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