibility with the US public, with his lacklustre handling of the Gulf oil spill coming under particularly intense fire.

On the national security and foreign policy front, President Obama has not fared any better. His leadership on the war in Afghanistan has been confused and at times lacking in conviction, and seemingly dictated by domestic political priorities rather than military and strategic goals. His overall foreign policy has been an appalling mess, with his flawed strategy of engagement of hostile regimes spectacularly backfiring. And as for the War on Terror, his administration has not even acknowledged it is fighting one. 

Read through the ten reasons and file them away. After the Democrats receive their November beatdown from the public, the ten reasons Gardnier labels today will be the same things openly discussed in the US media after November.

Via: Memeorandum

Via: The Wall Street Journal

Via: Rasmussen Reports

Via: Wall Street Journal

Via: Gallup 
Via: UK Telegraph

Liberals flunk basic economics questions

The Wall Street Journal has a very interesting Op-ed today. Daniel B. Klein and Zogby researcher Zeljka Buturovic conducted a survey of almost 5,000 adults to test the understanding of basic economic principles. They broke down the results by ideology (progressive to libertarian) and the results show that lefties don’t know diddly-squat about economics. 

The Wall Street Journal: Who is better informed about the policy choices facing the country—liberals, conservatives or libertarians? According to a Zogby International survey that I write about in the May issue of Econ Journal Watch, the answer is unequivocal: The left flunks Econ 101.

Zogby researcher Zeljka Buturovic and I considered the 4,835 respondents' (all American adults) answers to eight survey questions about basic economics. We also asked the respondents about their political leanings: progressive/very liberal; liberal; moderate; conservative; very conservative; and libertarian.

Rather than focusing on whether respondents answered a question correctly, we instead looked at whether they answered incorrectly. A response was counted as incorrect only if it was flatly unenlightened.

How did the six ideological groups do overall? Here they are, best to worst, with an average number of incorrect responses from 0 to 8: Very conservative, 1.30; Libertarian, 1.38; Conservative, 1.67; Moderate, 3.67; Liberal, 4.69; Progressive/very liberal, 5.26.

To be sure, none of the eight questions specifically challenge the political sensibilities of conservatives and libertarians. Still, not all of the eight questions are tied directly to left-wing concerns about inequality and redistribution. In particular, the questions about mandatory licensing, the standard of living, the definition of monopoly, and free trade do not specifically challenge leftist sensibilities.

Yet on every question the left did much worse. On the monopoly question, the portion of progressive/very liberals answering incorrectly (31%) was more than twice that of conservatives (13%) and more than four times that of libertarians (7%). On the question about living standards, the portion of progressive/very liberals answering incorrectly (61%) was more than four times that of conservatives (13%) and almost three times that of libertarians (21%).

Klein and Buturovic did not really have to spend too much time on this study.  Just by looking at Congress’ performance since 2006, pretty much tells the tale. The Democrats’ “Spend Your Way Out of Debt” plan is a complete disaster and is pretty proof positive that the left doesn’t know jack s—t about economics.

If I had to guess why liberals did so poorly, I would say it is because many of them are taught to always see the world through nuance, rather than clear-cut divisions of right and wrong.  While there is nothing wrong with this approach for the social and political realms, economics offers far less room for nuance. For example, borrowing tons of money you cannot afford to pay back, never ever, ever leads to a happy ending no matter how you look at it.

Via: Memeorandum

Via: The Wall Street Journal

SNL mocks Obama’s visit to China

This skit would be even more hilarious if it wasn’t both our president and our country that is the butt of the joke. Sadly though, Obama’s economic policy of “spend your way out of debt” is a laughable idea. The only reason why he has gotten this far with it is because we have such a bias media who invested their entire credibility in his election.

There are two things interesting to note here. First, Saturday Night Life is filmed in the very liberal New York City. You will note that there is not one moan, groan or catcalls from the audience. Instead we find hardy laughter in agreement with the skit.  This is bad news for Obama if he cannot find one faithful defender in NYC.

Second, there appears to be growing noise from the left that Obama ain’t all that and a bag of chips. Just this Sunday, lefty hack Maureen Dowd, suggests that Obama needs to be more like Sarah Palin. Of course Dowd says it in her snarky anti Palin sort of way, but she still speaks of Obama not measuring up.  Even Chris Matthews seems to have lost his man crush.

Via: Memeorandum

Via: Ms Underestimated

Via: New York Times

Sarah Palin on The Dollar and Energy Independence

From Sarah Palin's Facebook page:


Further Proof of the Need for Energy Independence

The British newspaper The Independent reported today that Gulf oil producers were negotiating with Russia, China, Japan and France to replace the dollar in pricing oil with a basket of currencies.[1] According to the Wall Street Journal, Arab oil officials have denied the story, but even the possibility of such a talk weakens the dollar and renews fears about its continued viability as an international reserve currency.[2] In fact, today a United Nations official called for a new global reserve currency to replace the dollar and end our “privilege” to run up huge deficits.[3] We can see the effect of this in the price of gold, which hit a record high today in response to fears about the weakened dollar.[4]

All of this is a result of our out-of-control debt. This is why we need to rein in spending, and this is also why we need energy independence. A weakened dollar means higher commodity prices. This will make it more difficult to pay our bills – including the bill to import oil.

In his book Architects of Ruin, Peter Schweizer points out that the Obama administration is focusing primarily on “green energy," while ignoring our need to develop our domestic conventional energy resources.[5] We’re ignoring the looming crisis caused by our dependence on foreign oil. Because we’re dependent on foreign nations for our oil, we’re also at their mercy if they decide to dump the dollar as their trade currency. We can’t allow ourselves to be so vulnerable to the whims of foreign nations. That’s why we must develop our own domestic supplies of oil and gas.

Though the chant of “Drill, baby, drill” was much derided, it expressed the need to confront this issue head-on before it reaches a crisis point.

Bottom line: let’s stop digging ourselves into debt and start drilling for energy independence.

- Sarah Palin

[1] See http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798

175.html

[2]  See http://online.wsj.com/article/SB125484066563367821.html

[3] See http://www.breitbart.com/article.php?id=CNG.e272eaa74dcc30f21c6ff763b0f37b.461&show_article=1

[4] See http://news.yahoo.com/s/afp/20091006/ts_afp/commoditiesgoldmetalprice_20091006144514

[5] See http://www.peterschweizer.com

*Note: Schweizer’s book is a real eye-opener. The sections on ACORN are quite informative

Who Is Minding The Store As The World Moves Against The Dollar?

From The UK Independent:

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar. 

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years. MORE

Obama and Congress seem more concern with sticking their snouts in the Treasury trough, than handling any of America’s international affairs. Whatever hot spots you look at on the international scene all you can see from this administration is minimal attention. An urgent request for more troops in Afghanistan is being delayed. Iran is going buck wild with their nuclear program and all we do is talk. Now China is positioning itself to replace us as the world’s sole superpower and all this administration and Congress can do is diligently work to shove an unwanted and expensive health care bill down our throats.

Keep in mind as these oil producing Arab states, China and our supposed "allies" work to replace the dollar with another, probably more expensive currency, Obama and Congress are readying their huge energy tax called Cap and Trade.  It is almost like Obama and Congress are deliberately working against the nation.

On a final note, I just want to point out once again that this is another example of the world not having a Kumbaya moment because Obama was elected. The left is finding out the hard way that anti-Americanism wasn’t just a Bush phenomenon.

Via: Memeorandum

Via: The Independent

Palinomics

Yesterday, in Anchorage at an event for Michael Reagan, Governor Sarah Palin had a few things to say about Obama's economic policies:

"Since when can you get out of huge national debt by creating trillions of dollars of new debt?" Palin asked. It all really is so backwards and skewed as to sound like absolute nonsense when some of this economic policy is explained."

"We need to be aware of the creation of a fearful population, and fearful lawmakers, being led to believe that big government is the answer, to bail out the private sector, because then government gets to get in there and control it," she said. "And mark my words, this is going to be next, I fear, bail out next debt-ridden states. Then government gets to get in there and control the people."

"Some in Washington would approach our economic woes in ways that absolutely defy Economics 101, and they fly in the face of principles, providing opportunity for industrious Americans to succeed or to fail on their own accord," she said. "Those principles it makes you wonder what the heck some in Washington are trying to accomplish here."

Well, bravo! I cannot tell you how many times I have listened to Obama talk about how the answer to our current economic downturn is massive spending on education, health care and energy. It all sounds like utter foolishness when you consider that our main economic woes lies in the mortgage mess. Not to mention the fact that we are flat ass broke or in his own words "we're out of money".

It has also puzzles me why the Republicans in Washington cannot state these simple facts as clearly as Governor Palin does. I hear them talking about Obama's plan spends too much, it is going to cause inflation, the size of the debt we are running up, and so on. But not a single one of them called it what it is ... G-damn foolish nonsense!

They don't even point out the truth behind all of this insane spending... government control. Had Republicans started the drum beat of "government control" early on, no one would still be buying Obama's protest that he doesn't want to run banks and car companies.

In just three short simple paragraphs, Palin clearly lays out the folly of all this spending and the real reason behind it. Why can't the rest of the Washington Republicans do this? Instead, they have a silly meeting over whether or not to call Democrats socialists. Puleeze!

Governor Palin doesn't just talk the talk about sound fiscal policy, she walks the walk too. Check out these numbers (h/t Conservatives4Palin):

Governor Murkowski's last budget FY2007: $11,697,400,000

Governor Palin's latest budget FY2010: $10,570,000,000

Total reduction in spending between 2007 and 2010: a whopping 9.5% or $1,127,400,000

Imagine that, lowering your state's budget to less than it was three years ago. Even in most of our fiscally responsible states, they have small increases for inflation. Not here, just pure spending cuts. Think about how much brighter our children's future would be had Obama and Congress used a little common sense rather than wasting all this money to buy government control.

When 2012 comes around, Obama and the Democrats will have a lot to answer for. America will be looking for someone who really knows how to tighten Washington's belt. Bring on the Palinomics!