Obama White House: 8% Unemployment Until 2013!

Obama's economic advisers believe the U.S. unemployment rate will continue to be above 8% until 2013.  We have already had 17 months of unemployment above 9%.  We have had 20 months of underemployment above 15%.  Now Obama and his team are saying we will have another 32 months or so of unemployment above 8%!

Obama and the Democrats have had a series of economic advisers who have been unable to prescribe any actions to take on the economy which have been beneficial.  Instead of the obvious beneficial recognition that taxes on businesses and the wealthy are too high, Obama and team have insisted on one tax increase after another.  Instead of recognizing that business needs the freedom to produce and to provide services, Obama, with his clueless socialist philosophy, has insisted that businessmen and women are all evil, conniving slime balls, who must be evermore intrusively regulated by government bureaucrats.  Since the phenomenal growth of the government's spending from 2000 to 2008 with an increase of 66.7%, was not enough, Obama stole huge measures of wealth from the private sector with huge additional spending and with huge mandates. The mandates require businesses to spend much more money and time to provide what Obama regards as social services, but does not want to add to the federal budget and deficit.

If you wonder how the huge increases in actual federal spending are a drain on the private sector, it is because that spending will be paid for by the private sector through a combination of:

• Higher future taxes
• The loss of present and future property values on buildings, equipment, and facilities
• The unavailability of money for present and future investment in new plant, equipment, facilities, and training
• Higher interest rates on borrowed money due to inflation and increased business risk brought on by growing government, which is always a threat
• The lower value of the dollar, making resources and supplies from abroad more expensive
• The lower growth of the economy due to money for political purposes doing nothing to increase the productivity of the American worker and businessman
• The mischief of using some of the money to subsidize very uneconomic products such as ethanol, solar power, wind energy generation, and mandated health insurance as a means to dump the costs of these lunacies upon the private sector
• Huge increases in the time to provide government with much more paperwork and to keep many more records for such things as ObamaCare, energy use, CO2 generation, financial activities, and recording and filing 1099 Forms for every person or company more than $600 was spent with

As a businessman trying to rationally plan your future investments, the blizzard of federal spending, mandates, regulations, paperwork, and taxes is mind-numbing.  You stop dead in your tracks and say "I do not understand what is going on.  Clearly Washington is trying to kill my business.  I have to stop making decisions until I can figure Washington out.  But I do not have enough copious free time to do that.  Is that even possible?  What they are doing is so clearly lunacy.  I will just hold as tight as I can until this mess is somehow straightened out.  If it is not, then it is time to retire."

 Meanwhile, one thing you will definitely not do is hire anyone.  So, remembering that the one thing we can count on from the Democrat socialists is that they have no understanding of the economy and even less of business, especially small businesses, who is crazy enough to believe that unemployment will come down to 8% in another 32 months under their management of a very meddlesome and ubiquitous government.  So long as a clueless government guided by the theories of Marx, Alinsky, Mao, Castro, Chavez, and Mussolini has its hands in everyone's every pocket and its fingers in everyone's personal apertures, the unemployment rate will never again be less than 8%.

Unless the government pretends to give everyone a job as the Union of Soviet Socialist Republics used to do.  The good old USSR used to have three to six people watch one person work, but all were said to be employed.  Look where that got them.  That is not the fate Americans want.  The majority understand economics and the business of business better than do Obama and his economic advisers from academia.  They are about to overthrow his regime of childish and destructive control-freak meddlers into the workings of the very complex and very adult private sector of America.  The Socialist Party is going to lose 69 seats in the House of Representatives, giving the Republicans a substantial majority in the House and mercifully ending the Pelosi "You have to pass the bill to know what is in it" regime there.  The Republicans will come to have 49 or 50 Senate seats and look to end up with 33 or 34 governorships just in time for the decadal redistricting of House seats.

The Republicans, even given more resolve by Tea Party members, may not be able to undo all the ill-gotten gains of the socialists with only control of the House, but they can and should defund all of the mischief of that socialist program.  Will they have the guts and will the American People prove to be the Winter Soldiers who will stand with then to fight Obama?  It will come to that, because Obama is a committed socialist and his promise to fight viciously with fists and elbows is the only promise we will ever be able to count on from him.

Of course we will always remember these whoppers:

• I will cure disease throughout the world, stop the warming and stop the rise of the oceans.
• I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States.
• I will not increase your taxes unless you make more than $250,000 a year.
• If you like your health insurance, you can keep it.
• The health care reform bill will decrease the cost of your insurance premiums.
• The Stimulus Bill will keep unemployment below 8%.
• There are no earmarks in the $787 billion Stimulus Bill.
• The health care package will pay for itself.
• The ObamaCare fee is not a new tax.
• We have run out of places in the U.S. to drill for oil.
• I will not rest until the BP Oil Spill stops.
• The Finance Bill will provide transparency and end the risks and abuses that nearly collapsed the financial system.
• The health care bill will not increase the deficit by one dime.

We can count on him adding greatly to the list over the remaining two sad years of his occupancy of the White House.  The man is a joke and a tragedy.

If only the first black American President had been Prof. Walter E. Williams and his wife had retracted her promise to assassinate him if he ran for the presidency!  With his good understanding of economics and the limits of legitimate government, what a President he would have been.  With advice from his friends Dr. Thomas Sowell and Supreme Court Justice Clarence Thomas, that triumvirate would have saved America much misery and would have demonstrated why you do not write anyone off on the basis of identity politics.

Fanny Mae and Freddy Mac Steal Again

The gang that cannot shoot straight, has come galloping into Washington, D.C., and robbed the Treasury, the People's Bank once again.  Sheriff Obama and his hooligan crew of law enforcers carried the loot out to their horses for them and invited them to a good dinner.  They are still in town, living it up!  Why not?  In the past, Fanny Mae and Freddy Mac always provided the Democrats and Obama in particular with great campaign contributions.  The more money the sheriff lets them steal, the more money they give him to remain sheriff.

Fanny Mae has just asked for another $8.4 billion from the Treasury after First Quarter losses this year of $13.1 billion, including $1.5 billion in dividends paid to the government on its preferred stock.  The government took control of Fanny Mae, a government-sponsored corporation, in September 2008.  Fannie Mae ended the First Quarter with a net worth of -$8.4 billion dollars.  This government-run business lost $15.2 billion in the Fourth Quarter of 2009 and $23.2 billion in the First Quarter of 2009.

Just four days earlier, Freddie Mac asked for a $10.6 billion handout.  Its First Quarter loss was $8 billion.  Freddy Mac had previously received $50.7 billion in bailouts, while Fanny Mae had previously received $76.2 billion.  Fanny Mae had already been given $15.3 billion of taxpayer's money as recently as 31 March 2010.  In December 2009, the Obama administration removed a $400 billion cap on gifts to Fanny Mae and Freddy Mac and promised unlimited support in 2010.  The total taxpayer money given them since they were taken over by the government, including the current requests, is $145.6 billion.

In the First Quarter, Fanny Mae purchased or guaranteed about $191.4 billion in loans.  Its credit losses were $5.1 billion, which was up from $4.1 billion the previous quarter.  The number of loan defaults was up in the first quarter.  5.47% of Fanny Mae mortgages were delinquent in the First Quarter, which is up from 5.38% in the Fourth Quarter of 2009.  The single-family foreclosure rate was up from 1.03% in the previous quarter to 1.36%.

Obama and the Democrats have refused to include Fanny Mae and Freddy Mac in any financial industry reform bill effort, since they are using them to reduce home foreclosures with loan modifications and will not admit their guilt in weakening the entire financial system of the U.S.  In the First Quarter, Fanny Mae made 94,000 mortgage modifications, after making 42,000 in the Fourth Quarter of 2009.  Together, Fanny Mae and Freddy Mac own or guarantee almost 31 million home mortgages worth about $5.5 trillion.  This is more than 40% and close to half of all home mortgages.

It is common to say that the recession began in the United States and was caused by too much easy credit.  Republicans go on to say government-sponsored Fanny Mae and Freddy Mac caused the recession and Democrats say an unregulated Wall Street caused it.  In fact, it was triggered by the sharp increase in oil prices.  After May of 2004, the price of oil went up in real terms, dropped briefly in late 2006, and then spiked upward beginning in early 2007.  By July of 2007, production in Canada had dropped.   It dropped  in Italy in August 2007, in France in October 2007, and the Euro area as a whole in November 2007. Japan's production reached a peak in October 2007, though it had a one-month uptick in February 2008. The decline in the U.S. was in February 2008.  In January 2008, the OECD leading indicators were down from a year before by 4.1 points in Ireland, 2.8 points in Japan, 2.6 points in Korea, 2.3 points in Sweden, but only 0.8 point in the U.S. Stock prices are another leading indicator. Stock prices peaked in Japan and in the Euro area four months before they peaked in the U.S. and the U.K. in October 2007!  In the 4th quarter of 2008, real GDP was lower around the world than it had been 1 year before, but it had dropped by much less in the U.S. than almost anywhere else. The dollar value of imports into the U.S. did not fall until August 2008 and the consumer purchases did not fall in the U.S. until September 2008.  The U.S. was the last economic engine to sputter to a stop and it took the combination of the oil price spike, the recession already underway in the rest of the world, Fanny Mae's and Freddy Mac's vulnerability, and the Wall Street over-extension combined to put us into this severe recession.

While we cannot blame the entire recession on Fanny Mae and Freddy Mac, they were the most egregious weaknesses and the most easily avoided ones in the U.S. economy.  They were following a foolish policy of easy credit for people who could not make their loan payments under almost any condition of strain and they with the easy credit Federal Reserve were the starting point for much of what went wrong in the private sector.  Government regulation of Freddy Mac and Fanny Mae did not keep them out of trouble and there is no reason to believe more federal regulation would have helped on Wall Street.  In fact, some of the problems on Wall Street turned out to be due to too much regulation and too cozy a relationship with the federal government.  The biggest backers of the unwise lending practices through the years were the Democrats.  Obama had contributed once he was in the Senate and he had worked on a lawsuit against Citibank himself to force them to lower their lending standards before that.  Meanwhile, President Bush had warned a number of times that the easy credit policies of Fanny Mae and Freddy Mac were a major risk for the economy.  McCain also joined in with warnings.  These were all ignored by Congress, which in 2007 and 2008 was controlled by the Democrats.

Fanny Mae and Freddy Mac could not be more controlled by the federal government.  We have only to examine how badly run they are to see the looming disaster as the Democrats try to gain more regulatory control over the major financial institutions of America.  We will be turning investment company after bank after insurance company into the next Fanny Maes and Freddy Macs.  This is exactly what the Democrats want to do.  Imagine how easy it will be to extort money from these more regulated companies and how easy it will be to command many of them to self-destruct.  Even as Fannie Mae had collapsed, Obama and the Democrats had been able to milk it mightily for campaign contributions.  This is the fate of the entire financial industry, if they get their way.