Showing posts with label Economy. Show all posts

Well here is an update about things going on with the LibertyCast. In absence a new project has been in the works. We will see a new change in the next few upcoming months. Everything is being redesigned to become a new network of information, connectivity, and resources.

We are becoming self hosted under the banner of a new blog that is more journalism centered on national and world economies. LibertyCast will still be available as the editor's blog so no fears the LibertyCast isn't going anywhere.

However, this isn't all. A new specialized Wiki will come that is economics focused built on MediaWiki. We will also incorporate a new social network that will be designed to help others to not only be educated about economics and world economies but also do it in a sense that helps people better themselves. The social network allowing for communication abroad will give opportunity for all to discuss problems worldwide and attempt to come up with solutions that can be effective and realized.

Other ideas are being hatched, including the possibility of going non profit, for philanthropic and charitable efforts.

Please stay tuned into the LibertyCast for progress and updates.

It is about time the the Federal Reserve be held accountable for itself. The Federal Reserve has secretively manipulated public money in the private sector for way to long. The Fed can manipulate money, create it from thin air via "programs", as they call it, and this can be incredibly damaging to the economy.

What they propose is the use Keynesian economics to bring us out of this depression. This doesn't work because it requires control of spending which our government and the Fed have shown they do not have the responsibility to do this. This use of supply side economics in overburdening our economy with over investment and malinvestment is what got us here in the first place. And now the Fed wants to do the same with our currency.

Bernanke of the Federal Reserve in the PBS Frontline special stated that the Reserve was becoming more transparent by offering a summary (in their own words) of their meetings to the comptroller general. This is not transparency because they offer only what they want us to see. You can see this special online here. Just go there and click "Watch Online".

What has been proposed by Rep. Ron Paul is H.R. 1207 Federal Reserve Transparency Act of 2009. This allows that now a complete audit of the Federal Reserve must be presented as required. It does not give control over them, but does present legitimate supervision of what they are doing to our economy. This is a great piece of legislation and is gaining momentum. You can take a look at the legislation here. There are currently 222 cosponsors to this legislation in the House of Representatives which you can find here. Enter in your zip code and if you do not find your representative presently cosigning this bill please call them immediately and ask them for their support of H.R. 1207!

Senator Sanders has since proposed a similar bill to the senate, S. 604 which you can find here. This has been moving more slowly in momentum, but still has hop so please call you senator as well!

Since this time the Federal Reserve is attempting to fight back! They have highered lobbyist Linda L. Robertson of John Hopkins University. She has worked in the treasury and was an infamous lobbyist for Enron before their collapse. You can find this article about her new position here, and her bio here. Please don't give the Federal Reserve the opportunity to stop this legislation. Please make sure that your Senators and Representatives have got aboard. Quash the secrecy, and promote accountability. All it takes is a phone call.

If you are not sure who your Representative is go here and enter your state and zip code.
You can find out you Senator as well by going here.

Pardon the long delay in the release of this post. With finals occupying much of my time and then constant problems with my internet provider I have had limited time and access to the internet to get much of anything of substance done.

I would like to bring up again the monetary and economic complications that the United States is currently going through. With all this talk over the mainstream media of how we are finally beginning to see the economy turn around I actually beg to differ.

Many liberals have such huge issues with Reaganomics/Trickle Down Theory/Supply Side Economics, regardless that in proper conditions it actually works, find this application entirely unfair, and justly right they are. As supply side economics increases economic investment and potential this is only truly effective when that investment is needed. When the demand or spending cannot meet the supply the economy it becomes overburdened and unstable.

Would you increase the height of a table without increasing the lengths of it's legs to support itself and expect it to prop itself up in thin air?

Of course not, that doesn't make any sense at all. Unfortunately, politicians and intellectuals coupled with the impact of the mainstream media fail to make sense of it for the common people. This of course is for numerous reasons to their own ends, but that is too long a subject for this article alone.

Well, President George W. Bush lead the charge in just this in recent years, and when other scams and rotten behaviors caught up to itself (such as the subprime mortgage crisis which I talk about it the following article here) the economy began to collapse in on itself. This has lead the United States to where it is at today. So how do you fix this? Well, there are actually numerous options, but practically none that either the government and private-sector can both agree upon exist in the same.

To increase demand to meet the supply our last effort has been to provide tax cuts to the middle and lower classes, those who typically spend money rather than invest it. Unfortunately, this really hasn't had the impact most of the media is attempting to feed us. Economists are saying in essence, as I compared before, that what has happened is that the table in mid-air has lowered itself back to the legs of the table. So yes, the economy is beginning to stabilize itself to some degree though in not as an efficient condition as it was prior to the crash.

To explain this further, look at all the lay offs that have been occurring, the businesses closing and consolidating, and overall unemployment levels. This has been the fatty investment that has been trimmed from our economy in order to compensate and balance itself out.

So why bring up what many are finally are beginning to learn and may be even understand already? Well, frankly we are still potential victims of the same treatment; now by the Federal Reserve.

The Fed, in order to compensate for a lack of supply of money is increasing that supply of money. Does that sound so fishy? Not yet, but stay with me. This lack of money is in banks. First, know that when banks do not have the money to make good on their loans and investments it is customary to borrow from other banks. BUT the other banks are in the same predicament this is where the Federal Reserve kicks in. The Fed buys bonds from the banks to give those banks more money to work with. But where do they get this money? May be you might say they create this investment in the economy out of thin air? Sound familiar? To be a bit more specific when the United States doesn't have the money it utilizes various programs such as increasing trade opportunities with foreign countries, such as China, for whom we are now indebted to.

So even though this is not a literal case the Fed, is in theory, just printing more money to make up for the lack of money. This reduces the value of the dollar ultimately creating inflation once exiting the depression the United States is currently in. The cost here is that we have to make good on those other programs and agreements, and must (timely) remove ourselves from them to reduce the period of inflation; restoring the value of the dollar. Again, a complicated manner because as we may begin to finally have money it begins losing its value...

Regardless, if you agree with me or other economists or not, if you believe that supply side economics is unjust as it unfairly favors the rich, how could you possibly support the same from the United States own semi-central bank? The Fed creates all this faux and unstable money to the benefit of big banks and corporations and while the common man is hurting from the deflation, lack of employment opportunities, and rising costs the businesses with this hidden money enjoy the windfall until the inflation catches up. All at the expense of the American tax payer. But as one might argue that the Federal Reserve doesn't use tax payer dollars as I already stated (they use money from elsewhere), directly, you are correct, but indirectly not. The American taxpayer pays taxes, if they even have work, and the value of the dollar goes less far for them while they get free money which will continue to impact our own economy as the value of the dollar goes down.

So how is it fair then that it is unfair for our government to propose tax break for the rich and those with investment in the economy, but then it is okay for the same treatment towards the lower and middle classes when a more centralized power does the same thing?

It is not. The principle is the same in one as it is in the other. Government involvement and regulation is not always the answer. The Federal Reserve is privately owned, but the impact of the government with in it is substantial. Government made poor decisions and took us to where we are and yet the same principle applied elsewhere is somehow expected to not do the same thing.

With this is my plea to please reconsider what government and the media keeps telling you and look to the real experts not bent in bureaucracy for the real truth. Keep an open eye and ear not always bent in government in that may we may all find the truth in real freedom and liberty.

This is so outrageous to me that we allow Washington to grant these kind of hypocritical and unstable powers just so that they have money to borrow against when they want it as they desire. And on top of that then to end up with all of this talk about credit card debt, of course the government is the exception. Not like the government should have to work within its means. I have always been skeptical of the gold standard because it is a limited resource, but now I'm beginning to believe that is its blessing. It would provide a nice check against the current ways of doing things.

What If?

That's a great question to ask America and its constituents...

What would the world be like if we didn't have military bases across the world policing it's countries?

What if we didn't have a base in Germany or South Korea or so many others?

What if we weren't in Iraq?

What about Afghanistan or Pakistan?

What if we remembered why our founders wanted a more non interventionist foreign policy?

What if we stopped wars relying on special interests?

What if we stopped the partisan bickering and worked together?

What if?

But before we can get to what if we must all stand together and ask our leaders:

Why?



Now I agree with this almost entirely, but not quite 100%. I think we do need to pull back heavily on our interventionist policies, be more defensive than offensive, and need more worldly cooperation to act as outward as we do. But I also think that the War on Terror is justified to the extent in that we do not let terrorists keep taking shots at us for free. Iraq did not fly planes into the World Trade Centers; it was not an intelligent move and indefinitely a wrongful choice from the beginning. We should have focused all our resources to Afghanistan and Pakistan. This could cause us lots more problems, and this should have been the "long haul" decision we made from the very beginning. At this point I'm not sure we have the real resources, morale, or support to pull it off any time soon. Right now we all need to turn to Washington and keep asking our leaders...

Tomorrow, March 3rd, residents of Davenport, IA have an opportunity to vote on The Davenport Promise. This is absolutely a major deal here locally. This is a move to improve residency and educational incentive in Davenport without any prominent financial burden on its residents.

What exactly is the point of Davenport Promise then?

Well the goal is to provide a college scholarship to all Davenport residents of high school graduate/GED level regardless of what school they went to or what school they are going to. It will also give a home-buyers grant for returning military and increase public safety. All of this is to be done without increasing property taxes.

Funding will be through reallocating the Davenport one cent sales tax.

Current Tax Allocation:
60% Property Tax Relief
40% Capital Improvements

Proposed Tax Reallocation:
60% Property Tax Relief
30% Capital Improvements or Davenport Promise
10% Public Safety Investment

Anyone see a problem here? I see that we are now intentionally running this tax at at least 30% over budget overall with capital improvements running 10% under budget. Now understand this isn't the sole funding for capital improvements either so actual numbers are in reality less than a real 10%, but it is still be under budget. So with this, they state that other projects have run under budget and money can be pulled from there though nothing is intentionally allocated to this or labeled in any official manner.

Okay so they want to attract new people to increase real estate values and increase the population to invest into the community and the Davenport Promise Task Force Report states that years of disinvestment in our economy is behind the poverty levels and dropouts in our children. This is may be not a cure all but the right step for us to take to get back on track as the task force and city council have declared overall. Note that not all approve of this and one who has disapproved (out of numerous) is Alderman Bill Lynn.

There are so many potential issues with this and actual issues to start with, first being running the tax over budget. However, there are many what-ifs to consider here one being: What if people come in mass at first but then stop do to increased property values and tuition rates that keep rising? Okay so with this the investment for new people to move here and continue this project is not as great anymore, and let's say with that significantly less come here. Now we have less enrolling students to count on for government funding and assistance in our public schools requiring more money for that was less before. We will then also have many going out which we will have to fund for college and we have to get that money somewhere. With more people utilizing public roads and public resources we in theory cannot afford to cut capital investment funds later down the line so where will this money come from? Another problem with this is that being based on a regressive tax this will have difficult time balancing out economically as it does not account for inflation. An even other concern is the 10% to public safety. This will actually go to a general fund with the intention of use in public safety. So to the firemen and policemen of Davenport their may be intent, but there are no guarantees; no real promises. My fear is that this will end up as more play money for the city.

Where will any of this money come from in these situations? Well, March 24th there was a Davenport Promise Forum at the Red Stone Room hosted by the QC Times, where Davenport Promise Task Force Member Ken Croken stated, "If and when these things happen we will handle them." So they have no real plans for the future; only reliance on the predictions of one analysis done by one, Upjohn, Institute. If these things happen an unknown board not appointed will handle these issues. Well are these board members going to be credible for the positions? We aren't going to know as they haven't been chosen, and will not be till after the fact. Croken also said there were no guarantees for the future either in regard to promises made now. So essentially they will not raise our taxes now, but if push comes to shove (and they are confident they won't) it could all be broken promises for us.

These numbers I look at with Upjohn's report show that in a bad case scenario we could be as much as 2.2 million in debt by year 4, and yet their answer is basically that they'll get around to it. If this is some kind of protectionist policy for questionable future direction then where is the protection from our own solution? Note I am not anti-education, but how could I consider a policy that is meant for my children which could just as likely hurt them or even worse in the end? We already pay the federal government taxes which go to educational grants already such as Pell, and where this goes right in being non-discriminatory we are again seeing taxes go to this thing for up to $1000 more per year for what could be an even worse economic disaster. It should also be noted that it is rightly requiring 400 hours to be able to get it but unfortunately doesn't require a minimum GPA to maintain it. This altogether should have been treated with more profound care.

You can count on me voting no on this policy. It could possibly be worth considering, but absolutely not when it is so fiscally negligent. This is not worth it right now under its current state, and I cannot bear this massive cloud of potential burden on every other citizen of this town. For any Davenport residents please vote no. There are numerous scholarships and grants available, including Pell already present. President Obama even amended the Hope tax credit with the current stimulus bill, increasing the college tax credit to an annual $2500 (and even refundable up to $1000). We have other resources available so please vote no until the city is forced to reevaluate this and treat it more responsibly for us all.

Related Documents:
The Davenport Promise Task Force Report here.
The Davenport Promise CIP Impact Report here.
The Upjohn Institute Analysis Report here.
The Anti-Promise Presentation from NoMorePromises here.

Related Sites:
City of Davenport, Davenport Promise Task Force Information here.
No More Promises Anti-Promise Initiative here.

The stimulus package as many have already seen in the news is that it is filled with pork (or unnecessary ineffective spending), and in many ways this has been very true. It is also in the unfortunate side of politics' nature. If someone or some group is not on board bargaining mechanisms come into play in an attempt to buy someone's vote, and a lot of times this will mean that you might have the opportunity to see something you want thrown in with the bill. Under the current market conditions we are driving up the debt, and printing more money to compensate, we are devaluing the dollar and risk horrible inflation in the near future.

Economists are torn on this bill in whether it will be effective or not. The problem with this package is that we are increasing the debt on a gamble. If we don't stimulate the economy with spending it will be hard for it to turn around. The issue being confidence. Companies have lost confidence and are afraid to invest. Some at this time are willing to invest but in our condition some is not enough. Until the motive is there to invest this is going to be a rough ride.

One option for this to occur is is to let these bad businesses who made bad decisions fail. If they fail and go bankrupt they will be forced to consolidate. This consolidation will open the door for new businesses to compete in the market; recreating a competitive market will give hope back to the economy and will provide incentive to invest.

To aid in this tax incentives are a smart move. To provide tax breaks will encourage investment into the economy. In our current market we need to restore confidence before this will be effective. Bailout with billions hasn't been effective as the money is not being spent, and tax breaks will not be effective until competitive conditions occur. So again tax breaks are a very viable option to aid the economy though it is no more viable than a debt building bailout in a volatile marketplace. We have to restore economic confidence.


A Note On the Stimulus From Ron Paul:



Official Info On the Final Bill *UPDATED*:

The Final Official Bill here.

The Official Financial Assestment here. (This is not recovery.gov but official CBO documentation.)

Well where should I get started?

How about that our economy is still doing bad and that banks are also doing bad, and it is questionable if and when they are going to get better. Now in a fiat based economy there are always ups and downs and it feeds on both, and in the process the market will change and businesses and laws both may also change.

So how did the market crisis get started?

Back in 1986 Congress passed law that barred interests deductions buying for individuals and families on anything other than home mortgage interest. This is code USC 26 Section 265. Now, this would be fine if they stopped with 265(a). However, they continued with 265(b) which is where they created the exception. This over time has been the beginning of bad mortgage buying habits as it became the tax preferred method for borrowing money. There is more to it than that as many options with first-time home buyer loans have encouraged the buying of loans that one could afford over time and getting loans for bigger homes that one could afford comfortably.

Now for the current problems in the banking industry. Credit Default Swaps. CDS's are essentially insurance, but through legal wording an arbitrary and unstable situation has been created. To give loans there needs to be protections, a backup in case an investment goes bad. This is where insurance has always kicked-in in the past, but to have insurance there has to be liquidated assets to cover it, as required, by law. This was seen as particularly advantageous to banks and other institutions as they did not have to have a liquid pool of money just lying around with this and could do elsewise with the money.

Here's the real kicker. Bad mortgage buying habits + no money to cover bad investments = companies pulling straight from assets to stay afloat and thus falling out from under themselves.

So this is where it has lead us. Granted Credit Default Swaps have extended beyond mortgages as it lies in almost all loan investments now, but this is a broader topic for another day. Now the question begs where do we go from here? Well they gave 800 billion to this already and economists are divided whether it will work or not. The reasoning is that if we give them money they can invest it and restimulate the economy. The problem is that confidence in the economy has been lost and the money may remain reserved in fear rather than being invested out of principle. It also doesn't help that these same companies such as Wells Fargo who have taken 25 billion of that and prepare for an elaborate trip to Vegas for its top loan officers (who could have likely been the ones issuing these bad loans). Since the public outrage Wells Fargo has withdrawn from these reservations and have called the trip off; I'm sure that we will still see more of this in our future.

So to fix the issue, USC 26 Section 265 must be ratified. It has encouraged BAD buying behavior and this needs to be corrected. Rating agencies have also been a problem here as they have been giving out better ratings than the property warrants. One solution (even though unappealing) is to allow these rating firms to be able to be sued by the issuer for negligence. These rating agencies have been too comfortable and too easily seduced due to legal protections and so something must also be done here. Granted law suits are not a great answer, however short term this will lead to either them going out of business really fast or pulling out of complex securities and simply not investing in them. This short term will at least "patch" this situation in the current crisis we are under. It is not a wise long term solution, but one of the better short term "patches" until proper mending can be devised and enacted.

Unlike many will claim and want you to believe. Deregulation has not been the problem here. It has been a combination of both government regulation and government oversight. Government oversight can be bad behavior as we have seen recently, but it has nothing to do with the deregulation of policies. Not watching and reducing control are two separate matters. What we could use as I've already talked about is the deregulation of the fore mentioned policy.

And to the prospective home buyer. Do your research and collect second opinions. Don't jump into a loan without educating yourself first and being sure you are making a wise decision. Check other agencies, look at your budget with an accountant, or even take your proposals to a real estate lawyer for review. Don't jump into any decision as dedicated as this without making a well rounded assessment of your situation and loan proposals at hand. In this current economy it is much better safe then sorry; even if you have to save and pay for a few other services to check things out beforehand.

Here is a statement made recently by Ron Paul which I find truthful:

First off Happy Thanksgiving to everyone!

We keep seeing the US government "bailout" or as they put it "rescue" businesses for the sake of the American economy and the foreign countries that are stakeholders in our economy, such as China. Now again we see another bailout plan, this one for Citigroup, which hit much of the news a few days ago. This bailout will be worth 20 million against predicted losses of 700K+ in the status quo. Is this fair or unfair? Right or wrong? Well a lot of this will depend on your opinion of economics and how the markets should be...

Personally I lean more in the direction of free markets; preferably laissez-faire. A free market is one free of government regulation by many interpretations. However this in itself is not entirely correct all on its own. A free market could also be one free of coercion; one free of forceful direction. Going back just for a moment Socialism/Communism have markets governed more or all by the state or government. Capitalism leans the other direction with private industry but can be handled on different levels being mixed capitalism (blend of state regulation and freedom, laissez-faire (minimal government influence), or anarcho-capitalism (no government influence).

Some disagree with free market principles, saying that in the current economic situation what would happen is that the market would consolidate with companies going away do to poor judgment and mistakes. This is absolutely true! But when many argue that this leads to monopolies because the companies left would grow larger, I disagree. Many people in educated countries know the dangers of monopolies (one being if one company owed all of one resource they could set any price no matter how high because they have no competition). Well, many would return to the support of smaller businesses and not approve of the development of monopolies because they do not want to become financially trapped.

Now, by pumping US companies with American tax-paid funds the US government is coercing companies back into their current condition before failure. This government intervention has been done without the intervention to protect its investment. Example: AIG executives going on a 400K spa retreat after getting millions from the government.

In the mortgage industry this was especially unpractical! Companies have allowed loans at high or flexible interest rates to those who could not afford them, and in return our government has given the corporations more of our money (our tax money) and leaving us with the same loans to continue to fail by. This is billions of our dollars going to what could likely be only the delay of the inevitable. This can only work with companies reforming their own policies, which may or may not happen.

And if we were to promote a fair economy why not also give American tax payers money back to them to pay for these loans that they have been trapped within? If the government would support the economic corporations should it not also support its ailing taxpayers?

Let these companies go away and give rise to new ones in their place! American citizens are not unintelligent and can avoid monopolies. Free markets for the most part are driven by the consumer because they buy they goods and services, and if we don't buy a company's goods or services then they don't make money. Consumer buying habits will determine what happens to out markets and we will buy what we want to buy.

This is only increasing our national deficit and to astounding amounts by which the government hasn't regulated to the degree in which the success they want is guaranteed, and thus is our money laid to the roulette table?

The question is do we feel lucky? I don't. Do you? Corporations have been acting on their behalf and, at least in the case of AIG, have continued to do so after assistance given to them in good faith. I am not convinced that they are going to change their habits. So they should learn from them they hard way, through their own experiences.

If they go away then let them go and make way for the new. In order to have a freer market we cannot block out competition. This is the same mannerism that creates monopolies, and even if on a larger scale it is a road of bad habits which would more than likely continue to lead us to disaster.

The deficit is huge and growing larger all the time. A good visual diagram of our economic history to now can be found here showing how it relates to the current budget. And I worry about the presidential elect, Barrack Obama, as well as he has supported the bailouts, and stated recently not to worry about the deficit for the next two years as the economy trumps the budget. I see that this risk is more of the same which will likely, in my mind, lead to same results.

We cannot afford the same constant ineffective status quo, and we need change. I hope that Barrack Obama will be more than "Change We Can Believe In", but more importantly "Change We Can Count On."