Congress has passed a debt limit increase...
clap...clap...clap
The debt limit increase has nothing to do with the debate about balancing the budget unless you want to balance the budget right now. The threat that the US credit rating may be downgraded persists. Even many Tea Party people believe that that is not realistic to immediately balance the budget. But tying the passage to commitments to trim the future budget was a smart thing to do.
Again, a balanced budget amendment is a good thing, but not until Congress is disciplined enough to balance the budget without a major personal income tax increase regardless of socioeconomic class. Also, pay raises for Congress, the President, the Cabinet and the Joint Chiefs should be tied to a balanced budget. This means that these people will not see pay increases unless the budget is balanced. If you tie pay raises to a balanced budget, Congress will find a way to get it done.
We would also like to see all 50 states and all municipalities in the US be able to balance their budgets without help from the Federal Government. This will set a positive example to all individuals who are now part of the Entitlement Generation. If States, Counties and Cities can do without Federal assistance businesses and individuals can as well. This battle is only beginning.
Tuesday, August 2, 2011
Wednesday, July 13, 2011
Rebuilding The Economy, Why Interest Rates Are Too Low.
Yes, as of July 13, 2011, interest rates are two low to stimulate the economy. And yes, Federal Reserve Chairman Ben Bernacke is wrong to keep them this low. A simple lesson in supply and demand will demonstrate why.
1. The price or cost of borrowing money is interest.
2. The law of supply and demand reveals that is the price is too high you have a surplus and if the price is too low you a shortage.
In the late 1970s, the fed raised interest rates well into the double digit range to fight inflation. As a result, the price to borrow money was too high and people would more reluctant to assume debt. When the interest rate is 15% the payment on a 100,000 home is 1200--principle and interest. The industry that was hurt more by these high interest rates was the US auto industry. Americans began to avoid the purchase of expensive Chevy and Ford cars for cheaper models from Toyota and Honda. We entered a period of stagflation...where both inflation and unemployment were high. The economy was stagnant. This led to the relaxing of lending rules, to get people to borrow, that remained in place until recently. It led to the housing crisis and the economic situation we find our country in today.
To get people to borrow again, the Federal Reserve has kept interest rates as low a possible. With interest rates being too low, banks have to tighten lending rules. Mainly because banks can not make enough money on the mortgage alone, they change fees to make up for the lack of interest that they earn. People are willing to borrow and companies are willing to borrow. With interest rates being too low, lending rules have become at best more complicated, but it is tougher, at any rate to borrow more money today. If the Fed allows interest rates to rise, then banks will be more willing to lend and loosen borrowing rules. With more people being able to borrow, the economy will grow.
1. The price or cost of borrowing money is interest.
2. The law of supply and demand reveals that is the price is too high you have a surplus and if the price is too low you a shortage.
In the late 1970s, the fed raised interest rates well into the double digit range to fight inflation. As a result, the price to borrow money was too high and people would more reluctant to assume debt. When the interest rate is 15% the payment on a 100,000 home is 1200--principle and interest. The industry that was hurt more by these high interest rates was the US auto industry. Americans began to avoid the purchase of expensive Chevy and Ford cars for cheaper models from Toyota and Honda. We entered a period of stagflation...where both inflation and unemployment were high. The economy was stagnant. This led to the relaxing of lending rules, to get people to borrow, that remained in place until recently. It led to the housing crisis and the economic situation we find our country in today.
To get people to borrow again, the Federal Reserve has kept interest rates as low a possible. With interest rates being too low, banks have to tighten lending rules. Mainly because banks can not make enough money on the mortgage alone, they change fees to make up for the lack of interest that they earn. People are willing to borrow and companies are willing to borrow. With interest rates being too low, lending rules have become at best more complicated, but it is tougher, at any rate to borrow more money today. If the Fed allows interest rates to rise, then banks will be more willing to lend and loosen borrowing rules. With more people being able to borrow, the economy will grow.
Monday, July 11, 2011
Karl Wimmer Declares...
Karl Wimmer has declared his candidacy for the US Congress in Utah even though the Congressional District boundaries have yet to be decided. Most plans put the southwest portion of Salt Lake County into the 4th Congressional District.
For those of you unfamiliar with Wimmer, here is what I know about him.
-He is a member of the Patrick Henry Caucus. This is not a Tea Party Group. This group believes in a weaker federal government and stronger state governments. Their belief is that the various states can run many things better than the Federal government can. They are for the dismantling of the US Department of Education and various other Federal agencies. This will allow for lower Federal taxes, but will obviously lead to higher state taxes.
-Wimmer has appeared on the Glen Beck show appealing for states rights.
-Otherwise, Wimmer totes the Tea Party line.
For those of you unfamiliar with Wimmer, here is what I know about him.
-He is a member of the Patrick Henry Caucus. This is not a Tea Party Group. This group believes in a weaker federal government and stronger state governments. Their belief is that the various states can run many things better than the Federal government can. They are for the dismantling of the US Department of Education and various other Federal agencies. This will allow for lower Federal taxes, but will obviously lead to higher state taxes.
-Wimmer has appeared on the Glen Beck show appealing for states rights.
-Otherwise, Wimmer totes the Tea Party line.
Saturday, July 2, 2011
Oil Companies and Tax Breaks
It does not seem fair that we are paying through the nose for gasoline, yet oil companies are making a huge profit, does it now? According to President Obama and Harry Reid, the oil companies deserve to help us close the gap on our budget deficit. After all, it is only fair, correct?
The big flaw is this logic is the law of supply and demand. When you have limited supplies and high demand the middle man is making a killing. It is the nature of economics. If prices are artificially low, no matter who is the reason for the low price, and the demand remains constant, then the result will be a shortage. The rich will get even richer. The consumers will get left with even less while paying more. Forcing the oil companies to lower their prices, or to charge them more taxes will cause supplies to dwindle and prices will go even higher. Supplies will become more limited. This policy will only make environmentalists happy.
If Congress really wants to punish the oil companies, they should enact policies that will permanently increase supply. This will cause the prices to drop. It will then cut into the profits of the oil companies. Then the only vehicles on the planet that will be parked more are the leer jets of oil executives. What any company fears the most is more competition.
The big flaw is this logic is the law of supply and demand. When you have limited supplies and high demand the middle man is making a killing. It is the nature of economics. If prices are artificially low, no matter who is the reason for the low price, and the demand remains constant, then the result will be a shortage. The rich will get even richer. The consumers will get left with even less while paying more. Forcing the oil companies to lower their prices, or to charge them more taxes will cause supplies to dwindle and prices will go even higher. Supplies will become more limited. This policy will only make environmentalists happy.
If Congress really wants to punish the oil companies, they should enact policies that will permanently increase supply. This will cause the prices to drop. It will then cut into the profits of the oil companies. Then the only vehicles on the planet that will be parked more are the leer jets of oil executives. What any company fears the most is more competition.
Name Change to Astroturf Republicans....
Since there is a pretty good chance that I will be moving out of the state of Utah for work, I have changed the name of this blog and will focus more on National issues. I would like to thank Harry Reid for the name.
Tuesday, June 28, 2011
Should Obama Feel Threatened by Michelle Bauchmann?
On Hannity yesterday, Michelle Bachmann says that the Obama regime fears her candidacy. Of course, she has shown the type of penchant, that only a politician can, at stretching the truth. Every politician does to some degree, but Bachmann has shown the type of truth stretching that only a Nazi could be proud of. Either that, or she is showing us the intelligence that we are missing in George W. Bush.
Not that this matters to the Tea Party. They would rather push a political novice than someone who agrees with them on 95% of the issues. Which, by the way, is about where Mitt Romney and other more moderate republicans lie. This is why the Tea Party is a danger to the Republican party. At one point, when you involve yourself in party politics, you have to decide if you are going to support someone who you only have 95% in common with who can win, or to continue to support someone who is a sure loser.
The trouble with Bachmann is this: If you wish to spin yarn and convince the voters in Minnesota's 6th congressional district to vote for you, that is one thing. But the President of the United States is different. Running for President, you have every news organization in the world fact checking everything you say. Half truths in presidential politicking have brought down more powerful people than Michelle Bachmann.
Now, I know that most of the people who read this are going to come back with a statement like, "Mitt Romney flip, flops" or "anyone is better than Obama" or something along those lines. My answer to you is this, at least ____________ (fill in the blank with Romney, Perry, Huntsman, Pawlenty, Gingritch, etc.) knows that John Quincy Adams was not at the Constitutional Convention, his father was. And yes, that does matter considering the President will chose the next Supreme Court Justice and appoints other judges to the bench. And yes, Mitt Romney has flip-flopped in his career, but who hasn't? Every politician spins and stretches the truth. But not to the extent that Bachmann already has. There is a limit to what voting Americans can handle.
One other thing about Michelle Bachmann and flip, flop. If there is any candidate for the GOP nomination who talks one way and votes another, it is Bachmann. Please examine her voting record, especially if you think the troop surge in Iraq was a good thing. She is only 9Publish Post8% Tea Party. No one in the race is 100% Tea Party.
Let's bring one fact to the forefront in answering the question about whether Obama feels threatened by Bachmann. There are three men who the Obama re-election campaign is focused on. Two of the three are former Governors, and the other is a current Governor. Bachmann is not a current or former state governor. A member of the House of Representatives has never beaten a sitting US President. If Bachmann becomes the GOP nominee, we are almost guaranteed to have another four years of Obama. History says so. But the American people will have the final say so.
Not that this matters to the Tea Party. They would rather push a political novice than someone who agrees with them on 95% of the issues. Which, by the way, is about where Mitt Romney and other more moderate republicans lie. This is why the Tea Party is a danger to the Republican party. At one point, when you involve yourself in party politics, you have to decide if you are going to support someone who you only have 95% in common with who can win, or to continue to support someone who is a sure loser.
The trouble with Bachmann is this: If you wish to spin yarn and convince the voters in Minnesota's 6th congressional district to vote for you, that is one thing. But the President of the United States is different. Running for President, you have every news organization in the world fact checking everything you say. Half truths in presidential politicking have brought down more powerful people than Michelle Bachmann.
Now, I know that most of the people who read this are going to come back with a statement like, "Mitt Romney flip, flops" or "anyone is better than Obama" or something along those lines. My answer to you is this, at least ____________ (fill in the blank with Romney, Perry, Huntsman, Pawlenty, Gingritch, etc.) knows that John Quincy Adams was not at the Constitutional Convention, his father was. And yes, that does matter considering the President will chose the next Supreme Court Justice and appoints other judges to the bench. And yes, Mitt Romney has flip-flopped in his career, but who hasn't? Every politician spins and stretches the truth. But not to the extent that Bachmann already has. There is a limit to what voting Americans can handle.
One other thing about Michelle Bachmann and flip, flop. If there is any candidate for the GOP nomination who talks one way and votes another, it is Bachmann. Please examine her voting record, especially if you think the troop surge in Iraq was a good thing. She is only 9Publish Post8% Tea Party. No one in the race is 100% Tea Party.
Let's bring one fact to the forefront in answering the question about whether Obama feels threatened by Bachmann. There are three men who the Obama re-election campaign is focused on. Two of the three are former Governors, and the other is a current Governor. Bachmann is not a current or former state governor. A member of the House of Representatives has never beaten a sitting US President. If Bachmann becomes the GOP nominee, we are almost guaranteed to have another four years of Obama. History says so. But the American people will have the final say so.
Saturday, June 18, 2011
Structural Issues with the economy?
President Obama is getting a lot of deserved ridicule for stating that ATMs are costing Americana's their jobs. Every time you use your ATM to withdraw money from your account, it costs an American a job. This is true, but it is this kind of thinking that can actually hurt the economy. In most seasons, there are not enough people to fill the demand for bank tellers if there were no ATMs. This would drive up bank teller' wages. ATMs are cheaper than people. With all of the bank failures in the past 4 years, the problem could have been exacerbated without ATMs. Therefore, ATMs actually saving jobs, not costing them.
Businesses have become more efficient, but that does not mean that there are fewer jobs as a result. It simply means that they are more efficient. Better efficiency is business saves the firm and that saves jobs. It is like throwing cargo from a plane or a ship to stay afloat.
But there are real structural problems with our economy. To name a few.
-Two income households. Not that earning more money is bad. But it makes it difficult for a household to change their address when one spouse can find a job in another city and the other can not.
-The housing crisis. Even if both spouses can move to a new city, many people are upside down on their mortgages and would have to take a big loss to sell their homes and move.
The bottom line is that households are not as flexible in their employment as they used to be. This has to be a factor in the movement of American jobs overseas. The bad news for business is that these problems will spread overseas as well, if they are not already happening. There are two answers for this. Businesses need to be more flexible, especially letting people work from home. And there needs to be better support for entrepreneurship in this US.
Businesses have become more efficient, but that does not mean that there are fewer jobs as a result. It simply means that they are more efficient. Better efficiency is business saves the firm and that saves jobs. It is like throwing cargo from a plane or a ship to stay afloat.
But there are real structural problems with our economy. To name a few.
-Two income households. Not that earning more money is bad. But it makes it difficult for a household to change their address when one spouse can find a job in another city and the other can not.
-The housing crisis. Even if both spouses can move to a new city, many people are upside down on their mortgages and would have to take a big loss to sell their homes and move.
The bottom line is that households are not as flexible in their employment as they used to be. This has to be a factor in the movement of American jobs overseas. The bad news for business is that these problems will spread overseas as well, if they are not already happening. There are two answers for this. Businesses need to be more flexible, especially letting people work from home. And there needs to be better support for entrepreneurship in this US.
Tuesday, June 14, 2011
Conservatives have been duped on this one.
Orrin Hatch has introduced a balanced budget amendment. I am all for a balanced budget in Washington, but a balanced budget amendment will lead to higher taxes. Surely we can not guarantee that we will always have a body in the senate and house and White House that will agree to put your needs first. Most states that have a balanced budget amendment in their constitution pay for it in higher taxes. We want a congress that has the courage to make the right decisions, not feel good proposals that have no chance in Hell at seeing the light of day.
Thursday, June 9, 2011
GOP Presidential Wannabee's Power Rankings...June, 2010
1. Former governor Mitt Romney of Massachusetts
2. Texas governor Rick Perry
3. Former Utah governor Jon M. Huntsman, Jr.
4. Former Minnesota governor Tim Pawlenty
5. Former New York City Mayor Rudolf Giuliani
6. Former Senator Rick Santorum of Pennsylvania
7. Representative Ron Paul of Texas
8. Representative Michelle Bachmann of Minnesota
9. Former Governor Sarah Palin of Alaska
10. Former Federal Reserve Banker Herman Cain of Georgia.
2. Texas governor Rick Perry
3. Former Utah governor Jon M. Huntsman, Jr.
4. Former Minnesota governor Tim Pawlenty
5. Former New York City Mayor Rudolf Giuliani
6. Former Senator Rick Santorum of Pennsylvania
7. Representative Ron Paul of Texas
8. Representative Michelle Bachmann of Minnesota
9. Former Governor Sarah Palin of Alaska
10. Former Federal Reserve Banker Herman Cain of Georgia.
Would You Hire This Person...
Who would you hire to be the CEO of your firm. Your company has experienced struggles in the current economy.
Candidate A
You are interviewing a job candidate who is not only sharp looking but says all the right things. This manager is considered a fast-track candidate. But in your investigation, you find out that she quit her last job because the going got a little rough.
Candidate B
You are interviewing someone else who also looks sharp and says all of the right things, but you review your files and find that you interviewed the same person four years earlier, and found that he changed his story on at least one major interview question. Otherwise this person is a capable leader and has a proven track record of strong performances. He even turned around a failing division.
Candidate C
Another person on the docket. Another who has a proven track record. This person left his job with your firm and worked for the competition for 2 years and now wants to come back. But he was able to make a strong performing division better.
Candidate D
Another candidate for your job is internal. Always on the edge as a leader in some issues, does not always walk the company line. But a few years back, came through like a champ when circumstances were about to put the firm out of business. He turned around a large failing division about 15 years ago.
Candidate E
He took over the same job from a manager who later filled the same position you are now interviewing for. Never really a superstar in his own right, but his team is leading the firm. Not the most charismatic leader, but proven effective. But his division has never experienced poor performance and his ability to turn around the company may be in question because he has never done it before.
Which candidate would you chose?
Candidate A
You are interviewing a job candidate who is not only sharp looking but says all the right things. This manager is considered a fast-track candidate. But in your investigation, you find out that she quit her last job because the going got a little rough.
Candidate B
You are interviewing someone else who also looks sharp and says all of the right things, but you review your files and find that you interviewed the same person four years earlier, and found that he changed his story on at least one major interview question. Otherwise this person is a capable leader and has a proven track record of strong performances. He even turned around a failing division.
Candidate C
Another person on the docket. Another who has a proven track record. This person left his job with your firm and worked for the competition for 2 years and now wants to come back. But he was able to make a strong performing division better.
Candidate D
Another candidate for your job is internal. Always on the edge as a leader in some issues, does not always walk the company line. But a few years back, came through like a champ when circumstances were about to put the firm out of business. He turned around a large failing division about 15 years ago.
Candidate E
He took over the same job from a manager who later filled the same position you are now interviewing for. Never really a superstar in his own right, but his team is leading the firm. Not the most charismatic leader, but proven effective. But his division has never experienced poor performance and his ability to turn around the company may be in question because he has never done it before.
Which candidate would you chose?
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