SOAKING THE RICH? WHO CARES?

"Who cares if the Bush tax cuts for the wealthiest Americans expire? I'm not one of them, so as long as MY tax cut remains in place, why should I care? It's nothing to me." This, understandably, is the attitude of most middle-class Americans. I get it. But what is the attitude of the 43% of American wage-earners who pay no federal income taxes at all?
Do they care if the rich get soaked? Nope. (See the above.) Would they care if the tax rates for middle-class tax-payers went up? Nope. If they're not paying, they don't care who does. And since they're not paying, why should they care how tax money is being spent? They have no skin in the game.
Do you think that it is desirable that so many Americans should be disincentivized from caring about how tax money is spent? Let's recall the advice of Deep Throat: Follow The Money. That's how you know where the Federal Government is going. Unless the government is spending YOUR money, you don't care where it comes from, and you don't care where it goes.
This is why all Americans need to pay income taxes, even if just a little bit: It makes you care, it makes you pay attention.

CARS NOBODY WANTS

General Motors/Government Motors is ready to begin selling the Volt. For $41,000. They first thought, a long time ago (long before the bankruptcy, etc.) that they could sell it for $28,000. But things have changed.
Oh, wait! The majority shareholder, the Federal Government, is willing to subsidize purchases of the Volt with a $7,500 tax credit! That brings the actual cost of the base model down to $33,500! Except you have to finance the $41,000 up front, then get the tax credit when you file your next tax return. OK...
My first question is this: If someone wants to spend $41,000 on a brand spanking new car, why do I have to help them pay for it with my tax dollars?
My second question is: Who is going to spend $$33,500 - $41,00 on a car the size of a Toyota Corolla? I don't think many people will do that. I think this is the same old story, "General" Motors trying to sell cars nobody wants. This whole thing is about "Government" Motors pursuing a political agenda. On my dime.

BERNANKE ON THE NATION'S ECONOMIC FUTURE

Today, Fed Chairman Bernanke explained that by the year 2020, the federal debt ratio to GDP could exceed 100%. The debt could be larger than the entire U.S. economy at that time, unless there existed the political will to do things necessary to avoid this result.
Don't worry, though. Treasury Secretary Geithner said that President Obama's budgetary measures will prevent that outcome. The Congressional Budget Office agrees with the secretary. They say that if things go as well as President Obama predicts, the debt to GDP ratio will only go to 90% by 2020.

WHEW! That was a close one.

DRILL, OBAMA, DRILL!

Everyone has known for a long time that the only way in the world that California can hope to ever balance its budget is to expand off-shore oil drilling, and get healthy on the royalties that it would receive.

Now recall Candidate Obama deriding Sarah Palin's "drill, baby, drill" slogan, saying that off-shore drilling would not save Americans any money. Now he has changed his mind about this, and will support drilling in the Gulf and the east coast, and in Alaska. Great. Look for Arnold to press for drilling off the California coast. This could easily be done using parallel drilling from existing platforms.

Now recall Teddy Roosevelt and his successful efforts to acquire lots of land in the western states, creating lots of national parks, reserves, and monuments. He was a great progressive. Let's just say, without cynicism, that this was his only motivation in buying up the western states. The federal government owns virtually all of Nevada and Utah. The government owns a great deal of Colorado and Wyoming. It's true that there is great natural beauty in the west. But that's also where the nation's natural resources exist, including oil. The government owns very little land east of Colorado.

Now recall Maxine Waters threatening the nations oil execs by saying that she would not be opposed to nationalizing all the oil companies in the country. Recall Hillary Clinton screaming about the oil companies' "obscene" profits, and calling for a large tax increase on their "excess" profits.

Recall that a lot of countries have nationalized their oil resources. These include not only the OPEC countries, but also Mexico and Venezulea, among others.

Although President"s plan for drilling is quite modest, it is a sign that something else is afoot: A plan to gain additional federal revenue from oil. Not by nationalizing the industry, at least not at first, but to gain revenue from royalties by expanding drilling on federal lands, and taxing the increased profits of oil companies.

Only a Democratic president can get this off. The environmentalists will be quieted by the fact that this kills two birds with one stone: Decreasing reliance on foreign oil, and solving the federal government's deficit problem. And throw in "job creation" as a rationale.

President Obama reluctantly got in the automotive business, the student loan business, the insurance and banking industries. Now watch him get in the oil business. Why would he do this? For the same reason that Willie Sutton robbed banks, and that middle-class tax increases are inevitable: Because that's where the money is.

PRESIDENT OBAMA SAYS RIDICULOUS THINGS ABOUT HEALTHCARE

President Obama, in his remarks following the House vote on the Senate healthcare bill said that that this bill was a "common sense" reform. If this was the case, why did it take more than a year to get it done? Why was it is so contentious? Why was it passed without a single Republican voting in support? Had it been a "common sense" reform, none of this would have been true.
He also said the passage of the bill was not a "top-down" effort, but came from the bottom up. How can that be said when every poll taken reflected overwhelming opposition on the part of the American people? This was most definitely a top-down process involving pay-offs and arm-twisting like we've never seen.

ARE THE ECONOMIES OF CHINA AND THE U.S. CO-DEPENDENT?

In a word, yes. For now.

Generally, every national economy in the world is dependent of the health and success of the U.S. economy. The current global economic problems have their roots in the U.S. What happens here doesn't stay here. As the U.S. economy goes, so goes the world. This is true for many reasons, not the least of which is that the U.S. dollar is the world's reserve currency. Every nation has a stake in the dollar's maintaining its value.
It seems like a long time ago, but there was a time when the U.S. was a creditor nation. Other nations owed us money. We were the world's banker. China was a debtor nation. They were poor. Now, the reverse is true. The U.S. is a debtor nation, and China (and Japan) is our banker. We have to borrow lots of money from them because Americans consume far more government services than we are willing to pay for. China has been willing to finance our consumption because their economy, since some capitalistic principles have been embraced, is generating a lot of money which has to be invested somewhere. Like a lot of other nations around the world, China decided that the U.S. offered safety and a good return, so they have invested heavily in U.S. government securities.
China's economy is export-driven. They sell a lot of goods in U.S. markets. In order to keep the prices of their goods low, the Chinese have for years suppressed the value of their currency. The U.S. has mixed feelings about this. On one hand, the artificially low value of the yuan creates an unfair advantage for the Chinese as the U.S. competes with them internationally. On the other hand, America really needs to import cheap goods. So while we sometimes complain about China's currency not being allowed to float toward its true value relative to other currencies, we don't really mind.
So right now, it goes like this: We buy tons of cheap Chinese goods, and they invest their profits in U.S. government securities. But how much longer can this co-dependency go on?

The Chinese government understands that, in the long term, their economy must become less export-driven and more consumer-based. That is to say that more and more of their goods must be sold to their own citizens. Right now, they have too many eggs in the export basket. Being one of the most populous nations on earth, their potential consumer base is massive. But, at present, the citizens of China are too poor to be a better market for Chinese goods than citizens in the rest of the world.
At some point in the future, China's expanding middle class will be able to buy the kinds of goods that are currently exported. This will diversify and stabilize their economy. Also, at this time, there will be no reason not to allow the yuan to find its own level in currency markets. When the yuan becomes stronger, the costs of Chinese exports will increase for consumers around the world. America will no longer enjoy the cheap prices we currently have at Target.
How much longer the Chinese will continue to finance our government is an open question. Very recently, Chinese government officials asserted that they have no intention to abandon the U.S. debt market. This statement was made despite China's having recently sold some of their debt holdings in the secondary bond market.
So, for now, the Chinese and American economies are co-dependent. China's long-term plans are to de-couple from the U.S. This may take a long time, but the U.S. will have to adjust to China's long-term economic policies.

THE STUPIDEST LOANS BANKS ARE MAKING RIGHT NOW

The stupidest loans banks are making right now are home mortgage loans at rates fixed at 5 to 5.5% for 30 years. Think about it.