4. May 2009 by David A. Peterson.

Forrest Gump called it “stupid is as stupid does.”

Last week the Obama Administration did an incredibly stupid thing, they sent Air Force One on a photo op. Well they called it an official photo op but it had to be an incredibly stupid movie stunt.

I’m not going to dwell on where the plane went. I’m not going to comment on just how insensitive the Obama Administration was to fly over that particular city.

I believe millions of Americans saw the television images of hundreds of people scared to death, running for their lives from this potential treat. People from two states dropped everything that they were doing to call their loved ones. The message - Get out now! People were streaming out their buildings in an orderly manner, frightened but composed enough to get on the phone to call others about the cities impending crisis.

In the end it was just a silly joke. I mean really this had to be a joke; no one in their right mind would have authorized a flyover of this city. Imagine the chaos that would cause. The only thing that I can figure is that the President authorized some of his movie buddies to begin filming a new Airplane movie starring O.J. Simpson. What better place to do the filming but a real airplane, with a real fighter escort, and a whole lot of really scared people. You don’t even need to pay the extras in the crowd, they would automatically come running to the set.

Okay I’m done with my rant…. stupid is as stupid does. My issue with this incredibly stupid movie stunt is obviously the insensitivity to that particular city. However I would also like to give a “shout out” to all of the hard working taxpayers that were forced to finance this stunt.

Let me put the costs into perspective.

The problem with Washingtonians is that they don’t understand how much money was involved in the making of this movie. Even the media doesn’t get it. How many times in the past few months have we heard that $19.6 billion in earmarks is just a “drop in the bucket” to the entire bill? Or that “I’m worried that we are not doing enough in terms of spending…” Or even “…we are given Chrysler $4 billion dollars so they can avoid bankruptcy - bankruptcy is NOT an option…”

Let me do a small test before I work through the calculations. Can you say out loud to the person standing next to you this number: $2,978,354,143,102.16? I wonder how many people had to stop and think about it in order to say it out loud? By the way that is a rough estimate of how much our TARP program will end up costing the American taxpayer. But that is another story.

Today’s story is to put into perspective the cost of that incredibly stupid movie stunt.

The cost is expected to be somewhere around $330,000.  Not even a drop in the bucket by Washington standards. Just a drip from the spigot.

It may be a drip from the spigot but did you know…?

The Bureau of Labor puts the average weekly earnings of production and non-supervisory workers (preliminary results non-farm payrolls) in March 2009 at $614.20. That equals $31,938.40/year. That grosses out to $3,938 dollars in 2008 federal taxes owed for just one single average taxpayer. I’m just talking federal taxes, not the additional taxes on cigarettes, alcohol, gasoline, social security etc. I’m just talking money that would probably be allocated to the fuel, maintenance, and the crew of that incredibly stupid movie stunt.

Now our gracious government will also give this person some tax relief on the $32k that he earned in the form of exemptions and maybe interest on his home ownership. But to lower the $31,938.40/year amount would really skew my result so lets keep it where it is…

Here we go:

• Total federal taxes paid: $3,938/year
• Total  cost of this incredibly stupid movie event: $330,000/one time (hopefully)
• Number of years this person will have to work to clear this one bill: $330,000/$3,938 = 83.79/years

Yep I calculated it right. The average wage earner WILL NOT be able to pay off this bill in his lifetime. It will take almost TWO full-time employees their entire working careers to pay off this one stupid movie stunt.

If there is ever going to be some form of fiscal constraint in Washington then it will take people who have some sense of money. What is the real cost to society for one incredibly stupid movie stunt? If it is going to take 2 people their entire working careers to pay for this event is it worth it to society? Can society afford these types of luxuries?

I heard and read that the President was furious over this event. Maybe he is sensitive to the demons haunting this particular city. I wonder if he even gave the costs of the event another thought? What is your best guess? Did the President give the costs of the incredibly stupid movie event a 2nd thought? Do you think the President can say $2,978,354,143,102.16 without thinking about it?

Would someone please ask anyone of importance in the Obama Administration to rent the movie Forrest Gump? I mean really even Forrest knew that “stupid is as stupid does.”

…………………………………………………………………………………..

Authors Footnote: The Obama Administration couldn’t keep letting our money burn a hole in their pocket for long… they also flew Air Force One to Missouri in the same week. Now we need 4 or 5 average income earners to work their entire lives just to pay for one week’s worth of jet fuel.

Posted in Economics | No Comments »

22. April 2009 by David A. Peterson.

Over the past few months since our banking crisis began we have been hearing a lot about nationalizing our banking system.

The government has repeatedly said that it does not want to go down that road, yet with the infusion of TARP dollars into selected banks the possibility of nationalizing a few of them now seems like a reality. Once the TARP funds move out of preferred stock into common stock then the nationalization of those selected banks will be complete.

Here is another way to look at it… once they government owns the common stock they then have voting rights in those corporations. The difference between them owning stock and you and I owning stock is that when you infuse billions of dollars into common stock you have lots and lots of votes. In other words you basically have the control of that bank.

But are we not in a banking crisis? Shouldn’t someone take control?

The government has two choices with unstable banks they can go the FDIC method which has been our traditional route since the 1930s or they can do a new method which is recapitalization.

The FDIC method of handling a failed bank basically pays off the depositors and then sells whatever is left to whoever will buy it. The control of the institution goes to another bank that steps in to purchase the assets.

The 2nd and newer method is called ”recapitalization.” Our new method began last fall with the Trouble Asset Relief Program or TARP. This new method of giving selected banks more capital to shore up their balance sheets kept some of these institutions from failing. I said “some” because some banks didn’t want the new capital but were persuaded to take it anyways.

I don’t think that during the crisis last fall the object was to ultimately purchase the common stock of these selected banks - but wouldn’t you know, once the Democrats were taught what this could actually mean to them they jumped at the chance to gain control. By buying the common stock and gaining control our government is now in the banking business.

Now why is that bad? If you trust your government then this should be no big deal. Get in, get out. Stabilize the institution, earn a few dollars in dividends while you’re at and then get out of the banking business.

But if the government has control why not stay in the business? After all isn’t government good?

Here is my take on this: Government Is Good- Politics Are Bad!

The politics of the situation can and will lead to very bad government. The fraud that can and will happen will outpace anything we have seen in the past.

Why? How can I be so sure? Let’s take a look at exactly what a bank does for a living.

A bank lends money. Not only do they lend money but they lend more than they take in. So if you deposit $1 into a savings account the bank will take that $1 and make $4, $6, or even $32 dollars worth of loans. Depending on the banking regulations at the time the bank actually CREATES money. They CREATE money by taking $1 and turning it into $4! Government regulators tell them how much risk they can take on. It is the government that tells them “today you can take $1 and lend out $4.”

Can you see why your congressman, why any congressman would want control over a money machine? Currently your government takes in a tremendous amount of tax dollars. Literally trillions of dollars but they can only SPEND what they take in and then they BORROW additional money to cover the government’s expenses.

But a bank, oh a big beautiful bank. You could take the $3 trillion dollars and turn it into $12 trillion dollars just by depositing that money into a bank that you happen to own.

Now for the politics: Let’s say that the New York Congressional Delegation needs $100 million for new schools for it’s cities. Because of the recession the cities have no additional tax revenues to pay for the schools and they can’t float new bonds due to their own crappy credit rating. So the school district asks their congressional delegation for help.

The next step is Congress will give whichever bank will help the school district in question an additional $25 million. The bank can then loan that $25 million dollars to whoever they want, many times over. Naturally they will loan it to the local school district. Who cares  if the school district defaults on the $100 million it borrowed, it only cost the taxpayer $25 million.

Oh what a mess.

So what is the chance this scenario doesn’t happen? What is the chance that these money making machines don’t stay nationalized with the Democrats in charge? What is the chance the bank presidents don’t make the loans to the risky school district or to whomever the congress wants them to lend?

If you saw the Congressional hearing over the past few weeks, those hearing where the bank presidents were beat to a pulp for the whole world to see… what is the chance those presidents don’t make those bad loans?

Welcome to the nationalization of our banking system. You don’t have to nationalize all of the banks to create a money machine. You just need a few big ones.

Can anyone tell me what the inflation rate in Zimbabwe is today?

Posted in Economics | No Comments »