Monday, February 6, 2012

The Government Bubble

Just my latest theory:
We are probably headed to a second recession as a result of "the government bubble".

The GDP of the country is roughly 14.5 trillion dollars/year.
The national deficit is roughly 10% of our GDP and has been for the past few years.

That's just the numbers.  You can look them up in half a minute through Google.

Roughly 10% of our economy right now is coming from deficit spending, which is to say, it is coming from borrowed money at a rate we can't keep up forever.
Roughly 1 out of every 10 people currently employed owes their job to this deficit spending.

So, for example, the upcoming cuts to the DOD call for the Army to shrink by 80,000 positions and the Marines by 20,000 positions.  So this will be 100,000 job openings that are being canceled as we try and draw down the deficit.  The Navy is additionally canceling about a dozen new ship orders over the next 5 years, for however many jobs that would have accounted for.

Not that I am, by any means, saying I supported this massive level of government spending.  I think Keynesian economics is probably bullshit, but I do think we have propped ourselves up with a frenzied pace of borrowing money and that lifeline is going to get pulled in the foreseeable future.

The problem, I think, is that the Obama administration has not addressed the core problem, which is America's competitiveness in the global market.  In order to really turn the economy around, we have to compete better with foreign companies.  We need to look more attractive to businesses and corporations looking to set up shop.  I know of nothing the Obama administration has done towards this end.  So we are no better off now than we were in 2008 when this all started.  The "economic recovery" has been entirely due to the 5+ trillion dollars Obama/Congress spent in the form of new debt over the last 3 years.

If we can keep adding 5 trillion to the national debt every 3 years, we might be able to hold steady.  If not, then we are going to go right back in the recession, because the underlying problems have not been addressed.

Wednesday, June 8, 2011

The Problem with Politics

The problem with politics today is that it's less like people figuring out how to run a country and more like two rival sports teams trying to score points, complete with fans beating each other up for wearing the wrong jersey.

Patriot Act passed with wide bipartisan support. Later, since the Patriot Act was passed under Bush, it was proclaimed that Republicans were stealing our freedoms and Bush was evil and so forth, completely disregarding the bipartisan support that got it through Congress to begin with.

Patriot Act extended, passing House and Senate with bipartisan support and signed by Obama.

There have been other shorter extensions I've skipped, but suffice to say they passed, under both a Democrat controlled Congress and a Republican controlled Congress, and Bush and Obama have both signed them into law. All of the sports-style rivalry was just for the sake of the show.

Just as Democrats used the Patriot Act as a way to villify Republicans in the media, you can bet that had the Democrats struck down the law and then America got attacked, Republicans would have leaped on the chance to villify them for that.

The point is that priorty #1 these days is Scoring Points in the Media. Priority #63 would be Solving the Problem, right behind Priority #62, which is Make Sure the Refrigerator Door of the Congressional Breakroom is Closed.

A lot of this is perpetrated by the media. They love a good face off. Some guys in a room sitting down to work things out? Booooring. That's just C-SPAN. Republican vs Democrat cage matches? Exciting! Throw in some one-sided websites and even more one-sided graphics and that's entertainment! Paint Democrats like THIS and then paint Republicans like THIS and we can really get them going at it.

Apparently they think that the majority of Americans are huge suckers, easily manipulated into going at each other while the important issues slip by unnoticed in the background.

Apparently they are largely correct about this. On the web and the media, the two parties are completely at odds. Most people won't even discuss politics unless they are on the same side, because we are conditioned into believing that it's all Red Team vs Blue Team and never the two shall meet. We spend more time talking about Palin, Beck, Pelosi and Olbermann than we do talking about real issues. I heard more about Schwarzenegger fucking the maid than I heard about Obama extending the Patriot Act.

Red Team and Blue Team are doing the same stuff where it matters. They are both big spenders. They are both big DEFICIT spenders. They are both supporting the wars we are in. They both back the Patriot Act and continue to extend it. They differ on some issues, but not uniformly enough that we should be easily slapping labels around based on party affiliation.

The media fueled frenzy of Democrat vs Republican, greatest sports rivalry of all time, is doing terrible things to us, and we are eating it right up.

Wednesday, March 30, 2011


Lately the discussion has been "Democrats vs Republicans. Basically the same thing these days, aren't they?"

After Libya, I'm more inclined to agree, as, I think, a lot of people are.

Don't get me wrong. I'm actually completely in favor of using American military power to stop a nation's military from simply going out and slaughtering their own citizens. Nobody inside can stop them, so it has to come from outside. We did it in the case of the Serbian conflict and I think we should have done it in Burma.

But the "humanitarian" aspect of Libya has not at all be sold to me. The rebels appear to have guns, in this case. It's not a massacre, as in Burma, but rather, an armed rebellion with two sides who seem to be killing each other. In that event, I don't see why it's "humanitarian" to back the rebels over the Libyan government troops. Or vice versa. In fact, I'm not sure why we should be remotely involved in what's going on in Libya.

Now that we're in it, though, I hope we're in it all the way. "Never do your enemy a small injury". We have certainly demonstrated to Ghadaffi that we don't like him anymore, and we will back a rebellion against him, which means if he actually gets through this rebellion, he is certainly going to seek his revenge against us and there won't be any more Mr. Nice Guy.

Because as I recall, he was one of the unstable leaders back in the days when he was drawing his "line of death" and basically made us go in and bomb him. After that he seemed to settle down. Gave up his nuclear ambitions. He stopped bothering us and we stopped bombing him.

Now the honeymoon is clearly over. We are back to bombing him and if he gets out of this, he's going to seek ways to get back at us.

Had we done nothing and the rebels won, we could have welcomed them. Congratulations on your successful overthrowing of that guy we never really liked anyway! Had we done nothing and Ghadaffi won, we could have just said good job on repressing those rebels, and gone back to business as usual. But now we've picked sides, and we'd best make sure that they win.

I supported Iraq. Saddam was flaunting the U.N. and shooting at our planes and had been known to own and use chemical warheads, even if we couldn't find any. He never really wound down from the first gulf war.

I supported Afghanistan. Taliban. Nuff said.

But Libya I just don't understand.

Tuesday, September 15, 2009

Real Estate: Elements of the Storm

I was thinking about the whole continuing real estate problem...

One thing I think has changed over, say, 30 years ago is that we are practically a society of transient workers now. Fewer people work in stable jobs that linger for 20 years. Far more people work in jobs that last, say, 2-8 years before requiring them to move on. Maybe the old job went to India. Maybe it got bought by a bigger company. Maybe the facilities simply moved to another state. Maybe they found a better offer somewhere else. Whatever the reason, they're moving and moving and moving again.

This alone creates a strong feeding ground for a real estate disaster. Short term purchases are far more likely to run into some type of recession that causes house prices to drop, and now you're screwed. Your job went away. You need or strongly want to move. You can't because you owe more than the house is worth.

I also think ARMs are going to play a big factor, especially as interest rates start going back up. You lose your job, you need to sell but you can't because your loan is underwater. So you stay on, maybe take a lower paying job, squeak by with your mortgage, but then interest rates go up and your ARM starts costing more. Now your job didn't change, but you can't afford your house anymore and you can't sell it because the loan is underwater.

And I was thinking about "specialization". America produces a lot of specialized stuff. The problem with specialized stuff is it takes specialized skills, which is why people have to move so much. When your job manufacturing printing presses goes away, you can't just find another printing press manufacturing job in your area. There aren't any. Everything in your area is another specialized job for which you do not have the skill. To find another job for your skillset, you need to move. If you can't move because your mortgage is underwater, you're screwed.

I'm wondering if these are the elements of the "perfect storm".

1) Americans stopped producing mundane, non-specialized goods. We only produce specialized goods.
2) When your specialized job goes away (which it will eventually, because this is the nature of specialized work), you have to move.
3) If the housing market takes any sort of tumble, your mortgage may be underwater and you can't move.
4) You are boned and the economy starts to buckle when enough people land in this situation. Too many people find themselves applying to Home Depot for work because their skill sets are too specialized and they can't reach the work for their specialization.

For the coup de grĂ¢ce, let's think about tax write-offs for mortgage interest.

Let's say you want to buy a $200,000 home and you have $40,000 in the bank.
Do you:
a) Put $10,000 down (5%) and spend the other $30,000 elsewhere
b) Put $40,000 down (20%)

With no tax incentive for mortgage interest, you would do "b". This would lower your interest payments and save you a lot of money. In fact, you may be encouraged to pay off your premium as fast and as early as possible just to get out from under your interest payments.

A tax incentive allowing you to write off mortgage interest wipes out that advantage, though. Doing "b" saves you nothing. You will instead do "a", use the government tax incentive to write off what would have been the savings of "b" and then spend the rest of your money somewhere else.

So we have created the perfect storm:
  • Specialized workforces move a lot and therefore tend to have newer home loans.
  • Tax incentives encourage new home loans to be as close to the cost of the house as possible.
  • Any drop in housing prices, therefore, will very quickly put our loans underwater, potentially inflicting personal financial ruin.
  • Enough people in personal financial ruin becomes national financial ruin.

If my theory is true, then this entire economic disaster can be attributed to government interference:
  • Tax incentives for home loans are a government intrusion into personal finances which has encouraged reckless behavior by individual home buyers.
  • High government taxes impacting basic manufacturing jobs have encouraged those jobs to move out of the country, necessitating that our work force become more specialized and therefore more transitory.
Transitory workers + incentives for dangerous financial situations = the perfect storm.

If my theory is correct, we haven't heard the last of this current recession because we haven't done anything to improve the two factors that fed it: government meddling in personal finance and government taxes making basic American manufacturing uncompetitive in the global market.

Friday, August 28, 2009

Health Care
Article title: "Majority of Americans Believe Health Care Reform Myths"


How many of those are actually "myths"?

For example, the "myth" of government funded abortions. The story behind it is that by the wording in the bill, what will and will not get funded will be determined after the bill goes live by some executive in charge of the system. Abortion is neither on nor off the list, but it's certainly doable given the current language of the bill. The person in charge would simple have to say, "Yes, we are funding abortions" and there you'd have it.

Some Republicans have tried to insert language specifically prohibiting abortion funding but it got struck down.

Obviously "abortion" is a hot button item but they could have just as easily said "breast implants" or "penis extensions". The bottom line is that the bill doesn't enumerate what will or will not be funded and efforts to limit what CAN be funded have been struck down by the Democrats, which I find to be rather mysterious. Setting a handful of definitions on what the government health care plan must or must not cover would do a lot to ease the unpopularity.

And stuff like this:
"Five out of 10 think cuts will be made to Medicare in order to cover more Americans (66 percent of Republicans, 37 percent of Democrats, 44 percent of Independents)."

Is that a "myth"? It sounds more like a prediction of the future and the real question is whether you're optimistic about it or not. Can Democrats guarantee that Medicare cuts will NOT be made? Of course they can't guarantee that. Medicare itself ended up costing vastly more than anticipated, didn't it? So really nobody has any idea what this health care reform will cost or what financial sacrifices might have to be made to keep it on the road.

I would call the article, "Americans Easily Duped By Disingenuous Left-Wing MSM Articles".

For my 2 cents, the problem here isn't "health care reform". I think many conservatives would agree that health care has problems which need to be addressed.

However, this bill is going about it in completely the wrong way. It does nothing to address medical costs and the language of the bill itself is very difficult to read and understand. They need to burn the thing and start over from scratch with something simpler and more focused on individual problems rather than simply creating a massive bill for the sake of saying "we have government health care now".

The currently proposed plan from the Democrats is simply a non-solution, as I see it. Conservatives aren't opposed to health care reform; they're just opposed to this particular legislative abomination.

Thursday, August 13, 2009

I've been seeing all these town hall meetings about the health bill. I got to wondering when my representative, Christopher Van Hollen, was going to hold one.

Here was his version of a town hall meeting, I guess:

Dear Friend,

After decades of struggle, we are now closer than at any other time in history to providing quality, affordable, and accessible health care for every American.

Grassroots Democrats like you are the reason we've gotten this far. Through your generous financial support and your tireless activism, you've created a force for progressive change on behalf of President Obama.

With all the fast-breaking developments this week, I wanted to gather our most dedicated supporters like you to provide an update on where we stand, answer your questions, and discuss our plan for action on health care reform.

Join me for the DCCC's Health Care Reform Tele-Town Hall Meeting this Friday, July 31 at 2:30 PM EDT. Sign-up today to participate from wherever you are.

Thank you for putting us on the verge of making history with health care reform. Let's keep up the fight against the Republican attacks and help President Obama finish the job.

Please join me on Friday.


Rep. Chris Van Hollen
DCCC Chairman

So. His town hall was a "tele town hall".

Addressed specifically to Democrats. Not all constituents. Just the Democrats.

I guess that's why I never heard about it.

Yyyeaah. Somehow I don't think he's getting my vote next election either.

I doubt he cares. Here in Maryland, conservatives are accustomed to just not having representation. The interesting thing is I think there's actually a lot of us, it's just that not enough of us think it's worth showing up for an election because the liberals always win (I hear people say that. Me: "You voting?" Them: "Nah. Democrats always carry Maryland. There's no point.")

Well, I voted last time. Voted against him. I'll do the same next election. We need more conservatives to do this. At least then we can say "we tried". Maybe we'll surprise these buzzards and make them realize they need to start representing their entire district and compromising between the sides rather than simply ignoring conservatives entirely. Better to lose with 42% of the vote and make him a little concerned than to let him win by a landslide and think he's got it in the bag for years to come.

Thursday, July 2, 2009


"Those ridiculous contracts with pages of fine print that no one can figure out—those things will be a thing of the past," the president said in a statement accompanying the 152-page draft bill. "And enforcement will be the rule, not the exception."

Hopefully they'll start enforcing it in Congress first. Government would probably run a lot smoother if they had to make bills small enough that everyone would actually read and understand it before voting on it.