Tim Burns has an even chance of winning the Congressional seat long held by John Murtha, who died earlier this year. Murtha was Congress's king-of-pork and had served as the Congressman in this district for more than two decades. It is 60 percent Democratic by party registration, but the district went for Gore in 2000 and Bush in in 2004 (which is interesting in of itself).
This is a must win for Democrats. Losing here would suggest as much as a 100 seat swing in the House of Representatives towards the Republicans in November. Both the Republican and Democratic candidates are running away from Obama and the health care debacle. (That seems to be true most places).
This is Pennsylvania's Scott Brown moment. I forecast that Burns will win and win handily. Why? For one thing, the district is the largest coal mining district in Pennsylvania and the Obama is coal-unfriendly, to put it mildly. For another, this district has gun toting, abortion-hating, Reagan democrats. I suspect they've seen and heard enough of Obama and are ready to go in another direction.
The other races, regardless of who wins, won't tell us much. Paul, Sestak, and Lincoln should win their races, but Lincoln may be forced into an embarassing and brutal runoff before she can reclaim the Democratic nomination for Senator in Arkansas. On Saturday, watch for Hawaii to elect a Republican, Charles Djou, their new Congressman in a bizarre three way race. It's hard to imagine Djou surviving his re-election in November, when it's just one Republican against one Democrat, in such a heavily Democratic district, but who knows.
Rand Paul, in Kentucky, is by far the most interesting candidate in Tuesday's elections. He should win the Kentucky Republican nomination easily over party favorite, Tray Grayson. Polls show, contracy to Democratic chatter, that he will win the general election easily as well. Mitch McConnell, the Senior Senator from Kentucky endorsed Grayson to his chagrin. A new Paul in Congress would be a welcome addition. His father, represents a middle class Congressional district just outside of Houston, Texas. Congressman Paul and his son are thoughtful libertarians and not afraid to tell it like it is.
The only race that could upset the landscape is if the Republicans win the 12th District Congressional seat in Pennsylvania. That would forecast a tsunami this November, sweeping the Obama supporters from control of the House and possibly the Senate as well.
Thanks you, Mr. President.
Senin, 17 Mei 2010
Credit Card Nightmare
Now that Obama has succeeded in a credit card "reform" package, which prohibits credit card companies from running their own businesses and competing with one another, the results are pouring in.
The credit card companies are cancelling credit cards and reducing credit limits throughout the country. Google your favorite credit card company and add the word "complaints" and you can read page after page of the victims of this latest Obama outrage.
If you pass a law that says that credit card companies can't raise rates on weaker customers, then the credit card companies will simply eliminate those customers. Warren Buffett and Bill Gates (who support stupidity like this) have nothing to fear. Their credit cards will remain intact with nice fat credit limits that they don't need. But, for much of small business and a significant chunk of the middle class, credit availability is now being dramatically restricted. It's the old adage: if you need credit, you can't get it...if you don't need credit, you can have it in abundance.
It's an article of faith within the Obama Administration that if A loans money to B when B really needs it and may not have a perfect credit rating, then B is the victim and A is the villain. That's the meaning of the constant Obama demagoguery on "predatory lending."
Okay, fine. So be it. Those who provide credit to the economy have gotten the message and are no longer lending to those who need it the most. Thanks, again, Mr. President. Another body blow to the middle class and small business. Too bad if you were hoping for an economic recovery.
The credit card companies are cancelling credit cards and reducing credit limits throughout the country. Google your favorite credit card company and add the word "complaints" and you can read page after page of the victims of this latest Obama outrage.
If you pass a law that says that credit card companies can't raise rates on weaker customers, then the credit card companies will simply eliminate those customers. Warren Buffett and Bill Gates (who support stupidity like this) have nothing to fear. Their credit cards will remain intact with nice fat credit limits that they don't need. But, for much of small business and a significant chunk of the middle class, credit availability is now being dramatically restricted. It's the old adage: if you need credit, you can't get it...if you don't need credit, you can have it in abundance.
It's an article of faith within the Obama Administration that if A loans money to B when B really needs it and may not have a perfect credit rating, then B is the victim and A is the villain. That's the meaning of the constant Obama demagoguery on "predatory lending."
Okay, fine. So be it. Those who provide credit to the economy have gotten the message and are no longer lending to those who need it the most. Thanks, again, Mr. President. Another body blow to the middle class and small business. Too bad if you were hoping for an economic recovery.
FinReg is an Embarassment
It is a sad statement about the state of American politics that the current so-called "financial regulation" bill is close to final passage. This bill addresses things that had absolutely nothing to do with the 2008 meltdown in the financial markets and the economy. Instead, this bill dramatically restricts the ability of the financial markets to spur economic recovery. It will curtail bank lending. It will reduce the ability of the financial services industry to provide much needed capital to businesses. Basically, it creates a huge regulatory overhang that will strangle the American financial industry without in any way addressing the causes of the 2008 collapse. But, it will appeal to the Obama coffee house crowd who seem to understand absolutely zero about the economy.
The true causes of the collapse of 2008 are the following: 1) tax favored residential housing market; 2) Fannie and Freddie. These two guarantee another boom and bust in residential housing. These two do not exist in Canada which is why Canada did not go bust in 2008 and is the best performing economy in the world today. Are Canadians that different from Americans? No. But what is different is that items 1) and 2) above exist in the US, but don't exist in Canada.
What in FinReg addresses 1) and 2) above? The answer -- nothing. Presumably, Chris Dodd will continue to get favorable financing from the companies that he purports to regulate, but for the rest of us the situation is not so good. It's interesting to note that Elena Kagan, the recent nominee by Obama for the Supreme Court got a $ 750,000 first mortgage from Countrywide just as did Charlie Wrangle and Chris Dodd. Wonder why left wing regulators seems so popular with the predatory lenders?
So look for a stagnant economy and within about five years another speculative binge in residential housing followed by the usual bust. If you rig the tax laws so that any rational American will speculate on his home, then don't be surprised by the recurrent booms and busts in housing. In the 1980s the commercial banks lent to this boom and were crushed. In the 1990s, the S&Ls lent to this boom and were crushed. In the 2000s, Wall Street lent to this boom and were crushed. In the next boom the US Treasury (which now through Fannie and Freddie control more than half of the mortgages in the United States) will get crushed.
Thanks, Mr. President, for nothing.
The true causes of the collapse of 2008 are the following: 1) tax favored residential housing market; 2) Fannie and Freddie. These two guarantee another boom and bust in residential housing. These two do not exist in Canada which is why Canada did not go bust in 2008 and is the best performing economy in the world today. Are Canadians that different from Americans? No. But what is different is that items 1) and 2) above exist in the US, but don't exist in Canada.
What in FinReg addresses 1) and 2) above? The answer -- nothing. Presumably, Chris Dodd will continue to get favorable financing from the companies that he purports to regulate, but for the rest of us the situation is not so good. It's interesting to note that Elena Kagan, the recent nominee by Obama for the Supreme Court got a $ 750,000 first mortgage from Countrywide just as did Charlie Wrangle and Chris Dodd. Wonder why left wing regulators seems so popular with the predatory lenders?
So look for a stagnant economy and within about five years another speculative binge in residential housing followed by the usual bust. If you rig the tax laws so that any rational American will speculate on his home, then don't be surprised by the recurrent booms and busts in housing. In the 1980s the commercial banks lent to this boom and were crushed. In the 1990s, the S&Ls lent to this boom and were crushed. In the 2000s, Wall Street lent to this boom and were crushed. In the next boom the US Treasury (which now through Fannie and Freddie control more than half of the mortgages in the United States) will get crushed.
Thanks, Mr. President, for nothing.
Minggu, 16 Mei 2010
The Week Ahead
Things are going to be a little scary this week for equity and debt markets. The Euro remains in free fall (trading in the mid 123's against the dollar). A lot of foolish economic myths are exploding.
Laying aside Greece and the Eurozone for the moment, the US economy faces major headwinds all its own. Most of the headwinds are a direct result of either Congressional or Presidential action. Obama's war on the financial industry will tighten the credit screws even more, so that small business will continue to be hampered by liquidity considerations. Don't expect much hiring.
State and local governments are facing their day of reckoning. Public employees are extremely overpaid in most states and the benefits provided to such employees border on the outrageous. This includes public school teachers. It is a myth that public school teachers are underpaid. They are overpaid and by a lot. There is a long line of qualified teachers ready to teach in our public schools for a lot less money than we currently pay public school teachers. That means the current group is overpaid. Most of these public employees have not suffered a bit in this recession. They applaud Obama's war on the private sector. But the private sector is the sector that funds the public sector. There will be millions of layoffs over the next twelve months in state and local government. Most of this is long overdue, but it is coming at the worst possible time -- when the economy is still very fragile.
Finally everyone knows that tax rates (not revenues) are headed upward. Higher tax rates discourage business hiring, so higher tax rates are another major headwind for the economy.
Meanwhile, there is Greece and the Eurozone. The US is on the hook for a lot of the worthless sovereign debt in Europe and Obama has pledged to buy more. We are now bailing out Europe. Wonder who will bail us out?
So, while the employment numbers and retail sales have been improving, the overall economic recovery is stunted and anemic. Until the White House calls a truce on its war on the American economy, it is hard to see an end to economic stagnation.
Laying aside Greece and the Eurozone for the moment, the US economy faces major headwinds all its own. Most of the headwinds are a direct result of either Congressional or Presidential action. Obama's war on the financial industry will tighten the credit screws even more, so that small business will continue to be hampered by liquidity considerations. Don't expect much hiring.
State and local governments are facing their day of reckoning. Public employees are extremely overpaid in most states and the benefits provided to such employees border on the outrageous. This includes public school teachers. It is a myth that public school teachers are underpaid. They are overpaid and by a lot. There is a long line of qualified teachers ready to teach in our public schools for a lot less money than we currently pay public school teachers. That means the current group is overpaid. Most of these public employees have not suffered a bit in this recession. They applaud Obama's war on the private sector. But the private sector is the sector that funds the public sector. There will be millions of layoffs over the next twelve months in state and local government. Most of this is long overdue, but it is coming at the worst possible time -- when the economy is still very fragile.
Finally everyone knows that tax rates (not revenues) are headed upward. Higher tax rates discourage business hiring, so higher tax rates are another major headwind for the economy.
Meanwhile, there is Greece and the Eurozone. The US is on the hook for a lot of the worthless sovereign debt in Europe and Obama has pledged to buy more. We are now bailing out Europe. Wonder who will bail us out?
So, while the employment numbers and retail sales have been improving, the overall economic recovery is stunted and anemic. Until the White House calls a truce on its war on the American economy, it is hard to see an end to economic stagnation.
One More Hat to Wear
I am pleased to announce to my many blog readers that I have a new (additional) career in the works. By a series of remarkable accidents, I wrote seven articles for our local newspaper, the Charlottesville Daily Progress, two years ago on the subject of the NCAA Tennis Championships in Tulsa, Oklahoma. (I wrote them mostly because it was the only way I could get in free to the NCAA Tournament).
Earlier this Spring, the Daily Progress sent my seven articles to Wimbledon and requested a press pass for yours truly to cover the Wimbledon Tennis Championships for 2010. Believe it or not, Wimbledon approved the request. So, from June 12th to July 5th, I will be covering the Wimbledon Tournament for the Daily Progress as well as for local NBC news and local WINA radio (may as well go the whole route!). The tournament starts on June 21st, but I will be there early to cover the qualifying rounds as well. Two former UVA national tennis champions -- Somdev Devarrman and Dominic Inglot will be playing in the qualifying rounds and their results will be of interest to Charlottesville readers and media watchers.
I am now applying for the US Open, the Australian Open, and the 2011 French Open. I am entertaining offers for the rights to my forthcoming book (not yet begun): "My Life as an Ace Tennis Reporter."
Earlier this Spring, the Daily Progress sent my seven articles to Wimbledon and requested a press pass for yours truly to cover the Wimbledon Tennis Championships for 2010. Believe it or not, Wimbledon approved the request. So, from June 12th to July 5th, I will be covering the Wimbledon Tournament for the Daily Progress as well as for local NBC news and local WINA radio (may as well go the whole route!). The tournament starts on June 21st, but I will be there early to cover the qualifying rounds as well. Two former UVA national tennis champions -- Somdev Devarrman and Dominic Inglot will be playing in the qualifying rounds and their results will be of interest to Charlottesville readers and media watchers.
I am now applying for the US Open, the Australian Open, and the 2011 French Open. I am entertaining offers for the rights to my forthcoming book (not yet begun): "My Life as an Ace Tennis Reporter."
Sabtu, 15 Mei 2010
Meanwhile, Back in Greece
The IMF apparently suggested, during the talks that led to the $ 1 Trillion ECU bailout package announced last week, that Greece "restructure" it's debt.
What does that mean? It means that Greece offer it's creditors 25 cents or 50 cents on the dollar in full settlement of their outstanding debt. That is the right answer and it is interesting that it was rejected.
Follow the logic of the current plan: dramatic cuts in Greek government spending, significant tax increases. Where does that lead? According to the ECU, the "austerity" program will, in time, lead to economic growth in three years. Really?
More likely is that we will have a repeat of the "Treaty of Versailles" problem that Keynes wrote so eloquently about nearly a century ago. The Greek economy will spiral downward out of control. Greek budget deficits will accelerate and the new loans will be worthless, pushing the problem back on Germany and France. Political unrest will, no doubt, ultimately force Greece out of the European union and into a default anyway. But, by then, the default will be a much more serious problem than a default would be today.
What does this mean for the European union? Ultimately, it means the break-up of the European Union and the Euro and the great experiment will descend into chaos.
Much simpler, much fairer, and much more sensible is to let Greece (and others) restructure their debt today. That is basically bankruptcy. But, bankruptcy is not all bad (and is usually unavoidable anyway). Postponing the problem only makes it worse.
That's what the equity markets are worried about.
What does that mean? It means that Greece offer it's creditors 25 cents or 50 cents on the dollar in full settlement of their outstanding debt. That is the right answer and it is interesting that it was rejected.
Follow the logic of the current plan: dramatic cuts in Greek government spending, significant tax increases. Where does that lead? According to the ECU, the "austerity" program will, in time, lead to economic growth in three years. Really?
More likely is that we will have a repeat of the "Treaty of Versailles" problem that Keynes wrote so eloquently about nearly a century ago. The Greek economy will spiral downward out of control. Greek budget deficits will accelerate and the new loans will be worthless, pushing the problem back on Germany and France. Political unrest will, no doubt, ultimately force Greece out of the European union and into a default anyway. But, by then, the default will be a much more serious problem than a default would be today.
What does this mean for the European union? Ultimately, it means the break-up of the European Union and the Euro and the great experiment will descend into chaos.
Much simpler, much fairer, and much more sensible is to let Greece (and others) restructure their debt today. That is basically bankruptcy. But, bankruptcy is not all bad (and is usually unavoidable anyway). Postponing the problem only makes it worse.
That's what the equity markets are worried about.
Small Business Lending Cut in 2009
So, what is the report card on the TARP? Did TARP, as Bennanke argued ar the time, rescue lending for small business?
We now know the answer to that question? The Congressional Oversight Panel released its report on commercial lending (by big banks) to small businesses this past Thursday. The result: commercial lending by large banks to small businesses was cut dramatically from 2008 to 2009. Overall lending declined by 4.1 percent, but small business lending endured a disastrous drop of 9 percent, twice the overall rate of decline.
No doubt, the angry attacks on the banks by Obama, as his Administration began its stormy first two years, helped to freeze the commercial banks into inactivity. But, TARP, itself was a foolish idea that has only served to lengthen what would have been a normal recession into something far, far worse.
Thanks, TARP.
We now know the answer to that question? The Congressional Oversight Panel released its report on commercial lending (by big banks) to small businesses this past Thursday. The result: commercial lending by large banks to small businesses was cut dramatically from 2008 to 2009. Overall lending declined by 4.1 percent, but small business lending endured a disastrous drop of 9 percent, twice the overall rate of decline.
No doubt, the angry attacks on the banks by Obama, as his Administration began its stormy first two years, helped to freeze the commercial banks into inactivity. But, TARP, itself was a foolish idea that has only served to lengthen what would have been a normal recession into something far, far worse.
Thanks, TARP.
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